1.1 	A bill for an act
1.2 	relating to financing and operation of government in
1.3 	this state; modifying truth in taxation provisions and
1.4 	adding a taxpayer satisfaction survey; changing
1.5 	income, corporate franchise, withholding, estate,
1.6 	property, sales and use, mortgage registry, health
1.7 	care gross revenues, motor fuels, gambling, cigarette
1.8 	and tobacco products, occupation, net proceeds,
1.9 	production, liquor, insurance, and other taxes and
1.10 	tax-related provisions; making technical, clarifying,
1.11 	collection, enforcement, refund, and administrative
1.12 	changes to certain taxes and tax-related provisions,
1.13 	tax-forfeited lands, revenue recapture, unfair
1.14 	cigarette sales, state debt collection, sustainable
1.15 	forest incentive programs, and payments in lieu of
1.16 	taxes; changing local government aids and credits;
1.17 	providing for determination of population for certain
1.18 	purposes; updating references to the Internal Revenue
1.19 	Code, changing property tax exemptions, homesteads,
1.20 	assessment, valuation, classification, class rates,
1.21 	levies, deferral, review and equalization, appeals,
1.22 	notices and statements, and distribution provisions;
1.23 	changing rent constituting property taxes and property
1.24 	tax refunds; requiring state contracts be with vendors
1.25 	registered to collect use taxes; abolishing the
1.26 	political contribution refund; authorizing local sales
1.27 	taxes; extending a sales tax expiration; providing for
1.28 	compliance with streamlined sales tax agreement;
1.29 	changing the taxation of liquor and cigarettes;
1.30 	authorizing income tax checkoffs; requiring
1.31 	registration of tax shelters and providing for a
1.32 	voluntary compliance initiative; changing job
1.33 	opportunity building zones, border city development
1.34 	zones, biotechnology and health sciences industry zone
1.35 	provisions; setting minimum employee compensation for
1.36 	qualifying business in a JOBZ; limiting sales tax
1.37 	construction exemption in job zones to businesses
1.38 	paying prevailing wage; requiring a referendum for
1.39 	certain subsidies to gambling enterprises; authorizing
1.40 	charges for certain emergency services; imposing a
1.41 	franchise fee on card clubs; defining the term "tax";
1.42 	regulating tax preparers; suspending appropriations or
1.43 	aids to public employers who prohibit certain
1.44 	employees from wearing a flag on a uniform; providing
1.45 	for training and conduct of assessors; prohibiting
1.46 	purchases of tax-forfeited lands by certain local
2.1 	officials; providing for data classification and
2.2 	exchange of data; establishing a tax reform
2.3 	commission; providing and imposing powers and duties
2.4 	on the commissioner of revenue and other state
2.5 	agencies and departments and on certain political
2.6 	subdivisions and certain officials; changing and
2.7 	imposing penalties; requiring reports; transferring
2.8 	funds; appropriating money; amending Minnesota
2.9 	Statutes 2004, sections 4A.02; 16C.03, by adding a
2.10 	subdivision; 16D.10; 168A.05, subdivision 1a; 190.09,
2.11 	subdivision 2; 240.30, by adding a subdivision;
2.12 	270.02, subdivision 3; 270.11, subdivision 2; 270.16,
2.13 	subdivision 2; 270.30, subdivisions 1, 5, 6, 8, by
2.14 	adding subdivisions; 270.65; 270.67, subdivision 4;
2.15 	270.69, subdivision 4; 270A.03, subdivisions 5, 7;
2.16 	272.01, subdivision 2; 272.02, subdivisions 1a, 7, 47,
2.17 	53, 64, by adding subdivisions; 272.0211, subdivisions
2.18 	1, 2; 272.0212, subdivisions 1, 2; 272.029,
2.19 	subdivisions 4, 6; 273.055; 273.0755; 273.11,
2.20 	subdivisions 1a, 8, by adding subdivisions; 273.111,
2.21 	by adding a subdivision; 273.123, subdivision 7;
2.22 	273.124, subdivisions 3, 6, 8, 14, 21; 273.125,
2.23 	subdivision 8; 273.13, subdivisions 22, 23, 25, by
2.24 	adding a subdivision; 273.1315; 273.1384, subdivision
2.25 	1; 273.19, subdivision 1a; 273.372; 274.01,
2.26 	subdivision 1; 274.014, subdivisions 2, 3; 274.14;
2.27 	275.025, subdivision 4; 275.065, subdivisions 1c, 3,
2.28 	4, 7, by adding subdivisions; 275.07, subdivisions 1,
2.29 	4; 276.04, subdivision 2; 276.112; 276A.01,
2.30 	subdivision 7; 282.016; 282.08; 282.15; 282.21;
2.31 	282.224; 282.301; 287.04; 289A.02, subdivision 7;
2.32 	289A.08, subdivisions 1, 3, 7, 13, 16; 289A.18,
2.33 	subdivision 1; 289A.19, subdivision 4; 289A.20,
2.34 	subdivision 2; 289A.31, subdivision 2; 289A.37,
2.35 	subdivision 5; 289A.38, subdivisions 6, 7, by adding
2.36 	subdivisions; 289A.40, subdivision 2, by adding
2.37 	subdivisions; 289A.50, subdivisions 1, 1a; 289A.56, by
2.38 	adding a subdivision; 289A.60, subdivisions 2a, 4, 6,
2.39 	7, 11, 13, 20, by adding subdivisions; 290.01,
2.40 	subdivisions 6, 7, 7b, 19, as amended, 19a, 19b, 19c,
2.41 	19d, 31; 290.032, subdivisions 1, 2; 290.06,
2.42 	subdivisions 2c, 22, by adding a subdivision; 290.067,
2.43 	subdivisions 1, 2a; 290.0671, subdivisions 1, 1a;
2.44 	290.0672, subdivisions 1, 2; 290.0674, subdivisions 1,
2.45 	2; 290.0675, subdivision 1; 290.091, subdivisions 2,
2.46 	3; 290.0922, subdivision 2; 290.191, subdivisions 2,
2.47 	3; 290.92, subdivisions 1, 4b; 290A.03, subdivisions
2.48 	3, 11, 13, 15, by adding subdivisions; 290A.07, by
2.49 	adding a subdivision; 290A.19; 290B.05, subdivision 3;
2.50 	290C.05; 290C.10; 291.005, subdivision 1; 291.03,
2.51 	subdivision 1; 295.52, subdivision 4; 295.53,
2.52 	subdivision 1; 295.582; 295.60, subdivision 3;
2.53 	296A.22, by adding a subdivision; 297A.61,
2.54 	subdivisions 3, 4, by adding a subdivision; 297A.64,
2.55 	subdivision 4; 297A.668, subdivisions 1, 5; 297A.67,
2.56 	subdivisions 2, 7, 9, 29, by adding a subdivision;
2.57 	297A.68, subdivisions 2, 5, 28, 35, 37, 38, 39, by
2.58 	adding subdivisions; 297A.70, subdivision 10; 297A.71,
2.59 	subdivision 12, by adding a subdivision; 297A.72, by
2.60 	adding a subdivision; 297A.75, subdivision 1; 297A.87,
2.61 	subdivisions 2, 3; 297A.99, subdivisions 1, 3, 4, 9,
2.62 	by adding subdivisions; 297E.01, subdivisions 5, 7, by
2.63 	adding subdivisions; 297E.06, subdivision 2; 297E.07;
2.64 	297F.08, subdivision 12, by adding a subdivision;
2.65 	297F.09, subdivisions 1, 2; 297F.14, subdivision 4;
2.66 	297G.09, by adding a subdivision; 297I.01, by adding
2.67 	subdivisions; 297I.05, subdivisions 4, 5, by adding a
2.68 	subdivision; 298.01, subdivisions 3, 4; 298.24,
2.69 	subdivision 1; 298.75, by adding a subdivision;
2.70 	325D.33, subdivision 6; 365.43, subdivision 1;
2.71 	365.431; 366.011; 366.012; 373.45, subdivision 7;
3.1 	469.169, by adding a subdivision; 469.1735,
3.2 	subdivision 3; 469.176, subdivisions 4l, 7; 469.310,
3.3 	subdivision 11, by adding a subdivision; 469.315;
3.4 	469.316; 469.317; 469.319, subdivision 1, by adding a
3.5 	subdivision; 469.320, subdivision 3; 469.330,
3.6 	subdivision 11; 469.335; 469.337; 469.340, subdivision
3.7 	1; 473.843, subdivision 5; 473F.02, subdivisions 2, 7;
3.8 	477A.011, subdivisions 3, 34, 35, 36, 38; 477A.0124,
3.9 	subdivisions 2, 4; 477A.013, subdivisions 8, 9, by
3.10 	adding a subdivision; 477A.016; 477A.03, subdivisions
3.11 	2a, 2b; 477A.11, subdivision 4, by adding a
3.12 	subdivision; 477A.12, subdivisions 1, 2; 477A.14,
3.13 	subdivision 1; 645.44, by adding a subdivision; Laws
3.14 	1998, chapter 389, article 3, section 42, subdivision
3.15 	2, as amended; Laws 1998, chapter 389, article 8,
3.16 	section 43, subdivision 3; Laws 2001, First Special
3.17 	Session chapter 5, article 3, section 8; Laws 2001,
3.18 	First Special Session chapter 5, article 12, section
3.19 	95, as amended; Laws 2002, chapter 377, article 3,
3.20 	section 4; Laws 2003, chapter 127, article 5, section
3.21 	27; Laws 2003, chapter 127, article 5, section 28;
3.22 	Laws 2003, First Special Session chapter 21, article
3.23 	5, section 13; Laws 2003, First Special Session
3.24 	chapter 21, article 6, section 9; Laws 2005, chapter
3.25 	43, section 1; proposing coding for new law in
3.26 	Minnesota Statutes, chapters 15; 270; 272; 273; 275;
3.27 	280; 289A; 290; 290C; 295; 297A; 297F; 373; 459; 473;
3.28 	repealing Minnesota Statutes 2004, sections 10A.322,
3.29 	subdivision 4; 16A.1522, subdivision 4; 270.85;
3.30 	270.88; 272.02, subdivision 65; 273.19, subdivision 5;
3.31 	273.37, subdivision 3; 274.05; 275.065, subdivisions
3.32 	5a, 6, 6b, 8; 275.15; 275.61, subdivision 2; 283.07;
3.33 	290.06, subdivision 23; 297E.12, subdivision 10;
3.34 	469.1794, subdivision 6; 477A.08; Laws 1975, chapter
3.35 	287, section 5; Laws 1998, chapter 389, article 3,
3.36 	section 41; Laws 2003, chapter 127, article 9, section
3.37 	9, subdivision 4; Minnesota Rules, parts 8093.2000;
3.38 	8093.3000; 8130.0110, subpart 4; 8130.0200, subparts
3.39 	5, 6; 8130.0400, subpart 9; 8130.1200, subparts 5, 6;
3.40 	8130.2900; 8130.3100, subpart 1; 8130.4000, subparts
3.41 	1, 2; 8130.4200, subpart 1; 8130.4400, subpart 3;
3.42 	8130.5200; 8130.5600, subpart 3; 8130.5800, subpart 5;
3.43 	8130.7300, subpart 5; 8130.8800, subpart 4.
3.44 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

3.45 	ARTICLE 1
3.46 	TAXPAYER SATISFACTION SURVEY

3.47 	Section 1. [275.063] PROPOSED PROPERTY TAXES; TAXPAYER
3.48 	SATISFACTION SURVEY; DEFINITIONS.
3.49 		Subdivision 1.Definitions. For the purposes of this
3.50 	section and section 275.065, the following definitions apply.
3.51 		Subd. 2.Budget; counties. For counties, "budget" means
3.52 	total government fund expenditures, as defined by the state
3.53 	auditor under section 375.169, less any expenditures for direct
3.54 	payments to recipients or providers for the human service aids
3.55 	listed below:
3.56 	(1) Minnesota family investment program under chapters 256J
3.57 	and 256K;
4.1 	(2) medical assistance under sections 256B.041, subdivision
4.2 	5, and 256B.19, subdivision 1;
4.3 	(3) general assistance medical care under section 256D.03,
4.4 	subdivision 6;
4.5 	(4) general assistance under section 256D.03, subdivision
4.6 	2;
4.7 	(5) Minnesota supplemental aid under section 256D.36,
4.8 	subdivision 1;
4.9 	(6) preadmission screening under section 256B.0911, and
4.10 	alternative care grants under section 256B.0913;
4.11 	(7) general assistance medical care claims processing,
4.12 	medical transportation, and related costs under section 256D.03,
4.13 	subdivision 4;
4.14 	(8) medical transportation and related costs under section
4.15 	256B.0625, subdivisions 17 to 18a;
4.16 	(9) group residential housing under section 256I.05,
4.17 	subdivision 8, transferred from programs in clauses (4) and (5);
4.18 	or 
4.19 	(10) any successor programs to those listed in clauses (1)
4.20 	to (9).
4.21 		Subd. 3.Budget; cities. For cities, "budget" means
4.22 	total government fund expenditures, as defined by the state
4.23 	auditor under section 471.6965, less any expenditures for
4.24 	improvements or services that are specially assessed or charged
4.25 	under chapter 429, 430, 435, or the provisions of any other law
4.26 	or charter.
4.27 		Subd. 4.Population. "Population" of a city means the
4.28 	most recent population as determined by the state demographer
4.29 	under section 4A.02 or by the Metropolitan Council under section
4.30 	477A.011, subdivision 3.
4.31 		Subd. 5.Property tax levy subject to approval; counties
4.32 	and cities. For a county or a city, "property tax levy subject
4.33 	to approval" means the jurisdiction's levy excluding any debt
4.34 	levy and any levy previously approved by the voters.
4.35 		Subd. 6.Debt levy. "Debt levy" means a levy to:
4.36 	(1) pay the costs of principal and interest on bonded
5.1 	indebtedness;
5.2 	(2) pay the costs of principal and interest on certificates
5.3 	of indebtedness issued for any corporate purpose except:
5.4 	(i) tax anticipation or aid anticipation certificates of
5.5 	indebtedness;
5.6 	(ii) certificates of indebtedness issued under sections
5.7 	298.28 and 298.282;
5.8 	(iii) certificates of indebtedness used to fund current
5.9 	expenses; or 
5.10 	(iv) certificates of indebtedness used to fund an
5.11 	insufficiency in tax receipts or an insufficiency in other
5.12 	revenue sources.
5.13 	(3) pay another city, town, county, or school district for
5.14 	principal and interest on general obligation debt; or 
5.15 	(4) fund payments made to the Minnesota State Armory
5.16 	Building Commission under section 193.145, subdivision 2, to
5.17 	retire the principal and interest on armory construction bonds.
5.18 		Subd. 7.State property tax credits. "State property tax
5.19 	credits" means any credits received under sections 273.119;
5.20 	273.123; 273.135; 273.1384; 273.1391; 273.1398, subdivision 4;
5.21 	469.171; and 473H.10.
5.22 		Subd. 8.Jurisdiction subject to taxpayer satisfaction
5.23 	survey. A "jurisdiction subject to the taxpayer satisfaction
5.24 	survey" means any county or any city with a population of 500 or
5.25 	greater.
5.26 	
EFFECTIVE DATE. This section is effective for taxes
5.27 	payable in 2006 and subsequent years.

5.28 	Sec. 2. Minnesota Statutes 2004, section 275.065,
5.29 	subdivision 1c, is amended to read:
5.30 		Subd. 1c.Levy; shared, merged, consolidated services.
 5.31 	If two or more taxing authorities are in the process of
5.32 	negotiating an agreement for sharing, merging, or consolidating
5.33 	services between those taxing authorities at the time the
5.34 	proposed levy is to be certified under subdivision 1, each
5.35 	taxing authority involved in the negotiation shall certify its
5.36 	total proposed levy as provided in that subdivision, including a
6.1 	notification to the county auditor of the specific service
6.2 	involved in the agreement which is not yet finalized.  The
6.3 	affected taxing authorities may amend their proposed levies
6.4 	under subdivision 1 until October 10 1 for levy amounts relating
6.5 	only to the specific service involved.
6.6 	
EFFECTIVE DATE. This section is effective for taxes
6.7 	payable in 2006 and subsequent years.

6.8 	Sec. 3. Minnesota Statutes 2004, section 275.065,
6.9 	subdivision 3, is amended to read:
6.10 		Subd. 3.Notice of proposed property taxes.  (a) The
6.11 	county auditor shall prepare and the county treasurer shall
6.12 	deliver after November 10 8 and on or before November 24 19 each
6.13 	year, by first class mail to each taxpayer at the address listed
6.14 	on the county's current year's assessment roll, a notice of
6.15 	proposed property taxes.
6.16 	(b) The commissioner of revenue shall prescribe the form of
6.17 	the notice. The form must be in the form prescribed by the
6.18 	commissioner.
6.19 	(c) The notice must inform taxpayers that it contains the
6.20 	amount of property taxes each taxing authority proposes to
6.21 	collect for taxes payable the following year.  In the case of a
6.22 	town, or in the case of the state general tax, the final tax
6.23 	amount will be its proposed tax unless the town changes its levy
6.24 	at a special town meeting under section 365.52. In the case of
6.25 	taxing authorities required to hold a public meeting under
6.26 	subdivision 6, the notice must clearly state that each taxing
6.27 	authority, including regional library districts established
6.28 	under section 134.201, and including the metropolitan taxing
6.29 	districts as defined in paragraph (i), but excluding all other
6.30 	special taxing districts and towns, will hold a public meeting
6.31 	to receive public testimony on the proposed budget and proposed
6.32 	or final property tax levy, or, in case of a school district, on
6.33 	the current budget and proposed property tax levy.  It must
6.34 	clearly state the time and place of each taxing authority's
6.35 	meeting, a telephone number for the taxing authority that
6.36 	taxpayers may call if they have questions related to the notice,
7.1 	and an address where comments will be received by mail.
7.2 	(d) The notice must state for each parcel:
7.3 	(1) the market value of the property as determined under
7.4 	section 273.11, and used for computing property taxes payable in
7.5 	the following year and for taxes payable in the current year as
7.6 	each appears in the records of the county assessor on November 1
7.7 	of the current year; and, in the case of residential property,
7.8 	whether the property is classified as homestead or
7.9 	nonhomestead.  The notice must clearly inform taxpayers of the
7.10 	years to which the market values apply and that the values are
7.11 	final values;.
7.12 	(2) (e) The items listed below, shown separately by notice
7.13 	must state for each parcel, for both taxes payable in the
7.14 	current year and the proposed taxes payable in the following
7.15 	year each of the following tax amounts, net of state property
7.16 	tax credits:county tax, city or town tax, and state general 
7.17 	tax, net of the residential and agricultural homestead credit
7.18 	under section 273.1384,voter approved school levy tax,
7.19 	other local school levy tax, and the sum of the tax amounts
7.20 	for all special taxing districts, the sum of the tax increment
7.21 	tax on captured tax capacity, if applicable, and the fiscal
7.22 	disparities areawide tax under chapter 276A or 473F, if
7.23 	applicable,and as a the total of tax amount for all taxing
7.24 	authorities:
7.25 	(i) the actual tax for taxes payable in the current year;
7.26 	and 
7.27 	(ii) the proposed tax amount.
7.28 	If the county levy under clause (2) includes an amount for
7.29 	a lake improvement district as defined under sections 103B.501
7.30 	to 103B.581, the amount attributable for that purpose must be
7.31 	separately stated from the remaining county levy amount.
7.32 	In the case of a town or the state general tax, the final
7.33 	tax shall also be its proposed tax unless the town changes its
7.34 	levy at a special town meeting under section 365.52.  If a
7.35 	school district has certified under section 126C.17, subdivision
7.36 	9, that a referendum will be held in the school district at the
8.1 	November general election, the county auditor must note next to
8.2 	the school district's proposed amount that a referendum is
8.3 	pending and that, if approved by the voters, the tax amount may
8.4 	be higher than shown on the notice.  In the case of the city of
8.5 	Minneapolis, the levy for the Minneapolis Library Board and the
8.6 	levy for Minneapolis Park and Recreation shall be listed
8.7 	separately from the remaining amount of the city's levy.  In the
8.8 	case of the city of St. Paul, the levy for the St. Paul Library
8.9 	Agency must be listed separately from the remaining amount of
8.10 	the city's levy.  In the case of a parcel where tax increment or
8.11 	the fiscal disparities areawide tax under chapter 276A or 473F
8.12 	applies, the proposed tax levy on the captured value or the
8.13 	proposed tax levy on the tax capacity subject to the areawide
8.14 	tax must each be stated separately and not included in the sum
8.15 	of the special taxing districts; and 
8.16 	(3) the increase or decrease between the total taxes
8.17 	payable in the current year and the total proposed taxes,
8.18 	expressed as a percentage.
8.19 	(f) The notice must state for each parcel the increase or
8.20 	decrease between the total taxes payable in the current year and
8.21 	the total proposed taxes, expressed as a percentage.
8.22 	(g) The notice must state for each parcel an estimate of
8.23 	any additional tax that would apply to the property under any
8.24 	referenda pending at the November general election.  Any amount
8.25 	shown under this item should be indicated as pending the results
8.26 	of referendum elections, and shall not be reflected in the total
8.27 	proposed net tax amount.
8.28 	(h) For purposes of this section, the amount of the tax on
8.29 	homesteads qualifying under the senior citizens' property tax
8.30 	deferral program under chapter 290B is the total amount of
8.31 	property tax before subtraction of the deferred property tax
8.32 	amount.
8.33 	(e) (i) The notice must clearly state that the proposed or
8.34 	final taxes do not include the following:
8.35 	(1) special assessments;
8.36 	(2) levies approved by the voters after the date of the
9.1 	proposed taxes are certified, including bond referenda and
9.2 	school district levy referenda November general election;
9.3 	(3) a levy limit increase approved by the voters by the
9.4 	first Tuesday after the first Monday in November of the levy
9.5 	year as provided under section 275.73;
9.6 	(4) amounts necessary to pay cleanup or other costs due to
9.7 	a natural disaster occurring after the date the proposed taxes
9.8 	are certified;
9.9 	(5) (4) amounts necessary to pay tort judgments against the
9.10 	taxing authority that become final after the date the proposed
9.11 	taxes are certified; and
9.12 	(6) (5) the contamination tax imposed on properties which
9.13 	received market value reductions for contamination.
9.14 	(f) (j) Except as provided in subdivision 7, failure of the
9.15 	county auditor to prepare or the county treasurer to deliver the
9.16 	notice as required in this section does not invalidate the
9.17 	proposed or final tax levy or the taxes payable pursuant to the
9.18 	tax levy.
9.19 	(g) If the notice the taxpayer receives under this section
9.20 	lists the property as nonhomestead, and satisfactory
9.21 	documentation is provided to the county assessor by the
9.22 	applicable deadline, and the property qualifies for the
9.23 	homestead classification in that assessment year, the assessor
9.24 	shall reclassify the property to homestead for taxes payable in
9.25 	the following year.
9.26 	(h) (k) In the case of class 4 residential property used as
9.27 	a residence for lease or rental periods of 30 days or more, the
9.28 	taxpayer must either: (1) mail or deliver a copy of the notice
9.29 	of proposed property taxes and the taxpayer satisfaction survey 
9.30 	to each tenant, renter, or lessee; or .
9.31 	(2) post a copy of the notice in a conspicuous place on the
9.32 	premises of the property.
9.33 	The copy of the notice must be mailed or posted by the
9.34 	taxpayer by November 27 22 or within three days of receipt of
9.35 	the notice, whichever is later.  A taxpayer may notify the
9.36 	county treasurer of the address of the taxpayer, agent,
10.1 	caretaker, or manager of the premises to which the notice must
10.2 	be mailed in order to fulfill the requirements of this paragraph.
10.3 	(i) (l) For purposes of this subdivision, subdivisions 5a
10.4 	and 6 section 276.04, "metropolitan special taxing districts"
10.5 	means the following taxing districts in the seven-county
10.6 	metropolitan area that levy a property tax for any of the
10.7 	specified purposes listed below:
10.8 	(1) Metropolitan Council under section 473.132, 473.167,
10.9 	473.249, 473.325, 473.446, 473.521, 473.547, or 473.834;
10.10 	(2) Metropolitan Airports Commission under section 473.667,
10.11 	473.671, or 473.672; and
10.12 	(3) Metropolitan Mosquito Control Commission under section
10.13 	473.711.
10.14 	(m) For purposes of this section, any levies made by the
10.15 	regional rail authorities in the county of Anoka, Carver,
10.16 	Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
10.17 	398A shall be included with the appropriate county's levy and
10.18 	shall be discussed at one of that county's public
10.19 	hearing regularly scheduled board meetings.
10.20 	(n) The governing body of a county, city, or school
10.21 	district may, with the county auditor's consent, include
10.22 	supplemental information with the statement of proposed property
10.23 	taxes about the impact of state aid increases or decreases on
10.24 	property tax increases or decreases and on the level of services
10.25 	provided in the affected jurisdiction.  This supplemental
10.26 	information may include information for the following year, the
10.27 	current year, and for as many consecutive preceding years as
10.28 	deemed appropriate by the governing body of the county, city, or
10.29 	school district.  It may include only information regarding:
10.30 	(1) the impact of inflation as measured by the implicit
10.31 	price deflator for state and local government purchases;
10.32 	(2) population growth and decline;
10.33 	(3) state or federal government action; and 
10.34 	(4) other financial factors that affect the level of
10.35 	property taxation and local services that the governing body of
10.36 	the county, city, or school district may deem appropriate to
11.1 	include.
11.2 	The information may be presented using tables, written
11.3 	narrative, and graphic representations and may contain
11.4 	instruction toward further sources of information or opportunity
11.5 	for comment.
11.6 	The supplemental information for each jurisdiction must not
11.7 	exceed one side of an 8.5 inch by 11 inch sheet of paper.
11.8 	
EFFECTIVE DATE. This section is effective for taxes
11.9 	payable in 2006 and subsequent years.

11.10 	Sec. 4. Minnesota Statutes 2004, section 275.065, is
11.11 	amended by adding a subdivision to read:
11.12 		Subd. 3b.Taxpayer satisfaction survey. (a) A taxpayer
11.13 	satisfaction survey form must be attached to or enclosed with
11.14 	each proposed property tax notice under subdivision 3.  The form
11.15 	must include a property description or a code number that allows
11.16 	the property to be uniquely identified.
11.17 	(b) The taxpayer satisfaction survey form shall present the
11.18 	following question for each jurisdiction subject to the taxpayer
11.19 	satisfaction survey:  "Are you satisfied with the proposed
11.20 	property tax levy for (name of jurisdiction)?"  A space will be
11.21 	provided for the respondent to answer "Yes" or "No" for each
11.22 	jurisdiction.  The form must also inform the taxpayer that if
11.23 	the number of responses marked "No" exceeds the criteria
11.24 	specified in subdivision 3e, a referendum will be held on the
11.25 	question of the increase in the property tax levy subject to
11.26 	approval unless a recertification is made under subdivision 9
11.27 	reducing the levy.
11.28 	(c) The mailing shall include a non-postage-paid envelope
11.29 	preaddressed to the agency designated to process survey
11.30 	results.  A taxpayer, including a tenant, renter, or lessee who
11.31 	is entitled to receive a copy of the notice and survey form
11.32 	under subdivision 3, paragraph (k), may respond to the survey by
11.33 	returning the completed survey form to the designated agency by
11.34 	December 1.  The responding taxpayer is responsible for the
11.35 	postage.
11.36 	
EFFECTIVE DATE. This section is effective for taxes
12.1 	payable in 2006 and subsequent years, except that two provisions
12.2 	are first effective for taxes payable in 2007:  the requirement
12.3 	that the survey form include a property description or code
12.4 	number, and the requirement that the form notify taxpayers that
12.5 	the results of the survey could cause a referendum election to
12.6 	be held.

12.7 	Sec. 5. Minnesota Statutes 2004, section 275.065, is
12.8 	amended by adding a subdivision to read:
12.9 		Subd. 3c.Taxpayer satisfaction survey additional
12.10 	information. The taxpayer satisfaction survey form must include
12.11 	the following information for the current year and for the
12.12 	proposed year, and show the percentage change between the years:
12.13 	(1) the county government's (i) budget and (ii) property
12.14 	tax levy subject to approval; and 
12.15 	(2) if the property is located in a city which is a
12.16 	jurisdiction subject to the taxpayer satisfaction survey, the
12.17 	city government's (i) budget and (ii) property tax levy subject
12.18 	to approval.
12.19 	
EFFECTIVE DATE. This section is effective for taxes
12.20 	payable in 2006 and subsequent years.

12.21 	Sec. 6. Minnesota Statutes 2004, section 275.065, is
12.22 	amended by adding a subdivision to read:
12.23 		Subd. 3d.Format of taxpayer satisfaction survey. The
12.24 	commissioner of revenue shall prescribe the format of the survey
12.25 	form required under subdivisions 3b to 3f and present the form
12.26 	to the chairs of the house and senate tax committees for
12.27 	review.  The form must be in the format prescribed by the
12.28 	commissioner.
12.29 	
EFFECTIVE DATE. This section is effective for taxes
12.30 	payable in 2006 and subsequent years.

12.31 	Sec. 7. Minnesota Statutes 2004, section 275.065, is
12.32 	amended by adding a subdivision to read:
12.33 		Subd. 3e.Results of taxpayer satisfaction survey. (a)
12.34 	Each agency designated to receive taxpayer satisfaction surveys
12.35 	shall verify the authenticity of each form received, to the
12.36 	extent possible, and tabulate the results of the survey for each
13.1 	taxing jurisdiction.  If the number of survey responses
13.2 	indicating dissatisfaction with the jurisdiction's proposed levy
13.3 	exceeds 20 percent of the total number of proposed tax notices
13.4 	distributed in the jurisdiction, and the proposed property tax
13.5 	levy subject to approval exceeds the property tax levy subject
13.6 	to approval for taxes payable in the current year, a referendum
13.7 	must be held on the last Tuesday in January.  By December 8, the
13.8 	agency must announce the results of the survey for each taxing
13.9 	jurisdiction, including both the number of responses indicating
13.10 	that they are satisfied with the proposed levy and the number
13.11 	indicating that they are not satisfied.
13.12 	(b) If the county auditor determines that a single person
13.13 	or entity owns more than ten percent of the parcels of property
13.14 	within a jurisdiction subject to taxpayer satisfaction survey,
13.15 	then the number of responses indicating dissatisfaction with the
13.16 	proposed levy must exceed the percentage owed by the single
13.17 	person or entity plus 20 percent of the total number of proposed
13.18 	tax notices distributed in the jurisdiction in order to initiate
13.19 	the referendum process described in paragraph (a).
13.20 	
EFFECTIVE DATE. This section is effective for taxes
13.21 	payable in 2006 and subsequent years, except that the
13.22 	requirement of an automatic referendum election is effective
13.23 	beginning with taxes payable in 2007 and subsequent years.

13.24 	Sec. 8. Minnesota Statutes 2004, section 275.065, is
13.25 	amended by adding a subdivision to read:
13.26 		Subd. 3f.Designated agency. For taxpayer satisfaction
13.27 	surveys pertaining to taxes payable in 2006, the designated
13.28 	agency is the county.  For taxing jurisdictions located in more
13.29 	than one county, each county shall tabulate the results of the
13.30 	survey for the portion of the jurisdiction in the county, and
13.31 	forward the results to the jurisdiction's home county by
13.32 	December 7.  The home county shall make available the survey
13.33 	results for the total jurisdiction.
13.34 	By January 1, 2006, and each year thereafter, the
13.35 	commissioner of revenue shall designate the agency or agencies
13.36 	to receive and process taxpayer satisfaction surveys for taxes
14.1 	payable in the following year.
14.2 	
EFFECTIVE DATE. This section is effective for taxes
14.3 	payable in 2006 and subsequent years.

14.4 	Sec. 9. Minnesota Statutes 2004, section 275.065,
14.5 	subdivision 4, is amended to read:
14.6 		Subd. 4.Costs. If the reasonable cost of The county may
14.7 	apportion the cost of the county auditor's services and the cost
14.8 	of preparing and mailing the notice and survey required in this
14.9 	section exceed the amount distributed to the county by the
14.10 	commissioner of revenue to administer this section, the taxing
14.11 	authority must reimburse the county for the excess cost.  The
14.12 	excess cost must be apportioned between taxing jurisdictions as
14.13 	follows:
14.14 	(1) one-third is allocated to the county;
14.15 	(2) one-third is allocated to cities and towns within the
14.16 	county; and
14.17 	(3) one-third is allocated to school districts within the
14.18 	county.
14.19 	The amounts in clause (2) must be further apportioned among
14.20 	the cities and towns in the proportion that the number of
14.21 	parcels in the city and town bears to the number of parcels in
14.22 	all the cities and towns within the county.  The amount in
14.23 	clause (3) must be further apportioned among the school
14.24 	districts in the proportion that the number of parcels in the
14.25 	school district bears to the number of parcels in all school
14.26 	districts within the county.
14.27 	
EFFECTIVE DATE. This section is effective for taxes
14.28 	payable in 2006 and subsequent years.

14.29 	Sec. 10. Minnesota Statutes 2004, section 275.065,
14.30 	subdivision 7, is amended to read:
14.31 		Subd. 7.Certification of compliance.  At the time the
14.32 	taxing authority certifies its tax levy under section 275.07, it
14.33 	shall certify to the commissioner of revenue its compliance with
14.34 	this section.  The certification must contain the information
14.35 	required by the commissioner of revenue to determine compliance
14.36 	with this section.  If the commissioner determines that the
15.1 	taxing authority has failed to substantially comply with the
15.2 	requirements of this section, the commissioner of revenue shall
15.3 	notify the county auditor.  The decision of the commissioner is
15.4 	final.  When fixing rates under section 275.08 for a taxing
15.5 	authority that has not complied with this section, the county
15.6 	auditor must use the taxing authority's previous year's levy,
15.7 	plus any additional amounts necessary to pay principal and
15.8 	interest on general obligation bonds of the taxing authority for
15.9 	which its taxing powers have been pledged if the bonds were
15.10 	issued before 1989 fund an increase in the authority's debt levy
15.11 	for taxes payable in the following year.
15.12 	
EFFECTIVE DATE. This section is effective for taxes
15.13 	payable in 2006 and subsequent years.

15.14 	Sec. 11. Minnesota Statutes 2004, section 275.065, is
15.15 	amended by adding a subdivision to read:
15.16 		Subd. 9.Recertification of proposed levy. By December
15.17 	15, a jurisdiction subject to taxpayer satisfaction survey, that
15.18 	has been notified under subdivision 3e that the criteria for a
15.19 	referendum have been met, may elect to recertify its proposed
15.20 	levy so that the proposed property tax levy subject to approval
15.21 	is equal to the property tax levy subject to approval for taxes
15.22 	payable in the current year.  If the jurisdiction recertifies
15.23 	its proposed levy to the county auditor according to the
15.24 	provisions of this subdivision, the auditor must cancel the
15.25 	referendum for that jurisdiction.
15.26 	
EFFECTIVE DATE. This section is effective for taxes
15.27 	payable in 2007 and subsequent years.

15.28 	Sec. 12. Minnesota Statutes 2004, section 275.065, is
15.29 	amended by adding a subdivision to read:
15.30 		Subd. 10.Levy approval; referendum. (a) If the
15.31 	designated agency has determined under subdivision 3e that a
15.32 	referendum is required, the increase in the property tax levy
15.33 	subject to approval shall not be effective until it has been
15.34 	submitted to the voters at a special election to be held on the
15.35 	last Tuesday in January, and a majority of votes cast on the
15.36 	question of approving the levy increase are in the affirmative.
16.1 	The commissioner of revenue shall prepare the form of the
16.2 	question to be presented at the referendum, which must reference
16.3 	only the amount of increase in the property tax levy subject to
16.4 	approval.
16.5 	(b) If the majority of the votes cast on the question are
16.6 	in the affirmative, the proposed levy shall be certified as the
16.7 	final levy.  If the majority of the votes cast on the question
16.8 	are in the negative, the levy shall be the property tax levy
16.9 	amount subject to approval for the previous year, plus the
16.10 	portion of the proposed levy that was not subject to referendum.
16.11 	(c) A levy approved under this subdivision must be levied
16.12 	against the net tax capacity of the jurisdiction.
16.13 	
EFFECTIVE DATE. This section is effective for taxes
16.14 	payable in 2007 and subsequent years.

16.15 	Sec. 13. Minnesota Statutes 2004, section 275.07,
16.16 	subdivision 1, is amended to read:
16.17 		Subdivision 1.Certification of levy.  (a) Except as
16.18 	provided under paragraph (b), the taxes voted by cities,
16.19 	counties, school districts, and special districts shall be
16.20 	certified by the proper authorities to the county auditor on or
16.21 	before five working days after December 20 28 in each year. A
16.22 	jurisdiction whose levy is subject to a referendum under section
16.23 	275.065, subdivision 10, shall at that time certify two levy
16.24 	amounts, one if the referendum is successful, and another if the
16.25 	referendum is not successful.  A jurisdiction whose levy is
16.26 	subject to a referendum must recertify its final levy the day
16.27 	immediately following the election.A town must certify the
16.28 	levy adopted by the town board to the county auditor by
16.29 	September 15 each year.  If the town board modifies the levy at
16.30 	a special town meeting after September 15, the town board must
16.31 	recertify its levy to the county auditor on or before five
16.32 	working days after December 20 28.  The taxes certified shall be
16.33 	reduced by the county auditor by the aid received under section
16.34 	273.1398, subdivision 3.  If a city, town, county, school
16.35 	district, or special district fails to certify its levy by that
16.36 	date, its levy shall be the amount levied by it for the
17.1 	preceding year.
17.2 	(b)(i) The taxes voted by counties under sections 103B.241,
17.3 	103B.245, and 103B.251 shall be separately certified by the
17.4 	county to the county auditor on or before five working days
17.5 	after December 20 28 in each year.  The taxes certified shall
17.6 	not be reduced by the county auditor by the aid received under
17.7 	section 273.1398, subdivision 3.  If a county fails to certify
17.8 	its levy by that date, its levy shall be the amount levied by it
17.9 	for the preceding year.
17.10 	(ii) For purposes of the proposed property tax notice under
17.11 	section 275.065 and the property tax statement under section
17.12 	276.04, for the first year in which the county implements the
17.13 	provisions of this paragraph, the county auditor shall reduce
17.14 	the county's levy for the preceding year to reflect any amount
17.15 	levied for water management purposes under clause (i) included
17.16 	in the county's levy.
17.17 	
EFFECTIVE DATE. This section is effective for taxes
17.18 	payable in 2007 and subsequent years.

17.19 	Sec. 14. REPEALER.
 17.20 	Minnesota Statutes 2004, section 275.065, subdivisions 5a,
17.21 	6, 6b, and 8, are repealed.

17.22 	EFFECTIVE DATE. This section is effective for taxes
17.23 	payable in 2006 and subsequent years.

17.24 	ARTICLE 2
17.25 	PROPERTY TAXES

17.26 	Section 1. Minnesota Statutes 2004, section 272.02,
17.27 	subdivision 47, is amended to read:
17.28 		Subd. 47.Poultry litter biomass generation facility;
17.29 	personal property.  Notwithstanding subdivision 9, clause (a),
17.30 	attached machinery and other personal property which is part of
17.31 	an electrical generating facility that meets the requirements of
17.32 	this subdivision is exempt.  At the time of construction, the
17.33 	facility must:
17.34 	(1) be designed to utilize poultry litter as a primary fuel
17.35 	source; and
17.36 	(2) be constructed for the purpose of generating power at
18.1 	the facility that will be sold pursuant to a contract approved
18.2 	by the Public Utilities Commission in accordance with the
18.3 	biomass mandate imposed under section 216B.2424.
18.4 	Construction of the facility must be commenced after
18.5 	January 1, 2003, and before December 31, 2003 2005.  Property
18.6 	eligible for this exemption does not include electric
18.7 	transmission lines and interconnections or gas pipelines and
18.8 	interconnections appurtenant to the property or the facility.
18.9 	
EFFECTIVE DATE. This section is effective for taxes
18.10 	levied in 2005, payable in 2006, and thereafter.

18.11 	Sec. 2. Minnesota Statutes 2004, section 272.02,
18.12 	subdivision 53, is amended to read:
18.13 		Subd. 53.Electric generation facility; personal
18.14 	property.  Notwithstanding subdivision 9, clause (a), attached
18.15 	machinery and other personal property which is part of a 3.2
18.16 	megawatt run-of-the-river hydroelectric generation facility and
18.17 	that meets the requirements of this subdivision is exempt.  At
18.18 	the time of construction, the facility must:
18.19 	(1) utilize two turbine generators at a dam site existing
18.20 	on March 31, 1994;
18.21 	(2) be located on publicly owned land and within 1,500 feet
18.22 	of a 13.8 kilovolt distribution substation; and
18.23 	(3) be eligible to receive a renewable energy production
18.24 	incentive payment under section 216C.41.
18.25 	Construction of the facility must be commenced after
18.26 	January 1, 2002 December 31, 2004, and before January 1, 2005 
18.27 	2007.  Property eligible for this exemption does not include
18.28 	electric transmission lines and interconnections or gas
18.29 	pipelines and interconnections appurtenant to the property or
18.30 	the facility.
18.31 	
EFFECTIVE DATE. This section is effective for taxes
18.32 	levied in 2005, payable in 2006 and thereafter.

18.33 	Sec. 3. Minnesota Statutes 2004, section 272.02, is
18.34 	amended by adding a subdivision to read:
18.35 		Subd. 68.Electric generation facility personal
18.36 	property. (a) Notwithstanding subdivision 9, clause (a), and
19.1 	section 453.54, subdivision 20, attached machinery and other
19.2 	personal property which is part of an electric generation
19.3 	facility that exceeds 150 megawatts of installed capacity and
19.4 	meets the requirements of this subdivision is exempt.  At the
19.5 	time of construction, the facility must:
19.6 	(1) be designed to utilize natural gas as a primary fuel;
19.7 	(2) be owned and operated by a municipal power agency as
19.8 	defined in section 453.52, subdivision 8;
19.9 	(3) have received the certificate of need under section
19.10 	216B.243;
19.11 	(4) be located outside the metropolitan area as defined
19.12 	under section 473.121, subdivision 2; and 
19.13 	(5) be designed to be a combined-cycle facility, although
19.14 	initially the facility will be operated as a simple-cycle
19.15 	combustion turbine.
19.16 	(b) To qualify under this subdivision, an agreement must be
19.17 	negotiated between the municipal power agency and the host city,
19.18 	for a payment in lieu of property taxes to the host city.
19.19 	(c) Construction of the facility must be commenced after
19.20 	January 1, 2004, and before January 1, 2006.  Property eligible
19.21 	for this exemption does not include electric transmission lines
19.22 	and interconnections or gas pipelines and interconnections
19.23 	appurtenant to the property or the facility.
19.24 	
EFFECTIVE DATE. This section is effective for assessment
19.25 	year 2005, taxes payable in 2006, and thereafter.

19.26 	Sec. 4. Minnesota Statutes 2004, section 272.02, is
19.27 	amended by adding a subdivision to read:
19.28 		Subd. 69.Electric generation facility; personal
19.29 	property. (a) Notwithstanding subdivision 9, clause (a),
19.30 	attached machinery and other personal property which is part of
19.31 	a simple-cycle combustion-turbine electric generation facility
19.32 	that exceeds 290 megawatts of installed capacity and that meets
19.33 	the requirements of this subdivision is exempt.  At the time of
19.34 	construction, the facility must:
19.35 	(1) be designed to utilize natural gas as a primary fuel;
19.36 	(2) not be owned by a public utility as defined in section
20.1 	216B.02, subdivision 4;
20.2 	(3) be located within 15 miles of the mainline existing
20.3 	interstate natural gas pipeline and within five miles of an
20.4 	existing electrical transmission substation;
20.5 	(4) be located outside the metropolitan area as defined
20.6 	under section 473.121, subdivision 2; and 
20.7 	(5) be designed to provide peaking capacity energy and
20.8 	ancillary services and have satisfied all of the requirements
20.9 	under section 216B.243.
20.10 	(b) Construction of the facility must be commenced after
20.11 	January 1, 2005, and before January 1, 2009.  Property eligible
20.12 	for this exemption does not include electric transmission lines
20.13 	and interconnections or gas pipelines and interconnections
20.14 	appurtenant to the property or the facility.
20.15 	
EFFECTIVE DATE. This section is effective for assessment
20.16 	year 2006, taxes payable in 2007, and thereafter.

20.17 	Sec. 5. Minnesota Statutes 2004, section 272.02, is
20.18 	amended by adding a subdivision to read:
20.19 		Subd. 70.Electric generation facility; personal
20.20 	property. Notwithstanding subdivision 9, clause (a), attached
20.21 	machinery and other personal property which is part of an
20.22 	existing simple-cycle, combustion-turbine electric generation
20.23 	facility that exceeds 300 megawatts of installed capacity and
20.24 	that meets the requirements of this subdivision is exempt.  At
20.25 	the time of the construction, the facility must:
20.26 	(1) be designed to utilize natural gas as a primary fuel;
20.27 	(2) be owned by a public utility as defined in section
20.28 	216B.02, subdivision 4, and be located at or interconnected with
20.29 	an existing generating plant of the utility;
20.30 	(3) be designed to provide peaking, emergency backup, or
20.31 	contingency services;
20.32 	(4) satisfy a resource need identified in an approved
20.33 	integrated resource plan filed under section 216B.2422; and 
20.34 	(5) have received, by resolution, the approval from the
20.35 	governing body of the county and the city for the exemption of
20.36 	personal property under this subdivision.
21.1 	Construction of the facility expansion must be commenced
21.2 	after January 1, 2004, and before January 1, 2005.  Property
21.3 	eligible for this exemption does not include electric
21.4 	transmission lines and interconnections or gas pipelines and
21.5 	interconnections appurtenant to the property or the facility.
21.6 	
EFFECTIVE DATE. This section is effective beginning with
21.7 	assessment year 2005, for taxes payable in 2006 and thereafter.

21.8 	Sec. 6. Minnesota Statutes 2004, section 272.02, is
21.9 	amended by adding a subdivision to read:
21.10 		Subd. 71.Electric generation facility; personal
21.11 	property. (a) Notwithstanding subdivision 9, clause (a),
21.12 	attached machinery and other personal property which is part of
21.13 	a simple-cycle combustion-turbine electric generation facility
21.14 	that exceeds 150 megawatts of installed capacity and that meets
21.15 	the requirements of this subdivision is exempt.  At the time of
21.16 	construction, the facility must:
21.17 	(1) utilize natural gas as a primary fuel;
21.18 	(2) be owned by an electric generation and transmission
21.19 	cooperative;
21.20 	(3) be located within five miles of parallel existing
21.21 	12-inch and 16-inch natural gas pipelines and a 69-kilovolt
21.22 	high-voltage electric transmission line;
21.23 	(4) be designed to provide peaking, emergency backup, or
21.24 	contingency services;
21.25 	(5) have received a certificate of need under section
21.26 	216B.243 demonstrating demand for its capacity; and 
21.27 	(6) have received by resolution the approval from the
21.28 	governing body of the county and township in which the proposed
21.29 	facility is to be located for the exemption of personal property
21.30 	under this subdivision.
21.31 	(b) Construction of the facility must be commenced after
21.32 	July 1, 2005, and before January 1, 2009.  Property eligible for
21.33 	this exemption does not include electric transmission lines and
21.34 	interconnections or gas pipelines and interconnections
21.35 	appurtenant to the property or the facility.
21.36 	
EFFECTIVE DATE. This section is effective for assessment
22.1 	year 2006 and thereafter, for taxes payable in 2007 and
22.2 	thereafter.

22.3 	Sec. 7. Minnesota Statutes 2004, section 272.02, is
22.4 	amended by adding a subdivision to read:
22.5 		Subd. 72.Electric generation facility personal
22.6 	property. (a) Notwithstanding subdivision 9, clause (a),
22.7 	attached machinery and other personal property which is part of
22.8 	either a simple-cycle, combustion-turbine electric generation
22.9 	facility, or a combined-cycle, combustion-turbine electric
22.10 	generation facility that does not exceed 325 megawatts of
22.11 	installed capacity and that meets the requirements of this
22.12 	subdivision is exempt.  At the time of construction, the
22.13 	facility must:
22.14 	(1) utilize either a simple-cycle or a combined-cycle
22.15 	combustion-turbine generator fueled by natural gas;
22.16 	(2) be connected to an existing 115-kilovolt high-voltage
22.17 	electric transmission line that is within two miles of the
22.18 	facility;
22.19 	(3) be located on an underground natural gas storage
22.20 	aquifer;
22.21 	(4) be designed as either a peaking or intermediate load
22.22 	facility; and 
22.23 	(5) have received, by resolution, the approval from the
22.24 	governing body of the county for the exemption of personal
22.25 	property under this subdivision.
22.26 	(b) Construction of the facility must be commenced after
22.27 	January 1, 2006, and before January 1, 2008.  Property eligible
22.28 	for this exemption does not include electric transmission lines
22.29 	and interconnections or gas pipelines and interconnections
22.30 	appurtenant to the property or the facility.
22.31 	
EFFECTIVE DATE. This section is effective for assessment
22.32 	year 2005, taxes payable in 2006, and thereafter.

22.33 	Sec. 8. Minnesota Statutes 2004, section 272.0211,
22.34 	subdivision 1, is amended to read:
22.35 		Subdivision 1.Efficiency determination and
22.36 	certification.  An owner or operator of a new or existing
23.1 	electric power generation facility, excluding wind energy
23.2 	conversion systems, may apply to the commissioner of revenue for
23.3 	a market value exclusion on the property as provided for in this
23.4 	section.  This exclusion shall apply only to the market value of
23.5 	the equipment of the facility, and shall not apply to the
23.6 	structures and the land upon which the facility is located.  The
23.7 	commissioner of revenue shall prescribe the forms and procedures
23.8 	for this application.  Upon receiving the application, the
23.9 	commissioner of revenue shall request the commissioner of
23.10 	commerce to make a determination of the efficiency of the
23.11 	applicant's electric power generation facility. In calculating
23.12 	the efficiency of a facility,The commissioner of commerce shall
23.13 	use a definition of calculate efficiency which calculates
23.14 	efficiency as the sum of:
23.15 	(1) the useful electrical power output; plus 
23.16 	(2) the useful thermal energy output; plus 
23.17 	(3) the fuel energy of the useful chemical products,
23.18 	all divided by the total energy input to the facility, expressed
23.19 	as a percentage as the ratio of useful energy outputs to energy
23.20 	inputs, expressed as a percentage, based on the performance of
23.21 	the facility's equipment during normal full load operation.  The
23.22 	commissioner must include in this formula the energy used in any
23.23 	on-site preparation of materials necessary to convert the
23.24 	materials into the fuel used to generate electricity, such as a
23.25 	process to gasify petroleum coke.  The commissioner shall use
23.26 	the high Higher Heating Value (HHV) for all substances in the
23.27 	commissioner's efficiency calculations, except for wood for fuel
23.28 	in a biomass-eligible project under section 216B.2424; for these
23.29 	instances, the commissioner shall adjust the heating value to
23.30 	allow for energy consumed for evaporation of the moisture in the
23.31 	wood.  The applicant shall provide the commissioner of commerce
23.32 	with whatever information the commissioner deems necessary to
23.33 	make the determination.  Within 30 days of the receipt of the
23.34 	necessary information, the commissioner of commerce shall
23.35 	certify the findings of the efficiency determination to the
23.36 	commissioner of revenue and to the applicant.  The commissioner
24.1 	of commerce shall determine the efficiency of the facility and
24.2 	certify the findings of that determination to the commissioner
24.3 	of revenue every two years thereafter from the date of the
24.4 	original certification.
24.5 	
EFFECTIVE DATE. This section is effective for assessment
24.6 	year 2005 and thereafter, for taxes payable in 2006 and
24.7 	thereafter.

24.8 	Sec. 9. Minnesota Statutes 2004, section 272.0211,
24.9 	subdivision 2, is amended to read:
24.10 		Subd. 2.Sliding scale exclusion.  Based upon the
24.11 	efficiency determination provided by the commissioner of
24.12 	commerce as described in subdivision 1, the commissioner of
24.13 	revenue shall subtract five eight percent of the taxable market
24.14 	value of the qualifying property for each percentage point that
24.15 	the efficiency of the specific facility, as determined by the
24.16 	commissioner of commerce, is above 35 40 percent.  The reduction
24.17 	in taxable market value shall be reflected in the taxable market
24.18 	value of the facility beginning with the assessment year
24.19 	immediately following the determination.  For a facility that is
24.20 	assessed by the county in which the facility is located, the
24.21 	commissioner of revenue shall certify to the assessor of that
24.22 	county the percentage of the taxable market value of the
24.23 	facility to be excluded.
24.24 	
EFFECTIVE DATE. This section is effective for assessment
24.25 	year 2005 and thereafter, for taxes payable in 2006 and
24.26 	thereafter.

24.27 	Sec. 10. [272.0275] PERSONAL PROPERTY USED TO GENERATE
24.28 	ELECTRICITY; EXEMPTION.
24.29 		Subdivision 1.New plant construction after january 1,
24.30 	2005. For a new generating plant built and placed in service
24.31 	after January 1, 2005, its personal property used to generate
24.32 	electric power is exempt from property taxation, including under
24.33 	section 453.54, subdivision 20, if an exemption of generation
24.34 	personal property form, with an attached siting agreement, is
24.35 	filed with the Department of Revenue.  The form must be signed
24.36 	by the utility, and the county and city or town where the
25.1 	facility is proposed to be located.
25.2 		Subd. 2.Existing plant; increase in nameplate capacity.
 25.3 	For a plant existing or under construction on the day of final
25.4 	enactment of this act, a partial exemption applies if the
25.5 	nameplate capacity of the plant is increased from that existing
25.6 	on the day of final enactment of this act, and if an exemption
25.7 	of generation personal property form, with an attached siting
25.8 	agreement is filed with the Department of Revenue.  The form
25.9 	must be signed by the utility, and the county and city or town
25.10 	where the facility expansion is located.  This partial exemption
25.11 	must be computed by taking the increase in megawatts over the
25.12 	total megawatt nameplate capacity after construction is
25.13 	complete, multiplied by the market value of all taxable tools,
25.14 	implements, and machinery of the generating plant as determined
25.15 	by the commissioner of revenue.  The resulting exemption is
25.16 	effective beginning in the next assessment year.
25.17 		Subd. 3.In-lieu payment; limitation. If an in-lieu
25.18 	payment or service fee is negotiated between a facility exempted
25.19 	under this section and the county, city, or town where the
25.20 	facility is located, the payment or fee in any year may not
25.21 	exceed the property tax revenue that the jurisdiction would
25.22 	receive from the facility if it were not exempt.
25.23 		Subd. 4.Definition; applicability. For purposes of this
25.24 	section, "personal property" means tools, implements, and
25.25 	machinery of the generating plant.  The exemption under this
25.26 	section does not apply to transformers, transmission lines,
25.27 	distribution lines, or any other tools, implements, and
25.28 	machinery that are part of an electric substation, wherever
25.29 	located.
25.30 	
EFFECTIVE DATE. This section is effective the day
25.31 	following final enactment.

25.32 	Sec. 11. Minnesota Statutes 2004, section 273.055, is
25.33 	amended to read:
25.34 	273.055 RESOLUTION TO APPOINT ASSESSOR; TERMINATION OF
25.35 	LOCAL ASSESSOR'S OFFICE.
25.36 	The election to provide for the assessment of property by
26.1 	the county assessor as provided in section 273.052 shall be made
26.2 	by the board of county commissioners by resolution with at least
26.3 	a two-thirds majority vote.  Such resolution shall be effective
26.4 	at the second assessment date following the adoption of the
26.5 	resolution.  Notwithstanding any other provisions contained in
26.6 	any other section of law or charter, the office of all township
26.7 	and city assessors in such county shall be terminated 90 days
26.8 	before the assessment date at which the election becomes
26.9 	effective, except that if part of such taxing district is
26.10 	located in a county not electing to have the county assessor
26.11 	assess all property as provided in section 273.052, the office
26.12 	will continue but shall apply only to such property in a
26.13 	nonelecting county.
26.14 	No township or city assessor in another county shall assess
26.15 	any property in an electing county, but shall turn over all tax
26.16 	records relating to property to the county assessor 90 days
26.17 	before the assessment date at which the county's election
26.18 	becomes effective.

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

26.21 	Sec. 12. Minnesota Statutes 2004, section 273.0755, is
26.22 	amended to read:
26.23 	273.0755 TRAINING AND EDUCATION OF PROPERTY TAX
26.24 	PERSONNEL.
26.25 	(a) Beginning with the four-year period starting on July 1,
26.26 	2000, every person licensed by the state Board of Assessors at
26.27 	the Accredited Minnesota Assessor level or higher, shall
26.28 	successfully complete a week-long Minnesota laws course
26.29 	sponsored by the Department of Revenue at least once in every
26.30 	four-year period.  An assessor need not attend the course if
26.31 	they successfully pass the test for the course.
26.32 	(b) The commissioner of revenue may require that each
26.33 	county, and each city for which the city assessor performs the
26.34 	duties of county assessor, have (i) a person on the assessor's
26.35 	staff who is certified by the Department of Revenue in sales
26.36 	ratio calculations, (ii) an officer or employee who is certified
27.1 	by the Department of Revenue in tax calculations, and (iii) an
27.2 	officer or employee who is certified by the Department of
27.3 	Revenue in the proper preparation of abstracts of assessment.
27.4 	The commissioner of revenue may require that each county have an
27.5 	officer or employee who is certified by the Department of
27.6 	Revenue in the proper preparation of abstracts of tax lists.
27.7 	(c) Beginning with the four-year educational licensing
27.8 	period starting on July 1, 2004, every Minnesota assessor
27.9 	licensed by the State Board of Assessors must attend and
27.10 	participate in a seminar that focuses on ethics, professional
27.11 	conduct and the need for standardized assessment practices
27.12 	developed and presented by the commissioner of revenue.  This
27.13 	requirement must be met at least once in every subsequent
27.14 	four-year period.  This requirement applies to all assessors
27.15 	licensed for one year or more in the four-year period.

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

27.18 	Sec. 13. Minnesota Statutes 2004, section 273.11,
27.19 	subdivision 1a, is amended to read:
27.20 		Subd. 1a.Limited market value.  In the case of all real 
27.21 	property classified as agricultural homestead or nonhomestead,
27.22 	residential homestead or nonhomestead, timber, or noncommercial
27.23 	seasonal residential recreational, the assessor shall compare
27.24 	the value with the taxable portion of the value determined in
27.25 	the preceding assessment, except that for class 1c resort
27.26 	property for assessment year 2005, the assessor shall determine
27.27 	the limited market value as provided in subdivision 1b.
27.28 	For assessment year 2002, the amount of the increase shall
27.29 	not exceed the greater of (1) ten percent of the value in the
27.30 	preceding assessment, or (2) 15 percent of the difference
27.31 	between the current assessment and the preceding assessment.
27.32 	For assessment year 2003, the amount of the increase shall
27.33 	not exceed the greater of (1) 12 percent of the value in the
27.34 	preceding assessment, or (2) 20 percent of the difference
27.35 	between the current assessment and the preceding assessment.
27.36 	For assessment year years 2004, 2005, and 2006, the amount
28.1 	of the increase shall not exceed the greater of (1) 15 percent
28.2 	of the value in the preceding assessment, or (2) 25 percent of
28.3 	the difference between the current assessment and the preceding
28.4 	assessment.
28.5 	For assessment year 2005 2007, the amount of the increase
28.6 	shall not exceed the greater of (1) 15 percent of the value in
28.7 	the preceding assessment, or (2) 33 percent of the difference
28.8 	between the current assessment and the preceding assessment.
28.9 	For assessment year 2006 2008, the amount of the increase
28.10 	shall not exceed the greater of (1) 15 percent of the value in
28.11 	the preceding assessment, or (2) 50 percent of the difference
28.12 	between the current assessment and the preceding assessment.
28.13 	This limitation shall not apply to increases in value due
28.14 	to improvements.  For purposes of this subdivision, the term
28.15 	"assessment" means the value prior to any exclusion under
28.16 	subdivision 16.
28.17 	The provisions of this subdivision shall be in effect
28.18 	through assessment year 2006 2008 as provided in this
28.19 	subdivision.
28.20 	For purposes of the assessment/sales ratio study conducted
28.21 	under section 127A.48, and the computation of state aids paid
28.22 	under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and
28.23 	477A, market values and net tax capacities determined under this
28.24 	subdivision and subdivision 16, shall be used.
28.25 	
EFFECTIVE DATE. This section is effective for assessment
28.26 	years 2005 through 2008, for taxes payable in 2006 through 2009.

28.27 	Sec. 14. Minnesota Statutes 2004, section 273.11, is
28.28 	amended by adding a subdivision to read:
28.29 		Subd. 1b.Class 1c resorts; 2005 assessment only. For
28.30 	assessment year 2005, the valuation on class 1c resort property
28.31 	shall not exceed the greater of (1) 130 percent of the value of
28.32 	its 2003 assessment, or (2) its value for the 2003 assessment
28.33 	year plus 40 percent of the difference in value between its 2005
28.34 	assessment and its 2003 assessment.  The valuation increase on
28.35 	class 1c resort property for assessment years 2006 and
28.36 	thereafter shall be determined as provided under subdivision 1a.
29.1 	
EFFECTIVE DATE. This section is effective the day
29.2 	following final enactment.

29.3 	Sec. 15. Minnesota Statutes 2004, section 273.11, is
29.4 	amended by adding a subdivision to read:
29.5 		Subd. 21.Valuation exclusion for lead hazard reduction.
 29.6 	Owners of property classified as class 1a, 1b, 1c, 2a, 4b, or
29.7 	4bb under section 273.13 may apply for a valuation exclusion for
29.8 	lead hazard reduction, provided that the property is located in
29.9 	a city which has authorized valuation exclusions under this
29.10 	subdivision.  A city may by resolution authorize valuation
29.11 	exclusions under this subdivision and must establish guidelines
29.12 	for qualifying lead hazard reduction projects and must designate
29.13 	an agency within the city to issue certificates of completion of
29.14 	qualifying projects.  For purposes of this subdivision, "lead
29.15 	hazard reduction" has the same meaning as in section 144.9501,
29.16 	subdivision 17.
29.17 	The property owner must obtain a certificate from the city
29.18 	stating that the project has been completed and stating the cost
29.19 	incurred by the owner in completing the project.  Only projects
29.20 	originating after April 1, 2004, may qualify for exclusion under
29.21 	this subdivision.  The property owner shall apply for a
29.22 	valuation exclusion to the assessor on a form prescribed by the
29.23 	assessor.
29.24 	A qualifying property is eligible for a valuation exclusion
29.25 	equal to 50 percent of the actual costs incurred, to a maximum
29.26 	exclusion of $15,000, for a period of five years.  The valuation
29.27 	exclusion shall terminate upon the sale of the property.  If a
29.28 	property owner applies for exclusion under this subdivision
29.29 	between January 1 and June 30 of any year, the exclusion shall
29.30 	first apply for taxes payable in the following year.  If a
29.31 	property owner applies for exclusion under this subdivision
29.32 	between July 1 and December 31 of any year, the exclusion shall
29.33 	first apply for taxes payable in the second following year.
29.34 	
EFFECTIVE DATE. This section is effective for taxes
29.35 	payable in 2006 and subsequent years.

29.36 	Sec. 16. Minnesota Statutes 2004, section 273.111, is
30.1 	amended by adding a subdivision to read:
30.2 		Subd. 86.Applications; denied by county. Beginning with
30.3 	applications filed for the 2005 assessment year, all
30.4 	applications for deferment of taxes and assessment under this
30.5 	section that have been denied by the county shall be forwarded
30.6 	to the commissioner of revenue by the county assessor within 30
30.7 	days of denial.  For the purpose of monitoring compliance with
30.8 	this section, the commissioner of revenue shall compile a report
30.9 	identifying all denied applications, the reason for the denial
30.10 	and any commissioner action or recommendation.  This report will
30.11 	be annually submitted to the chairs of the house and senate tax
30.12 	committees on or before February 1.
30.13 	
EFFECTIVE DATE. This section is effective for
30.14 	applications filed after the day following final enactment.

30.15 	Sec. 17. Minnesota Statutes 2004, section 273.123,
30.16 	subdivision 7, is amended to read:
30.17 		Subd. 7.Local option; other property.  The owner of
30.18 	homestead property not qualifying for an adjustment in valuation
30.19 	pursuant to subdivisions 1 to 5 or of nonhomestead property may
30.20 	receive a reduction in the amount of taxes payable on the
30.21 	property for the year in which the destruction occurs and in the
30.22 	following year if:
30.23 	(a) 50 percent or more of the homestead dwelling or other
30.24 	structure, as established by the county assessor, is
30.25 	unintentionally or accidentally destroyed or contaminated by
30.26 	mold and the homestead is uninhabitable or the other structure
30.27 	is not usable;
30.28 	(b) the owner of the property makes written application to
30.29 	the county assessor as soon as practical after the damage has
30.30 	occurred; and
30.31 	(c) the owner of the property makes written application to
30.32 	the county board.
30.33 	The county board may grant a reduction in the amount of
30.34 	property tax which the owner must pay on the qualifying property
30.35 	in the year of destruction and in the following year.  Any
30.36 	reduction in the amount of tax payable which is authorized by
31.1 	county board action shall be calculated based upon the number of
31.2 	months that the home is uninhabitable or the other structure is
31.3 	unusable.  The amount of net tax due from the taxpayer shall be
31.4 	multiplied by a fraction, the numerator of which is the number
31.5 	of months the dwelling was occupied by that taxpayer, or the
31.6 	number of months the other structure was used by the taxpayer,
31.7 	and the denominator of which is 12.  For purposes of this
31.8 	subdivision, if a structure is occupied or used for a fraction
31.9 	of a month, it is considered a month.  "Net tax" is defined as
31.10 	the amount of tax after the subtraction of all of the state paid
31.11 	property tax credits.  If application is made following payment
31.12 	of all property taxes due for the year of destruction, the
31.13 	amount of the reduction granted by the county board shall be
31.14 	refunded to the taxpayer by the county treasurer as soon as
31.15 	practical.
31.16 	Any reductions or refunds approved by the county board
31.17 	shall not be subject to approval by the commissioner of revenue.
31.18 	The county board may levy in the following year the amount
31.19 	of tax dollars lost to the county government as a result of the
31.20 	reductions granted pursuant to this subdivision.
31.21 	
EFFECTIVE DATE. This section is effective for property
31.22 	taxes payable in 2005 and thereafter.

31.23 	Sec. 18. Minnesota Statutes 2004, section 273.124,
31.24 	subdivision 14, is amended to read:
31.25 		Subd. 14.Agricultural homesteads; special provisions.
 31.26 	(a) Real estate of less than ten acres that is the homestead of
31.27 	its owner must be classified as class 2a under section 273.13,
31.28 	subdivision 23, paragraph (a), if:
31.29 	(1) the parcel on which the house is located is contiguous
31.30 	on at least two sides to (i) agricultural land, (ii) land owned
31.31 	or administered by the United States Fish and Wildlife Service,
31.32 	or (iii) land administered by the Department of Natural
31.33 	Resources on which in lieu taxes are paid under sections 477A.11
31.34 	to 477A.14;
31.35 	(2) its owner also owns a noncontiguous parcel of
31.36 	agricultural land that is at least 20 acres;
32.1 	(3) the noncontiguous land is located not farther than four
32.2 	townships or cities, or a combination of townships or cities
32.3 	from the homestead; and
32.4 	(4) the agricultural use value of the noncontiguous land
32.5 	and farm buildings is equal to at least 50 percent of the market
32.6 	value of the house, garage, and one acre of land.
32.7 	Homesteads initially classified as class 2a under the
32.8 	provisions of this paragraph shall remain classified as class
32.9 	2a, irrespective of subsequent changes in the use of adjoining
32.10 	properties, as long as the homestead remains under the same
32.11 	ownership, the owner owns a noncontiguous parcel of agricultural
32.12 	land that is at least 20 acres, and the agricultural use value
32.13 	qualifies under clause (4).  Homestead classification under this
32.14 	paragraph is limited to property that qualified under this
32.15 	paragraph for the 1998 assessment.
32.16 	(b)(i) Agricultural property consisting of at least 40
32.17 	acres shall be classified as the owner's homestead, to the same
32.18 	extent as other agricultural homestead property, if all of the
32.19 	following criteria are met:
32.20 	(1) the owner, the owner's spouse, or the son or daughter
32.21 	of the owner or owner's spouse, or the grandson or granddaughter
32.22 	of the owner or the owner's spouse,is actively farming the
32.23 	agricultural property, either on the person's own behalf as an
32.24 	individual or on behalf of a partnership operating a family
32.25 	farm, family farm corporation, joint family farm venture, or
32.26 	limited liability company of which the person is a partner,
32.27 	shareholder, or member;
32.28 	(2) both the owner of the agricultural property and the
32.29 	person who is actively farming the agricultural property under
32.30 	clause (1), are Minnesota residents;
32.31 	(3) neither the owner nor the spouse of the owner claims
32.32 	another agricultural homestead in Minnesota; and
32.33 	(4) neither the owner nor the person actively farming the
32.34 	property lives farther than four townships or cities, or a
32.35 	combination of four townships or cities, from the agricultural
32.36 	property, except that if the owner or the owner's spouse is
33.1 	required to live in employer-provided housing, the owner or
33.2 	owner's spouse, whichever is actively farming the agricultural
33.3 	property, may live more than four townships or cities, or
33.4 	combination of four townships or cities from the agricultural
33.5 	property.
33.6 	The relationship under this paragraph may be either by
33.7 	blood or marriage.
33.8 	(ii) Real property held by a trustee under a trust is
33.9 	eligible for agricultural homestead classification under this
33.10 	paragraph if the qualifications in clause (i) are met, except
33.11 	that "owner" means the grantor of the trust.
33.12 	(iii) Property containing the residence of an owner who
33.13 	owns qualified property under clause (i) shall be classified as
33.14 	part of the owner's agricultural homestead, if that property is
33.15 	also used for noncommercial storage or drying of agricultural
33.16 	crops.
33.17 	(c) Noncontiguous land shall be included as part of a
33.18 	homestead under section 273.13, subdivision 23, paragraph (a),
33.19 	only if the homestead is classified as class 2a and the detached
33.20 	land is located in the same township or city, or not farther
33.21 	than four townships or cities or combination thereof from the
33.22 	homestead.  Any taxpayer of these noncontiguous lands must
33.23 	notify the county assessor that the noncontiguous land is part
33.24 	of the taxpayer's homestead, and, if the homestead is located in
33.25 	another county, the taxpayer must also notify the assessor of
33.26 	the other county.
33.27 	(d) Agricultural land used for purposes of a homestead and
33.28 	actively farmed by a person holding a vested remainder interest
33.29 	in it must be classified as a homestead under section 273.13,
33.30 	subdivision 23, paragraph (a).  If agricultural land is
33.31 	classified class 2a, any other dwellings on the land used for
33.32 	purposes of a homestead by persons holding vested remainder
33.33 	interests who are actively engaged in farming the property, and
33.34 	up to one acre of the land surrounding each homestead and
33.35 	reasonably necessary for the use of the dwelling as a home, must
33.36 	also be assessed class 2a.
34.1 	(e) Agricultural land and buildings that were class 2a
34.2 	homestead property under section 273.13, subdivision 23,
34.3 	paragraph (a), for the 1997 assessment shall remain classified
34.4 	as agricultural homesteads for subsequent assessments if:
34.5 	(1) the property owner abandoned the homestead dwelling
34.6 	located on the agricultural homestead as a result of the April
34.7 	1997 floods;
34.8 	(2) the property is located in the county of Polk, Clay,
34.9 	Kittson, Marshall, Norman, or Wilkin;
34.10 	(3) the agricultural land and buildings remain under the
34.11 	same ownership for the current assessment year as existed for
34.12 	the 1997 assessment year and continue to be used for
34.13 	agricultural purposes;
34.14 	(4) the dwelling occupied by the owner is located in
34.15 	Minnesota and is within 30 miles of one of the parcels of
34.16 	agricultural land that is owned by the taxpayer; and
34.17 	(5) the owner notifies the county assessor that the
34.18 	relocation was due to the 1997 floods, and the owner furnishes
34.19 	the assessor any information deemed necessary by the assessor in
34.20 	verifying the change in dwelling.  Further notifications to the
34.21 	assessor are not required if the property continues to meet all
34.22 	the requirements in this paragraph and any dwellings on the
34.23 	agricultural land remain uninhabited.
34.24 	(f) Agricultural land and buildings that were class 2a
34.25 	homestead property under section 273.13, subdivision 23,
34.26 	paragraph (a), for the 1998 assessment shall remain classified
34.27 	agricultural homesteads for subsequent assessments if:
34.28 	(1) the property owner abandoned the homestead dwelling
34.29 	located on the agricultural homestead as a result of damage
34.30 	caused by a March 29, 1998, tornado;
34.31 	(2) the property is located in the county of Blue Earth,
34.32 	Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice;
34.33 	(3) the agricultural land and buildings remain under the
34.34 	same ownership for the current assessment year as existed for
34.35 	the 1998 assessment year;
34.36 	(4) the dwelling occupied by the owner is located in this
35.1 	state and is within 50 miles of one of the parcels of
35.2 	agricultural land that is owned by the taxpayer; and
35.3 	(5) the owner notifies the county assessor that the
35.4 	relocation was due to a March 29, 1998, tornado, and the owner
35.5 	furnishes the assessor any information deemed necessary by the
35.6 	assessor in verifying the change in homestead dwelling.  For
35.7 	taxes payable in 1999, the owner must notify the assessor by
35.8 	December 1, 1998.  Further notifications to the assessor are not
35.9 	required if the property continues to meet all the requirements
35.10 	in this paragraph and any dwellings on the agricultural land
35.11 	remain uninhabited.
35.12 	(g) Agricultural property consisting of at least 40 acres
35.13 	of a family farm corporation, joint family farm venture, family
35.14 	farm limited liability company, or partnership operating a
35.15 	family farm as described under subdivision 8 shall be classified
35.16 	homestead, to the same extent as other agricultural homestead
35.17 	property, if all of the following criteria are met:
35.18 	(1) a shareholder, member, or partner of that entity is
35.19 	actively farming the agricultural property;
35.20 	(2) that shareholder, member, or partner who is actively
35.21 	farming the agricultural property is a Minnesota resident;
35.22 	(3) neither that shareholder, member, or partner, nor the
35.23 	spouse of that shareholder, member, or partner claims another
35.24 	agricultural homestead in Minnesota; and
35.25 	(4) that shareholder, member, or partner does not live
35.26 	farther than four townships or cities, or a combination of four
35.27 	townships or cities, from the agricultural property.
35.28 	Homestead treatment applies under this paragraph for
35.29 	property leased to a family farm corporation, joint farm
35.30 	venture, limited liability company, or partnership operating a
35.31 	family farm if legal title to the property is in the name of an
35.32 	individual who is a member, shareholder, or partner in the
35.33 	entity.
35.34 	(h) To be eligible for the special agricultural homestead
35.35 	under this subdivision, an initial full application must be
35.36 	submitted to the county assessor where the property is located.
36.1 	Owners and the persons who are actively farming the property
36.2 	shall be required to complete only a one-page abbreviated
36.3 	version of the application in each subsequent year provided that
36.4 	none of the following items have changed since the initial
36.5 	application:
36.6 	(1) the day-to-day operation, administration, and financial
36.7 	risks remain the same;
36.8 	(2) the owners and the persons actively farming the
36.9 	property continue to live within the four townships or city
36.10 	criteria and are Minnesota residents;
36.11 	(3) the same operator of the agricultural property is
36.12 	listed with the Farm Service Agency;
36.13 	(4) a Schedule F or equivalent income tax form was filed
36.14 	for the most recent year;
36.15 	(5) the property's acreage is unchanged; and
36.16 	(6) none of the property's acres have been enrolled in a
36.17 	federal or state farm program since the initial application.
36.18 	The owners and any persons who are actively farming the
36.19 	property must include the appropriate Social Security numbers,
36.20 	and sign and date the application.  If any of the specified
36.21 	information has changed since the full application was filed,
36.22 	the owner must notify the assessor, and must complete a new
36.23 	application to determine if the property continues to qualify
36.24 	for the special agricultural homestead.  The commissioner of
36.25 	revenue shall prepare a standard reapplication form for use by
36.26 	the assessors.
36.27 	
EFFECTIVE DATE. This section is effective for assessment
36.28 	year 2005 and thereafter, for taxes payable in 2006 and
36.29 	thereafter.

36.30 	Sec. 19. Minnesota Statutes 2004, section 273.125,
36.31 	subdivision 8, is amended to read:
36.32 		Subd. 8.Manufactured homes; sectional structures.  (a)
36.33 	In this section, "manufactured home" means a structure
36.34 	transportable in one or more sections, which is built on a
36.35 	permanent chassis, and designed to be used as a dwelling with or
36.36 	without a permanent foundation when connected to the required
37.1 	utilities, and contains the plumbing, heating, air conditioning,
37.2 	and electrical systems in it.  Manufactured home includes any
37.3 	accessory structure that is an addition or supplement to the
37.4 	manufactured home and, when installed, becomes a part of the
37.5 	manufactured home.
37.6 	(b) Except as provided in paragraph (c),a manufactured
37.7 	home that meets each of the following criteria must be valued
37.8 	and assessed as an improvement to real property, the appropriate
37.9 	real property classification applies, and the valuation is
37.10 	subject to review and the taxes payable in the manner provided
37.11 	for real property:
37.12 	(1) the owner of the unit holds title to the land on which
37.13 	it is situated;
37.14 	(2) the unit is affixed to the land by a permanent
37.15 	foundation or is installed at its location in accordance with
37.16 	the Manufactured Home Building Code in sections 327.31 to
37.17 	327.34, and rules adopted under those sections, or is affixed to
37.18 	the land like other real property in the taxing district; and
37.19 	(3) the unit is connected to public utilities, has a well
37.20 	and septic tank system, or is serviced by water and sewer
37.21 	facilities comparable to other real property in the taxing
37.22 	district.
37.23 	(c) A manufactured home that meets each of the following
37.24 	criteria must be assessed at the rate provided by the
37.25 	appropriate real property classification but must be treated as
37.26 	personal property, and the valuation is subject to review and
37.27 	the taxes payable in the manner provided in this section:
37.28 	(1) the owner of the unit is a lessee of the land under the
37.29 	terms of a lease, or the unit is located in a manufactured home
37.30 	park, campground, or resort;
37.31 	(2) the unit is affixed to the land by a permanent
37.32 	foundation or is installed at its location in accordance with
37.33 	the Manufactured Home Building Code contained in sections 327.31
37.34 	to 327.34, and the rules adopted under those sections, or is
37.35 	affixed to the land like other real property in the taxing
37.36 	district; and
38.1 	(3) the unit is connected to public utilities, has a well
38.2 	and septic tank system, or is serviced by water and sewer
38.3 	facilities comparable to other real property in the taxing
38.4 	district.
38.5 	(d) Sectional structures must be valued and assessed as an
38.6 	improvement to real property if the owner of the structure holds
38.7 	title to the land on which it is located or is a qualifying
38.8 	lessee of the land under section 273.19.  In this paragraph
38.9 	"sectional structure" means a building or structural unit that
38.10 	has been in whole or substantial part manufactured or
38.11 	constructed at an off-site location to be wholly or partially
38.12 	assembled on-site alone or with other units and attached to a
38.13 	permanent foundation.
38.14 	(e) The commissioner of revenue may adopt rules under the
38.15 	Administrative Procedure Act to establish additional criteria
38.16 	for the classification of manufactured homes and sectional
38.17 	structures under this subdivision.
38.18 	(f) A storage shed, deck, or similar improvement
38.19 	constructed on property that is leased or rented as a site for a
38.20 	manufactured home, sectional structure, park trailer, or travel
38.21 	trailer is taxable as provided in this section.  In the case of
38.22 	property that is leased or rented as a site for a travel
38.23 	trailer, a storage shed, deck, or similar improvement on the
38.24 	site that is considered personal property under this paragraph
38.25 	is taxable only if its total estimated market value is over
38.26 	$500.  The property is taxable as personal property to the
38.27 	lessee of the site if it is not owned by the owner of the site.
38.28 	The property is taxable as real estate if it is owned by the
38.29 	owner of the site.  As a condition of permitting the owner of
38.30 	the manufactured home, sectional structure, park trailer, or
38.31 	travel trailer to construct improvements on the leased or rented
38.32 	site, the owner of the site must obtain the permanent home
38.33 	address of the lessee or user of the site.  The site owner must
38.34 	provide the name and address to the assessor upon request.
38.35 	
EFFECTIVE DATE. For purposes of Minnesota Statutes,
38.36 	sections 272.12 and 272.121, this section is effective the day
39.1 	following final enactment.  For all other purposes, this section
39.2 	is effective beginning with taxes payable in 2006, except that
39.3 	for any property treated as real property under this section for
39.4 	the 2005 assessment that will be treated as personal property
39.5 	under this section for the 2006 assessment, an adjustment must
39.6 	be made to the 2005 assessment roll on or before July 1, 2005,
39.7 	to reflect those changes.

39.8 	Sec. 20. [273.126] CERTIFICATION OF LOW-INCOME RENTAL
39.9 	PROPERTY.
39.10 		Subdivision 1.Requirement. Low-income rental property
39.11 	is entitled to classification as class 4d under section 273.13,
39.12 	subdivision 25, paragraph (e), for a maximum period of five
39.13 	years if at least 75 percent of the units in the rental housing
39.14 	property meet any of the following qualifications:
39.15 	(1) the units are subject to a housing assistance payments
39.16 	contract under Section 8 of the United States Housing Act of
39.17 	1937, as amended;
39.18 	(2) the units are rent-restricted and income-restricted
39.19 	units of a qualified low-income housing project receiving tax
39.20 	credits under section 42(g) of the Internal Revenue Code of
39.21 	1986, as amended; or 
39.22 	(3) the units are financed by the Rural Housing Service of
39.23 	the United States Department of Agriculture and receive payments
39.24 	under the rental assistance program pursuant to Section 521(a)
39.25 	of the Housing Act of 1949, as amended.
39.26 		Subd. 2.Application. (a) Application for certification
39.27 	under this section must be filed by March 31 of the levy year,
39.28 	or at a later date if the Housing Finance Agency deems
39.29 	practicable.  The application must be filed with the Housing
39.30 	Finance Agency, on a form prescribed by the agency, and must
39.31 	contain the information required by the Housing Finance Agency.
39.32 	(b) Each application must include:
39.33 	(1) the property tax identification number;
39.34 	(2) evidence that the property meets the requirements of
39.35 	subdivision 1; and 
39.36 	(3) a true and correct copy of the financial statement
40.1 	related to the property.
40.2 	(c) The Housing Finance Agency may charge an application
40.3 	fee approximately equal to the costs of processing and reviewing
40.4 	the applications but not to exceed $10 per unit.  If imposed,
40.5 	the applicant must pay the application fee to the Housing
40.6 	Finance Agency.  The fee must be deposited in the housing
40.7 	development fund.
40.8 	(d) An owner of low-income rental property certified under
40.9 	this section must reapply under this subdivision for
40.10 	certification every five years.
40.11 		Subd. 3.Certification. By June 1 of each levy year, the
40.12 	Housing Finance Agency must certify to local assessors the
40.13 	properties that are qualified under this section and the number
40.14 	of units in the building that qualify.  In making the
40.15 	certification, the Housing Finance Agency may rely on the
40.16 	application and any other supporting information that the agency
40.17 	deems necessary from the property owner.
40.18 	
EFFECTIVE DATE. This section is effective for taxes
40.19 	payable in 2006 and subsequent years.

40.20 	Sec. 21. Minnesota Statutes 2004, section 273.13,
40.21 	subdivision 22, is amended to read:
40.22 		Subd. 22.Class 1.  (a) Except as provided in subdivision
40.23 	23 and in paragraphs (b) and (c), real estate which is
40.24 	residential and used for homestead purposes is class 1a.  In the
40.25 	case of a duplex or triplex in which one of the units is used
40.26 	for homestead purposes, the entire property is deemed to be used
40.27 	for homestead purposes.  The market value of class 1a property
40.28 	must be determined based upon the value of the house, garage,
40.29 	and land.
40.30 	The first $500,000 of market value of class 1a property has
40.31 	a net class rate of one percent of its market value; and the
40.32 	market value of class 1a property that exceeds $500,000 has a
40.33 	class rate of 1.25 percent of its market value.
40.34 	(b) Class 1b property includes homestead real estate or
40.35 	homestead manufactured homes used for the purposes of a
40.36 	homestead by
41.1 	(1) any person who is blind as defined in section 256D.35,
41.2 	or the blind person and the blind person's spouse; or
41.3 	(2) any person, hereinafter referred to as "veteran," who:
41.4 	(i) served in the active military or naval service of the
41.5 	United States; and
41.6 	(ii) is entitled to compensation under the laws and
41.7 	regulations of the United States for permanent and total
41.8 	service-connected disability due to the loss, or loss of use, by
41.9 	reason of amputation, ankylosis, progressive muscular
41.10 	dystrophies, or paralysis, of both lower extremities, such as to
41.11 	preclude motion without the aid of braces, crutches, canes, or a
41.12 	wheelchair; and
41.13 	(iii) has acquired a special housing unit with special
41.14 	fixtures or movable facilities made necessary by the nature of
41.15 	the veteran's disability, or the surviving spouse of the
41.16 	deceased veteran for as long as the surviving spouse retains the
41.17 	special housing unit as a homestead; or
41.18 	(3) any person who is permanently and totally disabled.
41.19 	Property is classified and assessed under clause (3) only
41.20 	if the government agency or income-providing source certifies,
41.21 	upon the request of the homestead occupant, that the homestead
41.22 	occupant satisfies the disability requirements of this paragraph.
41.23 	Property is classified and assessed pursuant to clause (1)
41.24 	only if the commissioner of revenue certifies to the assessor
41.25 	that the homestead occupant satisfies the requirements of this
41.26 	paragraph.
41.27 	Permanently and totally disabled for the purpose of this
41.28 	subdivision means a condition which is permanent in nature and
41.29 	totally incapacitates the person from working at an occupation
41.30 	which brings the person an income.  The first $32,000 $50,000 
41.31 	market value of class 1b property has a net class rate of .45
41.32 	percent of its market value.  The remaining market value of
41.33 	class 1b property has a class rate using the rates for class 1a
41.34 	or class 2a property, whichever is appropriate, of similar
41.35 	market value.
41.36 	(c) Class 1c property is commercial use real property that
42.1 	abuts a lakeshore line and is devoted to temporary and seasonal
42.2 	residential occupancy for recreational purposes but not devoted
42.3 	to commercial purposes for more than 250 days in the year
42.4 	preceding the year of assessment, and that includes a portion
42.5 	used as a homestead by the owner, which includes a dwelling
42.6 	occupied as a homestead by a shareholder of a corporation that
42.7 	owns the resort, a partner in a partnership that owns the
42.8 	resort, or a member of a limited liability company that owns the
42.9 	resort even if the title to the homestead is held by the
42.10 	corporation, partnership, or limited liability company.  For
42.11 	purposes of this clause, property is devoted to a commercial
42.12 	purpose on a specific day if any portion of the property,
42.13 	excluding the portion used exclusively as a homestead, is used
42.14 	for residential occupancy and a fee is charged for residential
42.15 	occupancy.  The first $500,000 $300,000 of market value of class
42.16 	1c property has a class rate of one 0.55 percent, and the
42.17 	remaining next $1,500,000 of market value of class 1c property
42.18 	has a class rate of one percent, with the following limitation:
42.19 	the area of the property must not exceed 100 feet of lakeshore
42.20 	footage for each cabin or campsite located on the property up to
42.21 	a total of 800 feet and 500 feet in depth, measured away from
42.22 	the lakeshore. Any remaining market value is class 4c
42.23 	property.If any portion of the class 1c resort property is
42.24 	classified as class 4c under subdivision 25, the entire property
42.25 	must meet the requirements of subdivision 25, paragraph (d),
42.26 	clause (1), to qualify for class 1c treatment under this
42.27 	paragraph.
42.28 	(d) Class 1d property includes structures that meet all of
42.29 	the following criteria:
42.30 	(1) the structure is located on property that is classified
42.31 	as agricultural property under section 273.13, subdivision 23;
42.32 	(2) the structure is occupied exclusively by seasonal farm
42.33 	workers during the time when they work on that farm, and the
42.34 	occupants are not charged rent for the privilege of occupying
42.35 	the property, provided that use of the structure for storage of
42.36 	farm equipment and produce does not disqualify the property from
43.1 	classification under this paragraph;
43.2 	(3) the structure meets all applicable health and safety
43.3 	requirements for the appropriate season; and
43.4 	(4) the structure is not salable as residential property
43.5 	because it does not comply with local ordinances relating to
43.6 	location in relation to streets or roads.
43.7 	The market value of class 1d property has the same class
43.8 	rates as class 1a property under paragraph (a).
43.9 	
EFFECTIVE DATE. This section is effective for taxes
43.10 	levied in 2005, payable in 2006, and thereafter.

43.11 	Sec. 22. Minnesota Statutes 2004, section 273.13,
43.12 	subdivision 23, is amended to read:
43.13 		Subd. 23.Class 2.  (a) Class 2a property is agricultural
43.14 	land including any improvements that is homesteaded.  The market
43.15 	value of the house and garage and immediately surrounding one
43.16 	acre of land has the same class rates as class 1a property under
43.17 	subdivision 22.  The value of the remaining land including
43.18 	improvements up to and including $600,000 market value $750,000 
43.19 	has a net class rate of 0.55 percent of market value.  The
43.20 	remaining property value over $600,000 market value $750,000 has
43.21 	a class rate of one percent of market value.
43.22 	(b) Class 2b property is (1) real estate, rural in
43.23 	character and used exclusively for growing trees for timber,
43.24 	lumber, and wood and wood products; (2) real estate that is not
43.25 	improved with a structure and is used exclusively for growing
43.26 	trees for timber, lumber, and wood and wood products, if the
43.27 	owner has participated or is participating in a cost-sharing
43.28 	program for afforestation, reforestation, or timber stand
43.29 	improvement on that particular property, administered or
43.30 	coordinated by the commissioner of natural resources; (3) real
43.31 	estate that is nonhomestead agricultural land; or (4) a landing
43.32 	area or public access area of a privately owned public use
43.33 	airport.  Class 2b property has a net class rate of one percent
43.34 	of market value.
43.35 	(c) Agricultural land as used in this section means
43.36 	contiguous acreage of ten acres or more, used during the
44.1 	preceding year for agricultural purposes.  "Agricultural
44.2 	purposes" as used in this section means the raising or
44.3 	cultivation of agricultural products.  "Agricultural purposes"
44.4 	also includes enrollment in the Reinvest in Minnesota program
44.5 	under sections 103F.501 to 103F.535 or the federal Conservation
44.6 	Reserve Program as contained in Public Law 99-198 if the
44.7 	property was classified as agricultural (i) under this
44.8 	subdivision for the assessment year 2002 or (ii) in the year
44.9 	prior to its enrollment.  Contiguous acreage on the same parcel,
44.10 	or contiguous acreage on an immediately adjacent parcel under
44.11 	the same ownership, may also qualify as agricultural land, but
44.12 	only if it is pasture, timber, waste, unusable wild land, or
44.13 	land included in state or federal farm programs.  Agricultural
44.14 	classification for property shall be determined excluding the
44.15 	house, garage, and immediately surrounding one acre of land, and
44.16 	shall not be based upon the market value of any residential
44.17 	structures on the parcel or contiguous parcels under the same
44.18 	ownership.
44.19 	(d) Real estate, excluding the house, garage, and
44.20 	immediately surrounding one acre of land, of less than ten acres
44.21 	which is exclusively and intensively used for raising or
44.22 	cultivating agricultural products, shall be considered as
44.23 	agricultural land.
44.24 	Land shall be classified as agricultural even if all or a
44.25 	portion of the agricultural use of that property is the leasing
44.26 	to, or use by another person for agricultural purposes.
44.27 	Classification under this subdivision is not determinative
44.28 	for qualifying under section 273.111.
44.29 	The property classification under this section supersedes,
44.30 	for property tax purposes only, any locally administered
44.31 	agricultural policies or land use restrictions that define
44.32 	minimum or maximum farm acreage.
44.33 	(e) The term "agricultural products" as used in this
44.34 	subdivision includes production for sale of:
44.35 	(1) livestock, dairy animals, dairy products, poultry and
44.36 	poultry products, fur-bearing animals, horticultural and nursery
45.1 	stock, fruit of all kinds, vegetables, forage, grains, bees, and
45.2 	apiary products by the owner;
45.3 	(2) fish bred for sale and consumption if the fish breeding
45.4 	occurs on land zoned for agricultural use;
45.5 	(3) the commercial boarding of horses if the boarding is
45.6 	done in conjunction with raising or cultivating agricultural
45.7 	products as defined in clause (1);
45.8 	(4) property which is owned and operated by nonprofit
45.9 	organizations used for equestrian activities, excluding racing;
45.10 	(5) game birds and waterfowl bred and raised for use on a
45.11 	shooting preserve licensed under section 97A.115;
45.12 	(6) insects primarily bred to be used as food for animals;
45.13 	(7) trees, grown for sale as a crop, and not sold for
45.14 	timber, lumber, wood, or wood products; and
45.15 	(8) maple syrup taken from trees grown by a person licensed
45.16 	by the Minnesota Department of Agriculture under chapter 28A as
45.17 	a food processor.
45.18 	(f) If a parcel used for agricultural purposes is also used
45.19 	for commercial or industrial purposes, including but not limited
45.20 	to:
45.21 	(1) wholesale and retail sales;
45.22 	(2) processing of raw agricultural products or other goods;
45.23 	(3) warehousing or storage of processed goods; and
45.24 	(4) office facilities for the support of the activities
45.25 	enumerated in clauses (1), (2), and (3),
45.26 	the assessor shall classify the part of the parcel used for
45.27 	agricultural purposes as class 1b, 2a, or 2b, whichever is
45.28 	appropriate, and the remainder in the class appropriate to its
45.29 	use.  The grading, sorting, and packaging of raw agricultural
45.30 	products for first sale is considered an agricultural purpose.
45.31 	A greenhouse or other building where horticultural or nursery
45.32 	products are grown that is also used for the conduct of retail
45.33 	sales must be classified as agricultural if it is primarily used
45.34 	for the growing of horticultural or nursery products from seed,
45.35 	cuttings, or roots and occasionally as a showroom for the retail
45.36 	sale of those products.  Use of a greenhouse or building only
46.1 	for the display of already grown horticultural or nursery
46.2 	products does not qualify as an agricultural purpose.
46.3 	The assessor shall determine and list separately on the
46.4 	records the market value of the homestead dwelling and the one
46.5 	acre of land on which that dwelling is located.  If any farm
46.6 	buildings or structures are located on this homesteaded acre of
46.7 	land, their market value shall not be included in this separate
46.8 	determination.
46.9 	(g) To qualify for classification under paragraph (b),
46.10 	clause (4), a privately owned public use airport must be
46.11 	licensed as a public airport under section 360.018.  For
46.12 	purposes of paragraph (b), clause (4), "landing area" means that
46.13 	part of a privately owned public use airport properly cleared,
46.14 	regularly maintained, and made available to the public for use
46.15 	by aircraft and includes runways, taxiways, aprons, and sites
46.16 	upon which are situated landing or navigational aids.  A landing
46.17 	area also includes land underlying both the primary surface and
46.18 	the approach surfaces that comply with all of the following:
46.19 	(i) the land is properly cleared and regularly maintained
46.20 	for the primary purposes of the landing, taking off, and taxiing
46.21 	of aircraft; but that portion of the land that contains
46.22 	facilities for servicing, repair, or maintenance of aircraft is
46.23 	not included as a landing area;
46.24 	(ii) the land is part of the airport property; and
46.25 	(iii) the land is not used for commercial or residential
46.26 	purposes.
46.27 	The land contained in a landing area under paragraph (b), clause
46.28 	(4), must be described and certified by the commissioner of
46.29 	transportation.  The certification is effective until it is
46.30 	modified, or until the airport or landing area no longer meets
46.31 	the requirements of paragraph (b), clause (4).  For purposes of
46.32 	paragraph (b), clause (4), "public access area" means property
46.33 	used as an aircraft parking ramp, apron, or storage hangar, or
46.34 	an arrival and departure building in connection with the airport.
46.35 	
EFFECTIVE DATE. This section is effective for taxes
46.36 	payable in 2006 and thereafter.

47.1 	Sec. 23. Minnesota Statutes 2004, section 273.13,
47.2 	subdivision 25, is amended to read:
47.3 		Subd. 25.Class 4.  (a) Class 4a is residential real
47.4 	estate containing four or more units and used or held for use by
47.5 	the owner or by the tenants or lessees of the owner as a
47.6 	residence for rental periods of 30 days or more, excluding
47.7 	property qualifying for class 4d.  Class 4a also includes
47.8 	hospitals licensed under sections 144.50 to 144.56, other than
47.9 	hospitals exempt under section 272.02, and contiguous property
47.10 	used for hospital purposes, without regard to whether the
47.11 	property has been platted or subdivided.  The market value of
47.12 	class 4a property has a class rate of 1.8 percent for taxes
47.13 	payable in 2002, 1.5 percent for taxes payable in 2003, and 1.25
47.14 	percent for taxes payable in 2004 and thereafter, except that
47.15 	class 4a property consisting of a structure for which
47.16 	construction commenced after June 30, 2001, has a class rate of
47.17 	1.25 percent of market value for taxes payable in 2003 and
47.18 	subsequent years.
47.19 	(b) Class 4b includes:
47.20 	(1) residential real estate containing less than four units
47.21 	that does not qualify as class 4bb, other than seasonal
47.22 	residential recreational property;
47.23 	(2) manufactured homes not classified under any other
47.24 	provision;
47.25 	(3) a dwelling, garage, and surrounding one acre of
47.26 	property on a nonhomestead farm classified under subdivision 23,
47.27 	paragraph (b) containing two or three units; and
47.28 	(4) unimproved property that is classified residential as
47.29 	determined under subdivision 33.
47.30 	The market value of class 4b property has a class rate of
47.31 	1.5 percent for taxes payable in 2002, and 1.25 percent for
47.32 	taxes payable in 2003 and thereafter.
47.33 	(c) Class 4bb includes:
47.34 	(1) nonhomestead residential real estate containing one
47.35 	unit, other than seasonal residential recreational property; and
47.36 	(2) a single family dwelling, garage, and surrounding one
48.1 	acre of property on a nonhomestead farm classified under
48.2 	subdivision 23, paragraph (b).
48.3 	Class 4bb property has the same class rates as class 1a
48.4 	property under subdivision 22.
48.5 	Property that has been classified as seasonal residential
48.6 	recreational property at any time during which it has been owned
48.7 	by the current owner or spouse of the current owner does not
48.8 	qualify for class 4bb.
48.9 	(d) Class 4c property includes:
48.10 	(1) except as provided in subdivision 22, paragraph (c),
48.11 	real property devoted to temporary and seasonal residential
48.12 	occupancy for recreation purposes, including real property
48.13 	devoted to temporary and seasonal residential occupancy for
48.14 	recreation purposes and not devoted to commercial purposes for
48.15 	more than 250 days in the year preceding the year of
48.16 	assessment.  For purposes of this clause, property is devoted to
48.17 	a commercial purpose on a specific day if any portion of the
48.18 	property is used for residential occupancy, and a fee is charged
48.19 	for residential occupancy.  In order for a property to be
48.20 	classified as class 4c, seasonal residential recreational for
48.21 	commercial purposes, at least 40 percent of the annual gross
48.22 	lodging receipts related to the property must be from business
48.23 	conducted during 90 consecutive days and either (i) at least 60
48.24 	percent of all paid bookings by lodging guests during the year
48.25 	must be for periods of at least two consecutive nights; or (ii)
48.26 	at least 20 percent of the annual gross receipts must be from
48.27 	charges for rental of fish houses, boats and motors,
48.28 	snowmobiles, downhill or cross-country ski equipment, or charges
48.29 	for marina services, launch services, and guide services, or the
48.30 	sale of bait and fishing tackle.  For purposes of this
48.31 	determination, a paid booking of five or more nights shall be
48.32 	counted as two bookings.  Class 4c also includes commercial use
48.33 	real property used exclusively for recreational purposes in
48.34 	conjunction with class 4c property devoted to temporary and
48.35 	seasonal residential occupancy for recreational purposes, up to
48.36 	a total of two acres, provided the property is not devoted to
49.1 	commercial recreational use for more than 250 days in the year
49.2 	preceding the year of assessment and is located within two miles
49.3 	of the class 4c property with which it is used.  Class 4c
49.4 	property classified in this clause also includes the remainder
49.5 	of class 1c resorts provided that the entire property including
49.6 	that portion of the property classified as class 1c also meets
49.7 	the requirements for class 4c under this clause; otherwise the
49.8 	entire property is classified as class 3.  Owners of real
49.9 	property devoted to temporary and seasonal residential occupancy
49.10 	for recreation purposes and all or a portion of which was
49.11 	devoted to commercial purposes for not more than 250 days in the
49.12 	year preceding the year of assessment desiring classification as
49.13 	class 1c or 4c, must submit a declaration to the assessor
49.14 	designating the cabins or units occupied for 250 days or less in
49.15 	the year preceding the year of assessment by January 15 of the
49.16 	assessment year.  Those cabins or units and a proportionate
49.17 	share of the land on which they are located will be designated
49.18 	class 1c or 4c as otherwise provided.  The remainder of the
49.19 	cabins or units and a proportionate share of the land on which
49.20 	they are located will be designated as class 3a.  The owner of
49.21 	property desiring designation as class 1c or 4c property must
49.22 	provide guest registers or other records demonstrating that the
49.23 	units for which class 1c or 4c designation is sought were not
49.24 	occupied for more than 250 days in the year preceding the
49.25 	assessment if so requested.  The portion of a property operated
49.26 	as a (1) restaurant, (2) bar, (3) gift shop, and (4) other
49.27 	nonresidential facility operated on a commercial basis not
49.28 	directly related to temporary and seasonal residential occupancy
49.29 	for recreation purposes shall not qualify for class 1c or 4c;
49.30 	(2) qualified property used as a golf course if:
49.31 	(i) it is open to the public on a daily fee basis.  It may
49.32 	charge membership fees or dues, but a membership fee may not be
49.33 	required in order to use the property for golfing, and its green
49.34 	fees for golfing must be comparable to green fees typically
49.35 	charged by municipal courses; and
49.36 	(ii) it meets the requirements of section 273.112,
50.1 	subdivision 3, paragraph (d).
50.2 	A structure used as a clubhouse, restaurant, or place of
50.3 	refreshment in conjunction with the golf course is classified as
50.4 	class 3a property;
50.5 	(3) real property up to a maximum of one acre of land owned
50.6 	by a nonprofit community service oriented organization; provided
50.7 	that the property is not used for a revenue-producing activity
50.8 	for more than six days in the calendar year preceding the year
50.9 	of assessment and the property is not used for residential
50.10 	purposes on either a temporary or permanent basis.  For purposes
50.11 	of this clause, a "nonprofit community service oriented
50.12 	organization" means any corporation, society, association,
50.13 	foundation, or institution organized and operated exclusively
50.14 	for charitable, religious, fraternal, civic, or educational
50.15 	purposes, and which is exempt from federal income taxation
50.16 	pursuant to section 501(c)(3), (10), or (19) of the Internal
50.17 	Revenue Code of 1986, as amended through December 31, 1990.  For
50.18 	purposes of this clause, "revenue-producing activities" shall
50.19 	include but not be limited to property or that portion of the
50.20 	property that is used as an on-sale intoxicating liquor or 3.2
50.21 	percent malt liquor establishment licensed under chapter 340A, a
50.22 	restaurant open to the public, bowling alley, a retail store,
50.23 	gambling conducted by organizations licensed under chapter 349,
50.24 	an insurance business, or office or other space leased or rented
50.25 	to a lessee who conducts a for-profit enterprise on the
50.26 	premises.  Any portion of the property which is used for
50.27 	revenue-producing activities for more than six days in the
50.28 	calendar year preceding the year of assessment shall be assessed
50.29 	as class 3a.  The use of the property for social events open
50.30 	exclusively to members and their guests for periods of less than
50.31 	24 hours, when an admission is not charged nor any revenues are
50.32 	received by the organization shall not be considered a
50.33 	revenue-producing activity;
50.34 	(4) postsecondary student housing of not more than one acre
50.35 	of land that is owned by a nonprofit corporation organized under
50.36 	chapter 317A and is used exclusively by a student cooperative,
51.1 	sorority, or fraternity for on-campus housing or housing located
51.2 	within two miles of the border of a college campus;
51.3 	(5) manufactured home parks as defined in section 327.14,
51.4 	subdivision 3;
51.5 	(6) real property that is actively and exclusively devoted
51.6 	to indoor fitness, health, social, recreational, and related
51.7 	uses, is owned and operated by a not-for-profit corporation, and
51.8 	is located within the metropolitan area as defined in section
51.9 	473.121, subdivision 2;
51.10 	(7) a leased or privately owned noncommercial aircraft
51.11 	storage hangar not exempt under section 272.01, subdivision 2,
51.12 	and the land on which it is located, provided that:
51.13 	(i) the land is on an airport owned or operated by a city,
51.14 	town, county, Metropolitan Airports Commission, or group
51.15 	thereof; and
51.16 	(ii) the land lease, or any ordinance or signed agreement
51.17 	restricting the use of the leased premise, prohibits commercial
51.18 	activity performed at the hangar.
51.19 	If a hangar classified under this clause is sold after June
51.20 	30, 2000, a bill of sale must be filed by the new owner with the
51.21 	assessor of the county where the property is located within 60
51.22 	days of the sale; and 
51.23 	(8) a privately owned noncommercial aircraft storage hangar
51.24 	not exempt under section 272.01, subdivision 2, and the land on
51.25 	which it is located, provided that:
51.26 	(i) the land abuts a public airport; and 
51.27 	(ii) the owner of the aircraft storage hangar provides the
51.28 	assessor with a signed agreement restricting the use of the
51.29 	premises, prohibiting commercial use or activity performed at
51.30 	the hangar; and 
51.31 	(9) residential real estate, a portion of which is used by
51.32 	the owner for homestead purposes, and that is also a place of
51.33 	lodging, if all of the following criteria are met:
51.34 	(i) rooms are provided for rent to transient guests that
51.35 	generally stay for periods of 14 or fewer days;
51.36 	(ii) meals are provided to persons who rent rooms, the cost
52.1 	of which is incorporated in the basic room rate;
52.2 	(iii) meals are not provided to the general public except
52.3 	for special events on fewer than seven days in the calendar year
52.4 	preceding the year of the assessment; and
52.5 	(iv) the owner is the operator of the property.
52.6 	The market value subject to the 4c classification under this
52.7 	clause is limited to five rental units.  Any rental units on the
52.8 	property in excess of five, must be valued and assessed as class
52.9 	3a.  The portion of the property used for purposes of a
52.10 	homestead by the owner must be classified as class 1a property
52.11 	under subdivision 22.
52.12 	Class 4c property has a class rate of 1.5 percent of market
52.13 	value, except that (i) each parcel of seasonal residential
52.14 	recreational property not used for commercial purposes has the
52.15 	same class rates as class 4bb property, (ii) manufactured home
52.16 	parks assessed under clause (5) have the same class rate as
52.17 	class 4b property, (iii) commercial-use seasonal residential
52.18 	recreational property has a class rate of one percent for the
52.19 	first $500,000 of market value, which includes any market value
52.20 	receiving the one percent rate under subdivision 22, and 1.25
52.21 	percent for the remaining market value, (iv) the market value of
52.22 	property described in clause (4) has a class rate of one
52.23 	percent, (v) the market value of property described in clauses
52.24 	(2) and (6) has a class rate of 1.25 percent, and (vi) that
52.25 	portion of the market value of property in clause (8) qualifying
52.26 	for class 4c property has a class rate of 1.25 percent.
52.27 	(e) Class 4d property is qualifying low-income rental
52.28 	housing certified to the assessor by the Housing Finance Agency
52.29 	under section 273.126, subdivision 3.  If only a portion of the
52.30 	units in the building qualify as low-income rental housing units
52.31 	as certified under section 273.126, subdivision 3, only the
52.32 	proportion of qualifying units to the total number of units in
52.33 	the building qualify for class 4d.  The remaining portion of the
52.34 	building shall be classified by the assessor based upon its
52.35 	use.  Class 4d also includes the same proportion of land as the
52.36 	qualifying low-income rental housing units are to the total
53.1 	units in the building.  For all properties qualifying as class
53.2 	4d, the market value determined by the assessor must be based on
53.3 	the normal approach to value using normal unrestricted rents.
53.4 	Class 4d property has a class rate of 1.0 percent.
53.5 	
EFFECTIVE DATE. This section is effective for taxes
53.6 	payable in 2006 and subsequent years.

53.7 	Sec. 24. Minnesota Statutes 2004, section 273.13, is
53.8 	amended by adding a subdivision to read:
53.9 		Subd. 34.Homestead of disabled veteran or surviving
53.10 	spouse. (a) The first $200,000 of market value of property
53.11 	qualifying for homestead classification under subdivision 22 or
53.12 	23 is excluded in determining the property's taxable market
53.13 	value if it serves as the homestead of a military veteran, as
53.14 	defined in section 197.447, who has a total and permanent
53.15 	service-connected disability.  To qualify for exclusion under
53.16 	this subdivision, the veteran must have been honorably
53.17 	discharged from the United States armed forces, as indicated by
53.18 	United States Government Form DD214 or other official military
53.19 	discharge papers, and must be certified by the United States
53.20 	Veterans Administration as having a total (100 percent) and
53.21 	permanent service-connected disability.
53.22 	(b) If a disabled veteran qualifying for a valuation
53.23 	exclusion under paragraph (a) predeceases the veteran's spouse,
53.24 	and if upon the death of the veteran the spouse holds the legal
53.25 	or beneficial title to the homestead and permanently resides
53.26 	there, the exclusion shall carry over to the benefit of the
53.27 	veteran's spouse until such time as the spouse remarries or
53.28 	sells or otherwise disposes of the property.
53.29 	(c) In the case of an agricultural homestead, only the
53.30 	portion of the property consisting of the house and garage and
53.31 	immediately surrounding one acre of land qualifies for the
53.32 	valuation exclusion under this subdivision.
53.33 	(d) A property owner attempting to first qualify for a
53.34 	valuation exclusion under this subdivision must apply to the
53.35 	assessor by July 1 of the assessment year, except that for
53.36 	assessment year 2005 application may be made until September 1,
54.1 	2005.  The application must be accompanied by supporting
54.2 	documentation as required by the assessor.  Once a property has
54.3 	been accepted for a valuation exclusion under this subdivision,
54.4 	the property continues to qualify until there is a change in
54.5 	ownership of the property.
54.6 	(e) The value of any qualifying property in excess of
54.7 	$200,000 must be treated exactly the same as if the first
54.8 	$200,000 in value had not been excluded, for purposes of
54.9 	determining the appropriate class rate.  A property qualifying
54.10 	for exclusion under this subdivision shall not be eligible for
54.11 	the credit under section 273.1384, subdivision 1.
54.12 	
EFFECTIVE DATE. This section is effective for assessment
54.13 	year 2005 and thereafter, for taxes payable in 2006 and
54.14 	thereafter.

54.15 	Sec. 25. Minnesota Statutes 2004, section 274.01,
54.16 	subdivision 1, is amended to read:
54.17 		Subdivision 1.Ordinary board; meetings, deadlines,
54.18 	grievances.  (a) The town board of a town, or the council or
54.19 	other governing body of a city, is the board of appeal and
54.20 	equalization except (1) in cities whose charters provide for a
54.21 	board of equalization or (2) in any city or town that has
54.22 	transferred its local board of review power and duties to the
54.23 	county board as provided in subdivision 3.  The county assessor
54.24 	shall fix a day and time when the board or the board of
54.25 	equalization shall meet in the assessment districts of the
54.26 	county.  Notwithstanding any law or city charter to the
54.27 	contrary, a city board of equalization shall be referred to as a
54.28 	board of appeal and equalization.  On or before February 15 of
54.29 	each year the assessor shall give written notice of the time to
54.30 	the city or town clerk.  Notwithstanding the provisions of any
54.31 	charter to the contrary, the meetings must be held between April
54.32 	1 and May 31 each year.  The clerk shall give published and
54.33 	posted notice of the meeting at least ten days before the date
54.34 	of the meeting.
54.35 	The board shall meet at the office of the clerk to review
54.36 	the assessment and classification of property in the town or
55.1 	city.  No changes in valuation or classification which are
55.2 	intended to correct errors in judgment by the county assessor
55.3 	may be made by the county assessor after the board has adjourned
55.4 	in those cities or towns that hold a local board of review;
55.5 	however, corrections of errors that are merely clerical in
55.6 	nature or changes that extend homestead treatment to property
55.7 	are permitted after adjournment until the tax extension date for
55.8 	that assessment year.  The changes must be fully documented and
55.9 	maintained in the assessor's office and must be available for
55.10 	review by any person.  A copy of the changes made during this
55.11 	period in those cities or towns that hold a local board of
55.12 	review must be sent to the county board no later than December
55.13 	31 of the assessment year.
55.14 	(b) The board shall determine whether the taxable property
55.15 	in the town or city has been properly placed on the list and
55.16 	properly valued by the assessor.  If real or personal property
55.17 	has been omitted, the board shall place it on the list with its
55.18 	market value, and correct the assessment so that each tract or
55.19 	lot of real property, and each article, parcel, or class of
55.20 	personal property, is entered on the assessment list at its
55.21 	market value.  No assessment of the property of any person may
55.22 	be raised unless the person has been duly notified of the intent
55.23 	of the board to do so.  On application of any person feeling
55.24 	aggrieved, the board shall review the assessment or
55.25 	classification, or both, and correct it as appears just. The
55.26 	board may not make an individual market value adjustment or
55.27 	classification change that would benefit the property in cases
55.28 	where the owner or other person having control over the property
55.29 	will not permit the assessor to inspect the property and the
55.30 	interior of any buildings or structures.
55.31 	(c) A local board may reduce assessments upon petition of
55.32 	the taxpayer but the total reductions must not reduce the
55.33 	aggregate assessment made by the county assessor by more than
55.34 	one percent.  If the total reductions would lower the aggregate
55.35 	assessments made by the county assessor by more than one
55.36 	percent, none of the adjustments may be made.  The assessor
56.1 	shall correct any clerical errors or double assessments
56.2 	discovered by the board without regard to the one percent
56.3 	limitation.
56.4 	(d) A local board does not have authority to grant an
56.5 	exemption or to order property removed from the tax rolls.
56.6 	(e) A majority of the members may act at the meeting, and
56.7 	adjourn from day to day until they finish hearing the cases
56.8 	presented.  The assessor shall attend, with the assessment books
56.9 	and papers, and take part in the proceedings, but must not
56.10 	vote.  The county assessor, or an assistant delegated by the
56.11 	county assessor shall attend the meetings.  The board shall list
56.12 	separately, on a form appended to the assessment book, all
56.13 	omitted property added to the list by the board and all items of
56.14 	property increased or decreased, with the market value of each
56.15 	item of property, added or changed by the board, placed opposite
56.16 	the item.  The county assessor shall enter all changes made by
56.17 	the board in the assessment book.
56.18 	(f) Except as provided in subdivision 3, if a person fails
56.19 	to appear in person, by counsel, or by written communication
56.20 	before the board after being duly notified of the board's intent
56.21 	to raise the assessment of the property, or if a person feeling
56.22 	aggrieved by an assessment or classification fails to apply for
56.23 	a review of the assessment or classification, the person may not
56.24 	appear before the county board of appeal and equalization for a
56.25 	review of the assessment or classification.  This paragraph does
56.26 	not apply if an assessment was made after the local board
56.27 	meeting, as provided in section 273.01, or if the person can
56.28 	establish not having received notice of market value at least
56.29 	five days before the local board meeting.
56.30 	(g) The local board must complete its work and adjourn
56.31 	within 20 days from the time of convening stated in the notice
56.32 	of the clerk, unless a longer period is approved by the
56.33 	commissioner of revenue.  No action taken after that date is
56.34 	valid.  All complaints about an assessment or classification
56.35 	made after the meeting of the board must be heard and determined
56.36 	by the county board of equalization.  A nonresident may, at any
57.1 	time, before the meeting of the board file written objections to
57.2 	an assessment or classification with the county assessor.  The
57.3 	objections must be presented to the board at its meeting by the
57.4 	county assessor for its consideration.

57.5 	Sec. 26. Minnesota Statutes 2004, section 275.025,
57.6 	subdivision 4, is amended to read:
57.7 		Subd. 4.Apportionment and levy of state general tax.
 57.8 	Ninety-five percent of the state general tax must be distributed
57.9 	among the counties levied by applying a uniform rate to each
57.10 	county's all commercial-industrial tax capacity and its five
57.11 	percent of the state general tax must be levied by applying a
57.12 	uniform rate to all seasonal residential recreational tax
57.13 	capacity. Within each county, the tax must be levied by
57.14 	applying a uniform rate against commercial-industrial tax
57.15 	capacity and seasonal residential recreational tax capacity.On
57.16 	or before October 1 each year, the commissioner of revenue shall
57.17 	certify a the preliminary state general levy rate rates to each
57.18 	county auditor that must be used to prepare the notices of
57.19 	proposed property taxes for taxes payable in the following
57.20 	year.  By January 1 of each year, the commissioner shall certify
57.21 	the final state general levy rate to each county auditor that
57.22 	shall be used in spreading taxes.
57.23 	
EFFECTIVE DATE. This section is effective for taxes
57.24 	payable in 2006 and thereafter.

57.25 	Sec. 27. Minnesota Statutes 2004, section 276.04,
57.26 	subdivision 2, is amended to read:
57.27 		Subd. 2.Contents of tax statements.  (a) The treasurer
57.28 	shall provide for the printing of the tax statements.  The
57.29 	commissioner of revenue shall prescribe the form of the property
57.30 	tax statement and its contents.  The statement must contain a
57.31 	tabulated statement of the dollar amount due to each taxing
57.32 	authority and the amount of the state tax from the parcel of
57.33 	real property for which a particular tax statement is prepared.
57.34 	The dollar amounts attributable to the county, the state tax,
57.35 	the voter approved school tax, the other local school tax, the
57.36 	township or municipality, and the total of the metropolitan
58.1 	special taxing districts as defined in section 275.065,
58.2 	subdivision 3, paragraph (i), must be separately stated.  The
58.3 	amounts due all other special taxing districts, if any, may be
58.4 	aggregated except that any levies made by the regional rail
58.5 	authorities in the county of Anoka, Carver, Dakota, Hennepin,
58.6 	Ramsey, Scott, or Washington under chapter 398A shall be listed
58.7 	on a separate line directly under the appropriate county's
58.8 	levy.  If the county levy under this paragraph includes an
58.9 	amount for a lake improvement district as defined under sections
58.10 	103B.501 to 103B.581, the amount attributable for that purpose
58.11 	must be separately stated from the remaining county levy
58.12 	amount. In the case of Ramsey County, if the county levy under
58.13 	this paragraph includes an amount for public library service
58.14 	under section 134.07, the amount attributable for that purpose
58.15 	may be separated from the remaining county levy amount.The
58.16 	amount of the tax on homesteads qualifying under the senior
58.17 	citizens' property tax deferral program under chapter 290B is
58.18 	the total amount of property tax before subtraction of the
58.19 	deferred property tax amount.  The amount of the tax on
58.20 	contamination value imposed under sections 270.91 to 270.98, if
58.21 	any, must also be separately stated.  The dollar amounts,
58.22 	including the dollar amount of any special assessments, may be
58.23 	rounded to the nearest even whole dollar.  For purposes of this
58.24 	section whole odd-numbered dollars may be adjusted to the next
58.25 	higher even-numbered dollar.  The amount of market value
58.26 	excluded under section 273.11, subdivision 16, if any, must also
58.27 	be listed on the tax statement.
58.28 	(b) The property tax statements for manufactured homes and
58.29 	sectional structures taxed as personal property shall contain
58.30 	the same information that is required on the tax statements for
58.31 	real property.
58.32 	(c) Real and personal property tax statements must contain
58.33 	the following information in the order given in this paragraph.
58.34 	The information must contain the current year tax information in
58.35 	the right column with the corresponding information for the
58.36 	previous year in a column on the left:
59.1 	(1) the property's estimated market value under section
59.2 	273.11, subdivision 1;
59.3 	(2) the property's taxable market value after reductions
59.4 	under section 273.11, subdivisions 1a and 16;
59.5 	(3) the property's gross tax, calculated by adding the
59.6 	property's total property tax to the sum of the aids enumerated
59.7 	in clause (4);
59.8 	(4) a total of the following aids:
59.9 	(i) education aids payable under chapters 122A, 123A, 123B,
59.10 	124D, 125A, 126C, and 127A;
59.11 	(ii) local government aids for cities, towns, and counties
59.12 	under chapter 477A sections 477A.011 to 477A.04; and
59.13 	(iii) disparity reduction aid under section 273.1398;
59.14 	(5) for homestead residential and agricultural properties,
59.15 	the credits under section 273.1384;
59.16 	(6) any credits received under sections 273.119; 273.123;
59.17 	273.135; 273.1391; 273.1398, subdivision 4; 469.171; and
59.18 	473H.10, except that the amount of credit received under section
59.19 	273.135 must be separately stated and identified as "taconite
59.20 	tax relief"; and
59.21 	(7) the net tax payable in the manner required in paragraph
59.22 	(a).
59.23 	(d) If the county uses envelopes for mailing property tax
59.24 	statements and if the county agrees, a taxing district may
59.25 	include a notice with the property tax statement notifying
59.26 	taxpayers when the taxing district will begin its budget
59.27 	deliberations for the current year, and encouraging taxpayers to
59.28 	attend the hearings.  If the county allows notices to be
59.29 	included in the envelope containing the property tax statement,
59.30 	and if more than one taxing district relative to a given
59.31 	property decides to include a notice with the tax statement, the
59.32 	county treasurer or auditor must coordinate the process and may
59.33 	combine the information on a single announcement.
59.34 	The commissioner of revenue shall certify to the county
59.35 	auditor the actual or estimated aids enumerated in clause (4)
59.36 	that local governments will receive in the following year.  The
60.1 	commissioner must certify this amount by January 1 of each year.
60.2 	
EFFECTIVE DATE. This section is effective for property
60.3 	tax statements for taxes payable in 2006 and thereafter.

60.4 	Sec. 28. [280.44] NOTIFICATION TO HOMESTEAD PROPERTY
60.5 	OWNERS; TAX DELINQUENCY.
60.6 	In addition to other notices required under this chapter,
60.7 	the county auditor shall notify all taxpayers owning homestead
60.8 	property within the county whose real property taxes on that
60.9 	homestead are currently delinquent and also were delinquent in
60.10 	the preceding calendar year.  The notification must be mailed
60.11 	sometime between June 1 and August 1 in the year following the
60.12 	second year that property taxes were not paid.  The notification
60.13 	must contain a telephone number and an e-mail address for the
60.14 	county auditor's office to aid the taxpayer in contacting the
60.15 	county to discuss any questions relating to the tax
60.16 	delinquency.  The notification must contain a list of the
60.17 	various assistance programs and other options that might be
60.18 	available to the taxpayer to pay the delinquent taxes including,
60.19 	but not limited to, the senior citizens' property tax deferral
60.20 	under chapter 290B, partial property tax payments, and a
60.21 	confession of judgment under section 279.37.  The notice must
60.22 	inform the taxpayer of the state-paid property tax refund and
60.23 	the additional property tax refund under chapter 290A which may
60.24 	be available to the taxpayer once the delinquent taxes have been
60.25 	satisfied.  The notice must also state the number of years
60.26 	before the property will forfeit if the taxes are not paid or
60.27 	any installment plan initiated.  For purposes of this section,
60.28 	"homestead" property means property classified under section
60.29 	273.13, subdivision 22 or 23, paragraph (a).

60.30 	EFFECTIVE DATE. This section is effective for property
60.31 	tax delinquencies beginning January 1, 2006, provided that for
60.32 	calendar year 2006, the county auditor shall notify the owners
60.33 	of each homestead property in the county that has been
60.34 	delinquent for two or more years.

60.35 	Sec. 29. Minnesota Statutes 2004, section 290A.03,
60.36 	subdivision 11, is amended to read:
61.1 		Subd. 11.Rent constituting property taxes.  "Rent
61.2 	constituting property taxes" means 19 percent of the gross rent
61.3 	actually paid in cash, or its equivalent, or the portion of rent 
61.4 	the amount of gross rent actually paid in cash, or its
61.5 	equivalent, which is attributable (1) to the property tax paid
61.6 	on the unit or (2) to the amount paid in lieu of property taxes,
61.7 	in any calendar year by a claimant for the right of occupancy of
61.8 	the claimant's Minnesota homestead in the calendar year, and
61.9 	which rent constitutes the basis, in the succeeding calendar
61.10 	year of a claim for relief under this chapter by the
61.11 	claimant. The amount of rent attributable to property taxes
61.12 	paid or payments in lieu made on the unit must be determined by
61.13 	multiplying the gross rent paid by the claimant for the calendar
61.14 	year for the unit by a fraction, the numerator of which is the
61.15 	net tax on the property where the unit is located and the
61.16 	denominator of which is the total scheduled rent.  In no case
61.17 	may the rent constituting property taxes exceed 50 percent of
61.18 	the gross rent paid by the claimant during that calendar year.
61.19 	In the case of a claimant who resides in a unit for which (1) a
61.20 	rent subsidy is paid to, or for, the claimant based on the
61.21 	income of the claimant or the claimant's family, or (2) a
61.22 	subsidy is paid to a public housing authority that owns or
61.23 	operates the claimant's rental unit, pursuant to United States
61.24 	Code, title 42, section 1437c, 20 percent of gross rent actually
61.25 	paid in cash or its equivalent shall be the claimant's "rent
61.26 	constituting property taxes paid."  For purposes of this
61.27 	subdivision, "rent subsidy" does not include any housing
61.28 	assistance received under the Minnesota family investment
61.29 	program, general assistance, Minnesota supplemental assistance,
61.30 	supplemental security income, or similar income maintenance
61.31 	programs.
61.32 	
EFFECTIVE DATE. This section is effective for claims
61.33 	based on rent paid in 2005 and following years.

61.34 	Sec. 30. Minnesota Statutes 2004, section 290A.03,
61.35 	subdivision 13, is amended to read:
61.36 		Subd. 13.Property taxes payable.  "Property taxes
62.1 	payable" means the property tax exclusive of special
62.2 	assessments, penalties, and interest payable on a claimant's
62.3 	homestead after deductions made under sections 273.135,
62.4 	273.1384, 273.1391, 273.42, subdivision 2, and any other state
62.5 	paid property tax credits in any calendar year, and after any
62.6 	refund claimed and allowable under section 290A.04, subdivision
62.7 	2h, that is first payable in the year that the property tax is
62.8 	payable.  In the case of a claimant who makes ground lease
62.9 	payments, "property taxes payable" includes the amount of the
62.10 	payments directly attributable to the property taxes assessed
62.11 	against the parcel on which the house is located.  No
62.12 	apportionment or reduction of the "property taxes payable" shall
62.13 	be required for the use of a portion of the claimant's homestead
62.14 	for a business purpose if the claimant does not deduct any
62.15 	business depreciation expenses for the use of a portion of the
62.16 	homestead in the determination of federal adjusted gross
62.17 	income.  For homesteads which are manufactured homes as defined
62.18 	in section 273.125, subdivision 8, and for homesteads which are
62.19 	park trailers taxed as manufactured homes under section 168.012,
62.20 	subdivision 9, "property taxes payable" shall also include 19
62.21 	percent the amount of the gross rent paid in the preceding year
62.22 	for the site on which the homestead is located, which is
62.23 	attributable to the net tax paid on the site.  The amount
62.24 	attributable to property taxes must be determined by multiplying
62.25 	the net tax on the parcel by a fraction, the numerator of which
62.26 	is the gross rent paid for the calendar year for the site and
62.27 	the denominator of which is the gross rent paid for the calendar
62.28 	year for the parcel.  When a homestead is owned by two or more
62.29 	persons as joint tenants or tenants in common, such tenants
62.30 	shall determine between them which tenant may claim the property
62.31 	taxes payable on the homestead.  If they are unable to agree,
62.32 	the matter shall be referred to the commissioner of revenue
62.33 	whose decision shall be final.  Property taxes are considered
62.34 	payable in the year prescribed by law for payment of the taxes.
62.35 	In the case of a claim relating to "property taxes
62.36 	payable," the claimant must have owned and occupied the
63.1 	homestead on January 2 of the year in which the tax is payable
63.2 	and (i) the property must have been classified as homestead
63.3 	property pursuant to section 273.124, on or before December 15
63.4 	of the assessment year to which the "property taxes payable"
63.5 	relate; or (ii) the claimant must provide documentation from the
63.6 	local assessor that application for homestead classification has
63.7 	been made on or before December 15 of the year in which the
63.8 	"property taxes payable" were payable and that the assessor has
63.9 	approved the application.
63.10 	
EFFECTIVE DATE. This section is effective for claims
63.11 	based on rent paid in 2005 and following years.

63.12 	Sec. 31. Minnesota Statutes 2004, section 290A.03, is
63.13 	amended by adding a subdivision to read:
63.14 		Subd. 16.Total scheduled rent. "Total scheduled rent"
63.15 	means the sum of the monthly rents assigned to the residential
63.16 	rental units in the property multiplied by 12.  The rents must
63.17 	be an arm's-length rental, including garage rents if any, but
63.18 	not including charges for medical services furnished by the
63.19 	landlord as a part of the rental agreement.  In determining
63.20 	total scheduled rent, no deduction is allowed for vacant units,
63.21 	uncollected rent, or reduced cash rents in units occupied by
63.22 	employees or agents of the owner.
63.23 	
EFFECTIVE DATE. This section is effective for claims
63.24 	based on rent paid in 2005 and following years.

63.25 	Sec. 32. Minnesota Statutes 2004, section 290A.03, is
63.26 	amended by adding a subdivision to read:
63.27 		Subd. 17.Net tax. "Net tax" means:
63.28 	(1) the property tax, exclusive of special assessments,
63.29 	interest, and penalties, and after reduction for any state paid
63.30 	property tax credits as required in subdivision 13 except for
63.31 	the reduction under section 273.13, subdivisions 22 and 23; or 
63.32 	(2) the payments made in lieu of ad valorem taxes,
63.33 	including payments of special assessments imposed in lieu of ad
63.34 	valorem taxes,
63.35 	for the calendar year in which the rent was paid.  If a portion
63.36 	of the property is occupied as a homestead or is used for other
64.1 	than rental purposes, the net tax is the amount of tax reduced
64.2 	by the percentage that the nonrental use comprises of the total
64.3 	square footage of the building.  If a portion of the property is
64.4 	used for purposes other than for residential rental and none of
64.5 	the property is occupied as a homestead, the net tax is the
64.6 	amount of the tax of the parcel multiplied by a fraction, the
64.7 	numerator of which is the net tax capacity of the residential
64.8 	rental portion and the denominator of which is the total net tax
64.9 	capacity of the parcel.  If a portion of the property is used
64.10 	for other than rental residential purposes, the county treasurer
64.11 	shall list on the property tax statement the amount of net tax
64.12 	pertaining to the rental residential portion of the property.
64.13 	The amount of the net tax must not be reduced by an
64.14 	abatement or a court-ordered reduction in the property tax on
64.15 	the property made after the certificate of rent paid has been
64.16 	provided to the renter.
64.17 	
EFFECTIVE DATE. This section is effective for claims
64.18 	based on rent paid in 2005 and following years.

64.19 	Sec. 33. Minnesota Statutes 2004, section 290A.07, is
64.20 	amended by adding a subdivision to read:
64.21 		Subd. 5.Early payment; e-file claims. The commissioner
64.22 	may pay a claim up to 30 days earlier than the first permitted
64.23 	date under subdivision 2a or 3 if the claim is submitted by
64.24 	electronic means.
64.25 	
EFFECTIVE DATE. This section is effective the day
64.26 	following final enactment.

64.27 	Sec. 34. Minnesota Statutes 2004, section 290A.19, is
64.28 	amended to read:
64.29 	290A.19 OWNER OR MANAGING AGENT TO FURNISH RENT
64.30 	CERTIFICATE.
64.31 	(a) The owner or managing agent of any property for which
64.32 	rent is paid for occupancy as a homestead must furnish a
64.33 	certificate of rent paid to a person who is a renter on December
64.34 	31, in the form prescribed by the commissioner.  If the renter
64.35 	moves before December 31, the owner or managing agent may give
64.36 	the certificate to the renter at the time of moving, or mail the
65.1 	certificate to the forwarding address if an address has been
65.2 	provided by the renter.  The certificate must be made available
65.3 	to the renter before February 1 of the year following the year
65.4 	in which the rent was paid.  The owner or managing agent must
65.5 	retain a duplicate of each certificate or an equivalent record
65.6 	showing the same information for a period of three years.  The
65.7 	duplicate or other record must be made available to the
65.8 	commissioner upon request.  For the purposes of this section,
65.9 	"owner" includes a park owner as defined under section 327C.01,
65.10 	subdivision 6, and "property" includes a lot as defined under
65.11 	section 327C.01, subdivision 3.
65.12 	(b) If the owner or managing agent fails to provide the
65.13 	renter with a certificate of rent constituting property taxes,
65.14 	the commissioner shall allocate the net tax on the building to
65.15 	the unit on a square footage basis or other appropriate basis as
65.16 	the commissioner determines.  The renter shall supply the
65.17 	commissioner with a statement from the county treasurer that
65.18 	gives the amount of property tax on the parcel, the address and
65.19 	property tax parcel identification number of the property, and
65.20 	the number of units in the building.

65.21 	EFFECTIVE DATE. This section is effective for claims
65.22 	based on rent paid in 2005 and following years.

65.23 	Sec. 35. Minnesota Statutes 2004, section 365.43,
65.24 	subdivision 1, is amended to read:
65.25 		Subdivision 1.levied amount is spending limit total
65.26 	revenue defined.  A town must not contract debts or spend more
65.27 	money in a year than the taxes levied for the year its total
65.28 	revenue without a favorable vote of a majority of the town's
65.29 	electors. In this section, "total revenue" means property taxes
65.30 	payable in that year as well as amounts received from all other
65.31 	sources and amounts carried forward from the last year.

65.32 	Sec. 36. Minnesota Statutes 2004, section 365.431, is
65.33 	amended to read:
65.34 	365.431 AMOUNT VOTED AT MEETING IS TAX LIMIT.
65.35 	Except as otherwise authorized by law,the tax for town
65.36 	purposes must not be more than the amount voted to be raised at
66.1 	the annual town meeting.

66.2 	Sec. 37. Minnesota Statutes 2004, section 366.011, is
66.3 	amended to read:
66.4 	366.011 CHARGES FOR EMERGENCY SERVICES; COLLECTION.
66.5 	A town may impose a reasonable service charge for emergency
66.6 	services, including fire, rescue, medical, and related services
66.7 	provided by the town or contracted for by the town.  If the
66.8 	service charge remains unpaid 30 days after a notice of
66.9 	delinquency is sent to the recipient of the service or the
66.10 	recipient's representative or estate, the town or its contractor
66.11 	on behalf of the town may use any lawful means allowed to a
66.12 	private party for the collection of an unsecured delinquent
66.13 	debt.  The town may also use the authority of section 366.012 to
66.14 	collect unpaid service charges of this kind from delinquent
66.15 	recipients of services who are owners of taxable real property
66.16 	in the town state.
66.17 	The powers conferred by this section are in addition and
66.18 	supplemental to the powers conferred by any other law for a town
66.19 	to impose a service charge or assessment for a service provided
66.20 	by the town or contracted for by the town.

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

66.23 	Sec. 38. Minnesota Statutes 2004, section 366.012, is
66.24 	amended to read:
66.25 	366.012 COLLECTION OF UNPAID SERVICE CHARGES.
66.26 	If a town is authorized to impose a service charge on the
66.27 	owner, lessee, or occupant of property, or any of them,for a
66.28 	governmental service provided by the town, the town board may
66.29 	certify to the county auditor of the county in which the
66.30 	recipient of the services owns real property, on or before
66.31 	October 15 for each year, any unpaid service charges which shall
66.32 	then be collected together with property taxes levied against
66.33 	the property. The county auditor shall remit to the town all
66.34 	service charges collected by the auditor on behalf of the town.
66.35 	A charge may be certified to the auditor only if, on or before
66.36 	September 15, the town has given written notice to the property
67.1 	owner of its intention to certify the charge to the auditor.
67.2 	The service charges shall be subject to the same penalties,
67.3 	interest, and other conditions provided for the collection of
67.4 	property taxes.  This section is in addition to other law
67.5 	authorizing the collection of unpaid costs and service charges.

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

67.8 	Sec. 39. [373.251] LEVY FOR NON-COUNTY-OWNED PUBLIC
67.9 	NURSING HOMES.
67.10 	(a) If a county with a population of 150,000 or more,
67.11 	according to the 2000 Federal Census, located outside the
67.12 	metropolitan area as defined in section 473.121, subdivision 2,
67.13 	owns a nursing home that is funded in whole or part with county
67.14 	revenue, the county must levy an equal amount annually to be
67.15 	distributed to all other nursing homes located within the county
67.16 	that are owned by governmental units.
67.17 	(b) The proceeds of the levy authorized by paragraph (a)
67.18 	must be prorated among the government-owned nursing homes in the
67.19 	proportion that the number of beds in each of the
67.20 	government-owned nursing homes is to the total number of beds in
67.21 	all of the government-owned nursing homes in the county.
67.22 	(c) The levy authorized by paragraph (a) may be levied in
67.23 	addition to all other county levies authorized by law.

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

67.26 	Sec. 40. Minnesota Statutes 2004, section 473F.02,
67.27 	subdivision 2, is amended to read:
67.28 		Subd. 2.Area.  "Area" means the territory included
67.29 	within the boundaries of Anoka, Carver, Dakota excluding the
67.30 	city of Northfield, Hennepin, Ramsey, Scott excluding the city
67.31 	of New Prague, and Washington Counties, excluding lands
67.32 	constituting a major or an intermediate airport as defined under
67.33 	section 473.625.
67.34 	
EFFECTIVE DATE. This section is effective for taxes
67.35 	payable in 2006 and subsequent years.

67.36 	Sec. 41. Minnesota Statutes 2004, section 477A.11,
68.1 	subdivision 4, is amended to read:
68.2 		Subd. 4.Other natural resources land.  "Other natural
68.3 	resources land" means:
68.4 	(1) any other land presently owned in fee title by the
68.5 	state and administered by the commissioner, or any tax-forfeited
68.6 	land, other than platted lots within a city or those lands
68.7 	described under subdivision 3, clause (2), which is owned by the
68.8 	state and administered by the commissioner or by the county in
68.9 	which it is located; and 
68.10 	(2) land leased by the state from the United States of
68.11 	America through the United States Secretary of Agriculture
68.12 	pursuant to Title III of the Bankhead Jones Farm Tenant Act,
68.13 	which land is commonly referred to as land utilization project
68.14 	land that is administered by the commissioner.
68.15 	
EFFECTIVE DATE. This section is effective for aids paid
68.16 	in calendar year 2006 and thereafter.

68.17 	Sec. 42. Minnesota Statutes 2004, section 477A.11, is
68.18 	amended by adding a subdivision to read:
68.19 		Subd. 5.Land utilization project land. "Land
68.20 	utilization project land" means land that is leased by the state
68.21 	from the United States through the United States Secretary of
68.22 	Agriculture according to Title III of the Bankhead Jones Farm
68.23 	Tenant Act and that is administered by the commissioner.
68.24 	
EFFECTIVE DATE. This section is effective for aids paid
68.25 	in calendar year 2006 and thereafter.

68.26 	Sec. 43. Minnesota Statutes 2004, section 477A.12,
68.27 	subdivision 1, is amended to read:
68.28 		Subdivision 1.Types of land; payments.  (a) As an offset
68.29 	for expenses incurred by counties and towns in support of
68.30 	natural resources lands, the following amounts are annually
68.31 	appropriated to the commissioner of natural resources from the
68.32 	general fund for transfer to the commissioner of revenue.  The
68.33 	commissioner of revenue shall pay the transferred funds to
68.34 	counties as required by sections 477A.11 to 477A.145.  The
68.35 	amounts are:
68.36 	(1) for acquired natural resources land, $3, as adjusted
69.1 	for inflation under section 477A.145, multiplied by the total
69.2 	number of acres of acquired natural resources land or, at the
69.3 	county's option three-fourths of one percent of the appraised
69.4 	value of all acquired natural resources land in the county,
69.5 	whichever is greater;
69.6 	(2) 75 cents, as adjusted for inflation under section
69.7 	477A.145, multiplied by the number of acres of
69.8 	county-administered other natural resources land; and
69.9 	(3) 75 cents, as adjusted for inflation under section
69.10 	477A.145, multiplied by the total number of acres of land
69.11 	utilization project land;
69.12 	(3) (4) 37.5 cents, as adjusted for inflation under section
69.13 	477A.145, multiplied by the number of acres of
69.14 	commissioner-administered other natural resources land located
69.15 	in each county as of July 1 of each year prior to the payment
69.16 	year.
69.17 	(b) The amount determined under paragraph (a), clause (1),
69.18 	is payable for land that is acquired from a private owner and
69.19 	owned by the Department of Transportation for the purpose of
69.20 	replacing wetland losses caused by transportation projects, but
69.21 	only if the county contains more than 500 acres of such land at
69.22 	the time the certification is made under subdivision 2.
69.23 	
EFFECTIVE DATE. This section is effective for aids paid
69.24 	in calendar year 2006 and thereafter.

69.25 	Sec. 44. Minnesota Statutes 2004, section 477A.12,
69.26 	subdivision 2, is amended to read:
69.27 		Subd. 2.Procedure.  Lands for which payments in lieu are
69.28 	made pursuant to section 97A.061, subdivision 3, and Laws 1973,
69.29 	chapter 567, shall not be eligible for payments under this
69.30 	section.  Each county auditor shall certify to the Department of
69.31 	Natural Resources during July of each year prior to the payment
69.32 	year the number of acres of county-administered other natural
69.33 	resources land within the county.  The Department of Natural
69.34 	resources may, in addition to the certification of acreage,
69.35 	require descriptive lists of land so certified.  The
69.36 	commissioner of natural resources shall determine and certify to
70.1 	the commissioner of revenue by March 1 of the payment year:
70.2 	(1) the number of acres and most recent appraised value of
70.3 	acquired natural resources land within each county;
70.4 	(2) the number of acres of commissioner-administered
70.5 	natural resources land within each county; and 
70.6 	(3) the number of acres of county-administered other
70.7 	natural resources land within each county, based on the reports
70.8 	filed by each county auditor with the commissioner of natural
70.9 	resources; and 
70.10 	(4) the number of acres of land utilization project land
70.11 	within each county.
70.12 	The commissioner of transportation shall determine and
70.13 	certify to the commissioner of revenue by March 1 of the payment
70.14 	year the number of acres of land and the appraised value of the
70.15 	land described in subdivision 1, paragraph (b), but only if it
70.16 	exceeds 500 acres.
70.17 	The commissioner of revenue shall determine the
70.18 	distributions provided for in this section using the number of
70.19 	acres and appraised values certified by the commissioner of
70.20 	natural resources and the commissioner of transportation by
70.21 	March 1 of the payment year.
70.22 	
EFFECTIVE DATE. This section is effective for aids paid
70.23 	in calendar year 2006 and thereafter.

70.24 	Sec. 45. Minnesota Statutes 2004, section 477A.14,
70.25 	subdivision 1, is amended to read:
70.26 		Subdivision 1.General distribution.  Except as provided
70.27 	in subdivision 2 or in section 97A.061, subdivision 5, 40
70.28 	percent of the total payment to the county shall be deposited in
70.29 	the county general revenue fund to be used to provide property
70.30 	tax levy reduction.  The remainder shall be distributed by the
70.31 	county in the following priority:
70.32 	(a) 37.5 cents, as adjusted for inflation under section
70.33 	477A.145, for each acre of county-administered other natural
70.34 	resources land shall be deposited in a resource development fund
70.35 	to be created within the county treasury for use in resource
70.36 	development, forest management, game and fish habitat
71.1 	improvement, and recreational development and maintenance of
71.2 	county-administered other natural resources land.  Any county
71.3 	receiving less than $5,000 annually for the resource development
71.4 	fund may elect to deposit that amount in the county general
71.5 	revenue fund;
71.6 	(b) From the funds remaining, within 30 days of receipt of
71.7 	the payment to the county, the county treasurer shall pay each
71.8 	organized township 30 cents, as adjusted for inflation under
71.9 	section 477A.145, for each acre of acquired natural resources
71.10 	land and each acre of land described in section 477A.12,
71.11 	subdivision 1, paragraph (b), and 7.5 cents, as adjusted for
71.12 	inflation under section 477A.145, for each acre of other natural
71.13 	resources land and each acre of land utilization project land 
71.14 	located within its boundaries.  Payments for natural resources
71.15 	lands not located in an organized township shall be deposited in
71.16 	the county general revenue fund.  Payments to counties and
71.17 	townships pursuant to this paragraph shall be used to provide
71.18 	property tax levy reduction, except that of the payments for
71.19 	natural resources lands not located in an organized township,
71.20 	the county may allocate the amount determined to be necessary
71.21 	for maintenance of roads in unorganized townships.  Provided
71.22 	that, if the total payment to the county pursuant to section
71.23 	477A.12 is not sufficient to fully fund the distribution
71.24 	provided for in this clause, the amount available shall be
71.25 	distributed to each township and the county general revenue fund
71.26 	on a pro rata basis; and
71.27 	(c) Any remaining funds shall be deposited in the county
71.28 	general revenue fund.  Provided that, if the distribution to the
71.29 	county general revenue fund exceeds $35,000, the excess shall be
71.30 	used to provide property tax levy reduction.
71.31 	
EFFECTIVE DATE. This section is effective for aids paid
71.32 	in calendar year 2006 and thereafter.

71.33 	Sec. 46. Laws 1998, chapter 389, article 3, section 42,
71.34 	subdivision 2, as amended by Laws 2002, chapter 377, article 4,
71.35 	section 24, is amended to read:
71.36 		Subd. 2.Recapture. (a) Property or any portion thereof
72.1 	qualifying under section 38 is subject to additional taxes if:
72.2 	(1) ownership of the property is transferred to anyone
72.3 	other than the spouse or child of the current owner;
72.4 	(2) the current owner or the spouse or child of the current
72.5 	owner has not conveyed or entered into a contract before July 1,
72.6 	2007, to convey for ownership or public easement rights, (i) a
72.7 	portion of the property to a one or more nonprofit foundation 
72.8 	foundations or corporation operating corporations; and (ii) a
72.9 	portion of the property to one or more local governments; and
72.10 	those entities shall separately or jointly operate the property
72.11 	as an art park providing the services included in section 38,
72.12 	clauses (2) to (5), and may also use some of the property for
72.13 	other public purposes as determined by the local governments; or
72.14 	(3) the nonprofit foundation or corporation to which a
72.15 	portion of the property was transferred ceases to provide the
72.16 	services included in section 38, clauses (2) to (5), earlier
72.17 	than ten years following the effective date of the conveyance 
72.18 	conveyances or of the execution of the contract contracts to
72.19 	convey.
72.20 	(b) The additional taxes are imposed at the earlier of (1)
72.21 	the year following transfer of ownership to anyone other than
72.22 	the spouse or child of the current owner or a nonprofit
72.23 	foundation or corporation or local government operating the
72.24 	property as an art park and used for other public purposes, or
72.25 	(2) for taxes payable in 2008, or (3) in the event the nonprofit
72.26 	foundation or corporation to which a portion of the property was
72.27 	conveyed ceases to provide the required services within ten
72.28 	years after the conveyance, for taxes payable in the year
72.29 	following the year when it ceased to do so.
72.30 	The county board, with the approval of the city council,
72.31 	shall determine the amount of the additional taxes due on the
72.32 	portion of property which is no longer utilized as an art park;
72.33 	provided, however, that the additional taxes are equal to must
72.34 	not be greater than the difference between the taxes determined
72.35 	on that portion of the property utilized as an art park under
72.36 	sections 39 and 40 and the amount determined under subdivision 1
73.1 	for all years that the property qualified under section 38. The
73.2 	additional taxes must be extended against the property on the
73.3 	tax list for the current year; provided, however, that No
73.4 	interest or penalties may be levied on the additional taxes if
73.5 	timely paid amount provided that it is paid within 30 days of
73.6 	the county's notice.
73.7 	
EFFECTIVE DATE. This section is effective March 1, 2005.

73.8 	Sec. 47. Laws 2001, First Special Session chapter 5,
73.9 	article 3, section 8, the effective date, is amended to read:

73.10 	EFFECTIVE DATE. This section is effective for taxes
73.11 	levied in 2002, payable in 2003, through taxes levied in 2007 
73.12 	2009, payable in 2008 2010.

73.13 	Sec. 48. Laws 2005, chapter 43, section 1, the effective
73.14 	date, if enacted, is amended to read:

73.15 	EFFECTIVE DATE. This section is effective for taxes
73.16 	levied in 2005 2004, payable in 2006 2005, and thereafter.
73.17 	EFFECTIVE DATE.This section is effective the day
73.18 	following final enactment.

73.19 	Sec. 49. REPORT; PROPOSED STANDARDIZED ASSESSMENT AND
73.20 	CLASSIFICATION STANDARDS.
 73.21 	Recognizing the importance of uniform and professional
73.22 	property tax assessment practices, the commissioner of revenue,
73.23 	in consultation with appropriate stakeholder groups shall
73.24 	develop and issue a report to the chairs of the house and senate
73.25 	tax committees by February 1, 2006.  This report shall contain,
73.26 	but not be limited to, recommendations and proposed requirements
73.27 	for achieving standardized assessment and classification of
73.28 	seasonal residential recreational property, residential
73.29 	nonhomestead property, timber and woodland property, green acres
73.30 	property, seasonal residential recreational commercial and
73.31 	noncommercial property, and commercial/industrial property.

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

73.34 	Sec. 50. CODE OF CONDUCT AND ETHICS; ASSESSORS.
 73.35 	The commissioner of revenue is directed to develop a code
73.36 	of conduct and ethics for Minnesota assessors to ensure public
74.1 	confidence in property assessment.  The commissioner shall
74.2 	consult with representatives of the Minnesota Association of
74.3 	Assessing Officers, the State Board of Assessors, and any other
74.4 	groups that the commissioner deems appropriate.  The code must
74.5 	include language that promotes fairness and uniformity and
74.6 	recommends assessment practices that do not promote the
74.7 	perception of a conflict of interest.  The code must be
74.8 	completed and recommended to the Minnesota State Board of
74.9 	Assessors for adopting by January 1, 2006.  This code must be
74.10 	presented as part of the course required by Minnesota Statutes,
74.11 	section 273.0755, paragraph (c).

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

74.14 	Sec. 51. SCHOOL DEBT SERVICE LEVIES; ALTERNATIVE TAX
74.15 	BASE; PILOT PROJECT.
 74.16 		Subdivision 1.Commissioner designation. The
74.17 	commissioner of education may select up to three school
74.18 	districts to participate in the pilot project under this
74.19 	section.  The commissioner must notify the selected school
74.20 	districts by July 1, 2005.
74.21 		Subd. 2.Election by school board. A school board
74.22 	designated by the commissioner under subdivision 1 may by
74.23 	resolution elect to levy the debt service for a bond issued
74.24 	after July 1, 2005, and before July 1, 2007, against the
74.25 	alternative net tax capacity of the district, as defined under
74.26 	subdivision 6, rather than the net tax capacity of the
74.27 	district.  A resolution to levy against alternative net tax
74.28 	capacity must be passed at an open meeting of the board, at
74.29 	least 60 days prior to the referendum election.  A district
74.30 	electing to issue bonds with a levy against alternative net tax
74.31 	capacity must notify the commissioner of that intention in
74.32 	filing the proposal required by Minnesota Statutes, section
74.33 	123B.71, subdivision 9.
74.34 		Subd. 3.Debt service equalization revenue. For the
74.35 	purposes of Minnesota Statutes, section 123B.53, subdivision 4,
74.36 	debt service equalization revenue for a district that has issued
75.1 	bonds under an election to levy against alternative net tax
75.2 	capacity is the same as it would be if the levy were being made
75.3 	against net tax capacity.
75.4 		Subd. 4.Apportionment of debt service aid. Equalization
75.5 	aid for a district that has issued bonds under an election to
75.6 	levy against alternative net tax capacity must be apportioned
75.7 	between the net tax capacity debt service levy and the
75.8 	alternative net tax capacity debt service levy in the same
75.9 	proportions as eligible debt service revenues resulting from
75.10 	bonds issued against net tax capacity are to eligible debt
75.11 	service revenues resulting from bonds issued against alternative
75.12 	net tax capacity.
75.13 		Subd. 5.Alternative net tax capacity debt service levy.
 75.14 	The eligible debt service revenues resulting from bonds issued
75.15 	against alternative net tax capacity, minus the debt service
75.16 	equalization aid apportioned to the alternative net tax capacity
75.17 	levy, must be levied against the alternative net tax capacity of
75.18 	the district as defined in subdivision 6, and must be separately
75.19 	certified to the county auditor under Minnesota Statutes,
75.20 	section 275.07.
75.21 		Subd. 6.Alternative net tax capacity. "Alternative net
75.22 	tax capacity" means the net tax capacity of all taxable property
75.23 	in a district, as defined in Minnesota Statutes, section 273.13,
75.24 	except:
75.25 	(1) the first tier of class 2a property, excluding the
75.26 	portion of class 2a property consisting of the house, garage,
75.27 	and surrounding one acre of land of an agricultural homestead,
75.28 	has an alternative net tax capacity equal to 0.14 percent of its
75.29 	taxable market value;
75.30 	(2) the upper tier of class 2a property and all other class
75.31 	2 property has an alternative net tax capacity equal to 0.25
75.32 	percent of its taxable market value;
75.33 	(3) noncommercial class 4c(1) property has an alternative
75.34 	net tax capacity equal to 0.75 percent of its taxable market
75.35 	value;
75.36 	(4) class 4a and 4b property has an alternative net tax
76.1 	capacity equal to one percent of its taxable market value;
76.2 	(5) the first tier of class 3 property has an alternative
76.3 	net tax capacity equal to 1.25 percent of its taxable market
76.4 	value; and 
76.5 	(6) class 5 property and the upper tier of class 3 property
76.6 	has an alternative net tax capacity equal to 1.5 percent of its
76.7 	taxable market value.
76.8 	
EFFECTIVE DATE. This section is effective for taxes
76.9 	payable in 2006 and thereafter.

76.10 	Sec. 52. SCHOOL PROPERTY; EXEMPTION 2005 ONLY.
 76.11 	Notwithstanding Minnesota Statutes, section 272.02,
76.12 	subdivision 38, paragraph (b), the following property is exempt
76.13 	from taxation for assessment year 2004, for taxes payable in
76.14 	2005, if it meets all the following criteria:
76.15 	(1) is used to provide direct educational instruction for
76.16 	grades 7 through 10;
76.17 	(2) is located in a city of the first class that has a
76.18 	population greater than 250,000 and less than 350,000;
76.19 	(3) was purchased after July 1, 2004, by a nonprofit that
76.20 	is exempt from federal income tax under section 501(c)(3) of the
76.21 	Internal Revenue Code; and 
76.22 	(4) is leased and operated by two nonprofit corporations
76.23 	organized under Minnesota Statutes, chapter 317A.

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

76.26 	Sec. 53. REPEALER.
 76.27 	Laws 1998, chapter 389, article 3, section 41, is repealed.

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

76.30 	ARTICLE 3
76.31 	PROPERTY TAX AIDS AND CREDITS

76.32 	Section 1. Minnesota Statutes 2004, section 4A.02, is
76.33 	amended to read:
76.34 	4A.02 STATE DEMOGRAPHER.
76.35 	(a) The director shall appoint a state demographer.  The
76.36 	demographer must be professionally competent in demography and
77.1 	must possess demonstrated ability based upon past performance.
77.2 	(b) The demographer shall:
77.3 	(1) continuously gather and develop demographic data
77.4 	relevant to the state;
77.5 	(2) design and test methods of research and data
77.6 	collection;
77.7 	(3) periodically prepare population projections for the
77.8 	state and designated regions and periodically prepare
77.9 	projections for each county or other political subdivision of
77.10 	the state as necessary to carry out the purposes of this
77.11 	section;
77.12 	(4) review, comment on, and prepare analysis of population
77.13 	estimates and projections made by state agencies, political
77.14 	subdivisions, other states, federal agencies, or nongovernmental
77.15 	persons, institutions, or commissions;
77.16 	(5) serve as the state liaison with the United States
77.17 	Bureau of the Census, coordinate state and federal demographic
77.18 	activities to the fullest extent possible, and aid the
77.19 	legislature in preparing a census data plan and form for each
77.20 	decennial census;
77.21 	(6) compile an annual study of population estimates on the
77.22 	basis of county, regional, or other political or geographical
77.23 	subdivisions as necessary to carry out the purposes of this
77.24 	section and section 4A.03;
77.25 	(7) by January 1 of each year, issue a report to the
77.26 	legislature containing an analysis of the demographic
77.27 	implications of the annual population study and population
77.28 	projections;
77.29 	(8) prepare maps for all counties in the state, all
77.30 	municipalities with a population of 10,000 or more, and other
77.31 	municipalities as needed for census purposes, according to scale
77.32 	and detail recommended by the United States Bureau of the
77.33 	Census, with the maps of cities showing precinct boundaries;
77.34 	(9) prepare an estimate of population and of the number of
77.35 	households for each governmental subdivision for which the
77.36 	Metropolitan Council does not prepare an annual estimate, and
78.1 	convey the estimates to the governing body of each political
78.2 	subdivision by May June 1 of each year;
78.3 	(10) direct, under section 414.01, subdivision 14, and
78.4 	certify population and household estimates of annexed or
78.5 	detached areas of municipalities or towns after being notified
78.6 	of the order or letter of approval by the director;
78.7 	(11) prepare, for any purpose for which a population
78.8 	estimate is required by law or needed to implement a law, a
78.9 	population estimate of a municipality or town whose population
78.10 	is affected by action under section 379.02 or 414.01,
78.11 	subdivision 14; and
78.12 	(12) prepare an estimate of average household size for each
78.13 	statutory or home rule charter city with a population of 2,500
78.14 	or more by May June 1 of each year.
78.15 	(c) A governing body may challenge an estimate made under
78.16 	paragraph (b) by filing their specific objections in writing
78.17 	with the state demographer by June 10 24.  If the challenge does
78.18 	not result in an acceptable estimate by June 24, the governing
78.19 	body may have a special census conducted by the United States
78.20 	Bureau of the Census.  The political subdivision must notify the
78.21 	state demographer by July 1 of its intent to have the special
78.22 	census conducted.  The political subdivision must bear all costs
78.23 	of the special census.  Results of the special census must be
78.24 	received by the state demographer by the next April 15 to be
78.25 	used in that year's May June 1 estimate to the political
78.26 	subdivision under paragraph (b).
78.27 	(d) The state demographer shall certify the estimates of
78.28 	population and household size to the commissioner of revenue by
78.29 	July 15 each year, including any estimates still under objection.

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

78.32 	Sec. 2. Minnesota Statutes 2004, section 273.1384,
78.33 	subdivision 1, is amended to read:
78.34 		Subdivision 1.Residential homestead market value
78.35 	credit.  Each county auditor shall determine a homestead credit
78.36 	for each class 1a, 1b, 1c, and 2a homestead property within the
79.1 	county equal to 0.4 percent of the first $76,000 of market value
79.2 	of the property.  The amount of homestead credit for a homestead
79.3 	may not exceed $304 and is reduced by minus.09 percent of the
79.4 	market value in excess of $76,000. The credit amount may not be
79.5 	less than zero.In the case of an agricultural or resort
79.6 	homestead, only the market value of the house, garage, and
79.7 	immediately surrounding one acre of land is eligible in
79.8 	determining the property's homestead credit.  In the case of a
79.9 	property which is classified as part homestead and part
79.10 	nonhomestead, (i) the credit shall apply only to the homestead
79.11 	portion of the property., but (ii) if a portion of a property is
79.12 	classified as nonhomestead solely because not all the owners
79.13 	occupy the property, or solely because both spouses do not
79.14 	occupy the property, the credit amount shall be initially
79.15 	computed as if that nonhomestead portion were also in the
79.16 	homestead class and then prorated to the owner-occupant's
79.17 	percentage of ownership or prorated to one-half if both spouses
79.18 	do not occupy the property.
79.19 	
EFFECTIVE DATE. This section is effective for taxes
79.20 	payable in 2006 and thereafter.

79.21 	Sec. 3. Minnesota Statutes 2004, section 276A.01,
79.22 	subdivision 7, is amended to read:
79.23 		Subd. 7.Population.  "Population" means the most recent
79.24 	estimate of the population of a municipality made by the state
79.25 	demographer and filed with the commissioner of revenue as of
79.26 	July 1 15 of the year in which a municipality's distribution net
79.27 	tax capacity is calculated.  The state demographer shall
79.28 	annually estimate the population of each municipality and, in
79.29 	the case of a municipality which is located partly within and
79.30 	partly without the area, the proportion of the total which
79.31 	resides within the area, and shall file the estimates with the
79.32 	commissioner of revenue.
79.33 	
EFFECTIVE DATE. This section is effective the day
79.34 	following final enactment.

79.35 	Sec. 4. [473.24] POPULATION ESTIMATES.
79.36 	(a) The Metropolitan Council shall annually prepare an
80.1 	estimate of population for each county, city, and town in the
80.2 	metropolitan area and an estimate of the number of households
80.3 	and average household size for each city in the metropolitan
80.4 	area with a population of 2,500 or more, and an estimate of
80.5 	population over age 65 for each county in the metropolitan area,
80.6 	and convey the estimates to the governing body of each county,
80.7 	city, or town by June 1 each year.  In the case of a city or
80.8 	town that is located partly within and partly without the
80.9 	metropolitan area, the Metropolitan Council shall estimate the
80.10 	proportion of the total population and the average size of
80.11 	households that reside within the area.  The Metropolitan
80.12 	Council may prepare an estimate of the population and of the
80.13 	average household size for any other political subdivision
80.14 	located in the metropolitan area.
80.15 	(b) A governing body may challenge an estimate made under
80.16 	this section by filing its specific objections in writing with
80.17 	the Metropolitan Council by June 24.  If the challenge does not
80.18 	result in an acceptable estimate, the governing body may have a
80.19 	special census conducted by the United States Bureau of the
80.20 	Census.  The political subdivision must notify the Metropolitan
80.21 	Council on or before July 1 of its intent to have the special
80.22 	census conducted.  The political subdivision must bear all costs
80.23 	of the special census.  Results of the special census must be
80.24 	received by the Metropolitan Council by the next April 15 to be
80.25 	used in that year's June 1 estimate under this section.  The
80.26 	Metropolitan Council shall certify the estimates of population
80.27 	and the average household size to the state demographer and to
80.28 	the commissioner of revenue by July 15 each year, including any
80.29 	estimates still under objection.

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

80.32 	Sec. 5. Minnesota Statutes 2004, section 473F.02,
80.33 	subdivision 7, is amended to read:
80.34 		Subd. 7.Population.  "Population" means the most recent
80.35 	estimate of the population of a municipality made by the
80.36 	Metropolitan Council under section 473.24and filed with the
81.1 	commissioner of revenue as of July 1 15 of the year in which a
81.2 	municipality's distribution net tax capacity is calculated. The
81.3 	council shall annually estimate the population of each
81.4 	municipality as of a date which it determines and, in the case
81.5 	of a municipality which is located partly within and partly
81.6 	without the area, the proportion of the total which resides
81.7 	within the area, and shall promptly thereafter file its
81.8 	estimates with the commissioner of revenue.
81.9 	
EFFECTIVE DATE. This section is effective the day
81.10 	following final enactment.

81.11 	Sec. 6. Minnesota Statutes 2004, section 477A.011,
81.12 	subdivision 3, is amended to read:
81.13 		Subd. 3.Population.  "Population" means the
81.14 	population estimated or established as of July 1 15 in an aid
81.15 	calculation year by the most recent federal census, by a special
81.16 	census conducted under contract with the United States Bureau of
81.17 	the Census, by a population estimate made by the Metropolitan
81.18 	Council pursuant to section 473.24, or by a population estimate
81.19 	of the state demographer made pursuant to section 4A.02,
81.20 	whichever is the most recent as to the stated date of the count
81.21 	or estimate for the preceding calendar year, and which has been
81.22 	certified to the commissioner of revenue on or before July 15 of
81.23 	the aid calculation year.  The term "per capita" refers to
81.24 	population as defined by this subdivision. A revision of an
81.25 	estimate or count is effective for these purposes only if it is
81.26 	certified to the commissioner on or before July 15 of the aid
81.27 	calculation year.  Clerical errors in the certification or use
81.28 	of the estimates and counts established as of July 15 in the aid
81.29 	calculation year are subject to correction within the time
81.30 	periods allowed under section 477A.014.
81.31 	
EFFECTIVE DATE. This section is effective the day
81.32 	following final enactment.

81.33 	Sec. 7. Minnesota Statutes 2004, section 477A.011,
81.34 	subdivision 34, is amended to read:
81.35 		Subd. 34.City revenue need.  (a) For a city with a
81.36 	population equal to or greater than 2,500, "city revenue need"
82.1 	is the sum of (1) 5.0734098 times the pre-1940 housing
82.2 	percentage; plus (2) 19.141678 times the population decline
82.3 	percentage; plus (3) 2504.06334 times the road accidents factor;
82.4 	plus (4) 355.0547; minus (5) the metropolitan area factor; minus
82.5 	(6) 49.10638 times the household size.
82.6 	(b) For a city with a population less than 2,500, "city
82.7 	revenue need" is the sum of (1) 2.387 times the pre-1940 housing
82.8 	percentage; plus (2) 2.67591 times the commercial industrial
82.9 	percentage; plus (3) 3.16042 times the population decline
82.10 	percentage; plus (4) 1.206 times the transformed population;
82.11 	minus (5) 62.772.
82.12 	(c) For a city with a population of 2,500 or more and a
82.13 	population in one of the most recently available five years that
82.14 	was less than 2,500, "city revenue need" is the sum of (1) its
82.15 	city revenue need calculated under paragraph (a) multiplied by
82.16 	its transition factor; plus (2) its city revenue need calculated
82.17 	under the formula in paragraph (b) multiplied by the difference
82.18 	between one and its transition factor.  For purposes of this
82.19 	paragraph, a city's "transition factor" is equal to 0.2
82.20 	multiplied by the number of years that the city's population
82.21 	estimate has been 2,500 or more.  This provision only applies
82.22 	for aids payable in calendar years 2006 to 2008 to cities with a
82.23 	2002 population of less than 2,500.  It applies to any city for
82.24 	aids payable in 2009 and thereafter.
82.25 	(d) The city revenue need cannot be less than zero.
82.26 	(d) (e) For calendar year 2005 and subsequent years, the
82.27 	city revenue need for a city, as determined in paragraphs (a)
82.28 	to (c) (d), is multiplied by the ratio of the annual implicit
82.29 	price deflator for government consumption expenditures and gross
82.30 	investment for state and local governments as prepared by the
82.31 	United States Department of Commerce, for the most recently
82.32 	available year to the 2003 implicit price deflator for state and
82.33 	local government purchases.
82.34 	
EFFECTIVE DATE. This section is effective beginning with
82.35 	aids payable in 2006.

82.36 	Sec. 8. Minnesota Statutes 2004, section 477A.011,
83.1 	subdivision 35, is amended to read:
83.2 		Subd. 35.Tax effort rate.  "Tax effort rate" means the
83.3 	net levy for all cities divided by the sum of the city net tax
83.4 	capacity for all cities, unless the need increase percentage
83.5 	determined under section 477A.013, subdivision 8, is 100
83.6 	percent, in which case the tax effort rate is the rate needed so
83.7 	that the total aid under section 477A.013, subdivision 9, equals
83.8 	the total amount available for aid under section 477A.03, after
83.9 	the subtractions in section 477A.014.  For purposes of this
83.10 	section, "net levy" means the city levy, after all adjustments,
83.11 	used for calculating the local tax rate under section 275.08 for
83.12 	taxes payable in the year prior to the aid distribution.  The
83.13 	fiscal disparity distribution levy under chapter 276A or 473F is
83.14 	included in net levy.
83.15 	
EFFECTIVE DATE. This section is effective beginning with
83.16 	aids payable in 2006.

83.17 	Sec. 9. Minnesota Statutes 2004, section 477A.011,
83.18 	subdivision 36, is amended to read:
83.19 		Subd. 36.City aid base.  (a) Except as otherwise
83.20 	provided in this subdivision, "city aid base" is zero.
83.21 	(b) The city aid base for any city with a population less
83.22 	than 500 is increased by $40,000 for aids payable in calendar
83.23 	year 1995 and thereafter, and the maximum amount of total aid it
83.24 	may receive under section 477A.013, subdivision 9, paragraph
83.25 	(c), is also increased by $40,000 for aids payable in calendar
83.26 	year 1995 only, provided that:
83.27 	(i) the average total tax capacity rate for taxes payable
83.28 	in 1995 exceeds 200 percent;
83.29 	(ii) the city portion of the tax capacity rate exceeds 100
83.30 	percent; and
83.31 	(iii) its city aid base is less than $60 per capita.
83.32 	(c) The city aid base for a city is increased by $20,000 in
83.33 	1998 and thereafter and the maximum amount of total aid it may
83.34 	receive under section 477A.013, subdivision 9, paragraph (c), is
83.35 	also increased by $20,000 in calendar year 1998 only, provided
83.36 	that:
84.1 	(i) the city has a population in 1994 of 2,500 or more;
84.2 	(ii) the city is located in a county, outside of the
84.3 	metropolitan area, which contains a city of the first class;
84.4 	(iii) the city's net tax capacity used in calculating its
84.5 	1996 aid under section 477A.013 is less than $400 per capita;
84.6 	and
84.7 	(iv) at least four percent of the total net tax capacity,
84.8 	for taxes payable in 1996, of property located in the city is
84.9 	classified as railroad property.
84.10 	(d) The city aid base for a city is increased by $200,000
84.11 	in 1999 and thereafter and the maximum amount of total aid it
84.12 	may receive under section 477A.013, subdivision 9, paragraph
84.13 	(c), is also increased by $200,000 in calendar year 1999 only,
84.14 	provided that:
84.15 	(i) the city was incorporated as a statutory city after
84.16 	December 1, 1993;
84.17 	(ii) its city aid base does not exceed $5,600; and
84.18 	(iii) the city had a population in 1996 of 5,000 or more.
84.19 	(e) The city aid base for a city is increased by $450,000
84.20 	in 1999 to 2008 and the maximum amount of total aid it may
84.21 	receive under section 477A.013, subdivision 9, paragraph (c), is
84.22 	also increased by $450,000 in calendar year 1999 only, provided
84.23 	that:
84.24 	(i) the city had a population in 1996 of at least 50,000;
84.25 	(ii) its population had increased by at least 40 percent in
84.26 	the ten-year period ending in 1996; and
84.27 	(iii) its city's net tax capacity for aids payable in 1998
84.28 	is less than $700 per capita.
84.29 	(f) Beginning in 2004, the city aid base for a city is
84.30 	equal to the sum of its city aid base in 2003 and the amount of
84.31 	additional aid it was certified to receive under section 477A.06
84.32 	in 2003.  For 2004 only, the maximum amount of total aid a city
84.33 	may receive under section 477A.013, subdivision 9, paragraph
84.34 	(c), is also increased by the amount it was certified to receive
84.35 	under section 477A.06 in 2003.
84.36 	(g) The city aid base for a city is increased by $150,000
85.1 	for aids payable in 2000 and thereafter, and the maximum amount
85.2 	of total aid it may receive under section 477A.013, subdivision
85.3 	9, paragraph (c), is also increased by $150,000 in calendar year
85.4 	2000 only, provided that:
85.5 	(1) the city has a population that is greater than 1,000
85.6 	and less than 2,500;
85.7 	(2) its commercial and industrial percentage for aids
85.8 	payable in 1999 is greater than 45 percent; and
85.9 	(3) the total market value of all commercial and industrial
85.10 	property in the city for assessment year 1999 is at least 15
85.11 	percent less than the total market value of all commercial and
85.12 	industrial property in the city for assessment year 1998.
85.13 	(h) The city aid base for a city is increased by $200,000
85.14 	in 2000 and thereafter, and the maximum amount of total aid it
85.15 	may receive under section 477A.013, subdivision 9, paragraph
85.16 	(c), is also increased by $200,000 in calendar year 2000 only,
85.17 	provided that:
85.18 	(1) the city had a population in 1997 of 2,500 or more;
85.19 	(2) the net tax capacity of the city used in calculating
85.20 	its 1999 aid under section 477A.013 is less than $650 per
85.21 	capita;
85.22 	(3) the pre-1940 housing percentage of the city used in
85.23 	calculating 1999 aid under section 477A.013 is greater than 12
85.24 	percent;
85.25 	(4) the 1999 local government aid of the city under section
85.26 	477A.013 is less than 20 percent of the amount that the formula
85.27 	aid of the city would have been if the need increase percentage
85.28 	was 100 percent; and
85.29 	(5) the city aid base of the city used in calculating aid
85.30 	under section 477A.013 is less than $7 per capita.
85.31 	(i) The city aid base for a city is increased by $102,000
85.32 	in 2000 and thereafter, and the maximum amount of total aid it
85.33 	may receive under section 477A.013, subdivision 9, paragraph
85.34 	(c), is also increased by $102,000 in calendar year 2000 only,
85.35 	provided that:
85.36 	(1) the city has a population in 1997 of 2,000 or more;
86.1 	(2) the net tax capacity of the city used in calculating
86.2 	its 1999 aid under section 477A.013 is less than $455 per
86.3 	capita;
86.4 	(3) the net levy of the city used in calculating 1999 aid
86.5 	under section 477A.013 is greater than $195 per capita; and
86.6 	(4) the 1999 local government aid of the city under section
86.7 	477A.013 is less than 38 percent of the amount that the formula
86.8 	aid of the city would have been if the need increase percentage
86.9 	was 100 percent.
86.10 	(j) The city aid base for a city is increased by $32,000 in
86.11 	2001 and thereafter, and the maximum amount of total aid it may
86.12 	receive under section 477A.013, subdivision 9, paragraph (c), is
86.13 	also increased by $32,000 in calendar year 2001 only, provided
86.14 	that:
86.15 	(1) the city has a population in 1998 that is greater than
86.16 	200 but less than 500;
86.17 	(2) the city's revenue need used in calculating aids
86.18 	payable in 2000 was greater than $200 per capita;
86.19 	(3) the city net tax capacity for the city used in
86.20 	calculating aids available in 2000 was equal to or less than
86.21 	$200 per capita;
86.22 	(4) the city aid base of the city used in calculating aid
86.23 	under section 477A.013 is less than $65 per capita; and
86.24 	(5) the city's formula aid for aids payable in 2000 was
86.25 	greater than zero.
86.26 	(k) The city aid base for a city is increased by $7,200 in
86.27 	2001 and thereafter, and the maximum amount of total aid it may
86.28 	receive under section 477A.013, subdivision 9, paragraph (c), is
86.29 	also increased by $7,200 in calendar year 2001 only, provided
86.30 	that:
86.31 	(1) the city had a population in 1998 that is greater than
86.32 	200 but less than 500;
86.33 	(2) the city's commercial industrial percentage used in
86.34 	calculating aids payable in 2000 was less than ten percent;
86.35 	(3) more than 25 percent of the city's population was 60
86.36 	years old or older according to the 1990 census;
87.1 	(4) the city aid base of the city used in calculating aid
87.2 	under section 477A.013 is less than $15 per capita; and
87.3 	(5) the city's formula aid for aids payable in 2000 was
87.4 	greater than zero.
87.5 	(l) The city aid base for a city is increased by $45,000 in
87.6 	2001 and thereafter and by an additional $50,000 in calendar
87.7 	years 2002 to 2011, and the maximum amount of total aid it may
87.8 	receive under section 477A.013, subdivision 9, paragraph (c), is
87.9 	also increased by $45,000 in calendar year 2001 only, and by
87.10 	$50,000 in calendar year 2002 only, provided that:
87.11 	(1) the net tax capacity of the city used in calculating
87.12 	its 2000 aid under section 477A.013 is less than $810 per
87.13 	capita;
87.14 	(2) the population of the city declined more than two
87.15 	percent between 1988 and 1998;
87.16 	(3) the net levy of the city used in calculating 2000 aid
87.17 	under section 477A.013 is greater than $240 per capita; and
87.18 	(4) the city received less than $36 per capita in aid under
87.19 	section 477A.013, subdivision 9, for aids payable in 2000.
87.20 	(m) The city aid base for a city with a population of
87.21 	10,000 or more which is located outside of the seven-county
87.22 	metropolitan area is increased in 2002 and thereafter, and the
87.23 	maximum amount of total aid it may receive under section
87.24 	477A.013, subdivision 9, paragraph (b) or (c), is also increased
87.25 	in calendar year 2002 only, by an amount equal to the lesser of:
87.26 	(1)(i) the total population of the city, as determined by
87.27 	the United States Bureau of the Census, in the 2000 census, (ii)
87.28 	minus 5,000, (iii) times 60; or
87.29 	(2) $2,500,000.
87.30 	(n) The city aid base is increased by $50,000 in 2002 and
87.31 	thereafter, and the maximum amount of total aid it may receive
87.32 	under section 477A.013, subdivision 9, paragraph (c), is also
87.33 	increased by $50,000 in calendar year 2002 only, provided that:
87.34 	(1) the city is located in the seven-county metropolitan
87.35 	area;
87.36 	(2) its population in 2000 is between 10,000 and 20,000;
88.1 	and
88.2 	(3) its commercial industrial percentage, as calculated for
88.3 	city aid payable in 2001, was greater than 25 percent.
88.4 	(o) The city aid base for a city is increased by $150,000
88.5 	in calendar years 2002 to 2011 and the maximum amount of total
88.6 	aid it may receive under section 477A.013, subdivision 9,
88.7 	paragraph (c), is also increased by $150,000 in calendar year
88.8 	2002 only, provided that:
88.9 	(1) the city had a population of at least 3,000 but no more
88.10 	than 4,000 in 1999;
88.11 	(2) its home county is located within the seven-county
88.12 	metropolitan area;
88.13 	(3) its pre-1940 housing percentage is less than 15
88.14 	percent; and
88.15 	(4) its city net tax capacity per capita for taxes payable
88.16 	in 2000 is less than $900 per capita.
88.17 	(p) The city aid base for a city is increased by $200,000
88.18 	beginning in calendar year 2003 and the maximum amount of total
88.19 	aid it may receive under section 477A.013, subdivision 9,
88.20 	paragraph (c), is also increased by $200,000 in calendar year
88.21 	2003 only, provided that the city qualified for an increase in
88.22 	homestead and agricultural credit aid under Laws 1995, chapter
88.23 	264, article 8, section 18.
88.24 	(q) The city aid base for a city is increased by $200,000
88.25 	in 2004 only and the maximum amount of total aid it may receive
88.26 	under section 477A.013, subdivision 9, is also increased by
88.27 	$200,000 in calendar year 2004 only, if the city is the site of
88.28 	a nuclear dry cask storage facility.
88.29 	(r) The city aid base for a city is increased by $10,000 in
88.30 	2004 and thereafter and the maximum total aid it may receive
88.31 	under section 477A.013, subdivision 9, is also increased by
88.32 	$10,000 in calendar year 2004 only, if the city was included in
88.33 	a federal major disaster designation issued on April 1, 1998,
88.34 	and its pre-1940 housing stock was decreased by more than 40
88.35 	percent between 1990 and 2000.
88.36 	(s) The city aid base for a city is increased by $25,000 in
89.1 	2006 and thereafter and the maximum total aid it may receive
89.2 	under section 477A.013, subdivision 9, is also increased by
89.3 	$25,000 in calendar year 2006 only if the city had a population
89.4 	in 2003 of at least 1,000 and has a state park for which the
89.5 	city provides rescue services and which comprised at least 14
89.6 	percent of the total geographic area included within the city
89.7 	boundaries in 2000.
89.8 	
EFFECTIVE DATE. This section is effective for aids
89.9 	payable in 2006 and thereafter.

89.10 	Sec. 10. Minnesota Statutes 2004, section 477A.011,
89.11 	subdivision 38, is amended to read:
89.12 		Subd. 38.Household size.  "Household size" means the
89.13 	average number of persons per household in the jurisdiction as
89.14 	most recently estimated and reported by the state
89.15 	demographer and Metropolitan Council as of July 1 15 of the aid
89.16 	calculation year. A revision to an estimate or enumeration is
89.17 	effective for these purposes only if it is certified to the
89.18 	commissioner on or before July 15 of the aid calculation year.
89.19 	Clerical errors in the certification or use of estimates and
89.20 	counts established as of July 15 in the aid calculation year are
89.21 	subject to correction within the time periods allowed under
89.22 	section 477A.014.
89.23 	
EFFECTIVE DATE. This section is effective the day
89.24 	following final enactment.

89.25 	Sec. 11. Minnesota Statutes 2004, section 477A.0124,
89.26 	subdivision 2, is amended to read:
89.27 		Subd. 2.Definitions.  (a) For the purposes of this
89.28 	section, the following terms have the meanings given them.
89.29 	(b) "County program aid" means the sum of "county need aid,"
89.30 	"county tax base equalization aid," and "county transition aid."
89.31 	(c) "Age-adjusted population" means a county's population
89.32 	multiplied by the county age index.
89.33 	(d) "County age index" means the percentage of the
89.34 	population over age 65 within the county divided by the
89.35 	percentage of the population over age 65 within the state,
89.36 	except that the age index for any county may not be greater than
90.1 	1.8 nor less than 0.8.
90.2 	(e) "Population over age 65" means the population over age
90.3 	65 established as of July 1 15 in an aid calculation year by the
90.4 	most recent federal census, by a special census conducted under
90.5 	contract with the United States Bureau of the Census, by a
90.6 	population estimate made by the Metropolitan Council, or by a
90.7 	population estimate of the state demographer made pursuant to
90.8 	section 4A.02, whichever is the most recent as to the stated
90.9 	date of the count or estimate for the preceding calendar
90.10 	year and which has been certified to the commissioner of revenue
90.11 	on or before July 15 of the aid calculation year. A revision to
90.12 	an estimate or count is effective for these purposes only if
90.13 	certified to the commissioner on or before July 15 of the aid
90.14 	calculation year.  Clerical errors in the certification or use
90.15 	of estimates and counts established as of July 15 in the aid
90.16 	calculation year are subject to correction within the time
90.17 	periods allowed under section 477A.014.
90.18 	(f) "Part I crimes" means the three-year average annual
90.19 	number of Part I crimes reported for each county by the
90.20 	Department of Public Safety for the most recent years available.
90.21 	By July 1 of each year, the commissioner of public safety shall
90.22 	certify to the commissioner of revenue the number of Part I
90.23 	crimes reported for each county for the three most recent
90.24 	calendar years available.
90.25 	(g) "Households receiving food stamps" means the average
90.26 	monthly number of households receiving food stamps for the three
90.27 	most recent years for which data is available.  By July 1 of
90.28 	each year, the commissioner of human services must certify to
90.29 	the commissioner of revenue the average monthly number of
90.30 	households in the state and in each county that receive food
90.31 	stamps, for the three most recent calendar years available.
90.32 	(h) "County net tax capacity" means the net tax capacity of
90.33 	the county, computed analogously to city net tax capacity under
90.34 	section 477A.011, subdivision 20.
90.35 	
EFFECTIVE DATE. This section is effective the day
90.36 	following final enactment.

91.1 	Sec. 12. Minnesota Statutes 2004, section 477A.0124,
91.2 	subdivision 4, is amended to read:
91.3 		Subd. 4.County tax-base equalization aid.  (a) For
91.4 	2005 2006 and subsequent years, the money appropriated to county
91.5 	tax-base equalization aid each calendar year, after the payment
91.6 	under paragraph (f),shall be apportioned among the counties
91.7 	according to each county's tax-base equalization aid factor.
91.8 	(b) A county's tax-base equalization aid factor is equal to
91.9 	the amount by which (i) $185 times the county's population,
91.10 	exceeds (ii) 9.45 percent of the county's net tax capacity.
91.11 	(c) In the case of a county with a population less than
91.12 	10,000, the factor determined in paragraph (b) shall be
91.13 	multiplied by a factor of three.
91.14 	(d) In the case of a county with a population greater than
91.15 	or equal to 10,000, but less than 12,500, the factor determined
91.16 	in paragraph (b) shall be multiplied by a factor of two.
91.17 	(e) In the case of a county with a population greater than
91.18 	500,000, the factor determined in paragraph (b) shall be
91.19 	multiplied by a factor of 0.25.
91.20 	(f) Before the money appropriated to county base
91.21 	equalization aid is apportioned among the counties as provided
91.22 	in paragraph (a), an amount up to $73,259 is allocated annually
91.23 	to Anoka County and up to $59,664 is annually allocated to
91.24 	Washington County for the county to pay postretirement costs of
91.25 	health insurance premiums for court employees.  The allocation
91.26 	under this paragraph is in addition to the allocations under
91.27 	paragraphs (a) to (e).
91.28 	
EFFECTIVE DATE. This section is effective for aids
91.29 	payable in 2006 and thereafter.

91.30 	Sec. 13. Minnesota Statutes 2004, section 477A.013,
91.31 	subdivision 8, is amended to read:
91.32 		Subd. 8.City formula aid.  In calendar year 2004 and
91.33 	subsequent years, the formula aid for a city is equal to the
91.34 	need increase percentage multiplied by the difference between
91.35 	(1) the city's revenue need multiplied by its population, and
91.36 	(2) the sum of the city's net tax capacity multiplied by the tax
92.1 	effort rate, and ;the taconite aids under sections 298.28 and
92.2 	298.282, multiplied by the following percentages:
92.3 	(i) zero percent for aids payable in 2004;
92.4 	(ii) 25 percent for aids payable in 2005;
92.5 	(iii) 50 percent for aids payable in 2006;
92.6 	(iv) 75 percent for aids payable in 2007; and
92.7 	(v) 100 percent for aids payable in 2008 and thereafter;
92.8 	and 
92.9 	for first class cities only, the amount raised by a one-half of
92.10 	one percent local sales and use tax imposed in the city in the
92.11 	calendar year before the year in which the aid is being
92.12 	calculated.
92.13 	No city may have a formula aid amount less than zero.  The need
92.14 	increase percentage must be the same for all cities.
92.15 	The applicable need increase percentage must be calculated
92.16 	by the Department of Revenue so that the total of the aid under
92.17 	subdivision 9 equals the total amount available for aid under
92.18 	section 477A.03 after the subtraction under section 477A.014,
92.19 	subdivisions 4 and 5. The need increase percentage may not
92.20 	exceed 100 percent.
92.21 	
EFFECTIVE DATE. This section is effective beginning with
92.22 	aids payable in 2006.

92.23 	Sec. 14. Minnesota Statutes 2004, section 477A.013,
92.24 	subdivision 9, is amended to read:
92.25 		Subd. 9.City aid distribution.  (a) In calendar year
92.26 	2002 and thereafter, each city shall receive an aid distribution
92.27 	equal to the sum of (1) the city formula aid under subdivision
92.28 	8, and (2) its city aid base.
92.29 	(b) The aid for a city in calendar year 2004 shall not
92.30 	exceed the amount of its aid in calendar year 2003 after the
92.31 	reductions under Laws 2003, First Special Session chapter 21,
92.32 	article 5.
92.33 	(c) For aids payable in 2005 and thereafter, the total aid
92.34 	for any city shall not exceed the sum of (1) ten percent of the
92.35 	city's net levy for the year prior to the aid distribution plus
92.36 	(2) its total aid in the previous year.  For aids payable in
93.1 	2005 2006 and thereafter, the total aid for any city with a
93.2 	population of 2,500 or more, except for a city of the first
93.3 	class located within the seven-county metropolitan area,may not
93.4 	decrease from its total aid under this section in the previous
93.5 	year by an amount greater than ten percent of its net levy in
93.6 	the year prior to the aid distribution.
93.7 	(d) (c) For aids payable in 2004 only, the total aid for a
93.8 	city with a population less than 2,500 may not be less than the
93.9 	amount it was certified to receive in 2003 minus the greater of
93.10 	(1) the reduction to this aid payment in 2003 under Laws 2003,
93.11 	First Special Session chapter 21, article 5, or (2) five percent
93.12 	of its 2003 aid amount.For aids payable in 2005 and
93.13 	thereafter, the total aid for a city with a population less than
93.14 	2,500 must not be less than the amount it was certified to
93.15 	receive in the previous year minus five percent of its 2003
93.16 	certified aid amount.
93.17 	
EFFECTIVE DATE. This section is effective beginning with
93.18 	aids payable in 2006.

93.19 	Sec. 15. Minnesota Statutes 2004, section 477A.013, is
93.20 	amended by adding a subdivision to read:
93.21 		Subd. 10.Levy adjustments for aid
93.22 	decreases. Notwithstanding any local ordinance or charter
93.23 	provision, a city whose certified aid under subdivision 9 is
93.24 	less than the amount it received in the previous year under the
93.25 	same subdivision may increase its levy payable in the same year
93.26 	as the certified aid is paid by an amount equal to the aid
93.27 	decrease for that year.
93.28 	
EFFECTIVE DATE. This section is effective beginning with
93.29 	property tax levies payable in 2006 and thereafter.

93.30 	Sec. 16. Minnesota Statutes 2004, section 477A.03,
93.31 	subdivision 2a, is amended to read:
93.32 		Subd. 2a.Cities.  For aids payable in 2004, the total
93.33 	aids paid under section 477A.013, subdivision 9, are limited to
93.34 	$429,000,000.  For aids payable in 2005 and thereafter, the
93.35 	total aids paid under section 477A.013, subdivision 9,
93.36 	are increased limited to $437,052,000. For aids payable in
94.1 	2006, the total aids paid under section 477A.013, subdivision 9,
94.2 	is limited to $419,552,000.  For aids payable in 2007 and
94.3 	thereafter, the total aids paid under section 477A.013,
94.4 	subdivision 9, is limited to $437,052,000 provided that the
94.5 	taxpayer satisfaction survey in section 275.065 is in effect for
94.6 	property taxes levied in the year in which the aid is
94.7 	calculated, otherwise the amount is limited to $419,552,000.
94.8 	
EFFECTIVE DATE. This section is effective beginning with
94.9 	aids payable in 2006.

94.10 	Sec. 17. Minnesota Statutes 2004, section 477A.03,
94.11 	subdivision 2b, is amended to read:
94.12 		Subd. 2b.Counties.  (a) For aids payable in calendar
94.13 	year 2005 and thereafter, the total aids paid to counties under
94.14 	section 477A.0124, subdivision 3, are limited to $100,500,000.
94.15 	Each calendar year, $500,000 shall be retained by the
94.16 	commissioner of revenue to make reimbursements to the
94.17 	commissioner of finance for payments made under section 611.27.
94.18 	For calendar year 2004, the amount shall be in addition to the
94.19 	payments authorized under section 477A.0124, subdivision 1.  For
94.20 	calendar year 2005 and subsequent years, the amount shall be
94.21 	deducted from the appropriation under this paragraph.  The
94.22 	reimbursements shall be to defray the additional costs
94.23 	associated with court-ordered counsel under section 611.27.  Any
94.24 	retained amounts not used for reimbursement in a year shall be
94.25 	included in the next distribution of county need aid that is
94.26 	certified to the county auditors for the purpose of property tax
94.27 	reduction for the next taxes payable year.
94.28 	(b) For aids payable in 2005 and thereafter 2006, the total
94.29 	aids under section 477A.0124, subdivision 4, are limited to
94.30 	$105,000,000. For aids payable in 2007 and thereafter, the
94.31 	total aid under section 477A.0124, subdivision 4, is limited to
94.32 	$105,132,923.The commissioner of finance shall bill the
94.33 	commissioner of revenue for the cost of preparation of local
94.34 	impact notes as required by section 3.987, not to exceed
94.35 	$207,000 in fiscal year 2004 and thereafter.  The commissioner
94.36 	of education shall bill the commissioner of revenue for the cost
95.1 	of preparation of local impact notes for school districts as
95.2 	required by section 3.987, not to exceed $7,000 in fiscal year
95.3 	2004 and thereafter.  The commissioner of revenue shall deduct
95.4 	the amounts billed under this paragraph from the appropriation
95.5 	under this paragraph.  The amounts deducted are appropriated to
95.6 	the commissioner of finance and the commissioner of education
95.7 	for the preparation of local impact notes.
95.8 	
EFFECTIVE DATE. This section is effective for aids
95.9 	payable in 2007 and thereafter.

95.10 	Sec. 18. Laws 2003, First Special Session chapter 21,
95.11 	article 5, section 13, is amended to read:
95.12 	Sec. 132004 CITY AID REDUCTIONS.
 95.13 	The commissioner of revenue shall compute an aid reduction
95.14 	amount for 2004 for each city as provided in this section.
95.15 	The initial aid reduction amount for each city is the
95.16 	amount by which the city's aid distribution under Minnesota
95.17 	Statutes, section 477A.013, and related provisions payable in
95.18 	2003 exceeds the city's 2004 distribution under those provisions.
95.19 	The minimum aid reduction amount for a city is the amount
95.20 	of its reduction in 2003 under section 12.  If a city receives
95.21 	an increase to its city aid base under Minnesota Statutes,
95.22 	section 477A.011, subdivision 36, its minimum aid reduction is
95.23 	reduced by an equal amount.
95.24 	The maximum aid reduction amount for a city is an amount
95.25 	equal to 14 percent of the city's total 2004 levy plus aid
95.26 	revenue base, except that if the city has a city net tax
95.27 	capacity for aids payable in 2004, as defined in Minnesota
95.28 	Statutes, section 477A.011, subdivision 20, of $700 per capita
95.29 	or less, the maximum aid reduction shall not exceed an amount
95.30 	equal to 13 percent of the city's total 2004 levy plus aid
95.31 	revenue base.
95.32 	If the initial aid reduction amount for a city is less than
95.33 	the minimum aid reduction amount for that city, the final aid
95.34 	reduction amount for the city is the sum of the initial aid
95.35 	reduction amount and the lesser of the amount of the city's
95.36 	payable 2004 reimbursement under Minnesota Statutes, section
96.1 	273.1384, or the difference between the minimum and initial aid
96.2 	reduction amounts for the city, and the amount of the final aid
96.3 	reduction in excess of the initial aid reduction is deducted
96.4 	from the city's reimbursements pursuant to Minnesota Statutes,
96.5 	section 273.1384.
96.6 	If the initial aid reduction amount for a city is greater
96.7 	than the maximum aid reduction amount for the city, the city
96.8 	receives an additional distribution under this section equal to
96.9 	the result of subtracting the maximum aid reduction amount from
96.10 	the initial aid reduction amount.  This distribution shall be
96.11 	paid in equal installments in 2004 on the dates specified in
96.12 	Minnesota Statutes, section 477A.015.  The amount necessary for
96.13 	these additional distributions is appropriated to the
96.14 	commissioner of revenue from the general fund in fiscal year
96.15 	2005.
96.16 	The initial aid reduction is applied to the city's
96.17 	distribution pursuant to Minnesota Statutes, section 477A.013,
96.18 	and any aid reduction in excess of the initial aid reduction is
96.19 	applied to the city's reimbursements pursuant to Minnesota
96.20 	Statutes, section 273.1384.
96.21 	To the extent that sufficient information is available on
96.22 	each payment date in 2004, the commissioner of revenue shall pay
96.23 	the reimbursements reduced under this section in equal
96.24 	installments on the payment dates provided in law.

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

96.27 	Sec. 19. Laws 2003, First Special Session chapter 21,
96.28 	article 6, section 9, is amended to read:
96.29 	Sec. 9DEFINITIONS.
 96.30 	(a) For purposes of sections 9 to 15, the following terms
96.31 	have the meanings given them in this section.
96.32 	(b) The 2003 and 2004 "levy plus aid revenue base" for a
96.33 	county is the sum of that county's certified property tax levy
96.34 	for taxes payable in 2003, plus the sum of the amounts the
96.35 	county was certified to receive in the designated calendar year
96.36 	as:
97.1 	(1) homestead and agricultural credit aid under Minnesota
97.2 	Statutes, section 273.1398, subdivision 2, plus any additional
97.3 	aid under section 16, minus the amount calculated under section
97.4 	273.1398, subdivision 4a, paragraph (b), for counties in
97.5 	judicial districts one, three, six, and ten, and 25 percent of
97.6 	the amount calculated under section 273.1398, subdivision 4a,
97.7 	paragraph (b), for counties in judicial districts two and four;
97.8 	(2) the amount of county manufactured home homestead and
97.9 	agricultural credit aid computed for the county for payment in
97.10 	2003 under section 273.166;
97.11 	(3) criminal justice aid under Minnesota Statutes, section
97.12 	477A.0121;
97.13 	(4) family preservation aid under Minnesota Statutes,
97.14 	section 477A.0122;
97.15 	(5) taconite aids under Minnesota Statutes, sections 298.28
97.16 	and 298.282, including any aid which was required to be placed
97.17 	in a special fund for expenditure in the next succeeding year;
97.18 	and
97.19 	(6) county program aid under section 477A.0124, exclusive
97.20 	of the attached machinery aid component.

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

97.23 	Sec. 20. 2005 AND 2006 CITY AID PAYMENTS.
 97.24 	In 2005 and 2006, market value credit reimbursements for
97.25 	each city payable under Minnesota Statutes, section 273.1384,
97.26 	are reduced by the dollar amount of the 2003 reduction in market
97.27 	value credit reimbursements for that city due to Laws 2003,
97.28 	First Special Session chapter 21, article 5, section 12.  No
97.29 	city's 2005 or 2006 market value credit reimbursements are
97.30 	reduced to less than zero under this section.  To the extent
97.31 	sufficient information is available on each payment date, the
97.32 	commissioner shall pay the annual 2005 and 2006 market value
97.33 	credit reimbursement amounts, after reduction under this
97.34 	section, to cities in equal installments on the dates specified
97.35 	in Minnesota Statutes, section 273.1384.

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

98.2 	Sec. 21. COURT AID ADJUSTMENT.
 98.3 	For aids payable in 2005 only, the amount of court aid paid
98.4 	to Anoka County under Minnesota Statutes, section 273.1398,
98.5 	subdivision 4a, is increased by $36,630 for aids payable in 2005
98.6 	only and the amount paid to Washington County under Minnesota
98.7 	Statutes, section 273.1398, subdivision 4a, is increased by
98.8 	$29,832 for aids payable in 2005 only.

98.9 	EFFECTIVE DATE. This section is effective for aids
98.10 	payable in 2005 only.

98.11 	Sec. 22. DISTRICT COURTS BUDGET.
 98.12 	The district courts general fund appropriation is reduced
98.13 	by $66,462 in fiscal year 2006 and $132,923 beginning in fiscal
98.14 	year 2007 to fund the amount transferred to county tax base
98.15 	equalization aid to fund the payments under Minnesota Statutes,
98.16 	section 477A.0124, subdivision 4, paragraph (f), and section 21.

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

98.19 	ARTICLE 4
98.20 	DEPARTMENT OF REVENUE PROPERTY TAXES

98.21 	Section 1. Minnesota Statutes 2004, section 168A.05,
98.22 	subdivision 1a, is amended to read:
98.23 		Subd. 1a.Manufactured home; statement of property tax
98.24 	payment.  In the case of a manufactured home as defined in
98.25 	section 327.31, subdivision 6, the department shall not issue a
98.26 	certificate of title unless the application under section
98.27 	168A.04 is accompanied with a statement from the county auditor
98.28 	or county treasurer where the manufactured home is presently
98.29 	located, stating that all manufactured home personal property
98.30 	taxes levied on the unit in the name of the current owner at the
98.31 	time of transfer have been paid. For this purpose, manufactured
98.32 	home personal property taxes are treated as levied on January 1
98.33 	of the payable year.
98.34 	
EFFECTIVE DATE. This section is effective the day
98.35 	following final enactment.

98.36 	Sec. 2. Minnesota Statutes 2004, section 270.11,
99.1 	subdivision 2, is amended to read:
99.2 		Subd. 2.County assessor's reports of assessment filed
99.3 	with commissioner.  Each county assessor shall file by April 1
99.4 	with the commissioner of revenue a copy of the abstract that
99.5 	will be acted upon by the local and county boards of review.
99.6 	The abstract must list the real and personal property in the
99.7 	county itemized by assessment districts.  The assessor of each
99.8 	county in the state shall file with the commissioner, within ten
99.9 	working days following final action of the local board of review
99.10 	or equalization and within five days following final action of
99.11 	the county board of equalization, any changes made by the local
99.12 	or county board.  The information must be filed in the manner
99.13 	prescribed by the commissioner.  It must be accompanied by a
99.14 	printed or typewritten copy of the proceedings of the
99.15 	appropriate board.
99.16 	The final abstract of assessments after adjustments by the
99.17 	State Board of Equalization and inclusion of any omitted
99.18 	property shall be submitted to the commissioner of revenue on or
99.19 	before September 1 of each calendar year.  The final abstract
99.20 	must separately report the captured tax capacity of tax
99.21 	increment financing districts under section 469.177, subdivision
99.22 	2, the metropolitan revenue areawide net tax capacity 
99.23 	contribution value values determined under section sections
99.24 	276A.05, subdivision 1, and 473F.07, subdivision 1,and the
99.25 	value subject to the power line credit under section 273.42.
99.26 	
EFFECTIVE DATE. This section is effective the day
99.27 	following final enactment.

99.28 	Sec. 3. Minnesota Statutes 2004, section 270.16,
99.29 	subdivision 2, is amended to read:
99.30 		Subd. 2.Failure to appraise.  When an assessor has
99.31 	failed to properly appraise at least one-quarter one-fifth of
99.32 	the parcels of property in a district or county as provided in
99.33 	section 273.01, the commissioner of revenue shall appoint a
99.34 	special assessor and deputy assessor as necessary and cause a
99.35 	reappraisal to be made of the property due for reassessment in
99.36 	accordance with law.
100.1 	
EFFECTIVE DATE. This section is effective the day
100.2 	following final enactment.

100.3 	Sec. 4. Minnesota Statutes 2004, section 272.01,
100.4 	subdivision 2, is amended to read:
100.5 		Subd. 2.Effective date. This section is effective the day
102.5 	following final enactment.

102.6 	Sec. 5. Minnesota Statutes 2004, section 272.02,
102.7 	subdivision 1a, is amended to read:
 102.8 		Subd. 1a.Limitations on exemptions. The exemptions
102.9 	granted by subdivision 1 are subject to the limits contained in
102.10 	the other subdivisions of this section, section 272.025, or
102.11 	273.13, subdivision 25, paragraph (c), clause (1) or (2), or
102.12 	paragraph (d), clause (2) and all other provisions of applicable
102.13 	law.
102.14 	
EFFECTIVE DATE. This section is effective the day
102.15 	following final enactment.

102.16 	Sec. 6. Minnesota Statutes 2004, section 272.02,
102.17 	subdivision 7, is amended to read:
 102.18 		Subd. 7.Institutions of public charity. Institutions of
102.19 	purely public charity are exempt except parcels of property
102.20 	containing structures and the structures described in section
102.21 	273.13, subdivision 25, paragraph (e), other than those that
102.22 	qualify for exemption under subdivision 26. In determining
102.23 	whether rental housing property qualifies for exemption under
102.24 	this subdivision, the following are not gifts or donations to
102.25 	the owner of the rental housing:
102.26 	(1) rent assistance provided by the government to or on
102.27 	behalf of tenants; and 
102.28 	(2) financing assistance or tax credits provided by the
102.29 	government to the owner on condition that specific units or a
102.30 	specific quantity of units be set aside for persons or families
102.31 	with certain income characteristics.
102.32 	
EFFECTIVE DATE. This section is effective for taxes
102.33 	payable in 2004 and thereafter.

102.34 	Sec. 7. Minnesota Statutes 2004, section 272.02, is
102.35 	amended by adding a subdivision to read:
 102.36 		Subd. 68.Property subject to taconite production tax or
103.1 	net proceeds tax. (a) Real and personal property described in
103.2 	section 298.25 is exempt to the extent the tax on taconite and
103.3 	iron sulphides under section 298.24 is described in section
103.4 	298.25 as being in lieu of other taxes on such property.  This
103.5 	exemption applies for taxes payable in each year that the tax
103.6 	under section 298.24 is payable with respect to such property.
103.7 	(b) Deposits of mineral, metal, or energy resources the
103.8 	mining of which is subject to taxation under section 298.015 are
103.9 	exempt.  This exemption applies for taxes payable in each year
103.10 	that the tax under section 298.015 is payable with respect to
103.11 	such property.
103.12 	
EFFECTIVE DATE. This section is effective the day
103.13 	following final enactment.

103.14 	Sec. 8. Minnesota Statutes 2004, section 272.02, is
103.15 	amended by adding a subdivision to read:
 103.16 		Subd. 69.Religious corporations. Personal and real
103.17 	property that a religious corporation, formed under section
103.18 	317A.909, necessarily uses for a religious purpose is exempt to
103.19 	the extent provided in section 317A.909, subdivision 3.
103.20 	
EFFECTIVE DATE. This section is effective the day
103.21 	following final enactment.

103.22 	Sec. 9. Minnesota Statutes 2004, section 272.02, is
103.23 	amended by adding a subdivision to read:
 103.24 	Subd. 70.[CHILDREN'S HOMES.] Personal and real property
103.25 	owned by a corporation formed under section 317A.907 is exempt
103.26 	to the extent provided in section 317A.907, subdivision 7.

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

103.29 	Sec. 10. Minnesota Statutes 2004, section 272.02, is
103.30 	amended by adding a subdivision to read:
 103.31 		Subd. 71.Housing and redevelopment authority and tribal
103.32 	housing authority property. Property owned by a housing and
103.33 	redevelopment authority described in chapter 469, or by a
103.34 	designated housing authority described in section 469.040,
103.35 	subdivision 5, is exempt to the extent provided in chapter 469.
103.36 	
EFFECTIVE DATE. This section is effective the day
104.1 	following final enactment.

104.2 	Sec. 11. Minnesota Statutes 2004, section 272.02, is
104.3 	amended by adding a subdivision to read:
104.4 		Subd. 72.Property of housing and redevelopment
104.5 	authorities. Property of projects of housing and redevelopment
104.6 	authorities are exempt to the extent permitted by sections
104.7 	469.042, subdivision 1, and 469.043, subdivisions 2 and 5.
104.8 	
EFFECTIVE DATE. This section is effective the day
104.9 	following final enactment.

104.10 	Sec. 12. Minnesota Statutes 2004, section 272.02, is
104.11 	amended by adding a subdivision to read:
104.12 		Subd. 73.Property of regional rail authority. Property
104.13 	of a regional rail authority as defined in chapter 398A is
104.14 	exempt to the extent permitted by section 398A.05.
104.15 	
EFFECTIVE DATE. This section is effective the day
104.16 	following final enactment.

104.17 	Sec. 13. Minnesota Statutes 2004, section 272.02, is
104.18 	amended by adding a subdivision to read:
104.19 		Subd. 74.Spirit mountain recreation area
104.20 	authority. Property owned by the Spirit Mountain Recreation
104.21 	Area Authority is exempt from taxation to the extent provided in
104.22 	Laws 1973, chapter 327, section 6.

104.23 	Sec. 14. Minnesota Statutes 2004, section 272.02, is
104.24 	amended by adding a subdivision to read:
104.25 		Subd. 75.Installed capacity defined. For purposes of
104.26 	this section, the term "installed capacity" means generator
104.27 	nameplate capacity.
104.28 	
EFFECTIVE DATE. This section is effective the day
104.29 	following final enactment.

104.30 	Sec. 15. Minnesota Statutes 2004, section 272.029,
104.31 	subdivision 4, is amended to read:
104.32 		Subd. 4.Reports.  (a) An owner of a wind energy
104.33 	conversion system subject to tax under subdivision 3 shall file
104.34 	a report with the commissioner of revenue annually on or before
104.35 	March February 1 detailing the amount of electricity in
104.36 	kilowatt-hours that was produced by the wind energy conversion
105.1 	system for the previous calendar year.  The commissioner shall
105.2 	prescribe the form of the report.  The report must contain the
105.3 	information required by the commissioner to determine the tax
105.4 	due to each county under this section for the current year.  If
105.5 	an owner of a wind energy conversion system subject to taxation
105.6 	under this section fails to file the report by the due date, the
105.7 	commissioner of revenue shall determine the tax based upon the
105.8 	nameplate capacity of the system multiplied by a capacity factor
105.9 	of 40 percent.
105.10 	(b) On or before March 31 February 28, the commissioner of
105.11 	revenue shall notify the owner of the wind energy conversion
105.12 	systems of the tax due to each county for the current year and
105.13 	shall certify to the county auditor of each county in which the
105.14 	systems are located the tax due from each owner for the current
105.15 	year.
105.16 	
EFFECTIVE DATE. This section is effective for reports and
105.17 	certifications due in 2006 and thereafter.

105.18 	Sec. 16. Minnesota Statutes 2004, section 272.029,
105.19 	subdivision 6, is amended to read:
105.20 		Subd. 6.Distribution of revenues.  Revenues from the
105.21 	taxes imposed under subdivision 5 must be part of the settlement
105.22 	between the county treasurer and the county auditor under
105.23 	section 276.09.  The revenue must be distributed by the county
105.24 	auditor or the county treasurer to all local taxing
105.25 	jurisdictions in which the wind energy conversion system is
105.26 	located,as follows:  beginning with distributions in 2006, 80
105.27 	percent to counties; 14 percent to cities and townships; and six
105.28 	percent to school districts; and for distributions occurring in
105.29 	2004 and 2005 in the same proportion that each of the local 
105.30 	taxing jurisdiction's current year's net tax capacity based tax
105.31 	rate is to the current year's total local net tax capacity based
105.32 	rate.
105.33 	
EFFECTIVE DATE. This section is effective the day
105.34 	following final enactment.

105.35 	Sec. 17. Minnesota Statutes 2004, section 273.11,
105.36 	subdivision 8, is amended to read:
106.1 		Subd. 8.Limited equity cooperative apartments.  For the
106.2 	purposes of this subdivision, the terms defined in this
106.3 	subdivision have the meanings given them.
106.4 	A "limited equity cooperative" is a corporation organized
106.5 	under chapter 308A or 308B, which has as its primary purpose the
106.6 	provision of housing and related services to its members which
106.7 	meets one of the following criteria with respect to the income
106.8 	of its members:  (1) a minimum of 75 percent of members must
106.9 	have incomes at or less than 90 percent of area median income,
106.10 	(2) a minimum of 40 percent of members must have incomes at or
106.11 	less than 60 percent of area median income, or (3) a minimum of
106.12 	20 percent of members must have incomes at or less than 50
106.13 	percent of area median income.  For purposes of this clause,
106.14 	"member income" shall mean the income of a member existing at
106.15 	the time the member acquires cooperative membership, and median
106.16 	income shall mean the St. Paul-Minneapolis metropolitan area
106.17 	median income as determined by the United States Department of
106.18 	Housing and Urban Development.  It must also meet the following
106.19 	requirements:
106.20 	(a) The articles of incorporation set the sale price of
106.21 	occupancy entitling cooperative shares or memberships at no more
106.22 	than a transfer value determined as provided in the articles.
106.23 	That value may not exceed the sum of the following:
106.24 	(1) the consideration paid for the membership or shares by
106.25 	the first occupant of the unit, as shown in the records of the
106.26 	corporation;
106.27 	(2) the fair market value, as shown in the records of the
106.28 	corporation, of any improvements to the real property that were
106.29 	installed at the sole expense of the member with the prior
106.30 	approval of the board of directors;
106.31 	(3) accumulated interest, or an inflation allowance not to
106.32 	exceed the greater of a ten percent annual noncompounded
106.33 	increase on the consideration paid for the membership or share
106.34 	by the first occupant of the unit, or the amount that would have
106.35 	been paid on that consideration if interest had been paid on it
106.36 	at the rate of the percentage increase in the revised Consumer
107.1 	Price Index for All Urban Consumers for the Minneapolis-St. Paul
107.2 	metropolitan area prepared by the United States Department of
107.3 	Labor, provided that the amount determined pursuant to this
107.4 	clause may not exceed $500 for each year or fraction of a year
107.5 	the membership or share was owned; plus
107.6 	(4) real property capital contributions shown in the
107.7 	records of the corporation to have been paid by the transferor
107.8 	member and previous holders of the same membership, or of
107.9 	separate memberships that had entitled occupancy to the unit of
107.10 	the member involved.  These contributions include contributions
107.11 	to a corporate reserve account the use of which is restricted to
107.12 	real property improvements or acquisitions, contributions to the
107.13 	corporation which are used for real property improvements or
107.14 	acquisitions, and the amount of principal amortized by the
107.15 	corporation on its indebtedness due to the financing of real
107.16 	property acquisition or improvement or the averaging of
107.17 	principal paid by the corporation over the term of its real
107.18 	property-related indebtedness.
107.19 	(b) The articles of incorporation require that the board of
107.20 	directors limit the purchase price of stock or membership
107.21 	interests for new member-occupants or resident shareholders to
107.22 	an amount which does not exceed the transfer value for the
107.23 	membership or stock as defined in clause (a).
107.24 	(c) The articles of incorporation require that the total
107.25 	distribution out of capital to a member shall not exceed that
107.26 	transfer value.
107.27 	(d) The articles of incorporation require that upon
107.28 	liquidation of the corporation any assets remaining after
107.29 	retirement of corporate debts and distribution to members will
107.30 	be conveyed to a charitable organization described in section
107.31 	501(c)(3) of the Internal Revenue Code of 1986, as amended
107.32 	through December 31, 1992, or a public agency.
107.33 	A "limited equity cooperative apartment" is a dwelling unit
107.34 	owned by a limited equity cooperative.
107.35 	"Occupancy entitling cooperative share or membership" is
107.36 	the ownership interest in a cooperative organization which
108.1 	entitles the holder to an exclusive right to occupy a dwelling
108.2 	unit owned or leased by the cooperative.
108.3 	For purposes of taxation, the assessor shall value a unit
108.4 	owned by a limited equity cooperative at the lesser of its
108.5 	market value or the value determined by capitalizing the net
108.6 	operating income of a comparable apartment operated on a rental
108.7 	basis at the capitalization rate used in valuing comparable
108.8 	buildings that are not limited equity cooperatives.  If a
108.9 	cooperative fails to operate in accordance with the provisions
108.10 	of clauses (a) to (d), the property shall be subject to
108.11 	additional property taxes in the amount of the difference
108.12 	between the taxes determined in accordance with this subdivision
108.13 	for the last ten years that the property had been assessed
108.14 	pursuant to this subdivision and the amount that would have been
108.15 	paid if the provisions of this subdivision had not applied to
108.16 	it.  The additional taxes, plus interest at the rate specified
108.17 	in section 549.09, shall be extended against the property on the
108.18 	tax list for the current year.
108.19 	
EFFECTIVE DATE. This section is effective for taxes
108.20 	payable in 2004 and thereafter.

108.21 	Sec. 18. Minnesota Statutes 2004, section 273.124,
108.22 	subdivision 3, is amended to read:
108.23 		Subd. 3.Cooperatives and charitable corporations;
108.24 	homestead and other property.  (a) When property is owned by a
108.25 	corporation or association organized under chapter 308A or 308B,
108.26 	and each person who owns a share or shares in the corporation or
108.27 	association is entitled to occupy a building on the property, or
108.28 	a unit within a building on the property, the corporation or
108.29 	association may claim homestead treatment for each dwelling, or
108.30 	for each unit in the case of a building containing several
108.31 	dwelling units, or for the part of the value of the building
108.32 	occupied by a shareholder.  Each building or unit must be
108.33 	designated by legal description or number.  The net tax capacity
108.34 	of each building or unit that qualifies for assessment as a
108.35 	homestead under this subdivision must include not more than
108.36 	one-half acre of land, if platted, nor more than 80 acres if
109.1 	unplatted.  The net tax capacity of the property is the sum of
109.2 	the net tax capacities of each of the respective buildings or
109.3 	units comprising the property, including the net tax capacity of
109.4 	each unit's or building's proportionate share of the land and
109.5 	any common buildings.  To qualify for the treatment provided by
109.6 	this subdivision, the corporation or association must be wholly
109.7 	owned by persons having a right to occupy a building or unit
109.8 	owned by the corporation or association.  A charitable
109.9 	corporation organized under the laws of Minnesota and not
109.10 	otherwise exempt thereunder with no outstanding stock qualifies
109.11 	for homestead treatment with respect to member residents of the
109.12 	dwelling units who have purchased and hold residential
109.13 	participation warrants entitling them to occupy the units.
109.14 	(b) To the extent provided in paragraph (a), a cooperative
109.15 	or corporation organized under chapter 308A may obtain separate
109.16 	assessment and valuation, and separate property tax statements
109.17 	for each residential homestead, residential nonhomestead, or for
109.18 	each seasonal residential recreational building or unit not used
109.19 	for commercial purposes.  The appropriate class rates under
109.20 	section 273.13 shall be applicable as if each building or unit
109.21 	were a separate tax parcel; provided, however, that the tax
109.22 	parcel which exists at the time the cooperative or corporation
109.23 	makes application under this subdivision shall be a single
109.24 	parcel for purposes of property taxes or the enforcement and
109.25 	collection thereof, other than as provided in paragraph (a) or
109.26 	this paragraph.
109.27 	(c) A member of a corporation or association may initially
109.28 	obtain the separate assessment and valuation and separate
109.29 	property tax statements, as provided in paragraph (b), by
109.30 	applying to the assessor by June 30 of the assessment year.
109.31 	(d) When a building, or dwelling units within a building,
109.32 	no longer qualify under paragraph (a) or (b), the current owner
109.33 	must notify the assessor within 30 days.  Failure to notify the
109.34 	assessor within 30 days shall result in the loss of benefits
109.35 	under paragraph (a) or (b) for taxes payable in the year that
109.36 	the failure is discovered.  For these purposes, "benefits under
110.1 	paragraph (a) or (b)" means the difference in the net tax
110.2 	capacity of the building or units which no longer qualify as
110.3 	computed under paragraph (a) or (b) and as computed under the
110.4 	otherwise applicable law, times the local tax rate applicable to
110.5 	the building for that taxes payable year.  Upon discovery of a
110.6 	failure to notify, the assessor shall inform the auditor of the
110.7 	difference in net tax capacity for the building or buildings in
110.8 	which units no longer qualify, and the auditor shall calculate
110.9 	the benefits under paragraph (a) or (b).  Such amount, plus a
110.10 	penalty equal to 100 percent of that amount, shall then be
110.11 	demanded of the building's owner.  The property owner may appeal
110.12 	the county's determination by serving copies of a petition for
110.13 	review with county officials as provided in section 278.01 and
110.14 	filing a proof of service as provided in section 278.01 with the
110.15 	Minnesota Tax Court within 60 days of the date of the notice
110.16 	from the county.  The appeal shall be governed by the Tax Court
110.17 	procedures provided in chapter 271, for cases relating to the
110.18 	tax laws as defined in section 271.01, subdivision 5;
110.19 	disregarding sections 273.125, subdivision 5, and 278.03, but
110.20 	including section 278.05, subdivision 2.  If the amount of the
110.21 	benefits under paragraph (a) or (b) and penalty are not paid
110.22 	within 60 days, and if no appeal has been filed, the county
110.23 	auditor shall certify the amount of the benefit and penalty to
110.24 	the succeeding year's tax list to be collected as part of the
110.25 	property taxes on the affected property.
110.26 	
EFFECTIVE DATE. This section is effective for taxes
110.27 	payable in 2004 and thereafter.

110.28 	Sec. 19. Minnesota Statutes 2004, section 273.124,
110.29 	subdivision 6, is amended to read:
110.30 		Subd. 6.Leasehold cooperatives.  When one or more
110.31 	dwellings or one or more buildings which each contain several
110.32 	dwelling units is owned by a nonprofit corporation subject to
110.33 	the provisions of chapter 317A and qualifying under section
110.34 	501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as
110.35 	amended through December 31, 1990, or a limited partnership
110.36 	which corporation or partnership operates the property in
111.1 	conjunction with a cooperative association, and has received
111.2 	public financing, homestead treatment may be claimed by the
111.3 	cooperative association on behalf of the members of the
111.4 	cooperative for each dwelling unit occupied by a member of the
111.5 	cooperative.  The cooperative association must provide the
111.6 	assessor with the Social Security numbers of those members.  To
111.7 	qualify for the treatment provided by this subdivision, the
111.8 	following conditions must be met:
111.9 	(a) the cooperative association must be organized under
111.10 	chapter 308A or 308B and all voting members of the board of
111.11 	directors must be resident tenants of the cooperative and must
111.12 	be elected by the resident tenants of the cooperative;
111.13 	(b) the cooperative association must have a lease for
111.14 	occupancy of the property for a term of at least 20 years, which
111.15 	permits the cooperative association, while not in default on the
111.16 	lease, to participate materially in the management of the
111.17 	property, including material participation in establishing
111.18 	budgets, setting rent levels, and hiring and supervising a
111.19 	management agent;
111.20 	(c) to the extent permitted under state or federal law, the
111.21 	cooperative association must have a right under a written
111.22 	agreement with the owner to purchase the property if the owner
111.23 	proposes to sell it; if the cooperative association does not
111.24 	purchase the property it is offered for sale, the owner may not
111.25 	subsequently sell the property to another purchaser at a price
111.26 	lower than the price at which it was offered for sale to the
111.27 	cooperative association unless the cooperative association
111.28 	approves the sale;
111.29 	(d) a minimum of 40 percent of the cooperative
111.30 	association's members must have incomes at or less than 60
111.31 	percent of area median gross income as determined by the United
111.32 	States Secretary of Housing and Urban Development under section
111.33 	142(d)(2)(B) of the Internal Revenue Code of 1986, as amended
111.34 	through December 31, 1991.  For purposes of this clause, "member
111.35 	income" means the income of a member existing at the time the
111.36 	member acquires cooperative membership;
112.1 	(e) if a limited partnership owns the property, it must
112.2 	include as the managing general partner a nonprofit organization
112.3 	operating under the provisions of chapter 317A and qualifying
112.4 	under section 501(c)(3) or 501(c)(4) of the Internal Revenue
112.5 	Code of 1986, as amended through December 31, 1990, and the
112.6 	limited partnership agreement must provide that the managing
112.7 	general partner have sufficient powers so that it materially
112.8 	participates in the management and control of the limited
112.9 	partnership;
112.10 	(f) prior to becoming a member of a leasehold cooperative
112.11 	described in this subdivision, a person must have received
112.12 	notice that (1) describes leasehold cooperative property in
112.13 	plain language, including but not limited to the effects of
112.14 	classification under this subdivision on rents, property taxes
112.15 	and tax credits or refunds, and operating expenses, and (2)
112.16 	states that copies of the articles of incorporation and bylaws
112.17 	of the cooperative association, the lease between the owner and
112.18 	the cooperative association, a sample sublease between the
112.19 	cooperative association and a tenant, and, if the owner is a
112.20 	partnership, a copy of the limited partnership agreement, can be
112.21 	obtained upon written request at no charge from the owner, and
112.22 	the owner must send or deliver the materials within seven days
112.23 	after receiving any request;
112.24 	(g) if a dwelling unit of a building was occupied on the
112.25 	60th day prior to the date on which the unit became leasehold
112.26 	cooperative property described in this subdivision, the notice
112.27 	described in paragraph (f) must have been sent by first class
112.28 	mail to the occupant of the unit at least 60 days prior to the
112.29 	date on which the unit became leasehold cooperative property.
112.30 	For purposes of the notice under this paragraph, the copies of
112.31 	the documents referred to in paragraph (f) may be in proposed
112.32 	version, provided that any subsequent material alteration of
112.33 	those documents made after the occupant has requested a copy
112.34 	shall be disclosed to any occupant who has requested a copy of
112.35 	the document.  Copies of the articles of incorporation and
112.36 	certificate of limited partnership shall be filed with the
113.1 	secretary of state after the expiration of the 60-day period
113.2 	unless the change to leasehold cooperative status does not
113.3 	proceed;
113.4 	(h) the county attorney of the county in which the property
113.5 	is located must certify to the assessor that the property meets
113.6 	the requirements of this subdivision;
113.7 	(i) the public financing received must be from at least one
113.8 	of the following sources:
113.9 	(1) tax increment financing proceeds used for the
113.10 	acquisition or rehabilitation of the building or interest rate
113.11 	write-downs relating to the acquisition of the building;
113.12 	(2) government issued bonds exempt from taxes under section
113.13 	103 of the Internal Revenue Code of 1986, as amended through
113.14 	December 31, 1991, the proceeds of which are used for the
113.15 	acquisition or rehabilitation of the building;
113.16 	(3) programs under section 221(d)(3), 202, or 236, of Title
113.17 	II of the National Housing Act;
113.18 	(4) rental housing program funds under Section 8 of the
113.19 	United States Housing Act of 1937 or the market rate family
113.20 	graduated payment mortgage program funds administered by the
113.21 	Minnesota Housing Finance Agency that are used for the
113.22 	acquisition or rehabilitation of the building;
113.23 	(5) low-income housing credit under section 42 of the
113.24 	Internal Revenue Code of 1986, as amended through December 31,
113.25 	1991;
113.26 	(6) public financing provided by a local government used
113.27 	for the acquisition or rehabilitation of the building, including
113.28 	grants or loans from (i) federal community development block
113.29 	grants; (ii) HOME block grants; or (iii) residential rental
113.30 	bonds issued under chapter 474A; or
113.31 	(7) other rental housing program funds provided by the
113.32 	Minnesota Housing Finance Agency for the acquisition or
113.33 	rehabilitation of the building;
113.34 	(j) at the time of the initial request for homestead
113.35 	classification or of any transfer of ownership of the property,
113.36 	the governing body of the municipality in which the property is
114.1 	located must hold a public hearing and make the following
114.2 	findings:
114.3 	(1) that the granting of the homestead treatment of the
114.4 	apartment's units will facilitate safe, clean, affordable
114.5 	housing for the cooperative members that would otherwise not be
114.6 	available absent the homestead designation;
114.7 	(2) that the owner has presented information satisfactory
114.8 	to the governing body showing that the savings garnered from the
114.9 	homestead designation of the units will be used to reduce
114.10 	tenant's rents or provide a level of furnishing or maintenance
114.11 	not possible absent the designation; and
114.12 	(3) that the requirements of paragraphs (b), (d), and (i)
114.13 	have been met.
114.14 	Homestead treatment must be afforded to units occupied by
114.15 	members of the cooperative association and the units must be
114.16 	assessed as provided in subdivision 3, provided that any unit
114.17 	not so occupied shall be classified and assessed pursuant to the
114.18 	appropriate class.  No more than three acres of land may, for
114.19 	assessment purposes, be included with each dwelling unit that
114.20 	qualifies for homestead treatment under this subdivision.
114.21 	When dwelling units no longer qualify under this
114.22 	subdivision, the current owner must notify the assessor within
114.23 	60 days.  Failure to notify the assessor within 60 days shall
114.24 	result in the loss of benefits under this subdivision for taxes
114.25 	payable in the year that the failure is discovered.  For these
114.26 	purposes, "benefits under this subdivision" means the difference
114.27 	in the net tax capacity of the units which no longer qualify as
114.28 	computed under this subdivision and as computed under the
114.29 	otherwise applicable law, times the local tax rate applicable to
114.30 	the building for that taxes payable year.  Upon discovery of a
114.31 	failure to notify, the assessor shall inform the auditor of the
114.32 	difference in net tax capacity for the building or buildings in
114.33 	which units no longer qualify, and the auditor shall calculate
114.34 	the benefits under this subdivision.  Such amount, plus a
114.35 	penalty equal to 100 percent of that amount, shall then be
114.36 	demanded of the building's owner.  The property owner may appeal
115.1 	the county's determination by serving copies of a petition for
115.2 	review with county officials as provided in section 278.01 and
115.3 	filing a proof of service as provided in section 278.01 with the
115.4 	Minnesota Tax Court within 60 days of the date of the notice
115.5 	from the county.  The appeal shall be governed by the Tax Court
115.6 	procedures provided in chapter 271, for cases relating to the
115.7 	tax laws as defined in section 271.01, subdivision 5;
115.8 	disregarding sections 273.125, subdivision 5, and 278.03, but
115.9 	including section 278.05, subdivision 2.  If the amount of the
115.10 	benefits under this subdivision and penalty are not paid within
115.11 	60 days, and if no appeal has been filed, the county auditor
115.12 	shall certify the amount of the benefit and penalty to the
115.13 	succeeding year's tax list to be collected as part of the
115.14 	property taxes on the affected buildings.
115.15 	
EFFECTIVE DATE. This section is effective for taxes
115.16 	payable in 2004 and thereafter.

115.17 	Sec. 20. Minnesota Statutes 2004, section 273.124,
115.18 	subdivision 8, is amended to read:
115.19 		Subd. 8.Homestead owned by or leased to family farm
115.20 	corporation, joint farm venture, limited liability company, or
115.21 	partnership.  (a) Each family farm corporation, each ; each joint
115.22 	family farm venture,; and each limited liability company, and
115.23 	each or partnership operating which operates a family farm;is
115.24 	entitled to class 1b under section 273.13, subdivision 22,
115.25 	paragraph (b), or class 2a assessment for one homestead occupied
115.26 	by a shareholder, member, or partner thereof who is residing on
115.27 	the land, and actively engaged in farming of the land owned by
115.28 	the family farm corporation, joint family farm venture, limited
115.29 	liability company, or partnership operating a family farm.
115.30 	Homestead treatment applies even if legal title to the property
115.31 	is in the name of the family farm corporation, joint family farm
115.32 	venture, limited liability company, or partnership operating the
115.33 	family farm, and not in the name of the person residing on it.
115.34 	"Family farm corporation," "family farm," and "partnership
115.35 	operating a family farm" have the meanings given in section
115.36 	500.24, except that the number of allowable shareholders,
116.1 	members, or partners under this subdivision shall not exceed
116.2 	12.  "Limited liability company" has the meaning contained in
116.3 	sections 322B.03, subdivision 28, and 500.24, subdivision 2,
116.4 	paragraphs (l) and (m).  "Joint family farm venture" means a
116.5 	cooperative agreement among two or more farm enterprises
116.6 	authorized to operate a family farm under section 500.24.
116.7 	(b) In addition to property specified in paragraph (a), any
116.8 	other residences owned by family farm corporations, joint family
116.9 	farm ventures, limited liability companies, or partnerships
116.10 	operating a family farm described in paragraph (a) which are
116.11 	located on agricultural land and occupied as homesteads by its
116.12 	shareholders, members, or partners who are actively engaged in
116.13 	farming on behalf of that corporation, joint farm venture,
116.14 	limited liability company, or partnership must also be assessed
116.15 	as class 2a property or as class 1b property under section
116.16 	273.13.
116.17 	(c) Agricultural property that is owned by a member,
116.18 	partner, or shareholder of a family farm corporation or joint
116.19 	family farm venture, limited liability company operating a
116.20 	family farm, or by a partnership operating a family farm and
116.21 	leased to the family farm corporation, limited liability
116.22 	company, or partnership operating a family farm, or joint farm
116.23 	venture, as defined in paragraph (a), is eligible for
116.24 	classification as class 1b or class 2a under section 273.13, if
116.25 	the owner is actually residing on the property, and is actually
116.26 	engaged in farming the land on behalf of that corporation, joint
116.27 	farm venture, limited liability company, or partnership.  This
116.28 	paragraph applies without regard to any legal possession rights
116.29 	of the family farm corporation, joint family farm venture,
116.30 	limited liability company, or partnership operating a family
116.31 	farm under the lease.
116.32 	
EFFECTIVE DATE. This section is effective the day
116.33 	following final enactment.

116.34 	Sec. 21. Minnesota Statutes 2004, section 273.124,
116.35 	subdivision 21, is amended to read:
116.36 		Subd. 21.Trust property; homestead.  Real property held
117.1 	by a trustee under a trust is eligible for classification as
117.2 	homestead property if:
117.3 	(1) the grantor or surviving spouse of the grantor of the
117.4 	trust occupies and uses the property as a homestead;
117.5 	(2) a relative or surviving relative of the grantor who
117.6 	meets the requirements of subdivision 1, paragraph (c), in the
117.7 	case of residential real estate; or subdivision 1, paragraph
117.8 	(d), in the case of agricultural property, occupies and uses the
117.9 	property as a homestead;
117.10 	(3) a family farm corporation, joint farm venture, limited
117.11 	liability company, or partnership operating a family farm rents
117.12 	the property held by a trustee under a trust, and the grantor,
117.13 	the spouse of the grantor, or the son or daughter of the
117.14 	grantor, who is also a shareholder, member, or partner of the
117.15 	corporation, joint farm venture, limited liability company, or
117.16 	partnership occupies and uses the property as a homestead, and 
117.17 	or is actively farming the property on behalf of the
117.18 	corporation, joint farm venture, limited liability company, or
117.19 	partnership; or
117.20 	(4) a person who has received homestead classification for
117.21 	property taxes payable in 2000 on the basis of an unqualified
117.22 	legal right under the terms of the trust agreement to occupy the
117.23 	property as that person's homestead and who continues to use the
117.24 	property as a homestead or a person who received the homestead
117.25 	classification for taxes payable in 2005 under clause (3) who
117.26 	does not qualify under clause (3) for taxes payable in 2006 or
117.27 	thereafter but who continues to qualify under clause (3) as it
117.28 	existed for taxes payable in 2005.
117.29 	For purposes of this subdivision, "grantor" is defined as
117.30 	the person creating or establishing a testamentary, inter Vivos,
117.31 	revocable or irrevocable trust by written instrument or through
117.32 	the exercise of a power of appointment.
117.33 	
EFFECTIVE DATE. This section is effective for taxes
117.34 	payable in 2006 and thereafter.

117.35 	Sec. 22. Minnesota Statutes 2004, section 273.1315, is
117.36 	amended to read:
118.1 	273.1315 CERTIFICATION OF 1B PROPERTY.
118.2 	Any property owner seeking classification and assessment of
118.3 	the owner's homestead as class 1b property pursuant to section
118.4 	273.13, subdivision 22, paragraph (b), shall file with the
118.5 	commissioner of revenue a 1b homestead declaration, on a form
118.6 	prescribed by the commissioner.  The declaration shall contain
118.7 	the following information:
118.8 	(a) the information necessary to verify that on or before
118.9 	June 30 of the filing year,the property owner or the owner's
118.10 	spouse satisfies the requirements of section 273.13, subdivision
118.11 	22, paragraph (b), for 1b classification; and
118.12 	(b) any additional information prescribed by the
118.13 	commissioner.
118.14 	The declaration must be filed on or before October 1 to be
118.15 	effective for property taxes payable during the succeeding
118.16 	calendar year.  The declaration and any supplementary
118.17 	information received from the property owner pursuant to this
118.18 	section shall be subject to chapter 270B.  If approved by the
118.19 	commissioner, the declaration remains in effect until the
118.20 	property no longer qualifies under section 273.13, subdivision
118.21 	22, paragraph (b).  Failure to notify the commissioner within 30
118.22 	days that the property no longer qualifies under that paragraph
118.23 	because of a sale, change in occupancy, or change in the status
118.24 	or condition of an occupant shall result in the penalty provided
118.25 	in section 273.124, subdivision 13, computed on the basis of the
118.26 	class 1b benefits for the property, and the property shall lose
118.27 	its current class 1b classification.
118.28 	The commissioner shall provide to the assessor on or before
118.29 	November 1 a listing of the parcels of property qualifying for
118.30 	1b classification.

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

118.33 	Sec. 23. Minnesota Statutes 2004, section 273.19,
118.34 	subdivision 1a, is amended to read:
118.35 		Subd. 1a.Effective date. This section is effective the day
119.12 	following final enactment.

119.13 	Sec. 24. Minnesota Statutes 2004, section 273.372, is
119.14 	amended to read:
 119.15 	273.372 [PROCEEDINGS AND APPEALS; UTILITY OR RAILROAD
119.16 	VALUATIONS.]
119.17 		Subdivision 1.Scope. (a) As provided in this section,
119.18 	an appeal by a utility or railroad company concerning the
119.19 	exemption, valuation, or classification of property for which
119.20 	the commissioner of revenue has provided the city or county
119.21 	assessor with valuations by order, or for which the commissioner
119.22 	has recommended values to the city or county assessor, must be
119.23 	brought against the commissioner in Tax Court or in district
119.24 	court of the county where the property is located, and not
119.25 	against the county or taxing district where the property is
119.26 	located.
119.27 	(b) This section governs administrative appeals and appeals
119.28 	to court of a claim that utility or railroad operating property
119.29 	has been partially, unfairly, or unequally assessed, or assessed
119.30 	at a valuation greater than its real or actual value,
119.31 	misclassified, or that the property is exempt.  This section
119.32 	applies only to property described in sections 270.81,
119.33 	subdivision 1, 273.33, 273.35, 273.36, and 273.37, and only with
119.34 	regard to taxable net tax capacities that have been provided to
119.35 	the city or county by the commissioner and which have not been
119.36 	changed by city or county.  If the taxable net tax capacity
120.1 	being appealed is not the taxable net tax capacity established
120.2 	by the commissioner, or if the appeal claims that the tax rate
120.3 	applied against the parcel is incorrect, or that the tax has
120.4 	been paid, this section does not apply.
120.5 		Subd. 2.Contents and filing of petition. (a) In all
120.6 	appeals to court that are required to be brought against the
120.7 	commissioner under this section, the petition initiating the
120.8 	appeal must be served on the commissioner and must be filed with
120.9 	the Tax Court in Ramsey County, as provided in paragraph (b) or
120.10 	(c).
120.11 	(b) If the appeal to court is from an order of the
120.12 	commissioner, it must be brought under chapter 271, except that
120.13 	when the provisions of this section conflict with chapter 271,
120.14 	this section prevails.  In addition, the petition must include
120.15 	all the parcels encompassed by that order which the petitioner
120.16 	claims have been partially, unfairly, or unequally assessed,
120.17 	assessed at a valuation greater than their real or actual value,
120.18 	misclassified, or are exempt.  For this purpose, an order of the
120.19 	commissioner is either (1) a certification or notice of value by
120.20 	the commissioner for property described in subdivision 1, or (2)
120.21 	the final determination by the commissioner of either an
120.22 	administrative appeal conference or informal administrative
120.23 	appeal described in subdivision 4.
120.24 	(c) If the appeal is from the exemption, valuation,
120.25 	classification, or tax that results from implementation of the
120.26 	commissioner's order, certification,or recommendation, it must
120.27 	be brought under chapter 278, and the provisions in that chapter
120.28 	apply, except that service shall be on the commissioner only and
120.29 	not on the county local officials specified in section 278.01,
120.30 	subdivision 1, and if any other provision of this section
120.31 	conflicts with chapter 278, this section prevails.  In addition,
120.32 	the petition must include either all the utility parcels or all
120.33 	the railroad parcels in the state in which the petitioner claims
120.34 	an interest and which the petitioner claims have been partially,
120.35 	unfairly, or unequally assessed, assessed at a valuation greater
120.36 	than their real or actual value, misclassified, or are
121.1 	exempt. This provision applies to the property described in
121.2 	sections 273.33, 273.35, 273.36, and 273.37, but only if the
121.3 	appealed values have remained unchanged from those provided to
121.4 	the city or county by the commissioner.  If the exemption,
121.5 	valuation, or classification being appealed has been changed by
121.6 	the city or county, then the action must be brought under
121.7 	chapter 278 in the county where the property is located and
121.8 	proper service must be made upon the county officials as
121.9 	specified in section 278.01, subdivision 1.
121.10 		Subd. 3.Notice. Upon filing of any appeal in court by a
121.11 	utility company or railroad against the commissioner pursuant to
121.12 	this section, the commissioner shall give notice by first class
121.13 	mail to the county auditor of each county which would be
121.14 	affected by the appeal where property included in the petition
121.15 	is located.
121.16 		Subd. 4.Administrative appeals. (a) Companies that
121.17 	submit the reports under section 270.82 or 273.371 by the date
121.18 	specified in that section, or by the date specified by the
121.19 	commissioner in an extension, may appeal administratively to the
121.20 	commissioner under the procedures in section 270.11, subdivision
121.21 	6,prior to bringing an action in Tax Court or in district court
121.22 	, however, instituting an administrative appeal by submitting a
121.23 	written request with the commissioner does not change or
121.24 	modify for a conference within ten days after the date of the
121.25 	commissioner's valuation certification or notice to the company,
121.26 	or by May 15, whichever is earlier.  The commissioner shall
121.27 	conduct the conference upon the commissioner's entire files and
121.28 	records and such further information as may be offered.  The
121.29 	conference must be held no later than 20 days after the date of
121.30 	the commissioner's valuation certification or notice to the
121.31 	company, or by the date specified by the commissioner in an
121.32 	extension.  Within 60 days after the conference the commissioner
121.33 	shall make a final determination of the matter and shall notify
121.34 	the company promptly of the determination.  The conference is
121.35 	not a contested case hearing.
121.36 	(b) In addition to the opportunity for a conference under
122.1 	paragraph (a), the commissioner shall make a more informal
122.2 	procedure available to railroad and utility companies to
122.3 	question values established by the commissioner through
122.4 	certification or notice.  The availability of the informal
122.5 	procedure does not change or modify the deadline for requesting
122.6 	a conference under paragraph (a),the deadline in section 271.06
122.7 	for appealing an order of the commissioner in Tax Court ,or the
122.8 	deadline in section 278.01 for filing a property tax claim or
122.9 	objection in Tax Court or district appealing property taxes in 
122.10 	court.
122.11 	
EFFECTIVE DATE. This section is effective September 1,
122.12 	2005, and thereafter.

122.13 	Sec. 25. Minnesota Statutes 2004, section 274.014,
122.14 	subdivision 2, is amended to read:
122.15 		Subd. 2.Appeals and equalization course. By no later
122.16 	than January 1,Beginning in 2006, and each year thereafter,
122.17 	there must be at least one member at each meeting of a local
122.18 	board of appeal and equalization who has attended an appeals and
122.19 	equalization course developed or approved by the commissioner
122.20 	within the last four years, as certified by the commissioner.
122.21 	The course may be offered in conjunction with a meeting of the
122.22 	Minnesota League of Cities or the Minnesota Association of
122.23 	Townships.  The course content must include, but need not be
122.24 	limited to, a review of the handbook developed by the
122.25 	commissioner under subdivision 1.
122.26 	
EFFECTIVE DATE. This section is effective the day
122.27 	following final enactment.

122.28 	Sec. 26. Minnesota Statutes 2004, section 274.014,
122.29 	subdivision 3, is amended to read:
122.30 		Subd. 3.Proof of compliance; transfer of duties. (a) 
122.31 	Any city or town that does not conducts local boards of appeal
122.32 	and equalization meetings must provide proof to the county
122.33 	assessor by December 1, 2006, and each year thereafter, that it
122.34 	is in compliance with the requirements of subdivision 2, and
122.35 	that it had .  Beginning in 2006, this notice must also verify
122.36 	that there was a quorum of voting members at each meeting of the
123.1 	board of appeal and equalization in the prior current year,.  A
123.2 	city or town that does not comply with these requirements is
123.3 	deemed to have transferred its board of appeal and equalization
123.4 	powers to the county under section 274.01, subdivision 3,
123.5 	for beginning with the following year's assessment and
123.6 	continuing unless the powers are reinstated under paragraph (c).
123.7 	(b) The county shall notify the taxpayers when the board of
123.8 	appeal and equalization for a city or town has been transferred
123.9 	to the county under this subdivision and, prior to the meeting
123.10 	time of the county board of equalization, the county shall make
123.11 	available to those taxpayers a procedure for a review of the
123.12 	assessments, including, but not limited to, open book meetings.
123.13 	This alternate review process shall take place in April and May.
123.14 	(c) A local board whose powers are transferred to the
123.15 	county under this subdivision may be reinstated by resolution of
123.16 	the governing body of the city or town and upon proof of
123.17 	compliance with the requirements of subdivision 2.  The
123.18 	resolution and proofs must be provided to the county assessor by
123.19 	December 1 in order to be effective for the following year's
123.20 	assessment.
123.21 	
EFFECTIVE DATE. This section is effective the day
123.22 	following final enactment.

123.23 	Sec. 27. Minnesota Statutes 2004, section 274.14, is
123.24 	amended to read:
123.25 	274.14 LENGTH OF SESSION; RECORD.
123.26 	The county board of equalization or the special board of
123.27 	equalization appointed by it shall meet during the last ten
123.28 	meeting days in June.  For this purpose, "meeting days" are
123.29 	defined as any day of the week excluding Saturday and Sunday.
123.30 	The board may meet on any ten consecutive meeting days in June,
123.31 	after the second Friday in June, if .The actual meeting dates
123.32 	are must be contained on the valuation notices mailed to each
123.33 	property owner in the county under as provided in section
123.34 	273.121. For this purpose, "meeting days" is defined as any day
123.35 	of the week excluding Saturday and Sunday.No action taken by
123.36 	the county board of review after June 30 is valid, except for
124.1 	corrections permitted in sections 273.01 and 274.01.  The county
124.2 	auditor shall keep an accurate record of the proceedings and
124.3 	orders of the board.  The record must be published like other
124.4 	proceedings of county commissioners.  A copy of the published
124.5 	record must be sent to the commissioner of revenue, with the
124.6 	abstract of assessment required by section 274.16.

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

124.9 	Sec. 28. Minnesota Statutes 2004, section 275.07,
124.10 	subdivision 1, is amended to read:
124.11 		Subdivision 1.Certification of levy.  (a) Except as
124.12 	provided under paragraph (b), the taxes voted by cities,
124.13 	counties, school districts, and special districts shall be
124.14 	certified by the proper authorities to the county auditor on or
124.15 	before five working days after December 20 in each year.  A town
124.16 	must certify the levy adopted by the town board to the county
124.17 	auditor by September 15 each year.  If the town board modifies
124.18 	the levy at a special town meeting after September 15, the town
124.19 	board must recertify its levy to the county auditor on or before
124.20 	five working days after December 20. The taxes certified shall
124.21 	be reduced by the county auditor by the aid received under
124.22 	section 273.1398, subdivision 3.If a city, town, county,
124.23 	school district, or special district fails to certify its levy
124.24 	by that date, its levy shall be the amount levied by it for the
124.25 	preceding year.
124.26 	(b)(i) The taxes voted by counties under sections 103B.241,
124.27 	103B.245, and 103B.251 shall be separately certified by the
124.28 	county to the county auditor on or before five working days
124.29 	after December 20 in each year.  The taxes certified shall not
124.30 	be reduced by the county auditor by the aid received under
124.31 	section 273.1398, subdivision 3.  If a county fails to certify
124.32 	its levy by that date, its levy shall be the amount levied by it
124.33 	for the preceding year.
124.34 	(ii) For purposes of the proposed property tax notice under
124.35 	section 275.065 and the property tax statement under section
124.36 	276.04, for the first year in which the county implements the
125.1 	provisions of this paragraph, the county auditor shall reduce
125.2 	the county's levy for the preceding year to reflect any amount
125.3 	levied for water management purposes under clause (i) included
125.4 	in the county's levy.
125.5 	
EFFECTIVE DATE. This section is effective the day
125.6 	following final enactment.

125.7 	Sec. 29. Minnesota Statutes 2004, section 275.07,
125.8 	subdivision 4, is amended to read:
125.9 		Subd. 4.Report to commissioner.  (a) On or before
125.10 	October 8 of each year, the county auditor shall report to the
125.11 	commissioner of revenue the proposed levy certified by local
125.12 	units of government under section 275.065, subdivision 1.  If
125.13 	any taxing authorities have notified the county auditor that
125.14 	they are in the process of negotiating an agreement for sharing,
125.15 	merging, or consolidating services but that when the proposed
125.16 	levy was certified under section 275.065, subdivision 1c, the
125.17 	agreement was not yet finalized, the county auditor shall supply
125.18 	that information to the commissioner when filing the report
125.19 	under this section and shall recertify the affected levies as
125.20 	soon as practical after October 10.
125.21 	(b) On or before January 15 of each year, the county
125.22 	auditor shall report to the commissioner of revenue the final
125.23 	levy certified by local units of government under subdivision 1.
125.24 	(c) The levies must be reported in the manner prescribed by
125.25 	the commissioner. The reports must show a total levy and the
125.26 	amount of each special levy.
125.27 	
EFFECTIVE DATE. This section is effective the day
125.28 	following final enactment.

125.29 	Sec. 30. Minnesota Statutes 2004, section 276.112, is
125.30 	amended to read:
125.31 	276.112 STATE PROPERTY TAXES; COUNTY TREASURER.
125.32 	On or before January 25 each year, for the period ending
125.33 	December 31 of the prior year, and on or before June 29 28 each
125.34 	year, for the period ending on the most recent settlement day
125.35 	determined in section 276.09, and on or before December 2 each
125.36 	year, for the period ending November 20, the county treasurer
126.1 	must make full settlement with the county auditor according to
126.2 	sections 276.09, 276.10, and 276.111 for all receipts of state
126.3 	property taxes levied under section 275.025, and must transmit
126.4 	those receipts to the commissioner of revenue by electronic
126.5 	means.

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

126.8 	Sec. 31. Minnesota Statutes 2004, section 282.016, is
126.9 	amended to read:
126.10 	282.016 PROHIBITED PURCHASERS.
126.11 	No (a) A county auditor, county treasurer, county attorney,
126.12 	court administrator of the district court, or county assessor
126.13 	or ,supervisor of assessments, or deputy or clerk or an employee
126.14 	of such officer, and no a commissioner for tax-forfeited lands
126.15 	or an assistant to such commissioner may , must not become a
126.16 	purchaser, either personally or as an agent or attorney for
126.17 	another person,of the properties offered for sale under the
126.18 	provisions of this chapter, either personally, or as agent or
126.19 	attorney for any other person, except that in the county for
126.20 	which the person performs duties.  A person prohibited from
126.21 	purchasing property under this section must not directly or
126.22 	indirectly have another person purchase it on behalf of the
126.23 	prohibited purchaser for the prohibited purchaser's benefit or
126.24 	gain.
126.25 	(b) Notwithstanding paragraph (a),such officer, deputy,
126.26 	court administrator clerk, or employee or commissioner for
126.27 	tax-forfeited lands or assistant to such commissioner may (1)
126.28 	purchase lands owned by that official at the time the state
126.29 	became the absolute owner thereof or (2) bid upon and purchase
126.30 	forfeited property offered for sale under the alternate sale
126.31 	procedure described in section 282.01, subdivision 7a.

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

126.34 	Sec. 32. Minnesota Statutes 2004, section 282.08, is
126.35 	amended to read:
126.36 	282.08 APPORTIONMENT OF PROCEEDS TO TAXING DISTRICTS.
127.1 	The net proceeds from the sale or rental of any parcel of
127.2 	forfeited land, or from the sale of products from the forfeited
127.3 	land, must be apportioned by the county auditor to the taxing
127.4 	districts interested in the land, as follows:
127.5 	(1) the amounts necessary to pay the state general tax levy
127.6 	against the parcel for taxes payable in the year for which the
127.7 	tax judgment was entered, and for each subsequent payable year
127.8 	up to and including the year of forfeiture, must be apportioned
127.9 	to the state;
127.10 	(2) the portion required to pay any amounts included in the
127.11 	appraised value under section 282.01, subdivision 3, as
127.12 	representing increased value due to any public improvement made
127.13 	after forfeiture of the parcel to the state, but not exceeding
127.14 	the amount certified by the clerk of the municipality must be
127.15 	apportioned to the municipal subdivision entitled to it;
127.16 	(3) (2) the portion required to pay any amount included in
127.17 	the appraised value under section 282.019, subdivision 5,
127.18 	representing increased value due to response actions taken after
127.19 	forfeiture of the parcel to the state, but not exceeding the
127.20 	amount of expenses certified by the Pollution Control Agency or
127.21 	the commissioner of agriculture, must be apportioned to the
127.22 	agency or the commissioner of agriculture and deposited in the
127.23 	fund from which the expenses were paid;
127.24 	(4) (3) the portion of the remainder required to discharge
127.25 	any special assessment chargeable against the parcel for
127.26 	drainage or other purpose whether due or deferred at the time of
127.27 	forfeiture, must be apportioned to the municipal subdivision
127.28 	entitled to it; and
127.29 	(5) (4) any balance must be apportioned as follows:
127.30 	(i) The county board may annually by resolution set aside
127.31 	no more than 30 percent of the receipts remaining to be used for
127.32 	timber development on tax-forfeited land and dedicated memorial
127.33 	forests, to be expended under the supervision of the county
127.34 	board.  It must be expended only on projects approved by the
127.35 	commissioner of natural resources.
127.36 	(ii) The county board may annually by resolution set aside
128.1 	no more than 20 percent of the receipts remaining to be used for
128.2 	the acquisition and maintenance of county parks or recreational
128.3 	areas as defined in sections 398.31 to 398.36, to be expended
128.4 	under the supervision of the county board.
128.5 	(iii) Any balance remaining must be apportioned as
128.6 	follows:  county, 40 percent; town or city, 20 percent; and
128.7 	school district, 40 percent, provided, however, that in
128.8 	unorganized territory that portion which would have accrued to
128.9 	the township must be administered by the county board of
128.10 	commissioners.

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

128.14 	Sec. 33. Minnesota Statutes 2004, section 282.15, is
128.15 	amended to read:
128.16 	282.15 SALES OF FORFEITED AGRICULTURAL LANDS.
128.17 	The sale shall be conducted by the auditor of the county in
128.18 	which the parcels lie.  The parcels shall be sold to the highest
128.19 	bidder but not for less than the appraised value.  The sales
128.20 	shall be for cash or on the following terms:  The appraised
128.21 	value of all merchantable timber on agricultural lands shall be
128.22 	paid for in full at the date of sale.  At least 15 percent of
128.23 	the purchase price of the land shall be paid in cash at the time
128.24 	of purchase.  The balance shall be paid in not more than 20
128.25 	equal annual installments, with interest at a rate equal to the
128.26 	rate in effect at the time under section 549.09 on the unpaid
128.27 	balance each year.  Both principal and interest are due and
128.28 	payable on December 31 each year following that in which the
128.29 	purchase was made.  The purchaser may pay any number of
128.30 	installments of principal and interest on or before their due
128.31 	date.  When the sale is on terms other than for cash in full,
128.32 	the purchaser shall receive from the county auditor a contract
128.33 	for deed, in a form prescribed by the attorney general.  The
128.34 	county auditor shall make a report to the commissioner of
128.35 	natural resources not more than 30 days after each public sale
128.36 	showing the lands sold at the sales, and submit a copy of each
129.1 	contract of sale.
129.2 	All lands sold pursuant to this section shall, on the
129.3 	second day of January following the date of the sale,must be
129.4 	restored to the tax rolls and become subject to taxation in the
129.5 	same manner as they were assessed and taxed before becoming the
129.6 	absolute property of the state for the assessment year
129.7 	determined under section 272.02, subdivision 38, paragraph (c).

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

129.10 	Sec. 34. Minnesota Statutes 2004, section 282.21, is
129.11 	amended to read:
129.12 	282.21 FORM OF CONVEYANCE.
129.13 	When any sale has been made under sections 282.14 to
129.14 	282.22,upon payment in full of the purchase price, appropriate
129.15 	conveyance in fee in such form as may be prescribed by the
129.16 	attorney general shall be issued by the commissioner of finance
129.17 	to the purchaser or the purchaser's assigns and this conveyance
129.18 	shall have the force and effect of a patent from the state.

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

129.21 	Sec. 35. Minnesota Statutes 2004, section 282.224, is
129.22 	amended to read:
129.23 	282.224 FORM OF CONVEYANCE.
129.24 	When any sale has been made under sections 282.221 to
129.25 	282.226,upon payment in full of the purchase price,appropriate
129.26 	conveyance in fee, in such form as may be prescribed by the
129.27 	attorney general, shall be issued by the commissioner of natural
129.28 	resources to the purchaser or the purchaser's assignee, and the
129.29 	conveyance shall have the force and effect of a patent from the
129.30 	state.

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

129.33 	Sec. 36. Minnesota Statutes 2004, section 282.301, is
129.34 	amended to read:
129.35 	282.301 RECEIPTS FOR PAYMENTS.
129.36 	When any sale has been made under sections 282.012 and
130.1 	282.241 to 282.324,the purchaser shall receive from the county
130.2 	auditor at the time of repurchase a receipt, in such form as may
130.3 	be prescribed by the attorney general.  When the purchase price
130.4 	of a parcel of land shall be paid in full, the following facts
130.5 	shall be certified by the county auditor to the commissioner of
130.6 	revenue of the state of Minnesota:  the description of land, the
130.7 	date of sale, the name of the purchaser or the purchaser's
130.8 	assignee, and the date when the final installment of the
130.9 	purchase price was paid.  Upon payment in full of the purchase
130.10 	price, the purchaser or the assignee shall receive a quitclaim
130.11 	deed from the state, to be executed by the commissioner of
130.12 	revenue.  The deed must be sent to the county auditor who shall
130.13 	have it recorded before it is forwarded to the purchaser.
130.14 	Failure to make any payment herein required shall constitute
130.15 	default and upon such default and cancellation in accord with
130.16 	section 282.40, the right, title and interest of the purchaser
130.17 	or the purchaser's heirs, representatives, or assigns in such
130.18 	parcel shall terminate.

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

130.21 	Sec. 37. Minnesota Statutes 2004, section 290B.05,
130.22 	subdivision 3, is amended to read:
130.23 		Subd. 3.Calculation of deferred property tax amount.
 130.24 	When final property tax amounts for the following year have been
130.25 	determined, the county auditor shall calculate the "deferred
130.26 	property tax amount."  The deferred property tax amount is equal
130.27 	to the lesser of (1) the maximum allowable deferral for the
130.28 	year; or (2) the difference between (i) the total amount of
130.29 	property taxes and special assessments levied upon the
130.30 	qualifying homestead by all taxing jurisdictions and (ii) the
130.31 	maximum property tax amount. Any special assessments levied by
130.32 	any local unit of government must not be included in the total
130.33 	tax used to calculate the deferred tax amount.For this purpose
130.34 	"special assessments" includes any assessment, fee, or other
130.35 	charge that may by law, and which does, appear on the property
130.36 	tax statement for the property for collection under the laws
131.1 	applicable to the enforcement of real estate taxes.Any tax
131.2 	attributable to new improvements made to the property after the
131.3 	initial application has been approved under section 290B.04,
131.4 	subdivision 2, must be excluded when determining any subsequent
131.5 	deferred property tax amount.  The county auditor shall
131.6 	annually, on or before April 15, certify to the commissioner of
131.7 	revenue the property tax deferral amounts determined under this
131.8 	subdivision by property and by owner.
131.9 	
EFFECTIVE DATE. This section is effective for amounts
131.10 	deferred in 2006 and thereafter.

131.11 	Sec. 38. Minnesota Statutes 2004, section 290C.05, is
131.12 	amended to read:
131.13 	290C.05 ANNUAL CERTIFICATION.
131.14 	On or before July 1 of each year, beginning with the year
131.15 	after the claimant has received an approved application, the
131.16 	commissioner shall send each claimant enrolled under the
131.17 	sustainable forest incentive program a certification form.  The
131.18 	claimant must sign the certification, attesting that the
131.19 	requirements and conditions for continued enrollment in the
131.20 	program are currently being met, and must return the signed
131.21 	certification form to the commissioner by August 15 of that same
131.22 	year. Failure to If the claimant does not return an annual
131.23 	certification form by the due date shall result in removal of
131.24 	the lands from the provisions of the sustainable forest
131.25 	incentive program, and the imposition of any applicable removal
131.26 	penalty , the provisions in section 290C.11 apply. The claimant
131.27 	may appeal the removal and any associated penalty according to
131.28 	the procedures and within the time allowed under this chapter.

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

131.31 	Sec. 39. [290C.055] LENGTH OF COVENANT.
131.32 	The covenant remains in effect for a minimum of eight
131.33 	years.  If land is removed from the program before it has been
131.34 	enrolled for four years, the covenant remains in effect for
131.35 	eight years from the date recorded.
131.36 	If land that has been enrolled for four years or more is
132.1 	removed from the program for any reason, there is a waiting
132.2 	period before the covenant terminates.  The covenant terminates
132.3 	on January 1 of the fifth calendar year that begins after the
132.4 	date that:
132.5 	(1) the commissioner receives notification from the
132.6 	claimant that the claimant wishes to remove the land from the
132.7 	program under section 290C.10; or 
132.8 	(2) the date that the land is removed from the program
132.9 	under section 290C.11.
132.10 	Notwithstanding the other provisions of this section, the
132.11 	covenant is terminated at the same time that the land is removed
132.12 	from the program due to acquisition of title or possession for a
132.13 	public purpose under section 290C.10.

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

132.16 	Sec. 40. Minnesota Statutes 2004, section 290C.10, is
132.17 	amended to read:
132.18 	290C.10 WITHDRAWAL PROCEDURES.
132.19 	An approved claimant under the sustainable forest incentive
132.20 	program for a minimum of four years may notify the commissioner
132.21 	of the intent to terminate enrollment.  Within 90 days of
132.22 	receipt of notice to terminate enrollment, the commissioner
132.23 	shall inform the claimant in writing, acknowledging receipt of
132.24 	this notice and indicating the effective date of termination
132.25 	from the sustainable forest incentive program.  Termination of
132.26 	enrollment in the sustainable forest incentive program occurs on
132.27 	January 1 of the fifth calendar year that begins after receipt
132.28 	by the commissioner of the termination notice.  After the
132.29 	commissioner issues an effective date of termination, a claimant
132.30 	wishing to continue the land's enrollment in the sustainable
132.31 	forest incentive program beyond the termination date must apply
132.32 	for enrollment as prescribed in section 290C.04.  A claimant who
132.33 	withdraws a parcel of land from this program may not reenroll
132.34 	the parcel for a period of three years.  Within 90 days after
132.35 	the termination date, the commissioner shall execute and
132.36 	acknowledge a document releasing the land from the covenant
133.1 	required under this chapter.  The document must be mailed to the
133.2 	claimant and is entitled to be recorded.  The commissioner may
133.3 	allow early withdrawal from the Sustainable Forest Incentive Act
133.4 	without penalty in cases of condemnation when the state of
133.5 	Minnesota, any local government unit, or any other entity which
133.6 	has the right of eminent domain acquires title or possession to
133.7 	the land for a public purpose notwithstanding the provisions of
133.8 	this section. In the case of such acquisition, the commissioner
133.9 	shall execute and acknowledge a document releasing the land
133.10 	acquired by the state, local government unit, or other entity
133.11 	from the covenant.  All other enrolled land must remain in the
133.12 	program.

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

133.15 	Sec. 41. Minnesota Statutes 2004, section 373.45,
133.16 	subdivision 7, is amended to read:
133.17 		Subd. 7.Aid reduction for repayment.  (a) Except as
133.18 	provided in paragraph (b), the commissioner may reduce, by the
133.19 	amount paid by the state under this section on behalf of the
133.20 	county, plus the interest due on the state payments, the
133.21 	following aids payable to the county:
133.22 	(1) homestead and agricultural credit aid and disparity
133.23 	reduction aid payable under section 273.1398;
133.24 	(2) county criminal justice aid payable under section
133.25 	477A.0121; and 
133.26 	(3) family preservation aid payable under section 477A.0122
133.27 	county program aid under section 477A.0124.
133.28 	The amount of any aid reduction reverts from the appropriate
133.29 	account to the state general fund.
133.30 	(b) If, after review of the financial situation of the
133.31 	county, the authority advises the commissioner that a total
133.32 	reduction of the aids would cause an undue hardship on the
133.33 	county, the authority, with the approval of the commissioner,
133.34 	may establish a different schedule for reduction of aids to
133.35 	repay the state.  The amount of aids to be reduced are decreased
133.36 	by any amounts repaid to the state by the county from other
134.1 	revenue sources.
134.2 	
EFFECTIVE DATE. This section is effective for aid payable
134.3 	in 2005 and thereafter.

134.4 	Sec. 42. Minnesota Statutes 2004, section 469.1735,
134.5 	subdivision 3, is amended to read:
134.6 		Subd. 3.Transfer authority for property tax.  (a) A city
134.7 	may elect to use all or part of its allocation under subdivision
134.8 	2 to reimburse the city or county or both for property tax
134.9 	reductions under section 272.0212.  To elect this option, the
134.10 	city must notify the commissioner of revenue by October 1 of
134.11 	each calendar year of the amount of the property tax
134.12 	reductions for which it seeks reimbursements for taxes payable
134.13 	during the following current year and the governmental units to
134.14 	which the amounts will be paid.  The commissioner may require
134.15 	the city to provide information substantiating the amount of the
134.16 	reductions granted or any other information necessary to
134.17 	administer this provision.  The commissioner shall pay the
134.18 	reimbursements by December 26 of the taxes payable year.  Any
134.19 	amount transferred under this authority reduces the amount of
134.20 	tax credit certificates available under subdivisions 1 and 2.
134.21 	(b) The amount elected by the city under paragraph (a) is
134.22 	appropriated to the commissioner of revenue from the general
134.23 	fund to reimburse the city or county for tax reductions under
134.24 	section 272.0212.  The amount appropriated may not exceed the
134.25 	maximum amounts allocated to a city under subdivision 2,
134.26 	paragraph (b), less the amount of certificates issued by the
134.27 	city under subdivision 1, and is available until expended.
134.28 	
EFFECTIVE DATE. This section is effective for
134.29 	reimbursements of taxes payable in 2005 and thereafter.

134.30 	Sec. 43. Laws 2003, chapter 127, article 5, section 27,
134.31 	the effective date, is amended to read:

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

134.35 	Sec. 44. Laws 2003, chapter 127, article 5, section 28,
134.36 	the effective date, is amended to read:

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

135.4 	Sec. 45. LINCOLN AND PIPESTONE COUNTIES; TOWN LEVY
135.5 	ADJUSTMENT FOR WIND ENERGY PRODUCTION TAX.
 135.6 	Notwithstanding the deadlines in Minnesota Statutes,
135.7 	section 275.07, towns located in Lincoln or Pipestone County are
135.8 	authorized to adjust their payable 2004 levy for all or a
135.9 	portion of their estimated wind energy production tax amounts
135.10 	for 2004, as computed by the commissioner of revenue from
135.11 	reports filed under Minnesota Statutes, section 272.029,
135.12 	subdivision 4.  The Lincoln and Pipestone County auditors may
135.13 	adjust the payable 2004 levy certifications under Minnesota
135.14 	Statutes, section 275.07, subdivision 1, based upon the towns
135.15 	that have recertified their levies under this section by March
135.16 	15, 2004.

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

135.19 	Sec. 46. REPEALER.
 135.20 	(a) Minnesota Statutes 2004, sections 273.19, subdivision
135.21 	5; 274.05; 275.15; 275.61, subdivision 2; and 283.07, are
135.22 	repealed effective the day following final enactment.
135.23 	(b) Minnesota Statutes 2004, section 469.1794, subdivision
135.24 	6, is repealed effective the day following final enactment and
135.25 	applies to districts for which the request for certification was
135.26 	made on, before, or after August 1, 1979, and before August 1,
135.27 	2001.
135.28 	(c) Laws 1975, chapter 287, section 5, and Laws 2003,
135.29 	chapter 127, article 9, section 9, subdivision 4, are repealed
135.30 	effective without local approval for taxes payable in 2006 and
135.31 	thereafter.
135.32 	(d) Minnesota Statutes 2004, sections 270.85; 270.88; and
135.33 	273.37, subdivision 3, are repealed effective September 1, 2005.

135.34 	ARTICLE 5
135.35 	INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

135.36 	Section 1. Minnesota Statutes 2004, section 190.09,
136.1 	subdivision 2, is amended to read:
136.2 		Subd. 2.Mission; efficiency.  It is part of the
136.3 	department's mission that within the department's resources the
136.4 	adjutant general shall endeavor to:
136.5 	(1) prevent the waste or unnecessary spending of public
136.6 	money;
136.7 	(2) use innovative fiscal and human resource practices to
136.8 	manage the state's resources and operate the department as
136.9 	efficiently as possible;
136.10 	(3) coordinate the department's activities wherever
136.11 	appropriate with the activities of other governmental agencies;
136.12 	(4) use technology where appropriate to increase agency
136.13 	productivity, improve customer service, increase public access
136.14 	to information about government, and increase public
136.15 	participation in the business of government;
136.16 	(5) utilize constructive and cooperative labor-management
136.17 	practices to the extent otherwise required by chapters 43A and
136.18 	179A;
136.19 	(6) report to the legislature on the performance of agency
136.20 	operations and the accomplishment of agency goals in the
136.21 	agency's biennial budget according to section 16A.10,
136.22 	subdivision 1; and 
136.23 	(7) recommend to the legislature appropriate changes in law
136.24 	necessary to carry out the mission and improve the performance
136.25 	of the department; and 
136.26 	(8) administer checkoff funds as provided in section
136.27 	290.433.
136.28 	
EFFECTIVE DATE. This section is effective for taxable
136.29 	years beginning after December 31, 2004.

136.30 	Sec. 2. Minnesota Statutes 2004, section 289A.08,
136.31 	subdivision 1, is amended to read:
136.32 		Subdivision 1.Generally; individuals.  (a) A taxpayer
136.33 	must file a return for each taxable year the taxpayer is
136.34 	required to file a return under section 6012 of the Internal
136.35 	Revenue Code, except that:
136.36 	(1) an individual who is not a Minnesota resident for any
137.1 	part of the year is not required to file a Minnesota income tax
137.2 	return if the individual's gross income derived from Minnesota
137.3 	sources as determined under sections 290.081, paragraph (a), and
137.4 	290.17, is less than the filing requirements for a single
137.5 	individual who is a full year resident of Minnesota; and 
137.6 	(2) an individual who is a Minnesota resident is not
137.7 	required to file a Minnesota income tax return if the
137.8 	individual's gross income derived from Minnesota sources as
137.9 	determined under section 290.17, less the amount of the
137.10 	individual's gross income that consists of compensation paid to
137.11 	members of the armed forces of the United States or United
137.12 	Nations for active duty performed outside Minnesota, is less
137.13 	than the filing requirements for a single individual who is a
137.14 	full-year resident of Minnesota.
137.15 	(b) The decedent's final income tax return, and other
137.16 	income tax returns for prior years where the decedent had gross
137.17 	income in excess of the minimum amount at which an individual is
137.18 	required to file and did not file, must be filed by the
137.19 	decedent's personal representative, if any.  If there is no
137.20 	personal representative, the return or returns must be filed by
137.21 	the transferees, as defined in section 289A.38, subdivision 13,
137.22 	who receive property of the decedent.
137.23 	(c) The term "gross income," as it is used in this section,
137.24 	has the same meaning given it in section 290.01, subdivision 20.
137.25 	
EFFECTIVE DATE. This section is effective for taxable
137.26 	years beginning after December 31, 2004.

137.27 	Sec. 3. Minnesota Statutes 2004, section 289A.08,
137.28 	subdivision 3, is amended to read:
137.29 		Subd. 3.Corporations.  A corporation that is subject to
137.30 	the state's jurisdiction to tax under section 290.014,
137.31 	subdivision 5, must file a return, except that a foreign
137.32 	operating corporation as defined in section 290.01, subdivision
137.33 	6b, is not required to file a return.  The commissioner shall
137.34 	adopt rules for the filing of one return on behalf of the
137.35 	members of an affiliated group of corporations that are required
137.36 	to file a combined report.  All members of an affiliated group
138.1 	that are required to file a combined report must file one return
138.2 	on behalf of the members of the group under rules adopted by the
138.3 	commissioner. If a corporation claims on a return that it has
138.4 	paid tax in excess of the amount of taxes lawfully due, that
138.5 	corporation must include on that return information necessary
138.6 	for payment of the tax in excess of the amount lawfully due by
138.7 	electronic means.
138.8 	
EFFECTIVE DATE. This section is effective for returns
138.9 	filed after December 31, 2005.

138.10 	Sec. 4. Minnesota Statutes 2004, section 289A.08,
138.11 	subdivision 7, is amended to read:
138.12 		Subd. 7.Composite income tax returns for nonresident
138.13 	partners, shareholders, and beneficiaries.  (a) The commissioner
138.14 	may allow a partnership with nonresident partners to file a
138.15 	composite return and to pay the tax on behalf of nonresident
138.16 	partners who have no other Minnesota source income.  This
138.17 	composite return must include the names, addresses, Social
138.18 	Security numbers, income allocation, and tax liability for the
138.19 	nonresident partners electing to be covered by the composite
138.20 	return.
138.21 	(b) The computation of a partner's tax liability must be
138.22 	determined by multiplying the income allocated to that partner
138.23 	by the highest rate used to determine the tax liability for
138.24 	individuals under section 290.06, subdivision 2c.  Nonbusiness
138.25 	deductions, standard deductions, or personal exemptions are not
138.26 	allowed.
138.27 	(c) The partnership must submit a request to use this
138.28 	composite return filing method for nonresident partners.  The
138.29 	requesting partnership must file a composite return in the form
138.30 	prescribed by the commissioner of revenue.  The filing of a
138.31 	composite return is considered a request to use the composite
138.32 	return filing method.
138.33 	(d) The electing partner must not have any Minnesota source
138.34 	income other than the income from the partnership and other
138.35 	electing partnerships.  If it is determined that the electing
138.36 	partner has other Minnesota source income, the inclusion of the
139.1 	income and tax liability for that partner under this provision
139.2 	will not constitute a return to satisfy the requirements of
139.3 	subdivision 1.  The tax paid for the individual as part of the
139.4 	composite return is allowed as a payment of the tax by the
139.5 	individual on the date on which the composite return payment was
139.6 	made.  If the electing nonresident partner has no other
139.7 	Minnesota source income, filing of the composite return is a
139.8 	return for purposes of subdivision 1.
139.9 	(e) This subdivision does not negate the requirement that
139.10 	an individual pay estimated tax if the individual's liability
139.11 	would exceed the requirements set forth in section 289A.25.  A
139.12 	composite estimate may, however, be filed in a manner similar to
139.13 	and containing the information required under paragraph (a).
139.14 	(f) If an electing partner's share of the partnership's
139.15 	gross income from Minnesota sources is less than the filing
139.16 	requirements for a nonresident under this subdivision, the tax
139.17 	liability is zero.  However, a statement showing the partner's
139.18 	share of gross income must be included as part of the composite
139.19 	return.
139.20 	(g) The election provided in this subdivision is not only 
139.21 	available to any a partner other than who has no other Minnesota
139.22 	source income and who is either (1) a full-year nonresident
139.23 	individual who has no other Minnesota source income or (2) a
139.24 	trust or estate that does not claim a deduction under either
139.25 	section 651 or 661 of the Internal Revenue Code.
139.26 	(h) A corporation defined in section 290.9725 and its
139.27 	nonresident shareholders may make an election under this
139.28 	paragraph.  The provisions covering the partnership apply to the
139.29 	corporation and the provisions applying to the partner apply to
139.30 	the shareholder.
139.31 	(i) Estates and trusts distributing current income only and
139.32 	the nonresident individual beneficiaries of the estates or
139.33 	trusts may make an election under this paragraph.  The
139.34 	provisions covering the partnership apply to the estate or
139.35 	trust.  The provisions applying to the partner apply to the
139.36 	beneficiary.
140.1 	(j) For the purposes of this subdivision, "income" means
140.2 	the partner's share of federal adjusted gross income from the
140.3 	partnership modified by the additions provided in section
140.4 	290.01, subdivision 19a, clauses (6) and (7), and the
140.5 	subtractions provided in section 290.01, subdivision 19b, clause
140.6 	(11), to the extent the amount is assignable or allocable to
140.7 	Minnesota under section 290.17.  The subtraction allowed under
140.8 	section 290.01, subdivision 19b, clause (11), is only allowed on
140.9 	the composite tax computation to the extent the electing partner
140.10 	would have been allowed the subtraction.
140.11 	
EFFECTIVE DATE. This section is effective for tax years
140.12 	beginning after December 31, 2004.

140.13 	Sec. 5. Minnesota Statutes 2004, section 289A.08,
140.14 	subdivision 13, is amended to read:
140.15 		Subd. 13.Long and short forms.  The commissioner shall
140.16 	provide a long form individual income tax return and may provide
140.17 	a short form individual income tax return.  The returns shall be
140.18 	in a form that is consistent with the provisions of chapter 290,
140.19 	notwithstanding any other law to the contrary.  The nongame
140.20 	wildlife checkoff provided in section 290.431 and the dependent
140.21 	care credit provided in section 290.067 must be included on the
140.22 	short form. The commissioner must provide information on local
140.23 	use taxes in the individual income tax instruction booklet,
140.24 	including a list of the jurisdictions with local use taxes.  The
140.25 	commissioner must provide this information in the same section
140.26 	of the booklet that provides information on the state use tax.
140.27 	
EFFECTIVE DATE. This section is effective for taxable
140.28 	years beginning after December 31, 2004.

140.29 	Sec. 6. Minnesota Statutes 2004, section 289A.18,
140.30 	subdivision 1, is amended to read:
140.31 		Subdivision 1.Individual income, fiduciary income,
140.32 	corporate franchise, and entertainment taxes; partnership and s
140.33 	corporation returns; information returns; mining company
140.34 	returns.  The returns required to be made under sections 289A.08
140.35 	and 289A.12 must be filed at the following times:
140.36 	(1) returns made on the basis of the calendar year must be
141.1 	filed on April 15 following the close of the calendar year,
141.2 	except that returns of corporations must be filed on March 15
141.3 	following the close of the calendar year;
141.4 	(2) returns made on the basis of the fiscal year must be
141.5 	filed on the 15th day of the fourth month following the close of
141.6 	the fiscal year, except that returns of corporations must be
141.7 	filed on the 15th day of the third month following the close of
141.8 	the fiscal year;
141.9 	(3) returns for a fractional part of a year must be filed
141.10 	on the 15th day of the fourth month following the end of the
141.11 	month in which falls the last day of the period for which the
141.12 	return is made, except that the returns of corporations must be
141.13 	filed on the 15th day of the third month following the end of
141.14 	the month tax year of the unitary group in which falls the last
141.15 	day of the period for which the return is made;
141.16 	(4) in the case of a final return of a decedent for a
141.17 	fractional part of a year, the return must be filed on the 15th
141.18 	day of the fourth month following the close of the 12-month
141.19 	period that began with the first day of that fractional part of
141.20 	a year;
141.21 	(5) in the case of the return of a cooperative association,
141.22 	returns must be filed on or before the 15th day of the ninth
141.23 	month following the close of the taxable year;
141.24 	(6) if a corporation has been divested from a unitary group
141.25 	and files a return for a fractional part of a year in which it
141.26 	was a member of a unitary business that files a combined report
141.27 	under section 290.34, subdivision 2, the divested corporation's
141.28 	return must be filed on the 15th day of the third month
141.29 	following the close of the common accounting period that
141.30 	includes the fractional year;
141.31 	(7) returns of entertainment entities must be filed on
141.32 	April 15 following the close of the calendar year;
141.33 	(8) returns required to be filed under section 289A.08,
141.34 	subdivision 4, must be filed on the 15th day of the fifth month
141.35 	following the close of the taxable year;
141.36 	(9) returns of mining companies must be filed on May 1
142.1 	following the close of the calendar year; and
142.2 	(10) returns required to be filed with the commissioner
142.3 	under section 289A.12, subdivision 2, 4 to 10, or 14, must be
142.4 	filed within 30 days after being demanded by the commissioner.
142.5 	
EFFECTIVE DATE. This section is effective for fractional
142.6 	years closing after December 31, 2004.

142.7 	Sec. 7. Minnesota Statutes 2004, section 289A.19,
142.8 	subdivision 4, is amended to read:
142.9 		Subd. 4.Estate tax returns. When in the commissioner's
142.10 	judgment good cause exists, the commissioner may extend the time
142.11 	for filing an estate tax return for not more than six months.
142.12 	When an extension to file the federal estate tax return has been
142.13 	granted under section 6081 of the Internal Revenue Code, the
142.14 	time for filing the estate tax return is extended for that
142.15 	period. If the estate requests an extension to file an estate
142.16 	tax return within the time provided in section 289A.18,
142.17 	subdivision 3, the commissioner shall extend the time for filing
142.18 	the estate tax return for six months.
142.19 	
EFFECTIVE DATE. This section is effective for estates of
142.20 	decedents dying after December 31, 2004.

142.21 	Sec. 8. Minnesota Statutes 2004, section 289A.20,
142.22 	subdivision 2, is amended to read:
142.23 		Subd. 2.Withholding from wages, entertainer withholding,
142.24 	withholding from payments to out-of-state contractors, and
142.25 	withholding by partnerships and small business corporations.
 142.26 	(a) A tax required to be deducted and withheld during the
142.27 	quarterly period must be paid on or before the last day of the
142.28 	month following the close of the quarterly period, unless an
142.29 	earlier time for payment is provided.  A tax required to be
142.30 	deducted and withheld from compensation of an entertainer and
142.31 	from a payment to an out-of-state contractor must be paid on or
142.32 	before the date the return for such tax must be filed under
142.33 	section 289A.18, subdivision 2.  Taxes required to be deducted
142.34 	and withheld by partnerships and ,S corporations, and trusts 
142.35 	must be paid on or before the date the return must be filed
142.36 	under section 289A.18, subdivision 2a quarterly basis as
143.1 	estimated taxes under section 289A.25 for partnerships and
143.2 	trusts and under section 289A.26 for S corporations.
143.3 	(b) An employer who, during the previous quarter, withheld
143.4 	more than $1,500 of tax under section 290.92, subdivision 2a or
143.5 	3, or 290.923, subdivision 2, must deposit tax withheld under
143.6 	those sections with the commissioner within the time allowed to
143.7 	deposit the employer's federal withheld employment taxes under
143.8 	Code of Federal Regulations, title 26, section 31.6302-1, as
143.9 	amended through December 31, 2001, without regard to the safe
143.10 	harbor or de minimis rules in subparagraph (f) or the one-day
143.11 	rule in subsection (c), clause (3).  Taxpayers must submit a
143.12 	copy of their federal notice of deposit status to the
143.13 	commissioner upon request by the commissioner.
143.14 	(c) The commissioner may prescribe by rule other return
143.15 	periods or deposit requirements.  In prescribing the reporting
143.16 	period, the commissioner may classify payors according to the
143.17 	amount of their tax liability and may adopt an appropriate
143.18 	reporting period for the class that the commissioner judges to
143.19 	be consistent with efficient tax collection.  In no event will
143.20 	the duration of the reporting period be more than one year.
143.21 	(d) If less than the correct amount of tax is paid to the
143.22 	commissioner, proper adjustments with respect to both the tax
143.23 	and the amount to be deducted must be made, without interest, in
143.24 	the manner and at the times the commissioner prescribes.  If the
143.25 	underpayment cannot be adjusted, the amount of the underpayment
143.26 	will be assessed and collected in the manner and at the times
143.27 	the commissioner prescribes.
143.28 	(e) If the aggregate amount of the tax withheld during a
143.29 	fiscal year ending June 30 under section 290.92, subdivision 2a
143.30 	or 3, is equal to or exceeds the amounts established for
143.31 	remitting federal withheld taxes pursuant to the regulations
143.32 	promulgated under section 6302(h) of the Internal Revenue Code,
143.33 	the employer must remit each required deposit for wages paid in
143.34 	the subsequent calendar year by electronic means.
143.35 	(f) A third-party bulk filer as defined in section 290.92,
143.36 	subdivision 30, paragraph (a), clause (2), who remits
144.1 	withholding deposits must remit all deposits by electronic means
144.2 	as provided in paragraph (e), regardless of the aggregate amount
144.3 	of tax withheld during a fiscal year for all of the employers.
144.4 	
EFFECTIVE DATE. This section is effective for tax years
144.5 	beginning after December 31, 2005.

144.6 	Sec. 9. Minnesota Statutes 2004, section 289A.31,
144.7 	subdivision 2, is amended to read:
144.8 		Subd. 2.Joint income tax returns.  (a) If a joint income
144.9 	tax return is made by a husband and wife, the liability for the
144.10 	tax is joint and several.  A spouse who qualifies for relief
144.11 	from a liability attributable to an underpayment under section
144.12 	6015(b) of the Internal Revenue Code is relieved of the state
144.13 	income tax liability on the underpayment.
144.14 	(b) In the case of individuals who were a husband and wife
144.15 	prior to the dissolution of their marriage or their legal
144.16 	separation, or prior to the death of one of the individuals, for
144.17 	tax liabilities reported on a joint or combined return, the
144.18 	liability of each person is limited to the proportion of the tax
144.19 	due on the return that equals that person's proportion of the
144.20 	total tax due if the husband and wife filed separate returns for
144.21 	the taxable year.  This provision is effective only when the
144.22 	commissioner receives written notice of the marriage
144.23 	dissolution, legal separation, or death of a spouse from the
144.24 	husband or wife.  No refund may be claimed by an ex-spouse,
144.25 	legally separated or widowed spouse for any taxes paid more than
144.26 	60 days before receipt by the commissioner of the written notice.
144.27 	(c) A request for calculation of separate liability
144.28 	pursuant to paragraph (b) for taxes reported on a return must be
144.29 	made within six years after the due date of the return.  For
144.30 	calculation of separate liability for taxes assessed by the
144.31 	commissioner under section 289A.35 or 289A.37, the request must
144.32 	be made within six years after the date of assessment.  The
144.33 	commissioner is not required to calculate separate liability if
144.34 	the remaining unpaid liability for which recalculation is
144.35 	requested is $100 or less.
144.36 	
EFFECTIVE DATE. This section is effective for requests
145.1 	for relief made on or after the day following final enactment.

145.2 	Sec. 10. Minnesota Statutes 2004, section 289A.38,
145.3 	subdivision 7, is amended to read:
145.4 		Subd. 7.Federal tax changes.  If the amount of income,
145.5 	items of tax preference, deductions, or credits for any year of
145.6 	a taxpayer as reported to the Internal Revenue Service is
145.7 	changed or corrected by the commissioner of Internal Revenue or
145.8 	other officer of the United States or other competent authority,
145.9 	or where a renegotiation of a contract or subcontract with the
145.10 	United States results in a change in income, items of tax
145.11 	preference, deductions, credits, or withholding tax, or, in the
145.12 	case of estate tax, where there are adjustments to the taxable
145.13 	estate resulting in a change to the credit for state death
145.14 	taxes, the taxpayer shall report the change or correction or
145.15 	renegotiation results in writing to the commissioner.  The
145.16 	report must be submitted within 180 days after the final
145.17 	determination and must be in the form of either an amended
145.18 	Minnesota estate, withholding tax, corporate franchise tax,or
145.19 	income tax return conceding the accuracy of the federal
145.20 	determination or a letter detailing how the federal
145.21 	determination is incorrect or does not change the Minnesota
145.22 	tax.  An amended Minnesota income tax return must be accompanied
145.23 	by an amended property tax refund return, if necessary.  A
145.24 	taxpayer filing an amended federal tax return must also file a
145.25 	copy of the amended return with the commissioner of revenue
145.26 	within 180 days after filing the amended return.
145.27 	
EFFECTIVE DATE. This section is effective the day
145.28 	following final enactment.

145.29 	Sec. 11. Minnesota Statutes 2004, section 289A.50,
145.30 	subdivision 1a, is amended to read:
145.31 		Subd. 1a.Refund form.  On or before January 1, 2000, the
145.32 	commissioner of revenue shall prepare and make available to
145.33 	taxpayers a form for filing claims for refund of taxes paid in
145.34 	excess of the amount due. If the commissioner fails to prepare
145.35 	a form under this subdivision by January 1, 2000, any claims for
145.36 	refund made after January 1, 2000, and up to ten days after the
146.1 	form is made available to taxpayers are deemed to be made in
146.2 	compliance with the requirement of the form.The commissioner
146.3 	may require corporate franchise taxpayers claiming a refund of
146.4 	corporate franchise taxes paid in excess of the amount lawfully
146.5 	due to include on the claim for refund or amended return
146.6 	information necessary for payment of the taxes paid in excess of
146.7 	taxes lawfully due by electronic means.
146.8 	
EFFECTIVE DATE. This section is effective for claims for
146.9 	refund filed after December 31, 2005.

146.10 	Sec. 12. Minnesota Statutes 2004, section 289A.60,
146.11 	subdivision 13, is amended to read:
146.12 		Subd. 13.Penalties for tax return preparers.  (a) If an
146.13 	understatement of liability with respect to a return or claim
146.14 	for refund is due to a reckless disregard of laws and rules or 
146.15 	willful attempt in any manner to understate the liability for a
146.16 	tax by a person who is a tax return preparer with respect to the
146.17 	return or claim, the person shall pay to the commissioner a
146.18 	penalty of $500.  If a part of a property tax refund claim is
146.19 	excessive due to a reckless disregard or willful attempt in any
146.20 	manner to overstate the claim for relief allowed under chapter
146.21 	290A by a person who is a tax refund or return preparer, the
146.22 	person shall pay to the commissioner a penalty of $500 with
146.23 	respect to the claim.  These penalties may not be assessed
146.24 	against the employer of a tax return preparer unless the
146.25 	employer was actively involved in the reckless disregard or 
146.26 	willful attempt to understate the liability for a tax or to
146.27 	overstate the claim for refund.  These penalties are income tax
146.28 	liabilities and may be assessed at any time as provided in
146.29 	section 289A.38, subdivision 5.
146.30 	(b) A civil action in the name of the state of Minnesota
146.31 	may be commenced to enjoin any person who is a tax return
146.32 	preparer doing business in this state from further engaging in
146.33 	any conduct described in paragraph (c).  An action under this
146.34 	paragraph must be brought by the attorney general in the
146.35 	district court for the judicial district of the tax return
146.36 	preparer's residence or principal place of business, or in which
147.1 	the taxpayer with respect to whose tax return the action is
147.2 	brought resides.  The court may exercise its jurisdiction over
147.3 	the action separate and apart from any other action brought by
147.4 	the state of Minnesota against the tax return preparer or any
147.5 	taxpayer.
147.6 	(c) In an action under paragraph (b), if the court finds
147.7 	that a tax return preparer has:
147.8 	(1) engaged in any conduct subject to a civil penalty under
147.9 	section 289A.60 or a criminal penalty under section 289A.63;
147.10 	(2) misrepresented the preparer's eligibility to practice
147.11 	before the Department of Revenue, or otherwise misrepresented
147.12 	the preparer's experience or education as a tax return preparer;
147.13 	(3) guaranteed the payment of any tax refund or the
147.14 	allowance of any tax credit; or
147.15 	(4) engaged in any other fraudulent or deceptive conduct
147.16 	that substantially interferes with the proper administration of
147.17 	state tax law, and injunctive relief is appropriate to prevent
147.18 	the recurrence of that conduct,
147.19 	the court may enjoin the person from further engaging in that
147.20 	conduct.
147.21 	(d) If the court finds that a tax return preparer has
147.22 	continually or repeatedly engaged in conduct described in
147.23 	paragraph (c), and that an injunction prohibiting that conduct
147.24 	would not be sufficient to prevent the person's interference
147.25 	with the proper administration of state tax laws, the court may
147.26 	enjoin the person from acting as a tax return preparer.  The
147.27 	court may not enjoin the employer of a tax return preparer for
147.28 	conduct described in paragraph (c) engaged in by one or more of
147.29 	the employer's employees unless the employer was also actively
147.30 	involved in that conduct.
147.31 	(e) For purposes of this subdivision, the term
147.32 	"understatement of liability" means an understatement of the net
147.33 	amount payable with respect to a tax imposed by state tax law,
147.34 	or an overstatement of the net amount creditable or refundable
147.35 	with respect to a tax.  The determination of whether or not
147.36 	there is an understatement of liability must be made without
148.1 	regard to any administrative or judicial action involving the
148.2 	taxpayer.  For purposes of this subdivision, the amount
148.3 	determined for underpayment of estimated tax under either
148.4 	section 289A.25 or 289A.26 is not considered an understatement
148.5 	of liability.
148.6 	(f) For purposes of this subdivision, the term
148.7 	"overstatement of claim" means an overstatement of the net
148.8 	amount refundable with respect to a claim for property tax
148.9 	relief provided by chapter 290A.  The determination of whether
148.10 	or not there is an overstatement of a claim must be made without
148.11 	regard to administrative or judicial action involving the
148.12 	claimant.
148.13 	(g) For purposes of this section, the term "tax refund or
148.14 	return preparer" means an individual who prepares for
148.15 	compensation, or who employs one or more individuals to prepare
148.16 	for compensation, a return of tax, or a claim for refund of
148.17 	tax.  The preparation of a substantial part of a return or claim
148.18 	for refund is treated as if it were the preparation of the
148.19 	entire return or claim for refund.  An individual is not
148.20 	considered a tax return preparer merely because the individual:
148.21 	(1) gives typing, reproducing, or other mechanical
148.22 	assistance;
148.23 	(2) prepares a return or claim for refund of the employer,
148.24 	or an officer or employee of the employer, by whom the
148.25 	individual is regularly and continuously employed;
148.26 	(3) prepares a return or claim for refund of any person as
148.27 	a fiduciary for that person; or
148.28 	(4) prepares a claim for refund for a taxpayer in response
148.29 	to a tax order issued to the taxpayer.
148.30 	
EFFECTIVE DATE. This section is effective for returns
148.31 	filed after December 31, 2005.

148.32 	Sec. 13. Minnesota Statutes 2004, section 289A.60, is
148.33 	amended by adding a subdivision to read:
148.34 		Subd. 26.Restrictions on taxpayers who improperly claim
148.35 	refundable credits. (a) If a person claims a credit or refund
148.36 	under section 290.067, 290.0671, 290.0674, or chapter 290A and
149.1 	the claimed credit or refund is determined to be claimed
149.2 	fraudulently or with reckless or intentional disregard of the
149.3 	applicable provisions for the credit or refund, the person is
149.4 	barred from claiming that credit or refund for the disallowance
149.5 	period.
149.6 	(b) For the purposes of paragraph (a), the "disallowance
149.7 	period" is (1) ten taxable years from the taxable year the
149.8 	credit or refund is claimed if the credit or refund was
149.9 	fraudulently claimed; and (2) two taxable years from the taxable
149.10 	year the credit or refund is claimed if the credit or refund was
149.11 	not fraudulent but was claimed with reckless or intentional
149.12 	disregard of the applicable provisions.
149.13 	
EFFECTIVE DATE. This section is effective for credits or
149.14 	refunds claimed after December 31, 2005.

149.15 	Sec. 14. Minnesota Statutes 2004, section 290.01,
149.16 	subdivision 7, is amended to read:
149.17 		Subd. 7.Resident.  (a) The term "resident" means any
149.18 	individual domiciled in Minnesota, except that an individual is
149.19 	not a "resident" for the period of time that the individual is
149.20 	either:
149.21 	(1) on active duty stationed outside of Minnesota while in
149.22 	the armed forces of the United States or the United Nations; or 
149.23 	(2) a "qualified individual" as defined in section
149.24 	911(d)(1) of the Internal Revenue Code, if the qualified
149.25 	individual notifies the county within three months of moving out
149.26 	of the country that homestead status be revoked for the
149.27 	Minnesota residence of the qualified individual, and the
149.28 	property is not classified as a homestead while the individual
149.29 	remains a qualified individual.
149.30 	(b) "Resident" also means any individual domiciled outside
149.31 	the state who maintains a place of abode in the state and spends
149.32 	in the aggregate more than one-half of the tax year in
149.33 	Minnesota, unless:
149.34 	(1) the individual or the spouse of the individual is in
149.35 	the armed forces of the United States; or
149.36 	(2) the individual is covered under the reciprocity
150.1 	provisions in section 290.081.
150.2 	For purposes of this subdivision, presence within the state
150.3 	for any part of a calendar day constitutes a day spent in the
150.4 	state.  Individuals shall keep adequate records to substantiate
150.5 	the days spent outside the state.
150.6 	The term "abode" means a dwelling maintained by an
150.7 	individual, whether or not owned by the individual and whether
150.8 	or not occupied by the individual, and includes a dwelling place
150.9 	owned or leased by the individual's spouse.
150.10 	(c) Neither the commissioner nor any court shall consider
150.11 	charitable contributions made by an individual within or without
150.12 	the state the following factors in determining if the individual
150.13 	is domiciled in Minnesota:
150.14 	(1) charitable contributions made by an individual within
150.15 	or without the state;
150.16 	(2) the jurisdiction from which an individual's
150.17 	professional licenses were issued;
150.18 	(3) the location of an individual's union memberships;
150.19 	(4) the location of accounts or transactions with financial
150.20 	institutions;
150.21 	(5) the location of the place of worship at which the
150.22 	individual is a member;
150.23 	(6) the location of business relationships and the place
150.24 	where business is transacted;
150.25 	(7) the location of social, fraternal, or athletic
150.26 	organizations or clubs, lodges, or country clubs, in which the
150.27 	individual is a member; and 
150.28 	(8) statements made to an insurance company, concerning the
150.29 	individual's residence and on which insurance is based.
150.30 	
EFFECTIVE DATE. This section is effective for tax years
150.31 	beginning after December 31, 2004.

150.32 	Sec. 15. Minnesota Statutes 2004, section 290.01,
150.33 	subdivision 7b, is amended to read:
150.34 		Subd. 7b.Resident trust. (a) Resident trust means a
150.35 	trust, except a grantor type trust, which either (1) was created
150.36 	by a will of a decedent who at death was domiciled in this state
151.1 	or (2) is an irrevocable trust, the grantor of which was
151.2 	domiciled in this state at the time the trust became
151.3 	irrevocable.  For the purpose of this subdivision, a trust is
151.4 	considered irrevocable to the extent the grantor is not treated
151.5 	as the owner thereof under sections 671 to 678 of the Internal
151.6 	Revenue Code.  The term "grantor type trust" means a trust where
151.7 	the income or gains of the trust are taxable to the grantor or
151.8 	others treated as substantial owners under sections 671 to 678
151.9 	of the Internal Revenue Code.
151.10 	(b)(1) A trust, other than a grantor type trust, that
151.11 	became irrevocable before January 1, 1996, or that was
151.12 	administered in Minnesota before January 1, 1996, is a resident
151.13 	trust only if two or more of the following conditions are
151.14 	satisfied:
151.15 	(i) a majority of the discretionary decisions of the
151.16 	trustees relative to the investment of trust assets are made in
151.17 	Minnesota;
151.18 	(ii) a majority of the discretionary decisions of the
151.19 	trustees relative to the distributions of trust income and
151.20 	principal are made in Minnesota;
151.21 	(iii) the official books and records of the trust,
151.22 	consisting of the original minutes of trustee meetings and the
151.23 	original trust instruments, are located in Minnesota.
151.24 	(2) For purposes of this paragraph, if the trustees
151.25 	delegate decisions and actions to an agent or custodian, the
151.26 	actions and decisions of the agent or custodian must not be
151.27 	taken into account in determining whether the trust is
151.28 	administered in Minnesota, if:
151.29 	(i) the delegation was permitted under the trust agreement;
151.30 	(ii) the trustees retain the power to revoke the delegation
151.31 	on reasonable notice; and 
151.32 	(iii) the trustees monitor and evaluate the performance of
151.33 	the agent or custodian on a regular basis as is reasonably
151.34 	determined by the trustees.
151.35 	
EFFECTIVE DATE. This section is effective the day
151.36 	following final enactment.

152.1 	Sec. 16. Minnesota Statutes 2004, section 290.01,
152.2 	subdivision 19a, is amended to read:
152.3 		Subd. 19a.Additions to federal taxable income.  For
152.4 	individuals, estates, and trusts, there shall be added to
152.5 	federal taxable income:
152.6 	(1)(i) interest income on obligations of any state other
152.7 	than Minnesota or a political or governmental subdivision,
152.8 	municipality, or governmental agency or instrumentality of any
152.9 	state other than Minnesota exempt from federal income taxes
152.10 	under the Internal Revenue Code or any other federal statute;
152.11 	and
152.12 	(ii) exempt-interest dividends as defined in section
152.13 	852(b)(5) of the Internal Revenue Code, except the portion of
152.14 	the exempt-interest dividends derived from interest income on
152.15 	obligations of the state of Minnesota or its political or
152.16 	governmental subdivisions, municipalities, governmental agencies
152.17 	or instrumentalities, but only if the portion of the
152.18 	exempt-interest dividends from such Minnesota sources paid to
152.19 	all shareholders represents 95 percent or more of the
152.20 	exempt-interest dividends that are paid by the regulated
152.21 	investment company as defined in section 851(a) of the Internal
152.22 	Revenue Code, or the fund of the regulated investment company as
152.23 	defined in section 851(g) of the Internal Revenue Code, making
152.24 	the payment; and
152.25 	(iii) for the purposes of items (i) and (ii), interest on
152.26 	obligations of an Indian tribal government described in section
152.27 	7871(c) of the Internal Revenue Code shall be treated as
152.28 	interest income on obligations of the state in which the tribe
152.29 	is located;
152.30 	(2) the amount of income taxes paid or accrued within the
152.31 	taxable year under this chapter and income the amount of taxes
152.32 	based on net income paid to any other state or to any province
152.33 	or territory of Canada, to the extent allowed as a deduction
152.34 	under section 63(d) of the Internal Revenue Code, but the
152.35 	addition may not be more than the amount by which the itemized
152.36 	deductions as allowed under section 63(d) of the Internal
153.1 	Revenue Code exceeds the amount of the standard deduction as
153.2 	defined in section 63(c) of the Internal Revenue Code.  For the
153.3 	purpose of this paragraph, the disallowance of itemized
153.4 	deductions under section 68 of the Internal Revenue Code of
153.5 	1986, income tax is the last itemized deduction disallowed;
153.6 	(3) the capital gain amount of a lump sum distribution to
153.7 	which the special tax under section 1122(h)(3)(B)(ii) of the Tax
153.8 	Reform Act of 1986, Public Law 99-514, applies;
153.9 	(4) the amount of income taxes paid or accrued within the
153.10 	taxable year under this chapter and income taxes based on net
153.11 	income paid to any other state or any province or territory of
153.12 	Canada, to the extent allowed as a deduction in determining
153.13 	federal adjusted gross income.  For the purpose of this
153.14 	paragraph, income taxes do not include the taxes imposed by
153.15 	sections 290.0922, subdivision 1, paragraph (b), 290.9727,
153.16 	290.9728, and 290.9729;
153.17 	(5) the amount of expense, interest, or taxes disallowed
153.18 	pursuant to section 290.10other than expenses or interest used
153.19 	in computing net interest income for the subtraction allowed
153.20 	under subdivision 19b, clause (1);
153.21 	(6) the amount of a partner's pro rata share of net income
153.22 	which does not flow through to the partner because the
153.23 	partnership elected to pay the tax on the income under section
153.24 	6242(a)(2) of the Internal Revenue Code; and
153.25 	(7) 80 percent of the depreciation deduction allowed under
153.26 	section 168(k) of the Internal Revenue Code.  For purposes of
153.27 	this clause, if the taxpayer has an activity that in the taxable
153.28 	year generates a deduction for depreciation under section 168(k)
153.29 	and the activity generates a loss for the taxable year that the
153.30 	taxpayer is not allowed to claim for the taxable year, "the
153.31 	depreciation allowed under section 168(k)" for the taxable year
153.32 	is limited to excess of the depreciation claimed by the activity
153.33 	under section 168(k) over the amount of the loss from the
153.34 	activity that is not allowed in the taxable year.  In succeeding
153.35 	taxable years when the losses not allowed in the taxable year
153.36 	are allowed, the depreciation under section 168(k) is allowed.
154.1 	
EFFECTIVE DATE. This section is effective for tax years
154.2 	beginning after December 31, 2004.

154.3 	Sec. 17. Minnesota Statutes 2004, section 290.01,
154.4 	subdivision 19b, is amended to read:
154.5 		Subd. 19b.Subtractions from federal taxable income.  For
154.6 	individuals, estates, and trusts, there shall be subtracted from
154.7 	federal taxable income:
154.8 	(1) net interest income on obligations of any authority,
154.9 	commission, or instrumentality of the United States to the
154.10 	extent includable in taxable income for federal income tax
154.11 	purposes but exempt from state income tax under the laws of the
154.12 	United States;
154.13 	(2) if included in federal taxable income, the amount of
154.14 	any overpayment of income tax to Minnesota or to any other
154.15 	state, for any previous taxable year, whether the amount is
154.16 	received as a refund or as a credit to another taxable year's
154.17 	income tax liability;
154.18 	(3) the amount paid to others, less the amount used to
154.19 	claim the credit allowed under section 290.0674, not to exceed
154.20 	$1,625 for each qualifying child in grades kindergarten to 6 and
154.21 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
154.22 	textbooks, and transportation of each qualifying child in
154.23 	attending an elementary or secondary school situated in
154.24 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
154.25 	wherein a resident of this state may legally fulfill the state's
154.26 	compulsory attendance laws, which is not operated for profit,
154.27 	and which adheres to the provisions of the Civil Rights Act of
154.28 	1964 and chapter 363A.  For the purposes of this clause,
154.29 	"tuition" includes fees or tuition as defined in section
154.30 	290.0674, subdivision 1, clause (1).  As used in this clause,
154.31 	"textbooks" includes books and other instructional materials and
154.32 	equipment purchased or leased for use in elementary and
154.33 	secondary schools in teaching only those subjects legally and
154.34 	commonly taught in public elementary and secondary schools in
154.35 	this state.  Equipment expenses qualifying for deduction
154.36 	includes expenses as defined and limited in section 290.0674,
155.1 	subdivision 1, clause (3).  "Textbooks" does not include
155.2 	instructional books and materials used in the teaching of
155.3 	religious tenets, doctrines, or worship, the purpose of which is
155.4 	to instill such tenets, doctrines, or worship, nor does it
155.5 	include books or materials for, or transportation to,
155.6 	extracurricular activities including sporting events, musical or
155.7 	dramatic events, speech activities, driver's education, or
155.8 	similar programs.  For purposes of the subtraction provided by
155.9 	this clause, "qualifying child" has the meaning given in section
155.10 	32(c)(3) of the Internal Revenue Code;
155.11 	(4) income as provided under section 290.0802;
155.12 	(5) to the extent included in federal adjusted gross
155.13 	income, income realized on disposition of property exempt from
155.14 	tax under section 290.491;
155.15 	(6) to the extent included in federal taxable income,
155.16 	postservice benefits for youth community service under section
155.17 	124D.42 for volunteer service under United States Code, title
155.18 	42, sections 12601 to 12604;
155.19 	(7) to the extent not deducted in determining federal
155.20 	taxable income by an individual who does not itemize deductions
155.21 	for federal income tax purposes for the taxable year, an amount
155.22 	equal to 50 percent of the excess of charitable contributions
155.23 	allowable as a deduction for the taxable year under section
155.24 	170(a) of the Internal Revenue Code over $500 ;
155.25 	(8) (7) for taxable years beginning before January 1, 2008,
155.26 	the amount of the federal small ethanol producer credit allowed
155.27 	under section 40(a)(3) of the Internal Revenue Code which is
155.28 	included in gross income under section 87 of the Internal
155.29 	Revenue Code;
155.30 	(9) (8) for individuals who are allowed a federal foreign
155.31 	tax credit for taxes that do not qualify for a credit under
155.32 	section 290.06, subdivision 22, an amount equal to the carryover
155.33 	of subnational foreign taxes for the taxable year, but not to
155.34 	exceed the total subnational foreign taxes reported in claiming
155.35 	the foreign tax credit.  For purposes of this clause, "federal
155.36 	foreign tax credit" means the credit allowed under section 27 of
156.1 	the Internal Revenue Code, and "carryover of subnational foreign
156.2 	taxes" equals the carryover allowed under section 904(c) of the
156.3 	Internal Revenue Code minus national level foreign taxes to the
156.4 	extent they exceed the federal foreign tax credit;
156.5 	(10) (9) in each of the five tax years immediately
156.6 	following the tax year in which an addition is required under
156.7 	subdivision 19a, clause (7), or 19c, clause (15), in the case of
156.8 	a shareholder of a corporation that is an S corporation,an
156.9 	amount equal to one-fifth of the delayed depreciation.  For
156.10 	purposes of this clause, "delayed depreciation" means the amount
156.11 	of the addition made by the taxpayer under subdivision 19a,
156.12 	clause (7), or subdivision 19c, clause (15), in the case of a
156.13 	shareholder of an S corporation,minus the positive value of any
156.14 	net operating loss under section 172 of the Internal Revenue
156.15 	Code generated for the tax year of the addition.  The resulting
156.16 	delayed depreciation cannot be less than zero; and 
156.17 	(11) (10) job opportunity building zone income as provided
156.18 	under section 469.316.;
156.19 	(11) the amount of compensation paid to members of the
156.20 	Minnesota National Guard or other reserve components of the
156.21 	United States military for active service performed in
156.22 	Minnesota, excluding compensation for services performed under
156.23 	the Active Guard Reserve (AGR) program.  For purposes of this
156.24 	clause, "active service" means (i) state active service as
156.25 	defined in section 190.05, subdivision 5a, clause (1); (ii)
156.26 	federally funded state active service as defined in section
156.27 	190.05, subdivision 5b; or (iii) federal active service as
156.28 	defined in section 190.05, subdivision 5c, but "active service"
156.29 	excludes services performed exclusively for purposes of basic
156.30 	combat training, advanced individual training, annual training,
156.31 	and periodic inactive duty training; special training
156.32 	periodically made available to reserve members; and service
156.33 	performed in accordance with section 190.08, subdivision 3;
156.34 	(12) the amount of compensation paid to members of the
156.35 	armed forces of the United States or United Nations for active
156.36 	duty performed outside Minnesota; and 
157.1 	(13) to the extent not deducted in computing federal
157.2 	taxable income, an amount, not to exceed $10,000, equal to
157.3 	qualified expenses related to a qualified donor's donation,
157.4 	while living, of one or more of the qualified donor's organs to
157.5 	another person for human organ transplantation.  For purposes of
157.6 	determining the extent to which expenses are deducted in
157.7 	computing federal taxable income, travel and lodging expenses
157.8 	related to an organ donation are considered deducted by an
157.9 	individual in determining federal taxable income to the extent
157.10 	they exceed 7.5 percent of federal adjusted gross income as
157.11 	defined in section 62 of the Internal Revenue Code.  For
157.12 	purposes of this clause, "organ" means all or part of an
157.13 	individual's liver, pancreas, kidney, intestine, lung, or bone
157.14 	marrow; "human organ transplantation" means the medical
157.15 	procedure by which transfer of a human organ is made from the
157.16 	body of one person to the body of another person; "qualified
157.17 	expenses" means unreimbursed expenses for both the individual
157.18 	and the qualified donor for (i) travel, (ii) lodging, and (iii)
157.19 	lost wages net of sick pay, except that such expenses may be
157.20 	subtracted under this clause only once; and "qualified donor"
157.21 	means the individual or the individual's dependent, as defined
157.22 	in section 152 of the Internal Revenue Code.  An individual may
157.23 	claim the subtraction in this clause only once for each instance
157.24 	of organ donation for transplantation during the taxable year in
157.25 	which the human organ donation and transplantation occurs.
157.26 	
EFFECTIVE DATE. The amendment to clause (9) is effective
157.27 	retroactively for tax years beginning after December 31, 2001.
157.28 	The rest of this section is effective for the tax years
157.29 	beginning after December 31, 2004.

157.30 	Sec. 18. Minnesota Statutes 2004, section 290.01,
157.31 	subdivision 19c, is amended to read:
157.32 		Subd. 19c.Corporations; additions to federal taxable
157.33 	income.  For corporations, there shall be added to federal
157.34 	taxable income:
157.35 	(1) the amount of any deduction taken for federal income
157.36 	tax purposes for income, excise, or franchise taxes based on net
158.1 	income or related minimum taxes, including but not limited to
158.2 	the tax imposed under section 290.0922, paid by the corporation
158.3 	to Minnesota, another state, a political subdivision of another
158.4 	state, the District of Columbia, or any foreign country or
158.5 	possession of the United States;
158.6 	(2) interest not subject to federal tax upon obligations
158.7 	of:  the United States, its possessions, its agencies, or its
158.8 	instrumentalities; the state of Minnesota or any other state,
158.9 	any of its political or governmental subdivisions, any of its
158.10 	municipalities, or any of its governmental agencies or
158.11 	instrumentalities; the District of Columbia; or Indian tribal
158.12 	governments;
158.13 	(3) exempt-interest dividends received as defined in
158.14 	section 852(b)(5) of the Internal Revenue Code;
158.15 	(4) the amount of any net operating loss deduction taken
158.16 	for federal income tax purposes under section 172 or 832(c)(10)
158.17 	of the Internal Revenue Code or operations loss deduction under
158.18 	section 810 of the Internal Revenue Code;
158.19 	(5) the amount of any special deductions taken for federal
158.20 	income tax purposes under sections 241 to 247 of the Internal
158.21 	Revenue Code;
158.22 	(6) losses from the business of mining, as defined in
158.23 	section 290.05, subdivision 1, clause (a), that are not subject
158.24 	to Minnesota income tax;
158.25 	(7) the amount of any capital losses deducted for federal
158.26 	income tax purposes under sections 1211 and 1212 of the Internal
158.27 	Revenue Code;
158.28 	(8) the exempt foreign trade income of a foreign sales
158.29 	corporation under sections 921(a) and 291 of the Internal
158.30 	Revenue Code;
158.31 	(9) the amount of percentage depletion deducted under
158.32 	sections 611 through 614 and 291 of the Internal Revenue Code;
158.33 	(10) for certified pollution control facilities placed in
158.34 	service in a taxable year beginning before December 31, 1986,
158.35 	and for which amortization deductions were elected under section
158.36 	169 of the Internal Revenue Code of 1954, as amended through
159.1 	December 31, 1985, the amount of the amortization deduction
159.2 	allowed in computing federal taxable income for those
159.3 	facilities;
159.4 	(11) the amount of any deemed dividend from a foreign
159.5 	operating corporation determined pursuant to section 290.17,
159.6 	subdivision 4, paragraph (g);
159.7 	(12) the amount of any environmental tax paid under section
159.8 	59(a) of the Internal Revenue Code;
159.9 	(13) the amount of a partner's pro rata share of net income
159.10 	which does not flow through to the partner because the
159.11 	partnership elected to pay the tax on the income under section
159.12 	6242(a)(2) of the Internal Revenue Code;
159.13 	(14) (13) the amount of net income excluded under section
159.14 	114 of the Internal Revenue Code;
159.15 	(15) (14) any increase in subpart F income, as defined in
159.16 	section 952(a) of the Internal Revenue Code, for the taxable
159.17 	year when subpart F income is calculated without regard to the
159.18 	provisions of section 614 of Public Law 107-147; and
159.19 	(16) (15) 80 percent of the depreciation deduction allowed
159.20 	under section 168(k) (1)(A) and (k)(4)(A) of the Internal Revenue
159.21 	Code.  For purposes of this clause, if the taxpayer has an
159.22 	activity that in the taxable year generates a deduction for
159.23 	depreciation under section 168(k) (1)(A) and (k)(4)(A) and the
159.24 	activity generates a loss for the taxable year that the taxpayer
159.25 	is not allowed to claim for the taxable year, "the depreciation
159.26 	allowed under section 168(k) (1)(A) and (k)(4)(A) " for the
159.27 	taxable year is limited to excess of the depreciation claimed by
159.28 	the activity under section 168(k) (1)(A) and (k)(4)(A) over the
159.29 	amount of the loss from the activity that is not allowed in the
159.30 	taxable year.  In succeeding taxable years when the losses not
159.31 	allowed in the taxable year are allowed, the depreciation under
159.32 	section 168(k) (1)(A) and (k)(4)(A) is allowed.
159.33 	
EFFECTIVE DATE. This section is effective the day
159.34 	following final enactment.

159.35 	Sec. 19. Minnesota Statutes 2004, section 290.06,
159.36 	subdivision 22, is amended to read:
160.1 		Subd. 22.Credit for taxes paid to another state.  (a) A
160.2 	taxpayer who is liable for taxes based on or measured by net
160.3 	income to another state, as provided in paragraphs (b) through
160.4 	(f), upon income allocated or apportioned to Minnesota, is
160.5 	entitled to a credit for the tax paid to another state if the
160.6 	tax is actually paid in the taxable year or a subsequent taxable
160.7 	year.  A taxpayer who is a resident of this state pursuant to
160.8 	section 290.01, subdivision 7, clause (2) paragraph (b), and who
160.9 	is subject to income tax as a resident in the state of the
160.10 	individual's domicile is not allowed this credit unless the
160.11 	state of domicile does not allow a similar credit.
160.12 	(b) For an individual, estate, or trust, the credit is
160.13 	determined by multiplying the tax payable under this chapter by
160.14 	the ratio derived by dividing the income subject to tax in the
160.15 	other state that is also subject to tax in Minnesota while a
160.16 	resident of Minnesota by the taxpayer's federal adjusted gross
160.17 	income, as defined in section 62 of the Internal Revenue Code,
160.18 	modified by the addition required by section 290.01, subdivision
160.19 	19a, clause (1), and the subtraction allowed by section 290.01,
160.20 	subdivision 19b, clause (1), to the extent the income is
160.21 	allocated or assigned to Minnesota under sections 290.081 and
160.22 	290.17.
160.23 	(c) If the taxpayer is an athletic team that apportions all
160.24 	of its income under section 290.17, subdivision 5, the credit is
160.25 	determined by multiplying the tax payable under this chapter by
160.26 	the ratio derived from dividing the total net income subject to
160.27 	tax in the other state by the taxpayer's Minnesota taxable
160.28 	income.
160.29 	(d) The credit determined under paragraph (b) or (c) shall
160.30 	not exceed the amount of tax so paid to the other state on the
160.31 	gross income earned within the other state subject to tax under
160.32 	this chapter, nor shall the allowance of the credit reduce the
160.33 	taxes paid under this chapter to an amount less than what would
160.34 	be assessed if such income amount was excluded from taxable net
160.35 	income.
160.36 	(e) In the case of the tax assessed on a lump sum
161.1 	distribution under section 290.032, the credit allowed under
161.2 	paragraph (a) is the tax assessed by the other state on the lump
161.3 	sum distribution that is also subject to tax under section
161.4 	290.032, and shall not exceed the tax assessed under section
161.5 	290.032.  To the extent the total lump sum distribution defined
161.6 	in section 290.032, subdivision 1, includes lump sum
161.7 	distributions received in prior years or is all or in part an
161.8 	annuity contract, the reduction to the tax on the lump sum
161.9 	distribution allowed under section 290.032, subdivision 2,
161.10 	includes tax paid to another state that is properly apportioned
161.11 	to that distribution.
161.12 	(f) If a Minnesota resident reported an item of income to
161.13 	Minnesota and is assessed tax in such other state on that same
161.14 	income after the Minnesota statute of limitations has expired,
161.15 	the taxpayer shall receive a credit for that year under
161.16 	paragraph (a), notwithstanding any statute of limitations to the
161.17 	contrary.  The claim for the credit must be submitted within one
161.18 	year from the date the taxes were paid to the other state.  The
161.19 	taxpayer must submit sufficient proof to show entitlement to a
161.20 	credit.
161.21 	(g) For the purposes of this subdivision, a resident
161.22 	shareholder of a corporation treated as an "S" corporation under
161.23 	section 290.9725, must be considered to have paid a tax imposed
161.24 	on the shareholder in an amount equal to the shareholder's pro
161.25 	rata share of any net income tax paid by the S corporation to
161.26 	another state.  For the purposes of the preceding sentence, the
161.27 	term "net income tax" means any tax imposed on or measured by a
161.28 	corporation's net income.
161.29 	(h) For the purposes of this subdivision, a resident
161.30 	partner of an entity taxed as a partnership under the Internal
161.31 	Revenue Code must be considered to have paid a tax imposed on
161.32 	the partner in an amount equal to the partner's pro rata share
161.33 	of any net income tax paid by the partnership to another state.
161.34 	For purposes of the preceding sentence, the term "net income"
161.35 	tax means any tax imposed on or measured by a partnership's net
161.36 	income.
162.1 	(i) For the purposes of this subdivision, "another state":
162.2 	(1) includes:
162.3 	(i) the District of Columbia; and
162.4 	(ii) a province or territory of Canada; but
162.5 	(2) excludes Puerto Rico and the several territories
162.6 	organized by Congress.
162.7 	(j) The limitations on the credit in paragraphs (b), (c),
162.8 	and (d), are imposed on a state by state basis.
162.9 	(k) For a tax imposed by a province or territory of Canada,
162.10 	the tax for purposes of this subdivision is the excess of the
162.11 	tax over the amount of the foreign tax credit allowed under
162.12 	section 27 of the Internal Revenue Code.  In determining the
162.13 	amount of the foreign tax credit allowed, the net income taxes
162.14 	imposed by Canada on the income are deducted first.  Any
162.15 	remaining amount of the allowable foreign tax credit reduces the
162.16 	provincial or territorial tax that qualifies for the credit
162.17 	under this subdivision.
162.18 	
EFFECTIVE DATE. This section is effective for tax years
162.19 	beginning after December 31, 2004.

162.20 	Sec. 20. Minnesota Statutes 2004, section 290.06, is
162.21 	amended by adding a subdivision to read:
162.22 		Subd. 32.Dairy investment credit. (a) A dairy
162.23 	investment credit is allowed against the tax computed under this
162.24 	chapter equal to the credit amount in the table, based on the
162.25 	amount paid or incurred by the taxpayer in the tax year and
162.26 	certified by the commissioner of agriculture under paragraph
162.27 	(f), for qualifying expenditures:
162.28 	Amount of
162.29 	   qualifying expenditures Credit amount 
162.30 	up to $500,000 ten percent of
162.31 	                                    qualifying expenditures 
162.32 	over $500,000, but not $50,000, plus nine percent
162.33 	    more than $600,000 of the amount of qualified
162.34 	                                    expenditures in excess of
162.35 	                                    $500,000 
162.36 	over $600,000, but not $59,000, plus seven percent
162.37 	    more than $700,000 of the amount of qualified
162.38 	                                    expenditures in excess of
162.39 	                                    $600,000 
162.40 	over $700,000, but not $66,000, plus five percent
163.1 	    more than $800,000 of the amount of qualified
163.2 	                                    expenditures in excess of
163.3 	                                    $700,000 
163.4 	over $800,000, but not $71,000, plus three percent
163.5 	    more than $900,000 of the amount of qualified
163.6 	                                    expenditures in excess of
163.7 	                                    $800,000 
163.8 	over $900,000, but not $74,000, plus one percent
163.9 	    more than $1,000,000 of the amount of qualified
163.10 	                                    expenditures in excess of
163.11 	                                    $900,000 
163.12 	$1,000,000 or more $75,000 
163.13 	(b) "Qualifying expenditures," for purposes of this
163.14 	subdivision, means the expenses incurred for dairy animals for
163.15 	the construction or improvement of buildings or facilities, or
163.16 	the acquisition of equipment, for dairy animal housing,
163.17 	confinement, animal feeding, milk production, and waste
163.18 	management, including, but not limited to, the following:
163.19 	(1) freestall barns;
163.20 	(2) fences;
163.21 	(3) watering facilities;
163.22 	(4) feed storage and handling equipment;
163.23 	(5) milking parlors;
163.24 	(6) robotic equipment;
163.25 	(7) scales;
163.26 	(8) milk storage and cooling facilities;
163.27 	(9) bulk tanks;
163.28 	(10) manure handling equipment and storage facilities;
163.29 	(11) digesters;
163.30 	(12) equipment used to produce energy;
163.31 	(13) on-farm processing; and 
163.32 	(14) development of pasture other than land acquisition.
163.33 	Qualifying expenditures only include amounts that are
163.34 	capitalized and deducted under either section 167 or 179 of the
163.35 	Internal Revenue Code in computing federal taxable income.
163.36 	(c) The credit is limited to the liability for tax, as
163.37 	computed under this section for the taxable year for which the
163.38 	credit certificate is issued.  If the amount of the credit
163.39 	determined under this section for any taxable year exceeds this
163.40 	limitation, the excess is a dairy investment credit carryover to
164.1 	each of the 15 succeeding taxable years.  The entire amount of
164.2 	the excess unused credit for the taxable year is carried first
164.3 	to the earliest of the taxable years to which the credit may be
164.4 	carried and then to each successive year to which the credit may
164.5 	be carried.  The amount of the unused credit which may be added
164.6 	under this paragraph shall not exceed the taxpayer's liability
164.7 	for tax less the dairy investment credit for the taxable year.
164.8 	(d) For a partnership or S corporation, the maximum amount
164.9 	of the credit applies to the entity, not the individual partner
164.10 	or shareholder.
164.11 	(e) To be eligible for the dairy investment credit in this
164.12 	subdivision, a taxpayer must apply to the commissioner of
164.13 	agriculture for a tax credit certificate.  The application must
164.14 	be made on forms prescribed by the commissioner of agriculture
164.15 	and must include a statement of the qualifying expenditures by
164.16 	the taxpayer.
164.17 	(f) The commissioner of agriculture shall certify credits
164.18 	in the order the forms required under paragraph (e) are received
164.19 	and approved by the commissioner of agriculture, until the
164.20 	maximum credit amount for the taxable year has been reached.
164.21 	The maximum credit amount is $900,000 for tax years beginning
164.22 	after December 31, 2004, and before January 1, 2006; and
164.23 	$1,000,000 per year for tax years beginning after December 31,
164.24 	2005.
164.25 	Any eligible applications for which certificates are not
164.26 	issued in a tax year because the commissioner of agriculture has
164.27 	issued certificates totaling the maximum credit amount for that
164.28 	tax year remain eligible for a credit certificate in subsequent
164.29 	tax years, in the order in which the forms were received by the
164.30 	commissioner of agriculture.
164.31 	
EFFECTIVE DATE. This section is effective for assets
164.32 	placed in service in taxable years beginning after December 31,
164.33 	2004.

164.34 	Sec. 21. Minnesota Statutes 2004, section 290.067,
164.35 	subdivision 1, is amended to read:
164.36 		Subdivision 1.Amount of credit.  (a) A taxpayer may take
165.1 	as a credit against the tax due from the taxpayer and a spouse,
165.2 	if any, under this chapter an amount equal to the dependent care
165.3 	credit for which the taxpayer is eligible pursuant to the
165.4 	provisions of section 21 of the Internal Revenue Code subject to
165.5 	the limitations provided in subdivision 2 except that in
165.6 	determining whether the child qualified as a dependent, income
165.7 	received as a Minnesota family investment program grant or
165.8 	allowance to or on behalf of the child must not be taken into
165.9 	account in determining whether the child received more than half
165.10 	of the child's support from the taxpayer, and the provisions of
165.11 	section 32(b)(1)(D) of the Internal Revenue Code do not apply.
165.12 	(b) If a child who has not attained the age of six years at
165.13 	the close of the taxable year is cared for at a licensed family
165.14 	day care home operated by the child's parent, the taxpayer is
165.15 	deemed to have paid employment-related expenses.  If the child
165.16 	is 16 months old or younger at the close of the taxable year,
165.17 	the amount of expenses deemed to have been paid equals the
165.18 	maximum limit for one qualified individual under section 21(c)
165.19 	and (d) of the Internal Revenue Code.  If the child is older
165.20 	than 16 months of age but has not attained the age of six years
165.21 	at the close of the taxable year, the amount of expenses deemed
165.22 	to have been paid equals the amount the licensee would charge
165.23 	for the care of a child of the same age for the same number of
165.24 	hours of care.
165.25 	(c) If a married couple:
165.26 	(1) has a child who has not attained the age of one year at
165.27 	the close of the taxable year;
165.28 	(2) files a joint tax return for the taxable year; and
165.29 	(3) does not participate in a dependent care assistance
165.30 	program as defined in section 129 of the Internal Revenue Code,
165.31 	in lieu of the actual employment related expenses paid for that
165.32 	child under paragraph (a) or the deemed amount under paragraph
165.33 	(b), the lesser of (i) the combined earned income of the couple
165.34 	or (ii) the amount of the maximum limit for one qualified
165.35 	individual under section 21(c) and (d) of the Internal Revenue
165.36 	Code will be deemed to be the employment related expense paid
166.1 	for that child.  The earned income limitation of section 21(d)
166.2 	of the Internal Revenue Code shall not apply to this deemed
166.3 	amount.  These deemed amounts apply regardless of whether any
166.4 	employment-related expenses have been paid.
166.5 	(d) If the taxpayer is not required and does not file a
166.6 	federal individual income tax return for the tax year, no credit
166.7 	is allowed for any amount paid to any person unless:
166.8 	(1) the name, address, and taxpayer identification number
166.9 	of the person are included on the return claiming the credit; or
166.10 	(2) if the person is an organization described in section
166.11 	501(c)(3) of the Internal Revenue Code and exempt from tax under
166.12 	section 501(a) of the Internal Revenue Code, the name and
166.13 	address of the person are included on the return claiming the
166.14 	credit.
166.15 	In the case of a failure to provide the information required
166.16 	under the preceding sentence, the preceding sentence does not
166.17 	apply if it is shown that the taxpayer exercised due diligence
166.18 	in attempting to provide the information required.
166.19 	In the case of a nonresident, part-year resident, or a
166.20 	person who has earned income not subject to tax under this
166.21 	chapter including earned income excluded pursuant to section
166.22 	290.01, subdivision 19b, clause (11), the credit determined
166.23 	under section 21 of the Internal Revenue Code must be allocated
166.24 	based on the ratio by which the earned income of the claimant
166.25 	and the claimant's spouse from Minnesota sources bears to the
166.26 	total earned income of the claimant and the claimant's spouse.
166.27 	For residents of Minnesota, the subtractions for military
166.28 	pay under section 290.01, subdivision 19b, clauses (11) and
166.29 	(12), are not considered "earned income not subject to tax under
166.30 	this chapter." 

166.31 	Sec. 22. Minnesota Statutes 2004, section 290.067,
166.32 	subdivision 2a, is amended to read:
166.33 		Subd. 2a.Income.  (a) For purposes of this section,
166.34 	"income" means the sum of the following:
166.35 	(1) federal adjusted gross income as defined in section 62
166.36 	of the Internal Revenue Code; and plus 
167.1 	(2) the sum of the following amounts to the extent not
167.2 	included in clause (1):
167.3 	(i) all nontaxable income;
167.4 	(ii) the amount of a passive activity loss that is not
167.5 	disallowed as a result of section 469, paragraph (i) or (m) of
167.6 	the Internal Revenue Code and the amount of passive activity
167.7 	loss carryover allowed under section 469(b) of the Internal
167.8 	Revenue Code;
167.9 	(iii) an amount equal to the total of any discharge of
167.10 	qualified farm indebtedness of a solvent individual excluded
167.11 	from gross income under section 108(g) of the Internal Revenue
167.12 	Code;
167.13 	(iv) cash public assistance and relief;
167.14 	(v) any pension or annuity (including railroad retirement
167.15 	benefits, all payments received under the federal Social
167.16 	Security Act, supplemental security income, and veterans
167.17 	benefits), which was not exclusively funded by the claimant or
167.18 	spouse, or which was funded exclusively by the claimant or
167.19 	spouse and which funding payments were excluded from federal
167.20 	adjusted gross income in the years when the payments were made;
167.21 	(vi) interest received from the federal or a state
167.22 	government or any instrumentality or political subdivision
167.23 	thereof;
167.24 	(vii) workers' compensation;
167.25 	(viii) nontaxable strike benefits;
167.26 	(ix) the gross amounts of payments received in the nature
167.27 	of disability income or sick pay as a result of accident,
167.28 	sickness, or other disability, whether funded through insurance
167.29 	or otherwise;
167.30 	(x) a lump sum distribution under section 402(e)(3) of the
167.31 	Internal Revenue Code;
167.32 	(xi) contributions made by the claimant to an individual
167.33 	retirement account, including a qualified voluntary employee
167.34 	contribution; simplified employee pension plan; self-employed
167.35 	retirement plan; cash or deferred arrangement plan under section
167.36 	401(k) of the Internal Revenue Code; or deferred compensation
168.1 	plan under section 457 of the Internal Revenue Code; and
168.2 	(xii) nontaxable scholarship or fellowship grants; minus 
168.3 	(3) in the case of a married couple filing a joint return,
168.4 	the earned income of the lesser-earning spouse, as defined in
168.5 	section 290.0675, subdivision 1, paragraph (d).
168.6 	In the case of an individual who files an income tax return
168.7 	on a fiscal year basis, the term "federal adjusted gross income"
168.8 	means federal adjusted gross income reflected in the fiscal year
168.9 	ending in the next calendar year.  Federal adjusted gross income
168.10 	may not be reduced by the amount of a net operating loss
168.11 	carryback or carryforward or a capital loss carryback or
168.12 	carryforward allowed for the year.
168.13 	(b) "Income" does not include:
168.14 	(1) amounts excluded pursuant to the Internal Revenue Code,
168.15 	sections 101(a) and 102;
168.16 	(2) amounts of any pension or annuity that were exclusively
168.17 	funded by the claimant or spouse if the funding payments were
168.18 	not excluded from federal adjusted gross income in the years
168.19 	when the payments were made;
168.20 	(3) surplus food or other relief in kind supplied by a
168.21 	governmental agency;
168.22 	(4) relief granted under chapter 290A;
168.23 	(5) child support payments received under a temporary or
168.24 	final decree of dissolution or legal separation; and
168.25 	(6) restitution payments received by eligible individuals
168.26 	and excludable interest as defined in section 803 of the
168.27 	Economic Growth and Tax Relief Reconciliation Act of 2001,
168.28 	Public Law 107-16.
168.29 	
EFFECTIVE DATE. This section is effective for taxable
168.30 	years beginning after December 31, 2005.

168.31 	Sec. 23. Minnesota Statutes 2004, section 290.0671,
168.32 	subdivision 1, is amended to read:
168.33 		Subdivision 1.Credit allowed.  (a) An individual is
168.34 	allowed a credit against the tax imposed by this chapter equal
168.35 	to a percentage of earned income.  To receive a credit, a
168.36 	taxpayer must be eligible for a credit under section 32 of the
169.1 	Internal Revenue Code. An individual who would have been
169.2 	eligible for a credit under section 32 of the Internal Revenue
169.3 	Code if the phaseout in section 32(b) were calculated based on
169.4 	the income thresholds provided in paragraphs (b) through (d) as
169.5 	adjusted in paragraphs (i) through (k) is also eligible for a
169.6 	credit under this section.
169.7 	(b) For individuals with no qualifying children, the credit
169.8 	equals 1.9125 percent of the first $4,620 of earned income.  The
169.9 	credit is reduced by 1.9125 percent of earned income or modified 
169.10 	adjusted gross income, whichever is greater, in excess of
169.11 	$5,770, but in no case is the credit less than zero.
169.12 	(c) For individuals with one qualifying child, the credit
169.13 	equals 8.5 percent of the first $6,920 of earned income and 8.5
169.14 	percent of earned income over $12,080 but less than $13,450.
169.15 	The credit is reduced by 5.73 percent of earned income or
169.16 	modified adjusted gross income, whichever is greater, in excess
169.17 	of $15,080, but in no case is the credit less than zero.
169.18 	(d) For individuals with two or more qualifying children,
169.19 	the credit equals ten percent of the first $9,720 of earned
169.20 	income and 20 percent of earned income over $14,860 but less
169.21 	than $16,800.  The credit is reduced by 10.3 percent of earned
169.22 	income or modified adjusted gross income, whichever is greater,
169.23 	in excess of $17,890, but in no case is the credit less than
169.24 	zero.
169.25 	(e) For a nonresident or part-year resident, the credit
169.26 	must be allocated based on the percentage calculated under
169.27 	section 290.06, subdivision 2c, paragraph (e).
169.28 	(f) For a person who was a resident for the entire tax year
169.29 	and has earned income not subject to tax under this chapter,
169.30 	including income excluded under section 290.01, subdivision 19b,
169.31 	clause (11), the credit must be allocated based on the ratio of
169.32 	federal adjusted gross income reduced by the earned income not
169.33 	subject to tax under this chapter over federal adjusted gross
169.34 	income. For purposes of this paragraph, the subtractions for
169.35 	military pay under section 290.01, subdivision 19b, clauses (11)
169.36 	and (12), are not considered "earned income not subject to tax
170.1 	under this chapter." 
170.2 	(g) For tax years beginning after December 31, 2001, and
170.3 	before December 31, 2004, the $5,770 in paragraph (b), the
170.4 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
170.5 	after being adjusted for inflation under subdivision 7, are each
170.6 	increased by $1,000 for married taxpayers filing joint returns.
170.7 	(h) For tax years beginning after December 31, 2004, and
170.8 	before December 31, 2007 2005, the $5,770 in paragraph (b), the
170.9 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
170.10 	after being adjusted for inflation under subdivision 7, are each
170.11 	increased by $2,000 for married taxpayers filing joint returns.
170.12 	(i) For tax years beginning after December 31, 2005, and
170.13 	before December 31, 2007, the $5,770 in paragraph (b), the
170.14 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
170.15 	after being adjusted for inflation under subdivision 7, are each
170.16 	increased by the greater of (i) $2,000 or (ii) the earned income
170.17 	of the lesser-earning spouse, for married taxpayers filing joint
170.18 	returns.
170.19 	(i) (j) For tax years beginning after December 31, 2007,
170.20 	and before December 31, 2010, the $5,770 in paragraph (b), the
170.21 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
170.22 	after being adjusted for inflation under subdivision 7, are each
170.23 	increased by $3,000 the greater of (i) $3,000 or (ii) the earned
170.24 	income of the lesser-earning spouse,for married taxpayers
170.25 	filing joint returns.  For tax years beginning after December
170.26 	31, 2008, and before December 31, 2010,the $3,000 is adjusted
170.27 	annually for inflation under subdivision 7.
170.28 	(k) For tax years beginning after December 31, 2010, the
170.29 	$5,770 in paragraph (b), the $15,080 in paragraph (c), and the
170.30 	$17,890 in paragraph (d), after being adjusted for inflation
170.31 	under subdivision 7, are each increased by the earned income of
170.32 	the lesser-earning spouse, for married taxpayers filing joint
170.33 	returns.
170.34 	(j) (l) The commissioner shall construct tables showing the
170.35 	amount of the credit at various income levels and make them
170.36 	available to taxpayers.  The tables shall follow the schedule
171.1 	contained in this subdivision, except that the commissioner may
171.2 	graduate the transition between income brackets.

171.3 	Sec. 24. Minnesota Statutes 2004, section 290.0671,
171.4 	subdivision 1a, is amended to read:
171.5 		Subd. 1a.Definitions.  For purposes of this section, the
171.6 	terms "qualifying child," and "earned income," and "adjusted
171.7 	gross income" have the meanings given in section 32(c) of the
171.8 	Internal Revenue Code, and the term "adjusted gross income" has
171.9 	the meaning given in section 62 of the Internal Revenue Code.
171.10 	"Earned income of the lesser-earning spouse" has the
171.11 	meaning given in section 290.0675, subdivision 1, paragraph (d).
171.12 	
EFFECTIVE DATE. This section is effective for taxable
171.13 	years beginning after December 31, 2004.

171.14 	Sec. 25. Minnesota Statutes 2004, section 290.0672,
171.15 	subdivision 1, is amended to read:
171.16 		Subdivision 1.Definitions.  (a) For purposes of this
171.17 	section, the following terms have the meanings given.
171.18 	(b) "Long-term care insurance" means a policy that:
171.19 	(1) qualifies for a deduction under section 213 of the
171.20 	Internal Revenue Code, disregarding the 7.5 percent income test;
171.21 	or meets the requirements given in section 62A.46; or provides
171.22 	similar coverage issued under the laws of another jurisdiction;
171.23 	and
171.24 	(2) has a lifetime long-term care benefit limit of not less
171.25 	than $100,000; and
171.26 	(3) has been offered in compliance with the inflation
171.27 	protection requirements of section 62S.23.
171.28 	(c) "Qualified beneficiary" means the taxpayer or the
171.29 	taxpayer's spouse.
171.30 	(d) "Premiums deducted in determining federal taxable
171.31 	income" means the lesser of (1) long-term care insurance
171.32 	premiums that qualify as deductions under section 213 of the
171.33 	Internal Revenue Code; and (2) the total amount deductible for
171.34 	medical care under section 213 of the Internal Revenue Code.
171.35 	
EFFECTIVE DATE. This section is effective for tax years
171.36 	beginning after December 31, 2004.

172.1 	Sec. 26. Minnesota Statutes 2004, section 290.0672,
172.2 	subdivision 2, is amended to read:
172.3 		Subd. 2.Credit.  A taxpayer is allowed a credit against
172.4 	the tax imposed by this chapter for long-term care insurance
172.5 	policy premiums paid during the tax year.  The credit for each
172.6 	policy equals 25 percent of premiums paid to the extent not
172.7 	deducted in determining federal taxable income.  A taxpayer may
172.8 	claim a credit for only one policy for each qualified
172.9 	beneficiary.  A maximum of $100 applies to each qualified
172.10 	beneficiary.  The maximum total credit allowed per year is $200
172.11 	for married couples filing joint returns and $100 for all other
172.12 	filers.  For a nonresident or part-year resident, the credit
172.13 	determined under this section must be allocated based on the
172.14 	percentage calculated under section 290.06, subdivision 2c,
172.15 	paragraph (e).
172.16 	
EFFECTIVE DATE. This section is effective for tax years
172.17 	beginning after December 31, 2004.

172.18 	Sec. 27. Minnesota Statutes 2004, section 290.0674,
172.19 	subdivision 1, is amended to read:
172.20 		Subdivision 1.Credit allowed.  An individual is allowed
172.21 	a credit against the tax imposed by this chapter in an amount
172.22 	equal to 75 percent of the amount paid for education-related
172.23 	expenses for a qualifying child in kindergarten through grade
172.24 	12.  For purposes of this section, "education-related expenses"
172.25 	means:
172.26 	(1) fees or tuition for instruction by an instructor under
172.27 	section 120A.22, subdivision 10, clause (1), (2), (3), (4), or
172.28 	(5), or a member of the Minnesota Music Teachers Association,
172.29 	and who is not a lineal ancestor or sibling of the dependent for
172.30 	instruction outside the regular school day or school year,
172.31 	including tutoring, driver's education offered as part of school
172.32 	curriculum, regardless of whether it is taken from a public or
172.33 	private entity or summer camps, in grade or age appropriate
172.34 	curricula that supplement curricula and instruction available
172.35 	during the regular school year, that assists a dependent to
172.36 	improve knowledge of core curriculum areas or to expand
173.1 	knowledge and skills under the graduation rule under section
173.2 	120B.02, paragraph (e), clauses (1) to (7), (9), and (10) 
173.3 	required academic standards under section 120B.021, subdivision
173.4 	1, and the elective standard under section 120B.022, subdivision
173.5 	1, clause (2), and that do not include the teaching of religious
173.6 	tenets, doctrines, or worship, the purpose of which is to
173.7 	instill such tenets, doctrines, or worship;
173.8 	(2) expenses for textbooks, including books and other
173.9 	instructional materials and equipment purchased or leased for
173.10 	use in elementary and secondary schools in teaching only those
173.11 	subjects legally and commonly taught in public elementary and
173.12 	secondary schools in this state.  "Textbooks" does not include
173.13 	instructional books and materials used in the teaching of
173.14 	religious tenets, doctrines, or worship, the purpose of which is
173.15 	to instill such tenets, doctrines, or worship, nor does it
173.16 	include books or materials for extracurricular activities
173.17 	including sporting events, musical or dramatic events, speech
173.18 	activities, driver's education, or similar programs;
173.19 	(3) a maximum expense of $200 per family for personal
173.20 	computer hardware, excluding single purpose processors, and
173.21 	educational software that assists a dependent to improve
173.22 	knowledge of core curriculum areas or to expand knowledge and
173.23 	skills under the graduation rule under section 120B.02required
173.24 	academic standards under section 120B.021, subdivision 1, and
173.25 	the elective standard under section 120B.022, subdivision 1,
173.26 	clause (2),purchased for use in the taxpayer's home and not
173.27 	used in a trade or business regardless of whether the computer
173.28 	is required by the dependent's school; and
173.29 	(4) the amount paid to others for transportation of a
173.30 	qualifying child attending an elementary or secondary school
173.31 	situated in Minnesota, North Dakota, South Dakota, Iowa, or
173.32 	Wisconsin, wherein a resident of this state may legally fulfill
173.33 	the state's compulsory attendance laws, which is not operated
173.34 	for profit, and which adheres to the provisions of the Civil
173.35 	Rights Act of 1964 and chapter 363A.
173.36 	For purposes of this section, "qualifying child" has the
174.1 	meaning given in section 32(c)(3) of the Internal Revenue Code.
174.2 	
EFFECTIVE DATE. This section is effective for tax years
174.3 	beginning after December 31, 2004.

174.4 	Sec. 28. Minnesota Statutes 2004, section 290.0674,
174.5 	subdivision 2, is amended to read:
174.6 		Subd. 2.Limitations.  (a) For taxable years beginning
174.7 	after December 31, 2004, and before January 1, 2006,for
174.8 	claimants with income not greater than $33,500, the maximum
174.9 	credit allowed for a family is $1,000 per qualifying child and
174.10 	$2,000 per family multiplied by the number of qualifying
174.11 	children in kindergarten through grade 12 in the family. No
174.12 	credit is allowed for education-related expenses for claimants
174.13 	with income greater than $37,500.The maximum credit per child 
174.14 	for families with one qualifying child in kindergarten through
174.15 	grade 12 is reduced by $1 for each $4 of household income over
174.16 	$33,500, and the maximum credit per family for families with two
174.17 	or more qualifying children in kindergarten through grade 12 is
174.18 	reduced by $2 for each $4 of household income over $33,500, but
174.19 	in no case is the credit less than zero.
174.20 	(b) For taxable years beginning after December 31, 2005,
174.21 	for claimants with income not greater than the greater of (i)
174.22 	$33,500 or (ii) 185 percent of the federal poverty guidelines,
174.23 	the maximum credit allowed for a family is $1,000 multiplied by
174.24 	the number of qualifying children in the family in grades
174.25 	kindergarten through 12.  The maximum credit per family is
174.26 	reduced by $1 multiplied by the number of qualifying children in
174.27 	the family in grades kindergarten through 12 for each $4 of
174.28 	household income over the greater of (i) $33,500 or (ii) 185
174.29 	percent of the federal poverty guidelines, but in no case is the
174.30 	credit less than zero.
174.31 	(c) For purposes of this section "income" has the meaning
174.32 	given in section 290.067, subdivision 2a, but disregarding the
174.33 	subtraction in clause (3).  In the case of a married claimant, a
174.34 	credit is not allowed unless a joint income tax return is
174.35 	filed.  For purposes of this section "federal poverty
174.36 	guidelines" means the guidelines published in the Federal
175.1 	Register in the tax year for which the credit is claimed,
175.2 	adjusted for family size.
175.3 	(b) (d) For a nonresident or part-year resident, the credit
175.4 	determined under subdivision 1 and the maximum credit amount in
175.5 	paragraph (a) must be allocated using the percentage calculated
175.6 	in section 290.06, subdivision 2c, paragraph (e).
175.7 	
EFFECTIVE DATE. This section is effective for taxable
175.8 	years beginning after December 31, 2004.

175.9 	Sec. 29. Minnesota Statutes 2004, section 290.091,
175.10 	subdivision 2, is amended to read:
175.11 		Subd. 2.Definitions.  For purposes of the tax imposed by
175.12 	this section, the following terms have the meanings given:
175.13 	(a) "Alternative minimum taxable income" means the sum of
175.14 	the following for the taxable year:
175.15 	(1) the taxpayer's federal alternative minimum taxable
175.16 	income as defined in section 55(b)(2) of the Internal Revenue
175.17 	Code;
175.18 	(2) the taxpayer's itemized deductions allowed in computing
175.19 	federal alternative minimum taxable income, but excluding:
175.20 	(i) the charitable contribution deduction under section 170
175.21 	of the Internal Revenue Code:
175.22 	(A) for taxable years beginning before January 1, 2006,to
175.23 	the extent that the deduction exceeds 1.0 percent of adjusted
175.24 	gross income, as defined ;
175.25 	(B) for taxable years beginning after December 31, 2005, to
175.26 	the full extent of the deduction.
175.27 	For purposes of this clause, "adjusted gross income" has
175.28 	the meaning given in section 62 of the Internal Revenue Code;
175.29 	(ii) the medical expense deduction;
175.30 	(iii) the casualty, theft, and disaster loss deduction; and
175.31 	(iv) the impairment-related work expenses of a disabled
175.32 	person;
175.33 	(3) for depletion allowances computed under section 613A(c)
175.34 	of the Internal Revenue Code, with respect to each property (as
175.35 	defined in section 614 of the Internal Revenue Code), to the
175.36 	extent not included in federal alternative minimum taxable
176.1 	income, the excess of the deduction for depletion allowable
176.2 	under section 611 of the Internal Revenue Code for the taxable
176.3 	year over the adjusted basis of the property at the end of the
176.4 	taxable year (determined without regard to the depletion
176.5 	deduction for the taxable year);
176.6 	(4) to the extent not included in federal alternative
176.7 	minimum taxable income, the amount of the tax preference for
176.8 	intangible drilling cost under section 57(a)(2) of the Internal
176.9 	Revenue Code determined without regard to subparagraph (E);
176.10 	(5) to the extent not included in federal alternative
176.11 	minimum taxable income, the amount of interest income as
176.12 	provided by section 290.01, subdivision 19a, clause (1); and
176.13 	(6) the amount of addition required by section 290.01,
176.14 	subdivision 19a, clause (7);
176.15 	less the sum of the amounts determined under the following:
176.16 	(1) interest income as defined in section 290.01,
176.17 	subdivision 19b, clause (1);
176.18 	(2) an overpayment of state income tax as provided by
176.19 	section 290.01, subdivision 19b, clause (2), to the extent
176.20 	included in federal alternative minimum taxable income;
176.21 	(3) the amount of investment interest paid or accrued
176.22 	within the taxable year on indebtedness to the extent that the
176.23 	amount does not exceed net investment income, as defined in
176.24 	section 163(d)(4) of the Internal Revenue Code.  Interest does
176.25 	not include amounts deducted in computing federal adjusted gross
176.26 	income; and
176.27 	(4) amounts subtracted from federal taxable income as
176.28 	provided by section 290.01, subdivision 19b, clauses (10) and
176.29 	(11) (9) to (13).
176.30 	In the case of an estate or trust, alternative minimum
176.31 	taxable income must be computed as provided in section 59(c) of
176.32 	the Internal Revenue Code.
176.33 	(b) "Investment interest" means investment interest as
176.34 	defined in section 163(d)(3) of the Internal Revenue Code.
176.35 	(c) "Tentative minimum tax" equals 6.4 percent of
176.36 	alternative minimum taxable income after subtracting the
177.1 	exemption amount determined under subdivision 3.
177.2 	(d) "Regular tax" means the tax that would be imposed under
177.3 	this chapter (without regard to this section and section
177.4 	290.032), reduced by the sum of the nonrefundable credits
177.5 	allowed under this chapter.
177.6 	(e) "Net minimum tax" means the minimum tax imposed by this
177.7 	section.
177.8 	
EFFECTIVE DATE. This section is effective for taxable
177.9 	years beginning after December 31, 2004.

177.10 	Sec. 30. Minnesota Statutes 2004, section 290.091,
177.11 	subdivision 3, is amended to read:
177.12 		Subd. 3.Exemption amount. (a) For purposes of computing
177.13 	the alternative minimum tax, the exemption amount is:
177.14 	(1) for taxable years beginning before January 1, 2005,the
177.15 	exemption determined under section 55(d) of the Internal Revenue
177.16 	Code, as amended through December 31, 1992;
177.17 	(2) for taxable years beginning after December 31, 2004,
177.18 	and before January 1, 2006, $42,000 for married couples filing
177.19 	joint returns; $21,000 for married individuals filing separate
177.20 	returns, estates, and trusts; and $31,500 for unmarried
177.21 	individuals;
177.22 	(3) for taxable years beginning after December 31, 2005,
177.23 	and before January 1, 2007, $45,000 for married couples filing
177.24 	joint returns; $22,500 for married individuals filing separate
177.25 	returns, estates, and trusts; and $33,750 for unmarried
177.26 	individuals; and 
177.27 	(4) for taxable years beginning after December 31, 2006,
177.28 	and before January 1, 2008, $50,000 for married couples filing
177.29 	joint returns; $25,000 for married individuals filing separate
177.30 	returns, estates, and trusts; and $37,500 for unmarried
177.31 	individuals.
177.32 	(b) The exemption amount determined under this subdivision
177.33 	is subject to the phase out under section 55(d)(3) of the
177.34 	Internal Revenue Code, except that alternative minimum taxable
177.35 	income as determined under this section must be substituted in
177.36 	the computation of the phase out under section 55(d)(3).
178.1 	(c) For taxable years beginning after December 31, 2007,
178.2 	the exemption amount under paragraph (a), clause (4), must be
178.3 	adjusted for inflation.  The commissioner shall make the
178.4 	inflation adjustments in accordance with section 1(f) of the
178.5 	Internal Revenue Code except that for the purposes of this
178.6 	subdivision the percentage increase must be determined from the
178.7 	year starting September 1, 2006, and ending August 31, 2007, as
178.8 	the base year for adjusting for inflation for the tax year
178.9 	beginning after December 31, 2007.  The determination of the
178.10 	commissioner under this subdivision is not a rule under the
178.11 	Administrative Procedure Act.
178.12 	
EFFECTIVE DATE. This section is effective for taxable
178.13 	years beginning after December 31, 2004.

178.14 	Sec. 31. Minnesota Statutes 2004, section 290.0922,
178.15 	subdivision 2, is amended to read:
178.16 		Subd. 2.Exemptions.  The following entities are exempt
178.17 	from the tax imposed by this section:
178.18 	(1) corporations exempt from tax under section 290.05;
178.19 	(2) real estate investment trusts;
178.20 	(3) regulated investment companies or a fund thereof; and
178.21 	(4) entities having a valid election in effect under
178.22 	section 860D(b) of the Internal Revenue Code;
178.23 	(5) town and farmers' mutual insurance companies;
178.24 	(6) cooperatives organized under chapter 308A or 308B that
178.25 	provide housing exclusively to persons age 55 and over and are
178.26 	classified as homesteads under section 273.124, subdivision 3;
178.27 	and
178.28 	(7) an entity, if for the taxable year all of its property
178.29 	is located in a job opportunity building zone designated under
178.30 	section 469.314 and all of its payroll is a job opportunity
178.31 	building zone payroll under section 469.310.
178.32 	Entities not specifically exempted by this subdivision are
178.33 	subject to tax under this section, notwithstanding section
178.34 	290.05.
178.35 	
EFFECTIVE DATE. This section is effective for tax years
178.36 	beginning after December 31, 2004.

179.1 	Sec. 32. Minnesota Statutes 2004, section 290.191,
179.2 	subdivision 2, is amended to read:
179.3 		Subd. 2.Apportionment formula of general application.
 179.4 	(a) Except for those trades or businesses required to use a
179.5 	different formula under subdivision 3 or section 290.36, and for
179.6 	those trades or businesses that receive permission to use some
179.7 	other method under section 290.20 or under subdivision 4, a
179.8 	trade or business required to apportion its net income must
179.9 	apportion its income to this state on the basis of the
179.10 	percentage obtained by taking the sum of:
179.11 	(1) 75 the percent for the sales factor under paragraph (b) 
179.12 	of the percentage which the sales made within this state in
179.13 	connection with the trade or business during the tax period are
179.14 	of the total sales wherever made in connection with the trade or
179.15 	business during the tax period;
179.16 	(2) 12.5 the percent for the property factor under
179.17 	paragraph (b) of the percentage which the total tangible
179.18 	property used by the taxpayer in this state in connection with
179.19 	the trade or business during the tax period is of the total
179.20 	tangible property, wherever located, used by the taxpayer in
179.21 	connection with the trade or business during the tax period; and
179.22 	(3) 12.5 the percent for the payroll factor under paragraph
179.23 	(b) of the percentage which the taxpayer's total payrolls paid
179.24 	or incurred in this state or paid in respect to labor performed
179.25 	in this state in connection with the trade or business during
179.26 	the tax period are of the taxpayer's total payrolls paid or
179.27 	incurred in connection with the trade or business during the tax
179.28 	period.
179.29 	(b) For purposes of paragraph (a) and subdivision 3, the
179.30 	following percentages apply for the taxable years specified:
179.31 	Taxable years Sales factor Property Payroll
179.32 	beginning percent factor factor
179.33 	during calendar percent percent
179.34 	year
179.35 	     2007 78 11 11
179.36 	     2008 95 2.5 2.5
180.1 	     2009 and later 100 0 0
180.2 	     calendar years 
180.3 	
EFFECTIVE DATE. This section is effective for tax years
180.4 	beginning after December 31, 2006.

180.5 	Sec. 33. Minnesota Statutes 2004, section 290.191,
180.6 	subdivision 3, is amended to read:
180.7 		Subd. 3.Apportionment formula for financial
180.8 	institutions.  Except for an investment company required to
180.9 	apportion its income under section 290.36, a financial
180.10 	institution that is required to apportion its net income must
180.11 	apportion its net income to this state on the basis of the
180.12 	percentage obtained by taking the sum of:
180.13 	(1) 75 the percent for the sales factor under subdivision
180.14 	2, paragraph (b),of the percentage which the receipts from
180.15 	within this state in connection with the trade or business
180.16 	during the tax period are of the total receipts in connection
180.17 	with the trade or business during the tax period, from wherever
180.18 	derived;
180.19 	(2) 12.5 the percent for the property factor under
180.20 	subdivision 2, paragraph (b),of the percentage which the sum of
180.21 	the total tangible property used by the taxpayer in this state
180.22 	and the intangible property owned by the taxpayer and attributed
180.23 	to this state in connection with the trade or business during
180.24 	the tax period is of the sum of the total tangible property,
180.25 	wherever located, used by the taxpayer and the intangible
180.26 	property owned by the taxpayer and attributed to all states in
180.27 	connection with the trade or business during the tax period; and
180.28 	(3) 12.5 the percent for the payroll factor under
180.29 	subdivision 2, paragraph (b),of the percentage which the
180.30 	taxpayer's total payrolls paid or incurred in this state or paid
180.31 	in respect to labor performed in this state in connection with
180.32 	the trade or business during the tax period are of the
180.33 	taxpayer's total payrolls paid or incurred in connection with
180.34 	the trade or business during the tax period.
180.35 	
EFFECTIVE DATE. This section is effective for tax years
180.36 	beginning after December 31, 2006.

181.1 	Sec. 34. [290.433] NATIONAL GUARD AND RESERVES CHECKOFF.
181.2 		Subdivision 1.Checkoff established. (a) Every
181.3 	individual who files an income tax return may designate on their
181.4 	original return that $1 or more shall be added to the tax or
181.5 	deducted from the refund that would otherwise be payable by or
181.6 	to that individual and paid into a Minnesota military families
181.7 	relief account established in the special revenue fund.  The
181.8 	commissioner of revenue shall, on the income tax return, notify
181.9 	filers of their right to designate that a portion of their tax
181.10 	or refund shall be paid into the Minnesota military families
181.11 	relief account.  Amounts so designated to be paid shall be
181.12 	credited to the account as returns are processed, in as timely a
181.13 	manner as practical.  All interest earned on money accrued,
181.14 	gifts to the program, contributions to the program, and
181.15 	reimbursements of expenditures shall be credited to the
181.16 	account.  All money in the account is appropriated to the
181.17 	adjutant general of the Department of Military Affairs for the
181.18 	purpose of making grants as specified in subdivision 2.
181.19 	(b) The checkoff under this section is subject to removal
181.20 	from the income tax return as provided in section 290.439,
181.21 	subdivision 2.
181.22 		Subd. 2.Grants. (a) The adjutant general is authorized
181.23 	to expend any money appropriated from the Minnesota military
181.24 	families relief account in the special revenue fund for the
181.25 	purpose of making grants:
181.26 	(1) directly to eligible individuals; or 
181.27 	(2) to one or more eligible foundations for the purpose of
181.28 	making grants to eligible individuals, as provided in this
181.29 	section.
181.30 	(b) The term, "eligible individual" includes any Minnesota
181.31 	resident who is:
181.32 	(1) a member of the Minnesota National Guard or other
181.33 	United States armed forces reserves who has been ordered to
181.34 	federal active service since September 11, 2001, and has a
181.35 	financial need as a result of that service;
181.36 	(2) the spouse or dependent child of a person described in
182.1 	clause (1); or 
182.2 	(3) the surviving spouse or surviving dependent child of a
182.3 	person described in clause (1).
182.4 	To be an eligible individual, a person described in clause
182.5 	(2) or (3) must be residing within the state of Minnesota.
182.6 	(c) The term "eligible foundation" includes any
182.7 	organization that:
182.8 	(1) is a tax-exempt organization under section 501(c)(3) of
182.9 	the Internal Revenue Code;
182.10 	(2) has articles of incorporation under chapter 317A
182.11 	specifying the purpose of the organization as including the
182.12 	provision of financial assistance to members of the Minnesota
182.13 	National Guard and other United States armed forces reserves and
182.14 	their families and survivors; and 
182.15 	(3) agrees in writing to distribute any grant money
182.16 	received from the adjutant general under this section to
182.17 	eligible individuals as defined in this section and in
182.18 	accordance with any written policies and rules the adjutant
182.19 	general may impose as conditions of the grant to the foundation.
182.20 	(d) The maximum grant awarded to an eligible individual in
182.21 	a calendar year with funds from the Minnesota military families
182.22 	relief account, either through an eligible institution or
182.23 	directly from the adjutant general, may not exceed $2,000.
182.24 	(e) The state pledges and agrees with all contributors to
182.25 	the account to use the contributed funds solely for the purpose
182.26 	of providing assistance to eligible individuals.
182.27 	(f) The state further agrees that it will not impose
182.28 	additional conditions or restrictions that will limit or
182.29 	otherwise restrict the ability of the adjutant general to award
182.30 	grants under this section.
182.31 	(g) For purposes of this section, the term "federal active
182.32 	service" has the meaning given in section 190.05, subdivision
182.33 	5c, but excludes service performed exclusively for purposes of:
182.34 	(1) basic combat training, advanced individual training,
182.35 	annual training, and periodic inactive duty training;
182.36 	(2) special training periodically made available to reserve
183.1 	members; and 
183.2 	(3) service performed in accordance with section 190.08,
183.3 	subdivision 3.
183.4 		Subd. 3.Annual report. The adjutant general must report
183.5 	by February 1, 2007, and each year thereafter, to the chairs and
183.6 	ranking minority members of the legislative committees and
183.7 	divisions with jurisdiction over military and veterans' affairs
183.8 	on the number, amounts, and use of grants issued from the
183.9 	Minnesota military families relief account in the previous year
183.10 	and on the expenses related to administering the account.
183.11 	
EFFECTIVE DATE. This section is effective for income tax
183.12 	returns for taxable years beginning after December 31, 2004.

183.13 	Sec. 35. [290.434] PUBLIC SAFETY OFFICER CHECKOFF.
183.14 	(a) Every individual who files an income tax return may
183.15 	designate on their original return that $1 or more shall be
183.16 	added to the tax or deducted from the refund that would
183.17 	otherwise be payable by or to that individual and paid into a
183.18 	public safety officer memorial and survivor account in the
183.19 	special revenue fund.  The commissioner of revenue shall, on the
183.20 	income tax return, notify filers of their right to designate
183.21 	that a portion of their tax or refund shall be paid into the
183.22 	public safety officer memorial and survivor account.  The sum of
183.23 	the amounts so designated to be paid shall be credited to the
183.24 	account.  The account may be used by the commissioner of public
183.25 	safety to make grants to public safety officer associations that
183.26 	assist in building and preserving state memorial monuments,
183.27 	assist the families of public safety officers killed in the line
183.28 	of duty, award scholarships to surviving family members, and
183.29 	otherwise provide services relating to public safety officers
183.30 	killed in the line of duty.  All interest earned on money
183.31 	accrued, gifts to the program, contributions to the program, and
183.32 	reimbursements of expenditures shall be credited to the
183.33 	account.  All money in the account is appropriated to the
183.34 	commissioner of public safety for purposes of this section.
183.35 	(b) The state pledges and agrees with all contributors to
183.36 	the account to use the funds contributed solely for the
184.1 	maintenance of public safety officer memorials and for the
184.2 	benefit of survivors of Minnesota public safety officers killed
184.3 	in the line of duty and further agrees that it will not impose
184.4 	additional conditions or restrictions that will limit or
184.5 	otherwise restrict the ability of the commissioner of public
184.6 	safety, in consultation with the public safety officer memorial
184.7 	and survivor account advisory council, to award grants from the
184.8 	available funds in the most efficient and effective manner.
184.9 	(c) The commissioner of public safety must report by
184.10 	January 1, 2004, and each year thereafter to the chairs and
184.11 	ranking minority members of the legislative committees and
184.12 	divisions with jurisdiction over criminal justice policy and
184.13 	funding on the number, amounts, and use of grants issued from
184.14 	the account in the previous year.
184.15 	(d) A public safety officer memorial and survivor account
184.16 	advisory council is established to advise the commissioner of
184.17 	public safety on the distribution of grants under this section.
184.18 	The council must consist of eight members, one from each of the
184.19 	following organizations:  the Minnesota law enforcement memorial
184.20 	association, the Minnesota police and peace officers
184.21 	association, the Minnesota chiefs of police association, the
184.22 	Minnesota sheriffs association, the Minnesota state fire
184.23 	department association, the Minnesota state fire chiefs
184.24 	association, the Minnesota ambulance association, and the
184.25 	Minnesota emergency medical services association.  The council
184.26 	member is the executive director or president of the
184.27 	organization, or that person's designee.  Members must serve
184.28 	without compensation.  The commissioner must consider the
184.29 	advisory council's recommendations before awarding grants under
184.30 	this section.
184.31 	(e) As used in this section, "killed in the line of duty"
184.32 	and "public safety officer" have the meanings given in section
184.33 	299A.41.
184.34 	(f) The checkoff under this section is subject to removal
184.35 	from the income tax return as provided in section 290.439,
184.36 	subdivision 2.

185.1 	EFFECTIVE DATE. This section is effective for income tax
185.2 	returns for taxable years beginning after December 31, 2004.

185.3 	Sec. 36. [290.435] K-12 EDUCATION, HIGHER EDUCATION,
185.4 	TRANSPORTATION, HEALTH CARE, NURSING HOME, AND CLEAN WATER
185.5 	CHECKOFF.
185.6 		Subdivision 1.Checkoffs. (a) Every individual who files
185.7 	an income tax return may designate on their original return that
185.8 	$1 or more shall be added to the tax or deducted from the refund
185.9 	that would otherwise be payable by or to that individual.
185.10 	(b) The taxpayer shall designate that the added or deducted
185.11 	amount shall be paid into one or more of the following accounts
185.12 	and used for the stated purpose:
185.13 	(1) K-12 education, for technology and/or capital
185.14 	improvement grants to school districts;
185.15 	(2) higher education, for state assistance to individual
185.16 	students based on student need;
185.17 	(3) transportation, for local road and bridge funds;
185.18 	(4) health care, to provide funding for public health care
185.19 	programs;
185.20 	(5) nursing home assistance, for state reimbursement of
185.21 	nursing home costs; or 
185.22 	(6) environmental clean water, for grants to cities for
185.23 	wastewater treatment facilities.
185.24 	(c) The taxpayer may not designate an amount less than $1
185.25 	to be paid into any of the accounts.
185.26 		Subd. 2.Appropriation; special accounts. (a) All
185.27 	amounts designated by taxpayers to be paid into the K-12
185.28 	education account under subdivision 1, clause (1), must be
185.29 	deposited in the state treasury and credited to a special K-12
185.30 	education account.  Money in the account is appropriated
185.31 	annually to the commissioner of education to make onetime grants
185.32 	to school districts for technology or capital improvements.
185.33 	(b) All amounts designated by taxpayers to be paid into the
185.34 	higher education account under subdivision 1, clause (2), must
185.35 	be deposited in the state treasury and credited to a special
185.36 	higher education account.  Money in the account is appropriated
186.1 	annually to the Minnesota Higher Education Services Office to
186.2 	provide financial assistance to students, based on financial
186.3 	needs, attending postsecondary educational institutions located
186.4 	in and operated by this state.
186.5 	(c) All amounts designated by taxpayers to be paid into the
186.6 	transportation account under subdivision 1, clause (3), must be
186.7 	deposited in the state treasury and credited to a special
186.8 	transportation account.  Money in the account is appropriated
186.9 	annually to the commissioner of transportation for improvements
186.10 	to local roads and bridges.
186.11 	(d) All amounts designated by taxpayers to be paid into the
186.12 	health care account under subdivision 1, clause (4), must be
186.13 	deposited in the state treasury and credited to a special health
186.14 	care account.  Money in the account is appropriated annually to
186.15 	the commissioner of human services to provide additional funds
186.16 	for adult participation in MinnesotaCare.
186.17 	(e) All amounts designated by taxpayers to be paid into the
186.18 	nursing home assistance account under subdivision 1, clause (5),
186.19 	must be deposited in the state treasury and credited to a
186.20 	special nursing home assistance account.  Money in the account
186.21 	is appropriated annually to the commissioner of human services
186.22 	to fund a onetime increase in state paid nursing home
186.23 	reimbursement rates.
186.24 	(f) All amounts designated by taxpayers to be paid into the
186.25 	environmental clean water account under subdivision 1, clause
186.26 	(6), must be deposited in the state treasury and credited to the
186.27 	wastewater infrastructure fund, and annually appropriated to the
186.28 	public facilities authority to make onetime grants to
186.29 	municipalities for wastewater treatment facilities.
186.30 	(g) All amounts appropriated from the special accounts
186.31 	under this section are onetime appropriations and do not become
186.32 	part of the base level funding for the 2006-2007 biennium.
186.33 	(h) The checkoffs under this section are subject to removal
186.34 	from the income tax return as provided in section 290.439,
186.35 	subdivision 2.
186.36 	
EFFECTIVE DATE. This section is effective for taxable
187.1 	years beginning after December 31, 2004.

187.2 	Sec. 37. [290.439] ADMINISTRATION OF CHECKOFFS.
187.3 		Subdivision 1.Forms. The commissioner must provide a
187.4 	separate form as part of the income tax return that lists the
187.5 	nongame wildlife checkoff in section 290.432; the state election
187.6 	campaign fund checkoff in section 10A.31; the National Guard and
187.7 	Reserves checkoff in section 290.433; the public safety officer
187.8 	checkoff in section 290.434; and the education, higher
187.9 	education, transportation, health care, nursing home, and clean
187.10 	water checkoffs in section 290.435.  The commissioner must
187.11 	provide a single line on form M-1 for entering the total amount
187.12 	a taxpayer contributes to all the checkoffs listed on the
187.13 	separate form.
187.14 		Subd. 2.Removal of checkoffs. The commissioner must
187.15 	annually review usage of the income tax checkoffs in sections
187.16 	290.433 to 290.435, and determine the number of returns making
187.17 	contributions and the total amount contributed to each checkoff,
187.18 	including each of the separate checkoffs provided in section
187.19 	290.435.  If any of the checkoffs subject to review fails, for
187.20 	two consecutive tax years, to obtain contributions of at least
187.21 	$100,000 from at least eight percent of all returns that make
187.22 	contributions to any of the checkoffs in sections 10A.31 and
187.23 	290.433 to 290.435, the commissioner must remove the checkoff
187.24 	from the checkoff form and submit legislation proposing the
187.25 	repeal of the checkoff to the legislature.
187.26 	
EFFECTIVE DATE. This section is effective for taxable
187.27 	years beginning after December 31, 2004.

187.28 	Sec. 38. Minnesota Statutes 2004, section 290.92,
187.29 	subdivision 4b, is amended to read:
187.30 		Subd. 4b.Withholding by partnerships.  (a) A partnership
187.31 	shall deduct and withhold a tax as provided in paragraph (b) for
187.32 	nonresident individual partners based on their distributive
187.33 	shares of partnership income for a taxable year of the
187.34 	partnership.
187.35 	(b) The amount of tax withheld is determined by multiplying
187.36 	the partner's distributive share allocable to Minnesota under
188.1 	section 290.17, paid or credited during the taxable year by the
188.2 	highest rate used to determine the income tax liability for an
188.3 	individual under section 290.06, subdivision 2c, except that the
188.4 	amount of tax withheld may be determined by the commissioner if
188.5 	the partner submits a withholding exemption certificate under
188.6 	subdivision 5.
188.7 	(c) The commissioner may reduce or abate the tax withheld
188.8 	under this subdivision if the partnership had reasonable cause
188.9 	to believe that no tax was due under this section.
188.10 	(d) Notwithstanding paragraph (a), a partnership is not
188.11 	required to deduct and withhold tax for a nonresident partner if:
188.12 	(1) the partner elects to have the tax due paid as part of
188.13 	the partnership's composite return under section 289A.08,
188.14 	subdivision 7;
188.15 	(2) the partner has Minnesota assignable federal adjusted
188.16 	gross income from the partnership of less than $1,000; or
188.17 	(3) the partnership is liquidated or terminated, the income
188.18 	was generated by a transaction related to the termination or
188.19 	liquidation, and no cash or other property was distributed in
188.20 	the current or prior taxable year; or 
188.21 	(4) the distributive shares of partnership income are
188.22 	attributable to:
188.23 	(i) income required to be recognized because of discharge
188.24 	of indebtedness;
188.25 	(ii) income recognized because of a sale, exchange, or
188.26 	other disposition of real estate, depreciable property, or
188.27 	property described in section 179 of the Internal Revenue Code;
188.28 	or
188.29 	(iii) income recognized on the sale, exchange, or other
188.30 	disposition of any property that has been the subject of a basis
188.31 	reduction pursuant to section 108, 734, 743, 754, or 1017 of the
188.32 	Internal Revenue Code
188.33 	to the extent that the income does not include cash received or
188.34 	receivable or, if there is cash received or receivable, to the
188.35 	extent that the cash is required to be used to pay indebtedness
188.36 	by the partnership or a secured debt on partnership property; or 
189.1 	(5) the partnership is a publicly traded partnership, as
189.2 	defined in section 7704(b) of the Internal Revenue Code.
189.3 	(e) For purposes of subdivision 6a, and sections 289A.09,
189.4 	subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50,
189.5 	289A.56, 289A.60, and 289A.63, a partnership is considered an
189.6 	employer.
189.7 	(f) To the extent that income is exempt from withholding
189.8 	under paragraph (d), clause (4), the commissioner has a lien in
189.9 	an amount up to the amount that would be required to be withheld
189.10 	with respect to the income of the partner attributable to the
189.11 	partnership interest, but for the application of paragraph (d),
189.12 	clause (4).  The lien arises under section 270.69 from the date
189.13 	of assessment of the tax against the partner, and attaches to
189.14 	that partner's share of the profits and any other money due or
189.15 	to become due to that partner in respect of the partnership.
189.16 	Notice of the lien may be sent by mail to the partnership,
189.17 	without the necessity for recording the lien.  The notice has
189.18 	the force and effect of a levy under section 270.70, and is
189.19 	enforceable against the partnership in the manner provided by
189.20 	that section.  Upon payment in full of the liability subsequent
189.21 	to the notice of lien, the partnership must be notified that the
189.22 	lien has been satisfied.
189.23 	
EFFECTIVE DATE. This section is effective for taxable
189.24 	years beginning after December 31, 2004.

189.25 	Sec. 39. Minnesota Statutes 2004, section 291.005,
189.26 	subdivision 1, is amended to read:
189.27 		Subdivision 1.Scope.  Unless the context otherwise
189.28 	clearly requires, the following terms used in this chapter shall
189.29 	have the following meanings:
189.30 	(1) "Federal gross estate" means the gross estate of a
189.31 	decedent as valued and otherwise determined for federal estate
189.32 	tax purposes by federal taxing authorities pursuant to the
189.33 	provisions of the Internal Revenue Code.
189.34 	(2) "Minnesota gross estate" means the federal gross estate
189.35 	of a decedent after (a) excluding therefrom any property
189.36 	included therein which has its situs outside Minnesota, and (b)
190.1 	including therein any property omitted from the federal gross
190.2 	estate which is includable therein, has its situs in Minnesota,
190.3 	and was not disclosed to federal taxing authorities.
190.4 	(3) "Personal representative" means the executor,
190.5 	administrator or other person appointed by the court to
190.6 	administer and dispose of the property of the decedent.  If
190.7 	there is no executor, administrator or other person appointed,
190.8 	qualified, and acting within this state, then any person in
190.9 	actual or constructive possession of any property having a situs
190.10 	in this state which is included in the federal gross estate of
190.11 	the decedent shall be deemed to be a personal representative to
190.12 	the extent of the property and the Minnesota estate tax due with
190.13 	respect to the property.
190.14 	(4) "Resident decedent" means an individual whose domicile
190.15 	at the time of death was in Minnesota.
190.16 	(5) "Nonresident decedent" means an individual whose
190.17 	domicile at the time of death was not in Minnesota.
190.18 	(6) "Situs of property" means, with respect to real
190.19 	property, the state or country in which it is located; with
190.20 	respect to tangible personal property, the state or country in
190.21 	which it was normally kept or located at the time of the
190.22 	decedent's death; and with respect to intangible personal
190.23 	property, the state or country in which the decedent was
190.24 	domiciled at death.
190.25 	(7) "Commissioner" means the commissioner of revenue or any
190.26 	person to whom the commissioner has delegated functions under
190.27 	this chapter.
190.28 	(8) "Internal Revenue Code" means the United States
190.29 	Internal Revenue Code of 1986, as amended through December 31,
190.30 	2002 April 15, 2005.
190.31 	(9) "Minnesota adjusted taxable estate" means federal
190.32 	adjusted taxable estate as defined by section 2011(b)(3) of the
190.33 	Internal Revenue Code, increased by the amount of deduction for
190.34 	state death taxes allowed under section 2058 of the Internal
190.35 	Revenue Code.
190.36 	
EFFECTIVE DATE. The change to clause (8) is effective for
191.1 	estates of decedents dying after January 31, 2003, and the new
191.2 	clause (9) is effective for estates of decedents dying after
191.3 	December 31, 2004.

191.4 	Sec. 40. Minnesota Statutes 2004, section 291.03,
191.5 	subdivision 1, is amended to read:
191.6 		Subdivision 1.Tax amount. (a) The tax imposed shall be
191.7 	an amount equal to the proportion of the maximum credit for
191.8 	state death taxes computed under section 2011 of the Internal
191.9 	Revenue Code, as amended through December 31, 2000, for state
191.10 	death taxes but using Minnesota adjusted taxable estate instead
191.11 	of federal adjusted taxable estate,as the Minnesota gross
191.12 	estate bears to the value of the federal gross estate.  The tax
191.13 	determined under this paragraph shall not be greater than the
191.14 	federal estate tax amount computed by applying the rates and
191.15 	brackets under section 2001 (c) of the Internal Revenue Code
191.16 	after the allowance of to the Minnesota adjusted gross estate
191.17 	and subtracting the federal credits credit allowed under section
191.18 	2010 of the Internal Revenue Code of 1986, as amended through
191.19 	December 31, 2000.
191.20 	(b) For the purposes of this section, expenses which are
191.21 	deducted for federal income tax purposes under section 642(g) of
191.22 	the Internal Revenue Code as amended through December 31, 2002,
191.23 	are not allowable in computing the tax under this chapter.
191.24 	(c) The executor may make a qualified terminable interest
191.25 	property election, as defined in section 2056(b)(7) of the
191.26 	Internal Revenue Code, for purposes of computing the marital
191.27 	deduction under section 2056 of the Internal Revenue Code for
191.28 	the tax under this chapter that differs from the amount elected
191.29 	for federal estate tax purposes.  The election may not exceed
191.30 	the federal election by more than the difference between the
191.31 	applicable exclusion amount under section 2010(c) of the
191.32 	Internal Revenue Code and under section 2010(c) of the Internal
191.33 	Revenue Code, as amended through December 31, 2000.  The
191.34 	election must be made on the tax return under this chapter and
191.35 	is irrevocable.  All tax under this chapter must be determined
191.36 	using the qualified terminable interest election made on the
192.1 	Minnesota return.  For purposes of applying sections 2044 and
192.2 	2207A of the Internal Revenue Code to the computation of the
192.3 	federal and Minnesota gross estates of the surviving spouse,
192.4 	amounts for which a qualified terminable interest property
192.5 	election has been made under this section must be treated as
192.6 	though a valid federal qualified terminable interest property
192.7 	election under section 2056(b)(7) of the Internal Revenue Code
192.8 	had been made.
192.9 	
EFFECTIVE DATE. This section is effective for estates of
192.10 	decedents dying after December 31, 2004, except paragraph (c)
192.11 	applies for estates of decedents dying after December 31, 2006.

192.12 	Sec. 41. Minnesota Statutes 2004, section 298.01,
192.13 	subdivision 3, is amended to read:
192.14 		Subd. 3.Occupation tax; other ores.  Every person
192.15 	engaged in the business of mining or producing ores in this
192.16 	state, except iron ore or taconite concentrates, shall pay an
192.17 	occupation tax to the state of Minnesota as provided in this
192.18 	subdivision.  The tax is determined in the same manner as the
192.19 	tax imposed by section 290.02, except that sections 290.05,
192.20 	subdivision 1, clause (a), and 290.17, subdivision 4, and
192.21 	290.191, subdivision 2,do not apply. A person subject to
192.22 	occupation tax under this section shall apportion its net income
192.23 	on the basis of the percentage obtained by taking the sum of:
192.24 	(1) 75 percent of the percentage which the sales made
192.25 	within this state in connection with the trade or business
192.26 	during the tax period are of the total sales wherever made in
192.27 	connection with the trade or business during the tax period;
192.28 	(2) 12.5 percent of the percentage which the total tangible
192.29 	property used by the taxpayer in this state in connection with
192.30 	the trade or business during the tax period is of the total
192.31 	tangible property, wherever located, used by the taxpayer in
192.32 	connection with the trade or business during the tax period; and 
192.33 	(3) 12.5 percent of the percentage which the taxpayer's
192.34 	total payrolls paid or incurred in this state or paid in respect
192.35 	to labor performed in this state in connection with the trade or
192.36 	business during the tax period are of the taxpayer's total
193.1 	payrolls paid or incurred in connection with the trade or
193.2 	business during the tax period.
193.3 	The tax is in addition to all other taxes.
193.4 	
EFFECTIVE DATE. This section is effective for tax years
193.5 	beginning after December 31, 2006.

193.6 	Sec. 42. Minnesota Statutes 2004, section 298.01,
193.7 	subdivision 4, is amended to read:
193.8 		Subd. 4.Occupation tax; iron ore; taconite
193.9 	concentrates.  A person engaged in the business of mining or
193.10 	producing of iron ore, taconite concentrates or direct reduced
193.11 	ore in this state shall pay an occupation tax to the state of
193.12 	Minnesota.  The tax is determined in the same manner as the tax
193.13 	imposed by section 290.02, except that sections 290.05,
193.14 	subdivision 1, clause (a), and 290.17, subdivision 4, and
193.15 	290.191, subdivision 2,do not apply. A person subject to
193.16 	occupation tax under this section shall apportion its net income
193.17 	on the basis of the percentage obtained by taking the sum of:
193.18 	(1) 75 percent of the percentage which the sales made
193.19 	within this state in connection with the trade or business
193.20 	during the tax period are of the total sales wherever made in
193.21 	connection with the trade or business during the tax period;
193.22 	(2) 12.5 percent of the percentage which the total tangible
193.23 	property used by the taxpayer in this state in connection with
193.24 	the trade or business during the tax period is of the total
193.25 	tangible property, wherever located, used by the taxpayer in
193.26 	connection with the trade or business during the tax period; and 
193.27 	(3) 12.5 percent of the percentage which the taxpayer's
193.28 	total payrolls paid or incurred in this state or paid in respect
193.29 	to labor performed in this state in connection with the trade or
193.30 	business during the tax period are of the taxpayer's total
193.31 	payrolls paid or incurred in connection with the trade or
193.32 	business during the tax period.
193.33 	The tax is in addition to all other taxes.
193.34 	
EFFECTIVE DATE. This section is effective for tax years
193.35 	beginning after December 31, 2006.

193.36 	Sec. 43. REPEALER.
 194.1 	Minnesota Rules, parts 8093.2000; and 8093.3000, are
194.2 	repealed effective the day following final enactment.

194.3 	ARTICLE 6
194.4 	FEDERAL UPDATE

194.5 	Section 1. Minnesota Statutes 2004, section 289A.02,
194.6 	subdivision 7, is amended to read:
194.7 		Subd. 7.Internal revenue code.  Unless specifically
194.8 	defined otherwise, "Internal Revenue Code" means the Internal
194.9 	Revenue Code of 1986, as amended through June 15, 2003 April 15,
194.10 	2005.
194.11 	
EFFECTIVE DATE. This section is effective the day
194.12 	following final enactment.

194.13 	Sec. 2. Minnesota Statutes 2004, section 290.01,
194.14 	subdivision 19, as amended by Laws 2005, chapter 1, section 1,
194.15 	is amended to read:
194.16 		Subd. 19.Net income. The term "net income" means the
194.17 	federal taxable income, as defined in section 63 of the Internal
194.18 	Revenue Code of 1986, as amended through the date named in this
194.19 	subdivision, incorporating the federal effective dates of
194.20 	changes to the Internal Revenue Code and any elections made by
194.21 	the taxpayer in accordance with the Internal Revenue Code in
194.22 	determining federal taxable income for federal income tax
194.23 	purposes, and with the modifications provided in subdivisions
194.24 	19a to 19f.
194.25 	In the case of a regulated investment company or a fund
194.26 	thereof, as defined in section 851(a) or 851(g) of the Internal
194.27 	Revenue Code, federal taxable income means investment company
194.28 	taxable income as defined in section 852(b)(2) of the Internal
194.29 	Revenue Code, except that:
194.30 	(1) the exclusion of net capital gain provided in section
194.31 	852(b)(2)(A) of the Internal Revenue Code does not apply;
194.32 	(2) the deduction for dividends paid under section
194.33 	852(b)(2)(D) of the Internal Revenue Code must be applied by
194.34 	allowing a deduction for capital gain dividends and
194.35 	exempt-interest dividends as defined in sections 852(b)(3)(C)
194.36 	and 852(b)(5) of the Internal Revenue Code; and
195.1 	(3) the deduction for dividends paid must also be applied
195.2 	in the amount of any undistributed capital gains which the
195.3 	regulated investment company elects to have treated as provided
195.4 	in section 852(b)(3)(D) of the Internal Revenue Code.
195.5 	The net income of a real estate investment trust as defined
195.6 	and limited by section 856(a), (b), and (c) of the Internal
195.7 	Revenue Code means the real estate investment trust taxable
195.8 	income as defined in section 857(b)(2) of the Internal Revenue
195.9 	Code.
195.10 	The net income of a designated settlement fund as defined
195.11 	in section 468B(d) of the Internal Revenue Code means the gross
195.12 	income as defined in section 468B(b) of the Internal Revenue
195.13 	Code.
195.14 	The provisions of sections 1113(a), 1117, 1206(a), 1313(a),
195.15 	1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,
195.16 	1616, 1617, 1704(l), and 1704(m) of the Small Business Job
195.17 	Protection Act, Public Law 104-188, the provisions of Public Law
195.18 	104-117, the provisions of sections 313(a) and (b)(1), 602(a),
195.19 	913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,
195.20 	1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)
195.21 	and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and
195.22 	1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law
195.23 	105-34, the provisions of section 6010 of the Internal Revenue
195.24 	Service Restructuring and Reform Act of 1998, Public Law
195.25 	105-206, the provisions of section 4003 of the Omnibus
195.26 	Consolidated and Emergency Supplemental Appropriations Act,
195.27 	1999, Public Law 105-277, and the provisions of section 318 of
195.28 	the Consolidated Appropriation Act of 2001, Public Law 106-554,
195.29 	shall become effective at the time they become effective for
195.30 	federal purposes.
195.31 	The Internal Revenue Code of 1986, as amended through
195.32 	December 31, 1996 April 15, 2005, shall be in effect for taxable
195.33 	years beginning after December 31, 1996.
195.34 	The provisions of sections 202(a) and (b), 221(a), 225,
195.35 	312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and
195.36 	(c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,
196.1 	1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,
196.2 	1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)
196.3 	of the Taxpayer Relief Act of 1997, Public Law 105-34, the
196.4 	provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,
196.5 	and 7003 of the Internal Revenue Service Restructuring and
196.6 	Reform Act of 1998, Public Law 105-206, the provisions of
196.7 	section 3001 of the Omnibus Consolidated and Emergency
196.8 	Supplemental Appropriations Act, 1999, Public Law 105-277, the
196.9 	provisions of section 3001 of the Miscellaneous Trade and
196.10 	Technical Corrections Act of 1999, Public Law 106-36, and the
196.11 	provisions of section 316 of the Consolidated Appropriation Act
196.12 	of 2001, Public Law 106-554, shall become effective at the time
196.13 	they become effective for federal purposes.
196.14 	The Internal Revenue Code of 1986, as amended through
196.15 	December 31, 1997, shall be in effect for taxable years
196.16 	beginning after December 31, 1997.
196.17 	The provisions of sections 5002, 6009, 6011, and 7001 of
196.18 	the Internal Revenue Service Restructuring and Reform Act of
196.19 	1998, Public Law 105-206, the provisions of section 9010 of the
196.20 	Transportation Equity Act for the 21st Century, Public Law
196.21 	105-178, the provisions of sections 1004, 4002, and 5301 of the
196.22 	Omnibus Consolidation and Emergency Supplemental Appropriations
196.23 	Act, 1999, Public Law 105-277, the provision of section 303 of
196.24 	the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law
196.25 	105-369, the provisions of sections 532, 534, 536, 537, and 538
196.26 	of the Ticket to Work and Work Incentives Improvement Act of
196.27 	1999, Public Law 106-170, the provisions of the Installment Tax
196.28 	Correction Act of 2000, Public Law 106-573, and the provisions
196.29 	of section 309 of the Consolidated Appropriation Act of 2001,
196.30 	Public Law 106-554, shall become effective at the time they
196.31 	become effective for federal purposes.
196.32 	The Internal Revenue Code of 1986, as amended through
196.33 	December 31, 1998, shall be in effect for taxable years
196.34 	beginning after December 31, 1998.
196.35 	The provisions of the FSC Repeal and Extraterritorial
196.36 	Income Exclusion Act of 2000, Public Law 106-519, and the
197.1 	provision of section 412 of the Job Creation and Worker
197.2 	Assistance Act of 2002, Public Law 107-147, shall become
197.3 	effective at the time it became effective for federal purposes.
197.4 	The Internal Revenue Code of 1986, as amended through
197.5 	December 31, 1999, shall be in effect for taxable years
197.6 	beginning after December 31, 1999.  The provisions of sections
197.7 	306 and 401 of the Consolidated Appropriation Act of 2001,
197.8 	Public Law 106-554, and the provision of section 632(b)(2)(A) of
197.9 	the Economic Growth and Tax Relief Reconciliation Act of 2001,
197.10 	Public Law 107-16, and provisions of sections 101 and 402 of the
197.11 	Job Creation and Worker Assistance Act of 2002, Public Law
197.12 	107-147, shall become effective at the same time it became
197.13 	effective for federal purposes.
197.14 	The Internal Revenue Code of 1986, as amended through
197.15 	December 31, 2000, shall be in effect for taxable years
197.16 	beginning after December 31, 2000.  The provisions of sections
197.17 	659a and 671 of the Economic Growth and Tax Relief
197.18 	Reconciliation Act of 2001, Public Law 107-16, the provisions of
197.19 	sections 104, 105, and 111 of the Victims of Terrorism Tax
197.20 	Relief Act of 2001, Public Law 107-134, and the provisions of
197.21 	sections 201, 403, 413, and 606 of the Job Creation and Worker
197.22 	Assistance Act of 2002, Public Law 107-147, shall become
197.23 	effective at the same time it became effective for federal
197.24 	purposes.
197.25 	The Internal Revenue Code of 1986, as amended through March
197.26 	15, 2002, shall be in effect for taxable years beginning after
197.27 	December 31, 2001.
197.28 	The provisions of sections 101 and 102 of the Victims of
197.29 	Terrorism Tax Relief Act of 2001, Public Law 107-134, shall
197.30 	become effective at the same time it becomes effective for
197.31 	federal purposes.
197.32 	The Internal Revenue Code of 1986, as amended through June
197.33 	15, 2003, shall be in effect for taxable years beginning after
197.34 	December 31, 2002.  The provisions of section 201 of the Jobs
197.35 	and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if
197.36 	it is enacted into law, are effective at the same time it became
198.1 	effective for federal purposes.  The provisions of the Act of
198.2 	January 7, 2005, Public Law 109-1, to accelerate the income tax
198.3 	benefits for charitable cash contributions for the relief of
198.4 	victims of the Indian Ocean tsunami, are effective at the same
198.5 	time it became effective for federal purposes and apply to the
198.6 	subtraction under subdivision 19b, clause (7).
198.7 	Except as otherwise provided, references to the Internal
198.8 	Revenue Code in subdivisions 19a 19 to 19g 19f mean the code in
198.9 	effect for purposes of determining net income for the applicable
198.10 	year.
198.11 	
EFFECTIVE DATE. This section is effective the day
198.12 	following final enactment.

198.13 	Sec. 3. Minnesota Statutes 2004, section 290.01,
198.14 	subdivision 19a, is amended to read:
198.15 		Subd. 19a.Additions to federal taxable income.  For
198.16 	individuals, estates, and trusts, there shall be added to
198.17 	federal taxable income:
198.18 	(1)(i) interest income on obligations of any state other
198.19 	than Minnesota or a political or governmental subdivision,
198.20 	municipality, or governmental agency or instrumentality of any
198.21 	state other than Minnesota exempt from federal income taxes
198.22 	under the Internal Revenue Code or any other federal statute;
198.23 	and
198.24 	(ii) exempt-interest dividends as defined in section
198.25 	852(b)(5) of the Internal Revenue Code, except the portion of
198.26 	the exempt-interest dividends derived from interest income on
198.27 	obligations of the state of Minnesota or its political or
198.28 	governmental subdivisions, municipalities, governmental agencies
198.29 	or instrumentalities, but only if the portion of the
198.30 	exempt-interest dividends from such Minnesota sources paid to
198.31 	all shareholders represents 95 percent or more of the
198.32 	exempt-interest dividends that are paid by the regulated
198.33 	investment company as defined in section 851(a) of the Internal
198.34 	Revenue Code, or the fund of the regulated investment company as
198.35 	defined in section 851(g) of the Internal Revenue Code, making
198.36 	the payment; and
199.1 	(iii) for the purposes of items (i) and (ii), interest on
199.2 	obligations of an Indian tribal government described in section
199.3 	7871(c) of the Internal Revenue Code shall be treated as
199.4 	interest income on obligations of the state in which the tribe
199.5 	is located;
199.6 	(2) the amount of income or sales and use taxes paid or
199.7 	accrued within the taxable year under this chapter and income or
199.8 	sales and use taxes paid to any other state or to any province
199.9 	or territory of Canada, to the extent allowed as a deduction
199.10 	under section 63(d) of the Internal Revenue Code, but the
199.11 	addition may not be more than the amount by which the itemized
199.12 	deductions as allowed under section 63(d) of the Internal
199.13 	Revenue Code exceeds the amount of (i) the standard deduction as
199.14 	defined in section 63(c) of the Internal Revenue Code minus (ii)
199.15 	any addition required under clause (10).  For the purpose of
199.16 	this paragraph, the disallowance of itemized deductions under
199.17 	section 68 of the Internal Revenue Code of 1986, income or sales
199.18 	and use tax is the last itemized deduction disallowed;
199.19 	(3) the capital gain amount of a lump sum distribution to
199.20 	which the special tax under section 1122(h)(3)(B)(ii) of the Tax
199.21 	Reform Act of 1986, Public Law 99-514, applies;
199.22 	(4) the amount of income taxes paid or accrued within the
199.23 	taxable year under this chapter and income taxes paid to any
199.24 	other state or any province or territory of Canada, to the
199.25 	extent allowed as a deduction in determining federal adjusted
199.26 	gross income.  For the purpose of this paragraph, income taxes
199.27 	do not include the taxes imposed by sections 290.0922,
199.28 	subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
199.29 	(5) the amount of expense, interest, or taxes disallowed
199.30 	pursuant to section 290.10;
199.31 	(6) the amount of a partner's pro rata share of net income
199.32 	which does not flow through to the partner because the
199.33 	partnership elected to pay the tax on the income under section
199.34 	6242(a)(2) of the Internal Revenue Code; and 
199.35 	(7) 80 percent of the depreciation deduction allowed under
199.36 	section 168(k) of the Internal Revenue Code.  For purposes of
200.1 	this clause, if the taxpayer has an activity that in the taxable
200.2 	year generates a deduction for depreciation under section 168(k)
200.3 	and the activity generates a loss for the taxable year that the
200.4 	taxpayer is not allowed to claim for the taxable year, "the
200.5 	depreciation allowed under section 168(k)" for the taxable year
200.6 	is limited to excess of the depreciation claimed by the activity
200.7 	under section 168(k) over the amount of the loss from the
200.8 	activity that is not allowed in the taxable year.  In succeeding
200.9 	taxable years when the losses not allowed in the taxable year
200.10 	are allowed, the depreciation under section 168(k) is allowed;
200.11 	(8) 80 percent of the amount by which the deduction allowed
200.12 	by section 179 of the Internal Revenue Code exceeds the
200.13 	deduction allowable by section 179 of the Internal Revenue Code
200.14 	of 1986, as amended through December 31, 2003;
200.15 	(9) to the extent deducted in computing federal taxable
200.16 	income, the amount of the deduction allowable under section 199
200.17 	of the Internal Revenue Code;
200.18 	(10) for tax years beginning after December 31, 2006, to
200.19 	the extent deducted in computing federal taxable income, the
200.20 	amount by which the standard deduction allowed under section
200.21 	63(c) of the Internal Revenue Code exceeds the standard
200.22 	deduction allowable under section 63(c) of the Internal Revenue
200.23 	Code of 1986, as amended through December 31, 2003; and 
200.24 	(11) the exclusion allowed under section 139A of the
200.25 	Internal Revenue Code for federal subsidies for prescription
200.26 	drug plans.
200.27 	
EFFECTIVE DATE. This section is effective for tax years
200.28 	beginning after December 31, 2004, except the changes in clause
200.29 	(2) are effective for tax years beginning after December 31,
200.30 	2003.

200.31 	Sec. 4. Minnesota Statutes 2004, section 290.01,
200.32 	subdivision 19b, is amended to read:
200.33 		Subd. 19b.Subtractions from federal taxable income.  For
200.34 	individuals, estates, and trusts, there shall be subtracted from
200.35 	federal taxable income:
200.36 	(1) interest income on obligations of any authority,
201.1 	commission, or instrumentality of the United States to the
201.2 	extent includable in taxable income for federal income tax
201.3 	purposes but exempt from state income tax under the laws of the
201.4 	United States;
201.5 	(2) if included in federal taxable income, the amount of
201.6 	any overpayment of income tax to Minnesota or to any other
201.7 	state, for any previous taxable year, whether the amount is
201.8 	received as a refund or as a credit to another taxable year's
201.9 	income tax liability;
201.10 	(3) the amount paid to others, less the amount used to
201.11 	claim the credit allowed under section 290.0674, not to exceed
201.12 	$1,625 for each qualifying child in grades kindergarten to 6 and
201.13 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
201.14 	textbooks, and transportation of each qualifying child in
201.15 	attending an elementary or secondary school situated in
201.16 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
201.17 	wherein a resident of this state may legally fulfill the state's
201.18 	compulsory attendance laws, which is not operated for profit,
201.19 	and which adheres to the provisions of the Civil Rights Act of
201.20 	1964 and chapter 363A.  For the purposes of this clause,
201.21 	"tuition" includes fees or tuition as defined in section
201.22 	290.0674, subdivision 1, clause (1).  As used in this clause,
201.23 	"textbooks" includes books and other instructional materials and
201.24 	equipment purchased or leased for use in elementary and
201.25 	secondary schools in teaching only those subjects legally and
201.26 	commonly taught in public elementary and secondary schools in
201.27 	this state.  Equipment expenses qualifying for deduction
201.28 	includes expenses as defined and limited in section 290.0674,
201.29 	subdivision 1, clause (3).  "Textbooks" does not include
201.30 	instructional books and materials used in the teaching of
201.31 	religious tenets, doctrines, or worship, the purpose of which is
201.32 	to instill such tenets, doctrines, or worship, nor does it
201.33 	include books or materials for, or transportation to,
201.34 	extracurricular activities including sporting events, musical or
201.35 	dramatic events, speech activities, driver's education, or
201.36 	similar programs.  For purposes of the subtraction provided by
202.1 	this clause, "qualifying child" has the meaning given in section
202.2 	32(c)(3) of the Internal Revenue Code;
202.3 	(4) income as provided under section 290.0802;
202.4 	(5) to the extent included in federal adjusted gross
202.5 	income, income realized on disposition of property exempt from
202.6 	tax under section 290.491;
202.7 	(6) to the extent included in federal taxable income,
202.8 	postservice benefits for youth community service under section
202.9 	124D.42 for volunteer service under United States Code, title
202.10 	42, sections 12601 to 12604;
202.11 	(7) to the extent not deducted in determining federal
202.12 	taxable income by an individual who does not itemize deductions
202.13 	for federal income tax purposes for the taxable year, an amount
202.14 	equal to 50 percent of the excess of charitable contributions
202.15 	over $500 allowable as a deduction for the taxable year under
202.16 	section 170(a) of the Internal Revenue Code over $500 and under
202.17 	the provisions of Public Law 109-1;
202.18 	(8) for taxable years beginning before January 1, 2008, the
202.19 	amount of the federal small ethanol producer credit allowed
202.20 	under section 40(a)(3) of the Internal Revenue Code which is
202.21 	included in gross income under section 87 of the Internal
202.22 	Revenue Code;
202.23 	(9) for individuals who are allowed a federal foreign tax
202.24 	credit for taxes that do not qualify for a credit under section
202.25 	290.06, subdivision 22, an amount equal to the carryover of
202.26 	subnational foreign taxes for the taxable year, but not to
202.27 	exceed the total subnational foreign taxes reported in claiming
202.28 	the foreign tax credit.  For purposes of this clause, "federal
202.29 	foreign tax credit" means the credit allowed under section 27 of
202.30 	the Internal Revenue Code, and "carryover of subnational foreign
202.31 	taxes" equals the carryover allowed under section 904(c) of the
202.32 	Internal Revenue Code minus national level foreign taxes to the
202.33 	extent they exceed the federal foreign tax credit;
202.34 	(10) in each of the five tax years immediately following
202.35 	the tax year in which an addition is required under subdivision
202.36 	19a, clause (7), an amount equal to one-fifth of the delayed
203.1 	depreciation.  For purposes of this clause, "delayed
203.2 	depreciation" means the amount of the addition made by the
203.3 	taxpayer under subdivision 19a, clause (7), minus the positive
203.4 	value of any net operating loss under section 172 of the
203.5 	Internal Revenue Code generated for the tax year of the
203.6 	addition.  The resulting delayed depreciation cannot be less
203.7 	than zero; and 
203.8 	(11) job opportunity building zone income as provided under
203.9 	section 469.316.;
203.10 	(12) in each of the five tax years immediately following
203.11 	the tax year in which an addition is required under subdivision
203.12 	19a, clause (8), or 19c, clause (17), in the case of a
203.13 	shareholder of a corporation that is an S corporation, an amount
203.14 	equal to one-fifth of the addition made by the taxpayer under
203.15 	subdivision 19a, clause (8), or 19c, clause (17), in the case of
203.16 	a shareholder of a corporation that is an S corporation, minus
203.17 	the positive value of any net operating loss under section 172
203.18 	of the Internal Revenue Code generated for the tax year of the
203.19 	addition.  If the net operating loss exceeds the addition for
203.20 	the tax year, a subtraction is not allowed under this clause;
203.21 	and 
203.22 	(13) to the extent included in federal taxable income,
203.23 	compensation paid to a service member as defined in United
203.24 	States Code, title 10, section 101(a)(5), for military service
203.25 	as defined in the Service Member Civil Relief Act, Public Law
203.26 	108-189, section 101(2).
203.27 	
EFFECTIVE DATE. This section is effective for tax years
203.28 	beginning after December 31, 2004, except the change to clause
203.29 	(7) is effective for tax years beginning after December 31, 2003.

203.30 	Sec. 5. Minnesota Statutes 2004, section 290.01,
203.31 	subdivision 19c, is amended to read:
203.32 		Subd. 19c.Corporations; additions to federal taxable
203.33 	income.  For corporations, there shall be added to federal
203.34 	taxable income:
203.35 	(1) the amount of any deduction taken for federal income
203.36 	tax purposes for income, excise, or franchise taxes based on net
204.1 	income or related minimum taxes, including but not limited to
204.2 	the tax imposed under section 290.0922, paid by the corporation
204.3 	to Minnesota, another state, a political subdivision of another
204.4 	state, the District of Columbia, or any foreign country or
204.5 	possession of the United States;
204.6 	(2) interest not subject to federal tax upon obligations
204.7 	of:  the United States, its possessions, its agencies, or its
204.8 	instrumentalities; the state of Minnesota or any other state,
204.9 	any of its political or governmental subdivisions, any of its
204.10 	municipalities, or any of its governmental agencies or
204.11 	instrumentalities; the District of Columbia; or Indian tribal
204.12 	governments;
204.13 	(3) exempt-interest dividends received as defined in
204.14 	section 852(b)(5) of the Internal Revenue Code;
204.15 	(4) the amount of any net operating loss deduction taken
204.16 	for federal income tax purposes under section 172 or 832(c)(10)
204.17 	of the Internal Revenue Code or operations loss deduction under
204.18 	section 810 of the Internal Revenue Code;
204.19 	(5) the amount of any special deductions taken for federal
204.20 	income tax purposes under sections 241 to 247 of the Internal
204.21 	Revenue Code;
204.22 	(6) losses from the business of mining, as defined in
204.23 	section 290.05, subdivision 1, clause (a), that are not subject
204.24 	to Minnesota income tax;
204.25 	(7) the amount of any capital losses deducted for federal
204.26 	income tax purposes under sections 1211 and 1212 of the Internal
204.27 	Revenue Code;
204.28 	(8) the exempt foreign trade income of a foreign sales
204.29 	corporation under sections 921(a) and 291 of the Internal
204.30 	Revenue Code;
204.31 	(9) the amount of percentage depletion deducted under
204.32 	sections 611 through 614 and 291 of the Internal Revenue Code;
204.33 	(10) for certified pollution control facilities placed in
204.34 	service in a taxable year beginning before December 31, 1986,
204.35 	and for which amortization deductions were elected under section
204.36 	169 of the Internal Revenue Code of 1954, as amended through
205.1 	December 31, 1985, the amount of the amortization deduction
205.2 	allowed in computing federal taxable income for those
205.3 	facilities;
205.4 	(11) the amount of any deemed dividend from a foreign
205.5 	operating corporation determined pursuant to section 290.17,
205.6 	subdivision 4, paragraph (g);
205.7 	(12) the amount of any environmental tax paid under section
205.8 	59(a) of the Internal Revenue Code;
205.9 	(13) the amount of a partner's pro rata share of net income
205.10 	which does not flow through to the partner because the
205.11 	partnership elected to pay the tax on the income under section
205.12 	6242(a)(2) of the Internal Revenue Code;
205.13 	(14) the amount of net income excluded under section 114 of
205.14 	the Internal Revenue Code;
205.15 	(15) any increase in subpart F income, as defined in
205.16 	section 952(a) of the Internal Revenue Code, for the taxable
205.17 	year when subpart F income is calculated without regard to the
205.18 	provisions of section 614 of Public Law 107-147; and 
205.19 	(16) 80 percent of the depreciation deduction allowed under
205.20 	section 168(k) of the Internal Revenue Code.  For purposes of
205.21 	this clause, if the taxpayer has an activity that in the taxable
205.22 	year generates a deduction for depreciation under section 168(k)
205.23 	and the activity generates a loss for the taxable year that the
205.24 	taxpayer is not allowed to claim for the taxable year, "the
205.25 	depreciation allowed under section 168(k)" for the taxable year
205.26 	is limited to excess of the depreciation claimed by the activity
205.27 	under section 168(k) over the amount of the loss from the
205.28 	activity that is not allowed in the taxable year.  In succeeding
205.29 	taxable years when the losses not allowed in the taxable year
205.30 	are allowed, the depreciation under section 168(k) is allowed;
205.31 	(17) 80 percent of the amount by which the deduction
205.32 	allowed by section 179 of the Internal Revenue Code exceeds the
205.33 	deduction allowable by section 179 of the Internal Revenue Code
205.34 	of 1986, as amended through December 31, 2003;
205.35 	(18) to the extent deducted in computing federal taxable
205.36 	income, the amount of the deduction allowable under section 199
206.1 	of the Internal Revenue Code; and 
206.2 	(19) the exclusion allowed under section 139A of the
206.3 	Internal Revenue Code for federal subsidies for prescription
206.4 	drug plans.
206.5 	
EFFECTIVE DATE. This section is effective for tax years
206.6 	beginning after December 31, 2004.

206.7 	Sec. 6. Minnesota Statutes 2004, section 290.01,
206.8 	subdivision 19d, is amended to read:
206.9 		Subd. 19d.Corporations; modifications decreasing federal
206.10 	taxable income.  For corporations, there shall be subtracted
206.11 	from federal taxable income after the increases provided in
206.12 	subdivision 19c:
206.13 	(1) the amount of foreign dividend gross-up added to gross
206.14 	income for federal income tax purposes under section 78 of the
206.15 	Internal Revenue Code;
206.16 	(2) the amount of salary expense not allowed for federal
206.17 	income tax purposes due to claiming the federal jobs credit
206.18 	under section 51 of the Internal Revenue Code;
206.19 	(3) any dividend (not including any distribution in
206.20 	liquidation) paid within the taxable year by a national or state
206.21 	bank to the United States, or to any instrumentality of the
206.22 	United States exempt from federal income taxes, on the preferred
206.23 	stock of the bank owned by the United States or the
206.24 	instrumentality;
206.25 	(4) amounts disallowed for intangible drilling costs due to
206.26 	differences between this chapter and the Internal Revenue Code
206.27 	in taxable years beginning before January 1, 1987, as follows:
206.28 	(i) to the extent the disallowed costs are represented by
206.29 	physical property, an amount equal to the allowance for
206.30 	depreciation under Minnesota Statutes 1986, section 290.09,
206.31 	subdivision 7, subject to the modifications contained in
206.32 	subdivision 19e; and
206.33 	(ii) to the extent the disallowed costs are not represented
206.34 	by physical property, an amount equal to the allowance for cost
206.35 	depletion under Minnesota Statutes 1986, section 290.09,
206.36 	subdivision 8;
207.1 	(5) the deduction for capital losses pursuant to sections
207.2 	1211 and 1212 of the Internal Revenue Code, except that:
207.3 	(i) for capital losses incurred in taxable years beginning
207.4 	after December 31, 1986, capital loss carrybacks shall not be
207.5 	allowed;
207.6 	(ii) for capital losses incurred in taxable years beginning
207.7 	after December 31, 1986, a capital loss carryover to each of the
207.8 	15 taxable years succeeding the loss year shall be allowed;
207.9 	(iii) for capital losses incurred in taxable years
207.10 	beginning before January 1, 1987, a capital loss carryback to
207.11 	each of the three taxable years preceding the loss year, subject
207.12 	to the provisions of Minnesota Statutes 1986, section 290.16,
207.13 	shall be allowed; and
207.14 	(iv) for capital losses incurred in taxable years beginning
207.15 	before January 1, 1987, a capital loss carryover to each of the
207.16 	five taxable years succeeding the loss year to the extent such
207.17 	loss was not used in a prior taxable year and subject to the
207.18 	provisions of Minnesota Statutes 1986, section 290.16, shall be
207.19 	allowed;
207.20 	(6) an amount for interest and expenses relating to income
207.21 	not taxable for federal income tax purposes, if (i) the income
207.22 	is taxable under this chapter and (ii) the interest and expenses
207.23 	were disallowed as deductions under the provisions of section
207.24 	171(a)(2), 265 or 291 of the Internal Revenue Code in computing
207.25 	federal taxable income;
207.26 	(7) in the case of mines, oil and gas wells, other natural
207.27 	deposits, and timber for which percentage depletion was
207.28 	disallowed pursuant to subdivision 19c, clause (11), a
207.29 	reasonable allowance for depletion based on actual cost.  In the
207.30 	case of leases the deduction must be apportioned between the
207.31 	lessor and lessee in accordance with rules prescribed by the
207.32 	commissioner.  In the case of property held in trust, the
207.33 	allowable deduction must be apportioned between the income
207.34 	beneficiaries and the trustee in accordance with the pertinent
207.35 	provisions of the trust, or if there is no provision in the
207.36 	instrument, on the basis of the trust's income allocable to
208.1 	each;
208.2 	(8) for certified pollution control facilities placed in
208.3 	service in a taxable year beginning before December 31, 1986,
208.4 	and for which amortization deductions were elected under section
208.5 	169 of the Internal Revenue Code of 1954, as amended through
208.6 	December 31, 1985, an amount equal to the allowance for
208.7 	depreciation under Minnesota Statutes 1986, section 290.09,
208.8 	subdivision 7;
208.9 	(9) amounts included in federal taxable income that are due
208.10 	to refunds of income, excise, or franchise taxes based on net
208.11 	income or related minimum taxes paid by the corporation to
208.12 	Minnesota, another state, a political subdivision of another
208.13 	state, the District of Columbia, or a foreign country or
208.14 	possession of the United States to the extent that the taxes
208.15 	were added to federal taxable income under section 290.01,
208.16 	subdivision 19c, clause (1), in a prior taxable year;
208.17 	(10) 80 percent of royalties, fees, or other like income
208.18 	accrued or received from a foreign operating corporation or a
208.19 	foreign corporation which is part of the same unitary business
208.20 	as the receiving corporation;
208.21 	(11) income or gains from the business of mining as defined
208.22 	in section 290.05, subdivision 1, clause (a), that are not
208.23 	subject to Minnesota franchise tax;
208.24 	(12) the amount of handicap access expenditures in the
208.25 	taxable year which are not allowed to be deducted or capitalized
208.26 	under section 44(d)(7) of the Internal Revenue Code;
208.27 	(13) the amount of qualified research expenses not allowed
208.28 	for federal income tax purposes under section 280C(c) of the
208.29 	Internal Revenue Code, but only to the extent that the amount
208.30 	exceeds the amount of the credit allowed under section 290.068;
208.31 	(14) the amount of salary expenses not allowed for federal
208.32 	income tax purposes due to claiming the Indian employment credit
208.33 	under section 45A(a) of the Internal Revenue Code;
208.34 	(15) the amount of any refund of environmental taxes paid
208.35 	under section 59A of the Internal Revenue Code;
208.36 	(16) for taxable years beginning before January 1, 2008,
209.1 	the amount of the federal small ethanol producer credit allowed
209.2 	under section 40(a)(3) of the Internal Revenue Code which is
209.3 	included in gross income under section 87 of the Internal
209.4 	Revenue Code;
209.5 	(17) for a corporation whose foreign sales corporation, as
209.6 	defined in section 922 of the Internal Revenue Code, constituted
209.7 	a foreign operating corporation during any taxable year ending
209.8 	before January 1, 1995, and a return was filed by August 15,
209.9 	1996, claiming the deduction under section 290.21, subdivision
209.10 	4, for income received from the foreign operating corporation,
209.11 	an amount equal to 1.23 multiplied by the amount of income
209.12 	excluded under section 114 of the Internal Revenue Code,
209.13 	provided the income is not income of a foreign operating
209.14 	company;
209.15 	(18) any decrease in subpart F income, as defined in
209.16 	section 952(a) of the Internal Revenue Code, for the taxable
209.17 	year when subpart F income is calculated without regard to the
209.18 	provisions of section 614 of Public Law 107-147; and 
209.19 	(19) in each of the five tax years immediately following
209.20 	the tax year in which an addition is required under subdivision
209.21 	19c, clause (16), an amount equal to one-fifth of the delayed
209.22 	depreciation.  For purposes of this clause, "delayed
209.23 	depreciation" means the amount of the addition made by the
209.24 	taxpayer under subdivision 19c, clause (16).  The resulting
209.25 	delayed depreciation cannot be less than zero; and 
209.26 	(20) in each of the five tax years immediately following
209.27 	the tax year in which an addition is required under subdivision
209.28 	19c, clause (17), an amount equal to one-fifth of the amount of
209.29 	the addition.
209.30 	
EFFECTIVE DATE. This section is effective for tax years
209.31 	beginning after December 31, 2004.

209.32 	Sec. 7. Minnesota Statutes 2004, section 290.01,
209.33 	subdivision 31, is amended to read:
209.34 		Subd. 31.Internal revenue code.  Unless specifically
209.35 	defined otherwise, "Internal Revenue Code" means the Internal
209.36 	Revenue Code of 1986, as amended through June 15, 2003 April 15,
210.1 	2005.
210.2 	
EFFECTIVE DATE. This section is effective the day
210.3 	following final enactment except the changes incorporated by
210.4 	federal changes are effective at the same times as the changes
210.5 	were effective for federal purposes.

210.6 	Sec. 8. Minnesota Statutes 2004, section 290.032,
210.7 	subdivision 1, is amended to read:
210.8 		Subdivision 1.Imposition.  There is hereby imposed as an
210.9 	addition to the annual income tax for a taxable year of a
210.10 	taxpayer in the classes described in section 290.03 a tax with
210.11 	respect to any distribution received by such taxpayer that is
210.12 	treated as a lump sum distribution under section 402(d) of the
210.13 	Internal Revenue Code 1401(c)(2) of the Small Business Job
210.14 	Protection Act, Public Law 104-188 and that is subject to tax
210.15 	for such taxable year under section 402(d) of the Internal
210.16 	Revenue Code 1401(c)(2) of the Small Business Job Protection
210.17 	Act, Public Law 104-188.
210.18 	
EFFECTIVE DATE. This section is effective for tax years
210.19 	beginning after December 31, 1999.

210.20 	Sec. 9. Minnesota Statutes 2004, section 290.032,
210.21 	subdivision 2, is amended to read:
210.22 		Subd. 2.Computation.  The amount of tax imposed by
210.23 	subdivision 1 shall be computed in the same way as the tax
210.24 	imposed under section 402(d) of the Internal Revenue Code of
210.25 	1986, as amended through December 31, 1995, except that the
210.26 	initial separate tax shall be an amount equal to five times the
210.27 	tax which would be imposed by section 290.06, subdivision 2c, if
210.28 	the recipient was an unmarried individual, and the taxable net
210.29 	income was an amount equal to one-fifth of the excess of
210.30 	(i) the total taxable amount of the lump sum distribution
210.31 	for the year, over
210.32 	(ii) the minimum distribution allowance, and except that
210.33 	references in section 402(d) of the Internal Revenue Code of
210.34 	1986, as amended through December 31, 1995,to paragraph (1)(A)
210.35 	thereof shall instead be references to subdivision 1, and the
210.36 	excess, if any, of the subtraction base amount over federal
211.1 	taxable income for a qualified individual as provided under
211.2 	section 290.0802, subdivision 2.
211.3 	
EFFECTIVE DATE. This section is effective for tax years
211.4 	beginning after December 31, 1999.

211.5 	Sec. 10. Minnesota Statutes 2004, section 290.06,
211.6 	subdivision 2c, is amended to read:
211.7 		Subd. 2c.Schedules of rates for individuals, estates,
211.8 	and trusts.  (a) The income taxes imposed by this chapter upon
211.9 	married individuals filing joint returns and surviving spouses
211.10 	as defined in section 2(a) of the Internal Revenue Code must be
211.11 	computed by applying to their taxable net income the following
211.12 	schedule of rates:
211.13 	(1) On the first $25,680, 5.35 percent;
211.14 	(2) On all over $25,680, but not over $102,030, 7.05
211.15 	percent;
211.16 	(3) On all over $102,030, 7.85 percent.
211.17 	Married individuals filing separate returns, estates, and
211.18 	trusts must compute their income tax by applying the above rates
211.19 	to their taxable income, except that the income brackets will be
211.20 	one-half of the above amounts.
211.21 	(b) The income taxes imposed by this chapter upon unmarried
211.22 	individuals must be computed by applying to taxable net income
211.23 	the following schedule of rates:
211.24 	(1) On the first $17,570, 5.35 percent;
211.25 	(2) On all over $17,570, but not over $57,710, 7.05
211.26 	percent;
211.27 	(3) On all over $57,710, 7.85 percent.
211.28 	(c) The income taxes imposed by this chapter upon unmarried
211.29 	individuals qualifying as a head of household as defined in
211.30 	section 2(b) of the Internal Revenue Code must be computed by
211.31 	applying to taxable net income the following schedule of rates:
211.32 	(1) On the first $21,630, 5.35 percent;
211.33 	(2) On all over $21,630, but not over $86,910, 7.05
211.34 	percent;
211.35 	(3) On all over $86,910, 7.85 percent.
211.36 	(d) In lieu of a tax computed according to the rates set
212.1 	forth in this subdivision, the tax of any individual taxpayer
212.2 	whose taxable net income for the taxable year is less than an
212.3 	amount determined by the commissioner must be computed in
212.4 	accordance with tables prepared and issued by the commissioner
212.5 	of revenue based on income brackets of not more than $100.  The
212.6 	amount of tax for each bracket shall be computed at the rates
212.7 	set forth in this subdivision, provided that the commissioner
212.8 	may disregard a fractional part of a dollar unless it amounts to
212.9 	50 cents or more, in which case it may be increased to $1.
212.10 	(e) An individual who is not a Minnesota resident for the
212.11 	entire year must compute the individual's Minnesota income tax
212.12 	as provided in this subdivision.  After the application of the
212.13 	nonrefundable credits provided in this chapter, the tax
212.14 	liability must then be multiplied by a fraction in which:
212.15 	(1) the numerator is the individual's Minnesota source
212.16 	federal adjusted gross income as defined in section 62 of the
212.17 	Internal Revenue Code and increased by the additions required
212.18 	under section 290.01, subdivision 19a, clauses (1), (5), and 
212.19 	(6), (7), (8), and (9),and reduced by the subtraction under
212.20 	section 290.01, subdivision 19b, clause (11), and the Minnesota
212.21 	assignable portion of the subtraction for United States
212.22 	government interest under section 290.01, subdivision 19b,
212.23 	clause (1), and the subtractions under clauses (10), (11), (12),
212.24 	and (13),after applying the allocation and assignability
212.25 	provisions of section 290.081, clause (a), or 290.17; and
212.26 	(2) the denominator is the individual's federal adjusted
212.27 	gross income as defined in section 62 of the Internal Revenue
212.28 	Code of 1986, increased by the amounts specified in section
212.29 	290.01, subdivision 19a, clauses (1), (5), and (6), (7), (8),
212.30 	and (9),and reduced by the amounts specified in section 290.01,
212.31 	subdivision 19b, clauses (1) and , (10),(11), (12), and (13).
212.32 	
EFFECTIVE DATE. This section is effective for tax years
212.33 	beginning after December 31, 2004.

212.34 	Sec. 11. Minnesota Statutes 2004, section 290.067,
212.35 	subdivision 1, is amended to read:
212.36 		Subdivision 1.Amount of credit.  (a) A taxpayer may take
213.1 	as a credit against the tax due from the taxpayer and a spouse,
213.2 	if any, under this chapter an amount equal to the dependent care
213.3 	credit for which the taxpayer is eligible pursuant to the
213.4 	provisions of section 21 of the Internal Revenue Code subject to
213.5 	the limitations provided in subdivision 2 except that in
213.6 	determining whether the child qualified as a dependent, income
213.7 	received as a Minnesota family investment program grant or
213.8 	allowance to or on behalf of the child must not be taken into
213.9 	account in determining whether the child received more than half
213.10 	of the child's support from the taxpayer, and the provisions of
213.11 	section 32(b)(1)(D) of the Internal Revenue Code do not apply.
213.12 	(b) If a child who has not attained the age of six years at
213.13 	the close of the taxable year is cared for at a licensed family
213.14 	day care home operated by the child's parent, the taxpayer is
213.15 	deemed to have paid employment-related expenses.  If the child
213.16 	is 16 months old or younger at the close of the taxable year,
213.17 	the amount of expenses deemed to have been paid equals the
213.18 	maximum limit for one qualified individual under section 21(c)
213.19 	and (d) of the Internal Revenue Code.  If the child is older
213.20 	than 16 months of age but has not attained the age of six years
213.21 	at the close of the taxable year, the amount of expenses deemed
213.22 	to have been paid equals the amount the licensee would charge
213.23 	for the care of a child of the same age for the same number of
213.24 	hours of care.
213.25 	(c) If a married couple:
213.26 	(1) has a child who has not attained the age of one year at
213.27 	the close of the taxable year;
213.28 	(2) files a joint tax return for the taxable year; and
213.29 	(3) does not participate in a dependent care assistance
213.30 	program as defined in section 129 of the Internal Revenue Code,
213.31 	in lieu of the actual employment related expenses paid for that
213.32 	child under paragraph (a) or the deemed amount under paragraph
213.33 	(b), the lesser of (i) the combined earned income of the couple
213.34 	or (ii) the amount of the maximum limit for one qualified
213.35 	individual under section 21(c) and (d) of the Internal Revenue
213.36 	Code will be deemed to be the employment related expense paid
214.1 	for that child.  The earned income limitation of section 21(d)
214.2 	of the Internal Revenue Code shall not apply to this deemed
214.3 	amount.  These deemed amounts apply regardless of whether any
214.4 	employment-related expenses have been paid.
214.5 	(d) If the taxpayer is not required and does not file a
214.6 	federal individual income tax return for the tax year, no credit
214.7 	is allowed for any amount paid to any person unless:
214.8 	(1) the name, address, and taxpayer identification number
214.9 	of the person are included on the return claiming the credit; or
214.10 	(2) if the person is an organization described in section
214.11 	501(c)(3) of the Internal Revenue Code and exempt from tax under
214.12 	section 501(a) of the Internal Revenue Code, the name and
214.13 	address of the person are included on the return claiming the
214.14 	credit.
214.15 	In the case of a failure to provide the information required
214.16 	under the preceding sentence, the preceding sentence does not
214.17 	apply if it is shown that the taxpayer exercised due diligence
214.18 	in attempting to provide the information required.
214.19 	In the case of a nonresident, part-year resident, or a
214.20 	person who has earned income not subject to tax under this
214.21 	chapter including earned income excluded pursuant to section
214.22 	290.01, subdivision 19b, clause (11), the credit determined
214.23 	under section 21 of the Internal Revenue Code must be allocated
214.24 	based on the ratio by which the earned income of the claimant
214.25 	and the claimant's spouse from Minnesota sources bears to the
214.26 	total earned income of the claimant and the claimant's spouse.
214.27 	For residents of Minnesota, the exclusion of combat pay
214.28 	under section 112 of the Internal Revenue Code is not considered
214.29 	"earned income not subject to tax under this chapter." 
214.30 	
EFFECTIVE DATE. This section is effective for tax years
214.31 	beginning after December 31, 2003.

214.32 	Sec. 12. Minnesota Statutes 2004, section 290.067,
214.33 	subdivision 2a, is amended to read:
214.34 		Subd. 2a.Income.  (a) For purposes of this section,
214.35 	"income" means the sum of the following:
214.36 	(1) federal adjusted gross income as defined in section 62
215.1 	of the Internal Revenue Code; and
215.2 	(2) the sum of the following amounts to the extent not
215.3 	included in clause (1):
215.4 	(i) all nontaxable income;
215.5 	(ii) the amount of a passive activity loss that is not
215.6 	disallowed as a result of section 469, paragraph (i) or (m) of
215.7 	the Internal Revenue Code and the amount of passive activity
215.8 	loss carryover allowed under section 469(b) of the Internal
215.9 	Revenue Code;
215.10 	(iii) an amount equal to the total of any discharge of
215.11 	qualified farm indebtedness of a solvent individual excluded
215.12 	from gross income under section 108(g) of the Internal Revenue
215.13 	Code;
215.14 	(iv) cash public assistance and relief;
215.15 	(v) any pension or annuity (including railroad retirement
215.16 	benefits, all payments received under the federal Social
215.17 	Security Act, supplemental security income, and veterans
215.18 	benefits), which was not exclusively funded by the claimant or
215.19 	spouse, or which was funded exclusively by the claimant or
215.20 	spouse and which funding payments were excluded from federal
215.21 	adjusted gross income in the years when the payments were made;
215.22 	(vi) interest received from the federal or a state
215.23 	government or any instrumentality or political subdivision
215.24 	thereof;
215.25 	(vii) workers' compensation;
215.26 	(viii) nontaxable strike benefits;
215.27 	(ix) the gross amounts of payments received in the nature
215.28 	of disability income or sick pay as a result of accident,
215.29 	sickness, or other disability, whether funded through insurance
215.30 	or otherwise;
215.31 	(x) a lump sum distribution under section 402(e)(3) of the
215.32 	Internal Revenue Code of 1986, as amended through December 31,
215.33 	1995;
215.34 	(xi) contributions made by the claimant to an individual
215.35 	retirement account, including a qualified voluntary employee
215.36 	contribution; simplified employee pension plan; self-employed
216.1 	retirement plan; cash or deferred arrangement plan under section
216.2 	401(k) of the Internal Revenue Code; or deferred compensation
216.3 	plan under section 457 of the Internal Revenue Code; and 
216.4 	(xii) nontaxable scholarship or fellowship grants;
216.5 	(xiii) the amount of deduction allowed under section 199 of
216.6 	the Internal Revenue Code; and 
216.7 	(xiv) the amount of deduction allowed under section 220 or
216.8 	223 of the Internal Revenue Code.
216.9 	In the case of an individual who files an income tax return
216.10 	on a fiscal year basis, the term "federal adjusted gross income"
216.11 	means federal adjusted gross income reflected in the fiscal year
216.12 	ending in the next calendar year.  Federal adjusted gross income
216.13 	may not be reduced by the amount of a net operating loss
216.14 	carryback or carryforward or a capital loss carryback or
216.15 	carryforward allowed for the year.
216.16 	(b) "Income" does not include:
216.17 	(1) amounts excluded pursuant to the Internal Revenue Code,
216.18 	sections 101(a) and 102;
216.19 	(2) amounts of any pension or annuity that were exclusively
216.20 	funded by the claimant or spouse if the funding payments were
216.21 	not excluded from federal adjusted gross income in the years
216.22 	when the payments were made;
216.23 	(3) surplus food or other relief in kind supplied by a
216.24 	governmental agency;
216.25 	(4) relief granted under chapter 290A;
216.26 	(5) child support payments received under a temporary or
216.27 	final decree of dissolution or legal separation; and
216.28 	(6) restitution payments received by eligible individuals
216.29 	and excludable interest as defined in section 803 of the
216.30 	Economic Growth and Tax Relief Reconciliation Act of 2001,
216.31 	Public Law 107-16.
216.32 	
EFFECTIVE DATE. This section is effective for tax years
216.33 	beginning after December 31, 2003.

216.34 	Sec. 13. Minnesota Statutes 2004, section 290.0671,
216.35 	subdivision 1, is amended to read:
216.36 		Subdivision 1.Credit allowed.  (a) An individual is
217.1 	allowed a credit against the tax imposed by this chapter equal
217.2 	to a percentage of earned income.  To receive a credit, a
217.3 	taxpayer must be eligible for a credit under section 32 of the
217.4 	Internal Revenue Code.
217.5 	(b) For individuals with no qualifying children, the credit
217.6 	equals 1.9125 percent of the first $4,620 of earned income.  The
217.7 	credit is reduced by 1.9125 percent of earned income or modified
217.8 	adjusted gross income, whichever is greater, in excess of
217.9 	$5,770, but in no case is the credit less than zero.
217.10 	(c) For individuals with one qualifying child, the credit
217.11 	equals 8.5 percent of the first $6,920 of earned income and 8.5
217.12 	percent of earned income over $12,080 but less than $13,450.
217.13 	The credit is reduced by 5.73 percent of earned income or
217.14 	modified adjusted gross income, whichever is greater, in excess
217.15 	of $15,080, but in no case is the credit less than zero.
217.16 	(d) For individuals with two or more qualifying children,
217.17 	the credit equals ten percent of the first $9,720 of earned
217.18 	income and 20 percent of earned income over $14,860 but less
217.19 	than $16,800.  The credit is reduced by 10.3 percent of earned
217.20 	income or modified adjusted gross income, whichever is greater,
217.21 	in excess of $17,890, but in no case is the credit less than
217.22 	zero.
217.23 	(e) For a nonresident or part-year resident, the credit
217.24 	must be allocated based on the percentage calculated under
217.25 	section 290.06, subdivision 2c, paragraph (e).
217.26 	(f) For a person who was a resident for the entire tax year
217.27 	and has earned income not subject to tax under this chapter,
217.28 	including income excluded under section 290.01, subdivision 19b,
217.29 	clause (11), the credit must be allocated based on the ratio of
217.30 	federal adjusted gross income reduced by the earned income not
217.31 	subject to tax under this chapter over federal adjusted gross
217.32 	income. For the purposes of this paragraph, the exclusion of
217.33 	combat pay under section 112 of the Internal Revenue Code is not
217.34 	considered "earned income not subject to tax under this chapter." 
217.35 	(g) For tax years beginning after December 31, 2001, and
217.36 	before December 31, 2004, the $5,770 in paragraph (b), the
218.1 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
218.2 	after being adjusted for inflation under subdivision 7, are each
218.3 	increased by $1,000 for married taxpayers filing joint returns.
218.4 	(h) For tax years beginning after December 31, 2004, and
218.5 	before December 31, 2007, the $5,770 in paragraph (b), the
218.6 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
218.7 	after being adjusted for inflation under subdivision 7, are each
218.8 	increased by $2,000 for married taxpayers filing joint returns.
218.9 	(i) For tax years beginning after December 31, 2007, and
218.10 	before December 31, 2010, the $5,770 in paragraph (b), the
218.11 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
218.12 	after being adjusted for inflation under subdivision 7, are each
218.13 	increased by $3,000 for married taxpayers filing joint returns.
218.14 	For tax years beginning after December 31, 2008, the $3,000 is
218.15 	adjusted annually for inflation under subdivision 7.
218.16 	(j) The commissioner shall construct tables showing the
218.17 	amount of the credit at various income levels and make them
218.18 	available to taxpayers.  The tables shall follow the schedule
218.19 	contained in this subdivision, except that the commissioner may
218.20 	graduate the transition between income brackets.
218.21 	
EFFECTIVE DATE. This section is effective for tax years
218.22 	beginning after December 31, 2003.

218.23 	Sec. 14. Minnesota Statutes 2004, section 290.0675,
218.24 	subdivision 1, is amended to read:
218.25 		Subdivision 1.Definitions.  (a) For purposes of this
218.26 	section the following terms have the meanings given.
218.27 	(b) "Earned income" means the sum of the following, to the
218.28 	extent included in Minnesota taxable income:
218.29 	(1) earned income as defined in section 32(c)(2) of the
218.30 	Internal Revenue Code;
218.31 	(2) income received from a retirement pension,
218.32 	profit-sharing, stock bonus, or annuity plan; and
218.33 	(3) Social Security benefits as defined in section 86(d)(1)
218.34 	of the Internal Revenue Code.
218.35 	(c) "Taxable income" means net income as defined in section
218.36 	290.01, subdivision 19.
219.1 	(d) "Earned income of lesser-earning spouse" means the
219.2 	earned income of the spouse with the lesser amount of earned
219.3 	income as defined in paragraph (b) for the taxable year minus
219.4 	the sum of (i) the amount for one exemption under section 151(d)
219.5 	of the Internal Revenue Code and (ii) one-half the amount of the
219.6 	standard deduction under section 63(c)(2)(A) and (4) of the
219.7 	Internal Revenue Code minus one-half of any addition required
219.8 	under section 290.01, subdivision 19a, clause (10).
219.9 	
EFFECTIVE DATE. This section is effective for tax years
219.10 	beginning after December 31, 2004.

219.11 	Sec. 15. Minnesota Statutes 2004, section 290.091,
219.12 	subdivision 2, is amended to read:
219.13 		Subd. 2.Definitions.  For purposes of the tax imposed by
219.14 	this section, the following terms have the meanings given:
219.15 	(a) "Alternative minimum taxable income" means the sum of
219.16 	the following for the taxable year:
219.17 	(1) the taxpayer's federal alternative minimum taxable
219.18 	income as defined in section 55(b)(2) of the Internal Revenue
219.19 	Code;
219.20 	(2) the taxpayer's itemized deductions allowed in computing
219.21 	federal alternative minimum taxable income, but excluding:
219.22 	(i) the charitable contribution deduction under section 170
219.23 	of the Internal Revenue Code to the extent that the deduction
219.24 	exceeds 1.0 percent of adjusted gross income, as defined in
219.25 	section 62 of the Internal Revenue Code;
219.26 	(ii) the medical expense deduction;
219.27 	(iii) the casualty, theft, and disaster loss deduction; and
219.28 	(iv) the impairment-related work expenses of a disabled
219.29 	person;
219.30 	(3) for depletion allowances computed under section 613A(c)
219.31 	of the Internal Revenue Code, with respect to each property (as
219.32 	defined in section 614 of the Internal Revenue Code), to the
219.33 	extent not included in federal alternative minimum taxable
219.34 	income, the excess of the deduction for depletion allowable
219.35 	under section 611 of the Internal Revenue Code for the taxable
219.36 	year over the adjusted basis of the property at the end of the
220.1 	taxable year (determined without regard to the depletion
220.2 	deduction for the taxable year);
220.3 	(4) to the extent not included in federal alternative
220.4 	minimum taxable income, the amount of the tax preference for
220.5 	intangible drilling cost under section 57(a)(2) of the Internal
220.6 	Revenue Code determined without regard to subparagraph (E);
220.7 	(5) to the extent not included in federal alternative
220.8 	minimum taxable income, the amount of interest income as
220.9 	provided by section 290.01, subdivision 19a, clause (1); and
220.10 	(6) the amount of addition required by section 290.01,
220.11 	subdivision 19a, clause clauses (7), (8), and (9);
220.12 	less the sum of the amounts determined under the following:
220.13 	(1) interest income as defined in section 290.01,
220.14 	subdivision 19b, clause (1);
220.15 	(2) an overpayment of state income tax as provided by
220.16 	section 290.01, subdivision 19b, clause (2), to the extent
220.17 	included in federal alternative minimum taxable income;
220.18 	(3) the amount of investment interest paid or accrued
220.19 	within the taxable year on indebtedness to the extent that the
220.20 	amount does not exceed net investment income, as defined in
220.21 	section 163(d)(4) of the Internal Revenue Code.  Interest does
220.22 	not include amounts deducted in computing federal adjusted gross
220.23 	income; and
220.24 	(4) amounts subtracted from federal taxable income as
220.25 	provided by section 290.01, subdivision 19b, clauses (10) and ,
220.26 	(11), (12), and (13).
220.27 	In the case of an estate or trust, alternative minimum
220.28 	taxable income must be computed as provided in section 59(c) of
220.29 	the Internal Revenue Code.
220.30 	(b) "Investment interest" means investment interest as
220.31 	defined in section 163(d)(3) of the Internal Revenue Code.
220.32 	(c) "Tentative minimum tax" equals 6.4 percent of
220.33 	alternative minimum taxable income after subtracting the
220.34 	exemption amount determined under subdivision 3.
220.35 	(d) "Regular tax" means the tax that would be imposed under
220.36 	this chapter (without regard to this section and section
221.1 	290.032), reduced by the sum of the nonrefundable credits
221.2 	allowed under this chapter.
221.3 	(e) "Net minimum tax" means the minimum tax imposed by this
221.4 	section.
221.5 	
EFFECTIVE DATE. This section is effective for tax years
221.6 	beginning after December 31, 2004.

221.7 	Sec. 16. Minnesota Statutes 2004, section 290A.03,
221.8 	subdivision 3, is amended to read:
221.9 		Subd. 3.Income.  (1) "Income" means the sum of the
221.10 	following:
221.11 	(a) federal adjusted gross income as defined in the
221.12 	Internal Revenue Code; and
221.13 	(b) the sum of the following amounts to the extent not
221.14 	included in clause (a):
221.15 	(i) all nontaxable income;
221.16 	(ii) the amount of a passive activity loss that is not
221.17 	disallowed as a result of section 469, paragraph (i) or (m) of
221.18 	the Internal Revenue Code and the amount of passive activity
221.19 	loss carryover allowed under section 469(b) of the Internal
221.20 	Revenue Code;
221.21 	(iii) an amount equal to the total of any discharge of
221.22 	qualified farm indebtedness of a solvent individual excluded
221.23 	from gross income under section 108(g) of the Internal Revenue
221.24 	Code;
221.25 	(iv) cash public assistance and relief;
221.26 	(v) any pension or annuity (including railroad retirement
221.27 	benefits, all payments received under the federal Social
221.28 	Security Act, supplemental security income, and veterans
221.29 	benefits), which was not exclusively funded by the claimant or
221.30 	spouse, or which was funded exclusively by the claimant or
221.31 	spouse and which funding payments were excluded from federal
221.32 	adjusted gross income in the years when the payments were made;
221.33 	(vi) interest received from the federal or a state
221.34 	government or any instrumentality or political subdivision
221.35 	thereof;
221.36 	(vii) workers' compensation;
222.1 	(viii) nontaxable strike benefits;
222.2 	(ix) the gross amounts of payments received in the nature
222.3 	of disability income or sick pay as a result of accident,
222.4 	sickness, or other disability, whether funded through insurance
222.5 	or otherwise;
222.6 	(x) a lump sum distribution under section 402(e)(3) of the
222.7 	Internal Revenue Code of 1986, as amended through December 31,
222.8 	1995;
222.9 	(xi) contributions made by the claimant to an individual
222.10 	retirement account, including a qualified voluntary employee
222.11 	contribution; simplified employee pension plan; self-employed
222.12 	retirement plan; cash or deferred arrangement plan under section
222.13 	401(k) of the Internal Revenue Code; or deferred compensation
222.14 	plan under section 457 of the Internal Revenue Code; and 
222.15 	(xii) nontaxable scholarship or fellowship grants;
222.16 	(xiii) the amount of deduction allowed under section 199 of
222.17 	the Internal Revenue Code; and 
222.18 	(xiv) the amount of deduction allowed under section 220 or
222.19 	223 of the Internal Revenue Code.
222.20 	In the case of an individual who files an income tax return
222.21 	on a fiscal year basis, the term "federal adjusted gross income"
222.22 	shall mean federal adjusted gross income reflected in the fiscal
222.23 	year ending in the calendar year.  Federal adjusted gross income
222.24 	shall not be reduced by the amount of a net operating loss
222.25 	carryback or carryforward or a capital loss carryback or
222.26 	carryforward allowed for the year.
222.27 	(2) "Income" does not include:
222.28 	(a) amounts excluded pursuant to the Internal Revenue Code,
222.29 	sections 101(a) and 102;
222.30 	(b) amounts of any pension or annuity which was exclusively
222.31 	funded by the claimant or spouse and which funding payments were
222.32 	not excluded from federal adjusted gross income in the years
222.33 	when the payments were made;
222.34 	(c) surplus food or other relief in kind supplied by a
222.35 	governmental agency;
222.36 	(d) relief granted under this chapter;
223.1 	(e) child support payments received under a temporary or
223.2 	final decree of dissolution or legal separation; or
223.3 	(f) restitution payments received by eligible individuals
223.4 	and excludable interest as defined in section 803 of the
223.5 	Economic Growth and Tax Relief Reconciliation Act of 2001,
223.6 	Public Law 107-16.
223.7 	(3) The sum of the following amounts may be subtracted from
223.8 	income:
223.9 	(a) for the claimant's first dependent, the exemption
223.10 	amount multiplied by 1.4;
223.11 	(b) for the claimant's second dependent, the exemption
223.12 	amount multiplied by 1.3;
223.13 	(c) for the claimant's third dependent, the exemption
223.14 	amount multiplied by 1.2;
223.15 	(d) for the claimant's fourth dependent, the exemption
223.16 	amount multiplied by 1.1;
223.17 	(e) for the claimant's fifth dependent, the exemption
223.18 	amount; and
223.19 	(f) if the claimant or claimant's spouse was disabled or
223.20 	attained the age of 65 on or before December 31 of the year for
223.21 	which the taxes were levied or rent paid, the exemption amount.
223.22 	For purposes of this subdivision, the "exemption amount"
223.23 	means the exemption amount under section 151(d) of the Internal
223.24 	Revenue Code for the taxable year for which the income is
223.25 	reported.
223.26 	
EFFECTIVE DATE. This section is effective for property
223.27 	tax refunds based on household income for 2004 and thereafter.

223.28 	Sec. 17. Minnesota Statutes 2004, section 290A.03,
223.29 	subdivision 15, is amended to read:
223.30 		Subd. 15.Internal revenue code.  "Internal Revenue Code"
223.31 	means the Internal Revenue Code of 1986, as amended through June
223.32 	15, 2003 April 15, 2005.
223.33 	
EFFECTIVE DATE. This section is effective for property
223.34 	tax refunds based on property taxes payable on or after December
223.35 	31, 2004, and rent paid on or after December 31, 2003.

223.36 	ARTICLE 7
224.1 	SALES AND USE TAXES

224.2 	Section 1. Minnesota Statutes 2004, section 16C.03, is
224.3 	amended by adding a subdivision to read:
224.4 		Subd. 18.Contracts with foreign vendors. (a) The
224.5 	commissioner and other agencies to which this section applies
224.6 	and the legislative branch of government shall, subject to
224.7 	paragraph (d), cancel a contract for goods or services from a
224.8 	vendor or an affiliate of a vendor or suspend or debar a vendor
224.9 	or an affiliate of a vendor from future contracts upon
224.10 	notification from the commissioner of revenue that the vendor or
224.11 	an affiliate of the vendor has not registered to collect the
224.12 	sales and use tax imposed under chapter 297A on its sales in
224.13 	Minnesota or to a destination in Minnesota.  This subdivision
224.14 	shall not apply to state colleges and universities, the courts,
224.15 	and any agency in the judicial branch of government.  For
224.16 	purposes of this subdivision, the term "affiliate" means any
224.17 	person or entity that is controlled by, or is under common
224.18 	control of, a vendor through stock ownership or other
224.19 	affiliation.
224.20 	(b) Beginning January 1, 2006, each vendor or affiliate of
224.21 	a vendor selling goods or services, subject to tax under chapter
224.22 	297A, to an agency or the legislature must provide its Minnesota
224.23 	sales and use tax business identification number, upon request,
224.24 	to show that the vendor is registered to collect Minnesota sales
224.25 	or use tax.
224.26 	(c) The commissioner of revenue shall periodically provide
224.27 	to the commissioner and the legislative branch a list of vendors
224.28 	who have not registered to collect Minnesota sales and use tax
224.29 	and who are subject to being suspended or debarred as vendors or
224.30 	having their contracts canceled.
224.31 	(d) The provisions of this subdivision may be waived by the
224.32 	commissioner or the legislative branch when the vendor is the
224.33 	single source of such goods or services, in the event of an
224.34 	emergency, or when it is in the best interests of the state as
224.35 	determined by the commissioner in consultation with the
224.36 	commissioner of revenue.  Such consultation is not a disclosure
225.1 	violation under chapter 270B.
225.2 	
EFFECTIVE DATE. This section is effective for all
225.3 	contracts entered into after December 31, 2005.

225.4 	Sec. 2. Minnesota Statutes 2004, section 289A.38,
225.5 	subdivision 6, is amended to read:
225.6 		Subd. 6.Omission in excess of 25 percent.  Additional
225.7 	taxes may be assessed within 6-1/2 years after the due date of
225.8 	the return or the date the return was filed, whichever is later,
225.9 	if:
225.10 	(1) the taxpayer omits from gross income an amount properly
225.11 	includable in it that is in excess of 25 percent of the amount
225.12 	of gross income stated in the return;
225.13 	(2) the taxpayer omits from a sales, use,or withholding
225.14 	tax return an amount of taxes in excess of 25 percent of the
225.15 	taxes reported in the return; or
225.16 	(3) the taxpayer omits from the gross estate assets in
225.17 	excess of 25 percent of the gross estate reported in the return.
225.18 	
EFFECTIVE DATE. This section is effective the day
225.19 	following final enactment.

225.20 	Sec. 3. Minnesota Statutes 2004, section 289A.38, is
225.21 	amended by adding a subdivision to read:
225.22 		Subd. 15.Purchaser filed refund claims. If a purchaser
225.23 	refund claim is filed under section 289A.50, subdivision 2a, and
225.24 	the basis for the claim is that the purchaser was improperly
225.25 	charged tax on an improvement to real property or on the
225.26 	purchase of nontaxable services, sales or use tax may be
225.27 	assessed for the cost of materials used to make the real
225.28 	property improvement or to perform the nontaxable service.  The
225.29 	assessment may be made against the person making the improvement
225.30 	to real property or the sale of nontaxable services, within the
225.31 	period prescribed in subdivision 1, or within one year after the
225.32 	date of the refund order, whichever is later.
225.33 	
EFFECTIVE DATE. This section is effective for purchaser
225.34 	refund claims filed on or after July 1, 2005.

225.35 	Sec. 4. Minnesota Statutes 2004, section 289A.40,
225.36 	subdivision 2, is amended to read:
226.1 		Subd. 2.Bad debt loss.  If a claim relates to an
226.2 	overpayment because of a failure to deduct a loss due to a bad
226.3 	debt or to a security becoming worthless, the claim is
226.4 	considered timely if filed within seven years from the date
226.5 	prescribed for the filing of the return.  A claim relating to an
226.6 	overpayment of taxes under chapter 297A must be filed within
226.7 	3-1/2 years from the date prescribed for filing the return, plus
226.8 	any extensions granted for filing the return, but only if filed
226.9 	within the extended time.  The refund or credit is limited to
226.10 	the amount of overpayment attributable to the loss.  "Bad debt"
226.11 	for purposes of this subdivision, has the same meaning as that
226.12 	term is used in United States Code, title 26, section 166,
226.13 	except that for a claim relating to an overpayment of taxes
226.14 	under chapter 297A the following are excluded from the
226.15 	calculation of bad debt:  financing charges or interest; sales
226.16 	or use taxes charged on the purchase price; uncollectible
226.17 	amounts on property that remain in the possession of the seller
226.18 	until the full purchase price is paid; expenses incurred in
226.19 	attempting to collect any debt; and repossessed property.
226.20 	
EFFECTIVE DATE. For claims relating to an overpayment of
226.21 	taxes under chapter 297A, this section is effective for sales
226.22 	and purchases made on or after January 1, 2004; for all other
226.23 	bad debts or claims, this section is effective on or after July
226.24 	1, 2003.

226.25 	Sec. 5. Minnesota Statutes 2004, section 289A.40, is
226.26 	amended by adding a subdivision to read:
226.27 		Subd. 4.Purchaser filed refund claims. A claim for
226.28 	refund of taxes paid on a transaction not subject to tax under
226.29 	chapter 297A, where the purchaser may apply directly to the
226.30 	commissioner under section 289A.50, subdivision 2a, must be
226.31 	filed within 3-1/2 years from the 20th day of the month
226.32 	following the month of the invoice date for the purchase.
226.33 	
EFFECTIVE DATE. This section is effective for claims
226.34 	filed on or after the day following final enactment.

226.35 	Sec. 6. Minnesota Statutes 2004, section 289A.40, is
226.36 	amended by adding a subdivision to read:
227.1 		Subd. 5.Capital equipment refund claims. A claim for
227.2 	refund for taxes paid under chapter 297A on capital equipment
227.3 	must be filed within 3-1/2 years from the 20th day of the month
227.4 	following the month of the invoice date for the purchase of the
227.5 	capital equipment.  A claim for refund for taxes imposed on
227.6 	capital equipment under section 297A.63 must be filed within
227.7 	3-1/2 years from the date prescribed for filing the return, or
227.8 	one year from the date of an order assessing tax under section
227.9 	289A.37, subdivision 1, upon payment in full of the tax,
227.10 	penalties, and interest shown on the order, whichever period
227.11 	expires later.
227.12 	
EFFECTIVE DATE. This section is effective for claims
227.13 	filed on or after the day following final enactment.

227.14 	Sec. 7. Minnesota Statutes 2004, section 297A.61,
227.15 	subdivision 3, is amended to read:
227.16 		Subd. 3.Sale and purchase.  (a) "Sale" and "purchase"
227.17 	include, but are not limited to, each of the transactions listed
227.18 	in this subdivision.
227.19 	(b) Sale and purchase include:
227.20 	(1) any transfer of title or possession, or both, of
227.21 	tangible personal property, whether absolutely or conditionally,
227.22 	for a consideration in money or by exchange or barter; and
227.23 	(2) the leasing of or the granting of a license to use or
227.24 	consume, for a consideration in money or by exchange or barter,
227.25 	tangible personal property, other than a manufactured home used
227.26 	for residential purposes for a continuous period of 30 days or
227.27 	more.
227.28 	(c) Sale and purchase include the production, fabrication,
227.29 	printing, or processing of tangible personal property for a
227.30 	consideration for consumers who furnish either directly or
227.31 	indirectly the materials used in the production, fabrication,
227.32 	printing, or processing.
227.33 	(d) Sale and purchase include the preparing for a
227.34 	consideration of food.  Notwithstanding section 297A.67,
227.35 	subdivision 2, taxable food includes, but is not limited to, the
227.36 	following:
228.1 	(1) prepared food sold by the retailer;
228.2 	(2) soft drinks;
228.3 	(3) candy; and 
228.4 	(4) dietary supplements; and 
228.5 	(5) all food sold through vending machines, except milk.
228.6 	(e) A sale and a purchase includes the furnishing for a
228.7 	consideration of electricity, gas, water, or steam for use or
228.8 	consumption within this state.
228.9 	(f) A sale and a purchase includes the transfer for a
228.10 	consideration of prewritten computer software whether delivered
228.11 	electronically, by load and leave, or otherwise.
228.12 	(g) A sale and a purchase includes the furnishing for a
228.13 	consideration of the following services:
228.14 	(1) the privilege of admission to places of amusement,
228.15 	recreational areas, or athletic events, and the making available
228.16 	of amusement devices, tanning facilities, reducing salons, steam
228.17 	baths, turkish baths, health clubs, and spas or athletic
228.18 	facilities;
228.19 	(2) lodging and related services by a hotel, rooming house,
228.20 	resort, campground, motel, or trailer camp and the granting of
228.21 	any similar license to use real property in a specific facility,
228.22 	other than the renting or leasing of it for a continuous period
228.23 	of 30 days or more under an enforceable written agreement that
228.24 	may not be terminated without prior notice;
228.25 	(3) nonresidential parking services, whether on a
228.26 	contractual, hourly, or other periodic basis, except for parking
228.27 	at a meter;
228.28 	(4) the granting of membership in a club, association, or
228.29 	other organization if:
228.30 	(i) the club, association, or other organization makes
228.31 	available for the use of its members sports and athletic
228.32 	facilities, without regard to whether a separate charge is
228.33 	assessed for use of the facilities; and
228.34 	(ii) use of the sports and athletic facility is not made
228.35 	available to the general public on the same basis as it is made
228.36 	available to members.
229.1 	Granting of membership means both onetime initiation fees and
229.2 	periodic membership dues.  Sports and athletic facilities
229.3 	include golf courses; tennis, racquetball, handball, and squash
229.4 	courts; basketball and volleyball facilities; running tracks;
229.5 	exercise equipment; swimming pools; and other similar athletic
229.6 	or sports facilities;
229.7 	(5) delivery of aggregate materials and concrete block by a
229.8 	third party if the delivery would be subject to the sales tax if
229.9 	provided by the seller of the aggregate material or concrete
229.10 	block; and
229.11 	(6) services as provided in this clause:
229.12 	(i) laundry and dry cleaning services including cleaning,
229.13 	pressing, repairing, altering, and storing clothes, linen
229.14 	services and supply, cleaning and blocking hats, and carpet,
229.15 	drapery, upholstery, and industrial cleaning.  Laundry and dry
229.16 	cleaning services do not include services provided by coin
229.17 	operated facilities operated by the customer;
229.18 	(ii) motor vehicle washing, waxing, and cleaning services,
229.19 	including services provided by coin operated facilities operated
229.20 	by the customer, and rustproofing, undercoating, and towing of
229.21 	motor vehicles;
229.22 	(iii) building and residential cleaning, maintenance, and
229.23 	disinfecting and exterminating services;
229.24 	(iv) detective, security, burglar, fire alarm, and armored
229.25 	car services; but not including services performed within the
229.26 	jurisdiction they serve by off-duty licensed peace officers as
229.27 	defined in section 626.84, subdivision 1, or services provided
229.28 	by a nonprofit organization for monitoring and electronic
229.29 	surveillance of persons placed on in-home detention pursuant to
229.30 	court order or under the direction of the Minnesota Department
229.31 	of Corrections;
229.32 	(v) pet grooming services;
229.33 	(vi) lawn care, fertilizing, mowing, spraying and sprigging
229.34 	services; garden planting and maintenance; tree, bush, and shrub
229.35 	pruning, bracing, spraying, and surgery; indoor plant care;
229.36 	tree, bush, shrub, and stump removal, except when performed as
230.1 	part of a land clearing contract as defined in section 297A.68,
230.2 	subdivision 40; and tree trimming for public utility lines.
230.3 	Services performed under a construction contract for the
230.4 	installation of shrubbery, plants, sod, trees, bushes, and
230.5 	similar items are not taxable;
230.6 	(vii) massages, except when provided by a licensed health
230.7 	care facility or professional or upon written referral from a
230.8 	licensed health care facility or professional for treatment of
230.9 	illness, injury, or disease; and
230.10 	(viii) the furnishing of lodging, board, and care services
230.11 	for animals in kennels and other similar arrangements, but
230.12 	excluding veterinary and horse boarding services.
230.13 	In applying the provisions of this chapter, the terms
230.14 	"tangible personal property" and "sales at retail" include
230.15 	taxable services listed in clause (6), items (i) to (vi) and
230.16 	(viii), and the provision of these taxable services, unless
230.17 	specifically provided otherwise.  Services performed by an
230.18 	employee for an employer are not taxable.  Services performed by
230.19 	a partnership or association for another partnership or
230.20 	association are not taxable if one of the entities owns or
230.21 	controls more than 80 percent of the voting power of the equity
230.22 	interest in the other entity.  Services performed between
230.23 	members of an affiliated group of corporations are not taxable.
230.24 	For purposes of the preceding sentence, "affiliated group of
230.25 	corporations" includes those entities that would be classified
230.26 	as members of an affiliated group under United States Code,
230.27 	title 26, section 1504, and that are eligible to file a
230.28 	consolidated tax return for federal income tax purposes.
230.29 	(h) A sale and a purchase includes the furnishing for a
230.30 	consideration of tangible personal property or taxable services
230.31 	by the United States or any of its agencies or
230.32 	instrumentalities, or the state of Minnesota, its agencies,
230.33 	instrumentalities, or political subdivisions.
230.34 	(i) A sale and a purchase includes the furnishing for a
230.35 	consideration of telecommunications services, including cable
230.36 	television services and direct satellite services.
231.1 	Telecommunications services are taxed to the extent allowed
231.2 	under federal law.
231.3 	(j) A sale and a purchase includes the furnishing for a
231.4 	consideration of installation if the installation charges would
231.5 	be subject to the sales tax if the installation were provided by
231.6 	the seller of the item being installed.
231.7 	(k) A sale and a purchase includes the rental of a vehicle
231.8 	by a motor vehicle dealer to a customer when (1) the vehicle is
231.9 	rented by the customer for a consideration, or (2) the motor
231.10 	vehicle dealer is reimbursed pursuant to a service contract as
231.11 	defined in section 65B.29, subdivision 1, clause (1).
231.12 	
EFFECTIVE DATE. This section is effective the day
231.13 	following final enactment except that the amendment to paragraph
231.14 	(d), clause (5), is effective for sales made after June 30,
231.15 	2005, and the amendment to paragraph (g), clause (6)(vi), is
231.16 	effective for sales and purchases made after October 28, 2002,
231.17 	but for land clearing contracts entered into after October 28,
231.18 	2002, no refunds may be claimed under Minnesota Statutes,
231.19 	section 289A.50, for sales taxes collected and remitted to the
231.20 	state on the land clearing contracts.

231.21 	Sec. 8. Minnesota Statutes 2004, section 297A.61,
231.22 	subdivision 4, is amended to read:
231.23 		Subd. 4.Retail sale.  (a) A "retail sale" means any
231.24 	sale, lease, or rental for any purpose,other than resale,
231.25 	sublease, or subrent of items by the purchaser in the normal
231.26 	course of business as defined in subdivision 21.
231.27 	(b) A sale of property used by the owner only by leasing it
231.28 	to others or by holding it in an effort to lease it, and put to
231.29 	no use by the owner other than resale after the lease or effort
231.30 	to lease, is a sale of property for resale.
231.31 	(c) A sale of master computer software that is purchased
231.32 	and used to make copies for sale or lease is a sale of property
231.33 	for resale.
231.34 	(d) A sale of building materials, supplies, and equipment
231.35 	to owners, contractors, subcontractors, or builders for the
231.36 	erection of buildings or the alteration, repair, or improvement
232.1 	of real property is a retail sale in whatever quantity sold,
232.2 	whether the sale is for purposes of resale in the form of real
232.3 	property or otherwise.
232.4 	(e) A sale of carpeting, linoleum, or similar floor
232.5 	covering to a person who provides for installation of the floor
232.6 	covering is a retail sale and not a sale for resale since a sale
232.7 	of floor covering which includes installation is a contract for
232.8 	the improvement of real property.
232.9 	(f) A sale of shrubbery, plants, sod, trees, and similar
232.10 	items to a person who provides for installation of the items is
232.11 	a retail sale and not a sale for resale since a sale of
232.12 	shrubbery, plants, sod, trees, and similar items that includes
232.13 	installation is a contract for the improvement of real property.
232.14 	(g) A sale of tangible personal property that is awarded as
232.15 	prizes is a retail sale and is not considered a sale of property
232.16 	for resale.
232.17 	(h) A sale of tangible personal property utilized or
232.18 	employed in the furnishing or providing of services under
232.19 	subdivision 3, paragraph (g), clause (1), including, but not
232.20 	limited to, property given as promotional items, is a retail
232.21 	sale and is not considered a sale of property for resale.
232.22 	(i) A sale of tangible personal property used in conducting
232.23 	lawful gambling under chapter 349 or the state lottery under
232.24 	chapter 349A, including, but not limited to, property given as
232.25 	promotional items, is a retail sale and is not considered a sale
232.26 	of property for resale.
232.27 	(j) A sale of machines, equipment, or devices that are used
232.28 	to furnish, provide, or dispense goods or services, including,
232.29 	but not limited to, coin-operated devices, is a retail sale and
232.30 	is not considered a sale of property for resale.
232.31 	(k) In the case of a lease, a retail sale occurs (1) when
232.32 	an obligation to make a lease payment becomes due under the
232.33 	terms of the agreement or the trade practices of the lessor or
232.34 	(2) in the case of a lease of a motor vehicle, as defined in
232.35 	section 297B.01, subdivision 5, but excluding vehicles with a
232.36 	manufacturer's gross vehicle weight rating greater than 11,000
233.1 	pounds and rentals of vehicles for not more than 28 days, at the
233.2 	time the lease is executed.
233.3 	(l) In the case of a conditional sales contract, a retail
233.4 	sale occurs upon the transfer of title or possession of the
233.5 	tangible personal property.
233.6 	
EFFECTIVE DATE. This section is effective the day
233.7 	following final enactment, except that the amendments to
233.8 	paragraph (k) are effective for leases entered into after
233.9 	September 30, 2005.

233.10 	Sec. 9. Minnesota Statutes 2004, section 297A.61, is
233.11 	amended by adding a subdivision to read:
233.12 		Subd. 37.Personal rapid transit system. "Personal rapid
233.13 	transit system" means a transportation system of small,
233.14 	computer-controlled vehicles, transporting one to three
233.15 	passengers on elevated guideways in a transportation network
233.16 	operating on demand and nonstop directly to any stations in the
233.17 	network.
233.18 	
EFFECTIVE DATE. This section is effective for sales and
233.19 	purchases made after June 30, 2005.

233.20 	Sec. 10. Minnesota Statutes 2004, section 297A.64,
233.21 	subdivision 4, is amended to read:
233.22 		Subd. 4.Exemptions.  (a) The tax and the fee imposed by
233.23 	this section do not apply to a lease or rental of (1) a vehicle
233.24 	to be used by the lessee to provide a licensed taxi service; (2)
233.25 	a hearse or limousine used in connection with a burial or
233.26 	funeral service; or (3) a van designed or adapted primarily for
233.27 	transporting property rather than passengers. The tax and the
233.28 	fee imposed under this section do not apply when the lease or
233.29 	rental of a vehicle is exempt from the tax imposed under section
233.30 	297A.62, subdivision 1.
233.31 	(b) The lessor may elect not to charge the fee imposed in
233.32 	subdivision 2 if in the previous calendar year the lessor had no
233.33 	more than 20 vehicles available for lease that would have been
233.34 	subject to tax under this section, or no more than $50,000 in
233.35 	gross receipts that would have been subject to tax under this
233.36 	section.
234.1 	
EFFECTIVE DATE. This section is effective the day
234.2 	following final enactment.

234.3 	Sec. 11. Minnesota Statutes 2004, section 297A.668,
234.4 	subdivision 1, is amended to read:
234.5 		Subdivision 1. applicability.  The provisions of this
234.6 	section apply regardless of the characterization of a product as
234.7 	tangible personal property, a digital good, or a service; but do
234.8 	not apply to telecommunications services,or the sales of motor
234.9 	vehicles, watercraft, aircraft, modular homes, manufactured
234.10 	homes, or mobile homes.  These provisions only apply to
234.11 	determine a seller's obligation to pay or collect and remit a
234.12 	sales or use tax with respect to the seller's sale of a
234.13 	product.  These provisions do not affect the obligation of a
234.14 	seller as purchaser to remit tax on the use of the product.
234.15 	
EFFECTIVE DATE. This section is effective the day
234.16 	following final enactment.

234.17 	Sec. 12. Minnesota Statutes 2004, section 297A.668,
234.18 	subdivision 5, is amended to read:
234.19 		Subd. 5.Transportation equipment.  (a) The retail sale,
234.20 	including lease or rental, of transportation equipment shall be
234.21 	sourced the same as a retail sale in accordance with the
234.22 	provisions of subdivision 2, notwithstanding the exclusion of
234.23 	lease or rental in subdivision 2.
234.24 	(b) "Transportation equipment" means any of the following:
234.25 	(1) locomotives and railcars that are utilized for the
234.26 	carriage of persons or property in interstate commerce; and/or 
234.27 	(2) trucks and truck-tractors with a gross vehicle weight
234.28 	rating (GVWR) of 10,001 pounds or greater, trailers,
234.29 	semitrailers, or passenger buses that are:
234.30 	(i) registered through the international registration plan;
234.31 	and
234.32 	(ii) operated under authority of a carrier authorized and
234.33 	certified by the United States Department of Transportation or
234.34 	another federal authority to engage in the carriage of persons
234.35 	or property in interstate commerce;
234.36 	(3) aircraft that are operated by air carriers authorized
235.1 	and certificated by the United States Department of
235.2 	Transportation or another federal or a foreign authority to
235.3 	engage in the carriage of persons or property in interstate
235.4 	commerce; or 
235.5 	(4) containers designed for use on and component parts
235.6 	attached or secured on the transportation equipment described in
235.7 	items (1) through (3).
235.8 	
EFFECTIVE DATE. This section is effective for sales and
235.9 	purchases made on or after January 1, 2004.

235.10 	Sec. 13. Minnesota Statutes 2004, section 297A.67,
235.11 	subdivision 2, is amended to read:
235.12 		Subd. 2.Food and food ingredients. Except as otherwise
235.13 	provided in this subdivision,food and food ingredients are
235.14 	exempt.  For purposes of this subdivision, "food" and "food
235.15 	ingredients" mean substances, whether in liquid, concentrated,
235.16 	solid, frozen, dried, or dehydrated form, that are sold for
235.17 	ingestion or chewing by humans and are consumed for their taste
235.18 	or nutritional value.  Food and food ingredients exempt under
235.19 	this subdivision do not include candy, soft drinks, food sold
235.20 	through vending machines, dietary supplements,and prepared
235.21 	foods.  Food and food ingredients do not include alcoholic
235.22 	beverages, dietary supplements,and tobacco.  For purposes of
235.23 	this subdivision, "alcoholic beverages" means beverages that are
235.24 	suitable for human consumption and contain one-half of one
235.25 	percent or more of alcohol by volume.  For purposes of this
235.26 	subdivision, "tobacco" means cigarettes, cigars, chewing or pipe
235.27 	tobacco, or any other item that contains tobacco.  For purposes
235.28 	of this subdivision, "dietary supplements" means any product,
235.29 	other than tobacco, intended to supplement the diet that:
235.30 	(1) contains one or more of the following dietary
235.31 	ingredients:
235.32 	(i) a vitamin;
235.33 	(ii) a mineral;
235.34 	(iii) an herb or other botanical;
235.35 	(iv) an amino acid;
235.36 	(v) a dietary substance for use by humans to supplement the
236.1 	diet by increasing the total dietary intake; and
236.2 	(vi) a concentrate, metabolite, constituent, extract, or
236.3 	combination of any ingredient described in items (i) to (v);
236.4 	(2) is intended for ingestion in tablet, capsule, powder,
236.5 	softgel, gelcap, or liquid form, or if not intended for
236.6 	ingestion in such form, is not represented as conventional food
236.7 	and is not represented for use as a sole item of a meal or of
236.8 	the diet; and
236.9 	(3) is required to be labeled as a dietary supplement,
236.10 	identifiable by the supplement facts box found on the label and
236.11 	as required pursuant to Code of Federal Regulations, title 21,
236.12 	section 101.36.
236.13 	
EFFECTIVE DATE. This section is effective for sales made
236.14 	on or after the day following final enactment.

236.15 	Sec. 14. Minnesota Statutes 2004, section 297A.67,
236.16 	subdivision 7, is amended to read:
236.17 		Subd. 7.medicines drugs; medical devices.
 236.18 	(a) Prescribed Sales of the following drugs and medical devices
236.19 	are exempt:
236.20 	(1) drugs and medicine, and insulin, intended for internal
236.21 	or external use, in the cure, mitigation, treatment, or
236.22 	prevention of illness or disease in human beings are exempt.
236.23 	"Prescribed drugs and medicine" includes use, including 
236.24 	over-the-counter drugs or medicine prescribed by a licensed
236.25 	health care professional.
236.26 	(b) Nonprescription medicines consisting principally
236.27 	(determined by the weight of all ingredients) of analgesics that
236.28 	are approved by the United States Food and Drug Administration
236.29 	for internal use by human beings are exempt.  For purposes of
236.30 	this subdivision, "principally" means greater than 50 percent
236.31 	analgesics by weight.
236.32 	(c) Prescription glasses, hospital beds, fever
236.33 	thermometers, reusable ;
236.34 	(2) single-use finger-pricking devices for the extraction
236.35 	of blood, blood glucose monitoring machines,and
236.36 	other single-use devices and single-use diagnostic agents used
237.1 	in diagnosing, monitoring, or treating diabetes, and therapeutic
237.2 	and ;
237.3 	(3) insulin and medical oxygen for human use, regardless of
237.4 	whether prescribed or sold over the counter;
237.5 	(4) prosthetic devices are exempt.  "Therapeutic devices"
237.6 	means devices that are attached or applied to the human body to
237.7 	cure, heal, or alleviate injury, illness, or disease, either
237.8 	directly or by administering a curative agent.  "Prosthetic
237.9 	devices" means devices that replace injured, diseased, or
237.10 	missing parts of the human body, either temporarily or
237.11 	permanently ;
237.12 	(5) durable medical equipment for home use only;
237.13 	(6) mobility enhancing equipment; and 
237.14 	(7) prescription corrective eyeglasses.
237.15 	(b) For purposes of this subdivision:
237.16 	(1) "Drug" means a compound, substance, or preparation, and
237.17 	any component of a compound, substance, or preparation, other
237.18 	than food and food ingredients, dietary supplements, or
237.19 	alcoholic beverages that is:
237.20 	(i) recognized in the official United States Pharmacopoeia,
237.21 	official Homeopathic Pharmacopoeia of the United States, or
237.22 	official National Formulary, and supplement to any of them;
237.23 	(ii) intended for use in the diagnosis, cure, mitigation,
237.24 	treatment, or prevention of disease; or 
237.25 	(iii) intended to affect the structure or any function of
237.26 	the body.
237.27 	(2) "Durable medical equipment" means equipment, including
237.28 	repair and replacement parts, but not including mobility
237.29 	enhancing equipment, that:
237.30 	(i) can withstand repeated use;
237.31 	(ii) is primarily and customarily used to serve a medical
237.32 	purpose;
237.33 	(iii) generally is not useful to a person in the absence of
237.34 	illness or injury; and 
237.35 	(iv) is not worn in or on the body.
237.36 	(3) "Mobility enhancing equipment" means equipment,
238.1 	including repair and replacement parts, but not including
238.2 	durable medical equipment, that:
238.3 	(i) is primarily and customarily used to provide or
238.4 	increase the ability to move from one place to another and that
238.5 	is appropriate for use either in a home or a motor vehicle;
238.6 	(ii) is not generally used by persons with normal mobility;
238.7 	and 
238.8 	(iii) does not include any motor vehicle or equipment on a
238.9 	motor vehicle normally provided by a motor vehicle manufacturer.
238.10 	(4) "Over-the-counter drug" means a drug that contains a
238.11 	label that identifies the product as a drug as required by Code
238.12 	of Federal Regulations, title 21, section 201.66.  The label
238.13 	must include a "drug facts" panel or a statement of the active
238.14 	ingredients with a list of those ingredients contained in the
238.15 	compound, substance, or preparation.  Over-the-counter drugs do
238.16 	not include grooming and hygiene products, regardless of whether
238.17 	they otherwise meet the definition.  "Grooming and hygiene
238.18 	products" are soaps, cleaning solutions, shampoo, toothpaste,
238.19 	mouthwash, antiperspirants, and suntan lotions and sunscreens.
238.20 	(5) "Prescribed" and "prescription" means a direction in
238.21 	the form of an order, formula, or recipe issued in any form of
238.22 	oral, written, electronic, or other means of transmission by a
238.23 	duly licensed health care professional.
238.24 	(6) "Prosthetic device" means a replacement, corrective, or
238.25 	supportive device, including repair and replacement parts, worn
238.26 	on or in the body to:
238.27 	(i) artificially replace a missing portion of the body;
238.28 	(ii) prevent or correct physical deformity or malfunction;
238.29 	or 
238.30 	(iii) support a weak or deformed portion of the body.
238.31 	Prosthetic device does not include corrective eyeglasses.
238.32 	
EFFECTIVE DATE. This section is effective for sales and
238.33 	purchases made after June 30, 2005.

238.34 	Sec. 15. Minnesota Statutes 2004, section 297A.67,
238.35 	subdivision 9, is amended to read:
238.36 		Subd. 9.Baby products. (a) Products such as lotion,
239.1 	creams, ointments, oil, powder, or shampoo, and other articles
239.2 	designed for application to the hair or skin of babies are
239.3 	exempt.
239.4 	(b) Baby bottles and nipples, pacifiers, teething rings,
239.5 	thumb sucking preventatives,and infant syringes are exempt.
239.6 	
EFFECTIVE DATE. This section is effective for sales and
239.7 	purchases made after June 30, 2005.

239.8 	Sec. 16. Minnesota Statutes 2004, section 297A.67,
239.9 	subdivision 29, is amended to read:
239.10 		Subd. 29.solar energy efficient products. (a) A
239.11 	residential lighting fixture or a compact fluorescent bulb is
239.12 	exempt if it has an energy star label.
239.13 	(b) The following products are exempt if they have an
239.14 	energyguide label that indicates that the product meets or
239.15 	exceeds the standards listed below:
239.16 	(1) an electric heat pump hot water heater with an energy
239.17 	factor of at least 1.9;
239.18 	(2) a natural gas water heater with an energy factor of at
239.19 	least 0.62;
239.20 	(3) a propane gas or fuel oil water heater with an energy
239.21 	factor of at least 0.62;
239.22 	(4) a natural gas furnace with an annual fuel utilization
239.23 	efficiency greater than 92 percent; and 
239.24 	(5) a propane gas or fuel oil furnace with an annual fuel
239.25 	utilization efficiency greater than 92 percent.
239.26 	(c) A photovoltaic device solar energy system, as defined
239.27 	in section 216C.06, subdivision 17,is exempt. For purposes of
239.28 	this subdivision, "photovoltaic device" means a solid-state
239.29 	electrical device, such as a solar module, that converts light
239.30 	directly into direct current electricity of voltage-current
239.31 	characteristics that are a function of the characteristics of
239.32 	the light source and the materials in and design of the device.
239.33 	A "solar module" is a photovoltaic device that produces a
239.34 	specified power output under defined test conditions, usually
239.35 	composed of groups of solar cells connected in series, in
239.36 	parallel, or in series-parallel combinations.
240.1 	(d) For purposes of this subdivision, "energy star label"
240.2 	means the label granted to certain products that meet United
240.3 	States Environmental Protection Agency and United States
240.4 	Department of Energy criteria for energy efficiency.  For
240.5 	purposes of this subdivision, "energyguide label" means the
240.6 	label that the United States Federal Trade Commissioner requires
240.7 	manufacturers to apply to certain appliances under United States
240.8 	Code, title 16, part 305.
240.9 	
EFFECTIVE DATE. This section is effective for sales and
240.10 	purchases made on or after August 1, 2005.

240.11 	Sec. 17. Minnesota Statutes 2004, section 297A.67, is
240.12 	amended by adding a subdivision to read:
240.13 		Subd. 32.Cigarettes. Cigarettes upon which a tax has
240.14 	been imposed under section 297F.25 are exempt.
240.15 	
EFFECTIVE DATE. This section is effective for sales and
240.16 	purchases made after July 31, 2005.

240.17 	Sec. 18. Minnesota Statutes 2004, section 297A.68,
240.18 	subdivision 2, is amended to read:
240.19 		Subd. 2.Materials consumed in industrial production.
 240.20 	(a) Materials stored, used, or consumed in industrial production
240.21 	of personal property intended to be sold ultimately at retail
240.22 	are exempt, whether or not the item so used becomes an
240.23 	ingredient or constituent part of the property produced.
240.24 	Materials that qualify for this exemption include, but are not
240.25 	limited to, the following:
240.26 	(1) chemicals, including chemicals used for cleaning food
240.27 	processing machinery and equipment;
240.28 	(2) materials, including chemicals, fuels, and electricity
240.29 	purchased by persons engaged in industrial production to treat
240.30 	waste generated as a result of the production process;
240.31 	(3) fuels, electricity, gas, and steam used or consumed in
240.32 	the production process, except that electricity, gas, or steam
240.33 	used for space heating, cooling, or lighting is exempt if (i) it
240.34 	is in excess of the average climate control or lighting for the
240.35 	production area, and (ii) it is necessary to produce that
240.36 	particular product;
241.1 	(4) petroleum products and lubricants;
241.2 	(5) packaging materials, including returnable containers
241.3 	used in packaging food and beverage products;
241.4 	(6) accessory tools, equipment, and other items that are
241.5 	separate detachable units with an ordinary useful life of less
241.6 	than 12 months used in producing a direct effect upon the
241.7 	product; and
241.8 	(7) the following materials, tools, and equipment used in
241.9 	metalcasting:  crucibles, thermocouple protection sheaths and
241.10 	tubes, stalk tubes, refractory materials, molten metal filters
241.11 	and filter boxes, degassing lances, and base blocks.
241.12 	(b) This exemption does not include:
241.13 	(1) machinery, equipment, implements, tools, accessories,
241.14 	appliances, contrivances and furniture and fixtures, except
241.15 	those listed in paragraph (a), clause (6); and
241.16 	(2) petroleum and special fuels used in producing or
241.17 	generating power for propelling ready-mixed concrete trucks on
241.18 	the public highways of this state.
241.19 	(c) Industrial production includes, but is not limited to,
241.20 	research, development, design or production of any tangible
241.21 	personal property, manufacturing, processing (other than by
241.22 	restaurants and consumers) of agricultural products (whether
241.23 	vegetable or animal), commercial fishing, refining, smelting,
241.24 	reducing, brewing, distilling, printing, mining, quarrying,
241.25 	lumbering, generating electricity, the production of road
241.26 	building materials, and the research, development, design, or
241.27 	production of computer software.  Industrial production does not
241.28 	include painting, cleaning, repairing or similar processing of
241.29 	property except as part of the original manufacturing process.
241.30 	(d) Industrial production does not include:
241.31 	(1) the furnishing of services listed in section 297A.61,
241.32 	subdivision 3, paragraph (g), clause (6), items (i) to (vi) and
241.33 	(viii); or 
241.34 	(2) the transportation, transmission, or distribution of
241.35 	petroleum, liquefied gas, natural gas, water, or steam, in, by,
241.36 	or through pipes, lines, tanks, mains, or other means of
242.1 	transporting those products.  For purposes of this paragraph,
242.2 	"transportation, transmission, or distribution" does not include
242.3 	blending of petroleum or biodiesel fuel as defined in section
242.4 	239.77.
242.5 	
EFFECTIVE DATE. This section is effective the day
242.6 	following final enactment, except that the provision in
242.7 	paragraph (d) is effective for sales and purchases made after
242.8 	June 30, 2005.

242.9 	Sec. 19. Minnesota Statutes 2004, section 297A.68,
242.10 	subdivision 5, is amended to read:
242.11 		Subd. 5.Capital equipment.  (a) Capital equipment is
242.12 	exempt.  The tax must be imposed and collected as if the rate
242.13 	under section 297A.62, subdivision 1, applied, and then refunded
242.14 	in the manner provided in section 297A.75, unless:
242.15 	(1) the purchaser qualifies as a small business as defined
242.16 	in section 645.445, subdivision 2, paragraphs (a) to (c);
242.17 	(2) the business is located in the state; and 
242.18 	(3) the purchaser provides an exemption certificate as
242.19 	required in section 297A.72, subdivision 3.
242.20 	"Capital equipment" means machinery and equipment purchased
242.21 	or leased, and used in this state by the purchaser or lessee
242.22 	primarily for manufacturing, fabricating, mining, or refining
242.23 	tangible personal property to be sold ultimately at retail if
242.24 	the machinery and equipment are essential to the integrated
242.25 	production process of manufacturing, fabricating, mining, or
242.26 	refining.  Capital equipment also includes machinery and
242.27 	equipment used primarily to electronically transmit results
242.28 	retrieved by a customer of an on-line computerized data
242.29 	retrieval system.
242.30 	(b) Capital equipment includes, but is not limited to:
242.31 	(1) machinery and equipment used to operate, control, or
242.32 	regulate the production equipment;
242.33 	(2) machinery and equipment used for research and
242.34 	development, design, quality control, and testing activities;
242.35 	(3) environmental control devices that are used to maintain
242.36 	conditions such as temperature, humidity, light, or air pressure
243.1 	when those conditions are essential to and are part of the
243.2 	production process;
243.3 	(4) materials and supplies used to construct and install
243.4 	machinery or equipment;
243.5 	(5) repair and replacement parts, including accessories,
243.6 	whether purchased as spare parts, repair parts, or as upgrades
243.7 	or modifications to machinery or equipment;
243.8 	(6) materials used for foundations that support machinery
243.9 	or equipment;
243.10 	(7) materials used to construct and install special purpose
243.11 	buildings used in the production process;
243.12 	(8) ready-mixed concrete equipment in which the ready-mixed
243.13 	concrete is mixed as part of the delivery process regardless if
243.14 	mounted on a chassis, repair parts for ready-mixed concrete
243.15 	trucks,and leases of ready-mixed concrete trucks; and
243.16 	(9) machinery or equipment used for research, development,
243.17 	design, or production of computer software.
243.18 	(c) Capital equipment does not include the following:
243.19 	(1) motor vehicles taxed under chapter 297B;
243.20 	(2) machinery or equipment used to receive or store raw
243.21 	materials;
243.22 	(3) building materials, except for materials included in
243.23 	paragraph (b), clauses (6) and (7);
243.24 	(4) machinery or equipment used for nonproduction purposes,
243.25 	including, but not limited to, the following:  plant security,
243.26 	fire prevention, first aid, and hospital stations; support
243.27 	operations or administration; pollution control; and plant
243.28 	cleaning, disposal of scrap and waste, plant communications,
243.29 	space heating, cooling, lighting, or safety;
243.30 	(5) farm machinery and aquaculture production equipment as
243.31 	defined by section 297A.61, subdivisions 12 and 13;
243.32 	(6) machinery or equipment purchased and installed by a
243.33 	contractor as part of an improvement to real property; or 
243.34 	(7) machinery and equipment used by restaurants in the
243.35 	furnishing, preparing, or serving of prepared foods as defined
243.36 	in section 297A.61, subdivision 31;
244.1 	(8) machinery and equipment used to furnish the services
244.2 	listed in section 297A.61, subdivision 3, paragraph (g), clause
244.3 	(6), items (i) to (vi) and (viii);
244.4 	(9) machinery or equipment used in the transportation,
244.5 	transmission, or distribution of petroleum, liquefied gas,
244.6 	natural gas, water, or steam, in, by, or through pipes, lines,
244.7 	tanks, mains, or other means of transporting those products.
244.8 	This clause does not apply to machinery or equipment used to
244.9 	blend petroleum or biodiesel fuel as defined in section 239.77;
244.10 	or 
244.11 	(10) any other item that is not essential to the integrated
244.12 	process of manufacturing, fabricating, mining, or refining.
244.13 	(d) For purposes of this subdivision:
244.14 	(1) "Equipment" means independent devices or tools separate
244.15 	from machinery but essential to an integrated production
244.16 	process, including computers and computer software, used in
244.17 	operating, controlling, or regulating machinery and equipment;
244.18 	and any subunit or assembly comprising a component of any
244.19 	machinery or accessory or attachment parts of machinery, such as
244.20 	tools, dies, jigs, patterns, and molds.
244.21 	(2) "Fabricating" means to make, build, create, produce, or
244.22 	assemble components or property to work in a new or different
244.23 	manner.
244.24 	(3) "Integrated production process" means a process or
244.25 	series of operations through which tangible personal property is
244.26 	manufactured, fabricated, mined, or refined.  For purposes of
244.27 	this clause, (i) manufacturing begins with the removal of raw
244.28 	materials from inventory and ends when the last process prior to
244.29 	loading for shipment has been completed; (ii) fabricating begins
244.30 	with the removal from storage or inventory of the property to be
244.31 	assembled, processed, altered, or modified and ends with the
244.32 	creation or production of the new or changed product; (iii)
244.33 	mining begins with the removal of overburden from the site of
244.34 	the ores, minerals, stone, peat deposit, or surface materials
244.35 	and ends when the last process before stockpiling is completed;
244.36 	and (iv) refining begins with the removal from inventory or
245.1 	storage of a natural resource and ends with the conversion of
245.2 	the item to its completed form.
245.3 	(4) "Machinery" means mechanical, electronic, or electrical
245.4 	devices, including computers and computer software, that are
245.5 	purchased or constructed to be used for the activities set forth
245.6 	in paragraph (a), beginning with the removal of raw materials
245.7 	from inventory through completion of the product, including
245.8 	packaging of the product.
245.9 	(5) "Machinery and equipment used for pollution control"
245.10 	means machinery and equipment used solely to eliminate, prevent,
245.11 	or reduce pollution resulting from an activity described in
245.12 	paragraph (a).
245.13 	(6) "Manufacturing" means an operation or series of
245.14 	operations where raw materials are changed in form, composition,
245.15 	or condition by machinery and equipment and which results in the
245.16 	production of a new article of tangible personal property.  For
245.17 	purposes of this subdivision, "manufacturing" includes the
245.18 	generation of electricity or steam to be sold at retail.
245.19 	(7) "Mining" means the extraction of minerals, ores, stone,
245.20 	or peat.
245.21 	(8) "On-line data retrieval system" means a system whose
245.22 	cumulation of information is equally available and accessible to
245.23 	all its customers.
245.24 	(9) "Primarily" means machinery and equipment used 50
245.25 	percent or more of the time in an activity described in
245.26 	paragraph (a).
245.27 	(10) "Refining" means the process of converting a natural
245.28 	resource to an intermediate or finished product, including the
245.29 	treatment of water to be sold at retail.
245.30 	
EFFECTIVE DATE. This section is effective the day
245.31 	following final enactment, except that the second sentence in
245.32 	paragraph (a) is effective for sales and purchases made after
245.33 	December 31, 2005, and paragraph (c), clause (9), is effective
245.34 	for sales and purchases made after June 30, 2005.

245.35 	Sec. 20. Minnesota Statutes 2004, section 297A.68,
245.36 	subdivision 28, is amended to read:
246.1 		Subd. 28.Medical supplies.  Medical supplies purchased
246.2 	by a licensed health care facility or licensed health care
246.3 	professional to provide medical treatment to residents or
246.4 	patients are exempt.  The exemption does not apply to durable 
246.5 	medical equipment or components of durable medical equipment,
246.6 	laboratory supplies, radiological supplies, and other items used
246.7 	in providing medical services.  For purposes of this
246.8 	subdivision, "medical supplies" means adhesive and nonadhesive
246.9 	bandages, gauze pads and strips, cotton applicators,
246.10 	antiseptics, nonprescription drugs,eye solution, and other
246.11 	similar supplies used directly on the resident or patient in
246.12 	providing medical services.
246.13 	
EFFECTIVE DATE. This section is effective for sales and
246.14 	purchases made after June 30, 2005.

246.15 	Sec. 21. Minnesota Statutes 2004, section 297A.68,
246.16 	subdivision 35, is amended to read:
246.17 		Subd. 35.Telecommunications equipment.  (a)
246.18 	Telecommunications machinery and equipment purchased or leased
246.19 	for use directly by a telecommunications service provider
246.20 	primarily in the provision of telecommunications services that
246.21 	are ultimately to be sold at retail are exempt, regardless of
246.22 	whether purchased by the owner, a contractor, or a subcontractor.
246.23 	(b) For purposes of this subdivision, "telecommunications
246.24 	machinery and equipment" includes, but is not limited to:
246.25 	(1) machinery, equipment, and fixtures utilized in
246.26 	receiving, initiating, amplifying, processing, transmitting,
246.27 	retransmitting, recording, switching, or monitoring
246.28 	telecommunications services, such as computers, transformers,
246.29 	amplifiers, routers, bridges, repeaters, multiplexers, and other
246.30 	items performing comparable functions;
246.31 	(2) machinery, equipment, and fixtures used in the
246.32 	transportation of telecommunications services, radio
246.33 	transmitters and receivers, satellite equipment, microwave
246.34 	equipment, and other transporting media, but not wire, cable,
246.35 	fiber, poles, or conduit;
246.36 	(3) ancillary machinery, equipment, and fixtures that
247.1 	regulate, control, protect, or enable the machinery in clauses
247.2 	(1) and (2) to accomplish its intended function, such as
247.3 	auxiliary power supply, test equipment, towers, heating,
247.4 	ventilating, and air conditioning equipment necessary to the
247.5 	operation of the telecommunications equipment; and software
247.6 	necessary to the operation of the telecommunications equipment;
247.7 	and
247.8 	(4) repair and replacement parts, including accessories,
247.9 	whether purchased as spare parts, repair parts, or as upgrades
247.10 	or modifications to qualified machinery or equipment.
247.11 	(c) For purposes of this subdivision, "telecommunications
247.12 	services" means telecommunications services as defined in
247.13 	section 297A.61, subdivision 24, paragraph paragraphs (a), only 
247.14 	(c), and (d).
247.15 	
EFFECTIVE DATE. This section is effective the day
247.16 	following final enactment.

247.17 	Sec. 22. Minnesota Statutes 2004, section 297A.68,
247.18 	subdivision 39, is amended to read:
247.19 		Subd. 39.Preexisting bids or contracts.  (a) The sale of
247.20 	tangible personal property or services is exempt from tax or a
247.21 	tax rate increase for a period of six months from the effective
247.22 	date of the law change that results in the imposition of the tax
247.23 	or the tax rate increase under this chapter if:
247.24 	(1) the act imposing the tax or increasing the tax rate 
247.25 	does not have transitional effective date language for existing
247.26 	construction contracts and construction bids; and
247.27 	(2) the requirements of paragraph (b) are met.
247.28 	(b) A sale is tax exempt under paragraph (a) if it meets
247.29 	the requirements of either clause (1) or (2):
247.30 	(1) For a construction contract:
247.31 	(i) the goods or services sold must be used for the
247.32 	performance of a bona fide written lump sum or fixed price
247.33 	construction contract;
247.34 	(ii) the contract must be entered into before the date the
247.35 	goods or services become subject to the sales tax or the tax
247.36 	rate was increased;
248.1 	(iii) the contract must not provide for allocation of
248.2 	future taxes; and
248.3 	(iv) for each qualifying contract the contractor must give
248.4 	the seller documentation of the contract on which an exemption
248.5 	is to be claimed.
248.6 	(2) For a construction bid:
248.7 	(i) the goods or services sold must be used pursuant to an
248.8 	obligation of a bid or bids;
248.9 	(ii) the bid or bids must be submitted and accepted before
248.10 	the date the goods or services became subject to the sales
248.11 	tax or the tax rate was increased;
248.12 	(iii) the bid or bids must not be able to be withdrawn,
248.13 	modified, or changed without forfeiting a bond; and
248.14 	(iv) for each qualifying bid, the contractor must give the
248.15 	seller documentation of the bid on which an exemption is to be
248.16 	claimed.
248.17 	
EFFECTIVE DATE. This section is effective the day
248.18 	following final enactment.

248.19 	Sec. 23. Minnesota Statutes 2004, section 297A.68, is
248.20 	amended by adding a subdivision to read:
248.21 		Subd. 40.Land clearing. Tree, bush, shrub, and stump
248.22 	removal are exempt when sold to contractors or subcontractors as
248.23 	part of a land clearing contract.  For purposes of this
248.24 	subdivision, "land clearing contract" means a contract for the
248.25 	removal of trees, bushes, and shrubs, including the removal of
248.26 	roots and stumps, to develop a site.  This exemption does not
248.27 	apply to land clearing of a portion of a site to allow for
248.28 	remodeling, improvement, or expansion of an existing structure.
248.29 	
EFFECTIVE DATE. This section is effective for sales and
248.30 	purchases made after October 28, 2002, but for land clearing
248.31 	contracts entered into after October 28, 2002, no refunds may be
248.32 	claimed under Minnesota Statutes, section 289A.50, for sales
248.33 	taxes collected and remitted to the state on the land clearing
248.34 	contracts.

248.35 	Sec. 24. Minnesota Statutes 2004, section 297A.68, is
248.36 	amended by adding a subdivision to read:
249.1 		Subd. 41.Personal rapid transit system. (a) Machinery,
249.2 	equipment, and supplies purchased or leased, and used by the
249.3 	purchaser or lessee in this state directly in the provision of a
249.4 	personal rapid transit system as defined in section 297A.61,
249.5 	subdivision 37, which provides service to the public on a
249.6 	regular and continuing basis, are exempt, provided that the
249.7 	system is operated independent of any government subsidies.
249.8 	Machinery, equipment, and supplies that qualify for this
249.9 	exemption include, but are not limited to, the following:
249.10 	(1) vehicles, guideways, and related parts used directly in
249.11 	the transit system;
249.12 	(2) computers and equipment used primarily for operating,
249.13 	controlling, and regulating the system;
249.14 	(3) machinery, equipment, furniture, and fixtures necessary
249.15 	for the functioning of system stations;
249.16 	(4) machinery, equipment, implements, tools, and supplies
249.17 	used to maintain vehicles, guideways, and stations; and 
249.18 	(5) electricity and other fuels used in the provision of
249.19 	the transit service, including heating, cooling, and lighting of
249.20 	system stations.
249.21 	(b) This exemption does not include machinery, equipment,
249.22 	and supplies used for nonproduction purposes such as operations
249.23 	support and administration.
249.24 	
EFFECTIVE DATE. This section is effective for sales and
249.25 	purchases made after June 30, 2005.

249.26 	Sec. 25. Minnesota Statutes 2004, section 297A.70,
249.27 	subdivision 10, is amended to read:
249.28 		Subd. 10.Nonprofit tickets or admissions.  (a) Tickets
249.29 	or admissions to an event are exempt if all the gross receipts
249.30 	are recorded as such, in accordance with generally accepted
249.31 	accounting principles, on the books of one or more organizations
249.32 	whose primary mission is to provide an opportunity for citizens
249.33 	of the state to participate in the creation, performance, or
249.34 	appreciation of the arts, and provided that each organization is:
249.35 	(1) an organization described in section 501(c)(3) of the
249.36 	Internal Revenue Code in which voluntary contributions make up
250.1 	at least the following percent of the organization's annual
250.2 	revenue in its most recently completed 12-month fiscal year, or
250.3 	in the current year if the organization has not completed a
250.4 	12-month fiscal year:
250.5 	(i) for sales made after July 31, 2001, and before July 1,
250.6 	2002, for the organization's fiscal year completed in calendar
250.7 	year 2000, three percent;
250.8 	(ii) for sales made on or after July 1, 2002, and on or
250.9 	before June 30, 2003, for the organization's fiscal year
250.10 	completed in calendar year 2001, three percent;
250.11 	(iii) for sales made on or after July 1, 2003, and on or
250.12 	before June 30, 2004, for the organization's fiscal year
250.13 	completed in calendar year 2002, four percent; and
250.14 	(iv) for sales made in each 12-month period, beginning on
250.15 	July 1, 2004, and each subsequent year, for the organization's
250.16 	fiscal year completed in the preceding calendar year, five
250.17 	percent;
250.18 	(2) a municipal board that promotes cultural and arts
250.19 	activities; or
250.20 	(3) the University of Minnesota, a state college and
250.21 	university, or a private nonprofit college or university 
250.22 	provided that the event is held at a university-owned facility
250.23 	owned by the educational institution holding the event.
250.24 	The exemption only applies if the entire proceeds, after
250.25 	reasonable expenses, are used solely to provide opportunities
250.26 	for citizens of the state to participate in the creation,
250.27 	performance, or appreciation of the arts.
250.28 	(b) Tickets or admissions to the premises of the Minnesota
250.29 	Zoological Garden are exempt, provided that the exemption under
250.30 	this paragraph does not apply to tickets or admissions to
250.31 	performances or events held on the premises unless the
250.32 	performance or event is sponsored and conducted exclusively by
250.33 	the Minnesota Zoological Board or employees of the Minnesota
250.34 	Zoological Garden.
250.35 	
EFFECTIVE DATE. This section is effective for tickets and
250.36 	admissions to events held on or after July 1, 2005, but does not
251.1 	apply to events for which sales of tickets or admissions were
251.2 	made prior to July 1, 2005.

251.3 	Sec. 26. Minnesota Statutes 2004, section 297A.71,
251.4 	subdivision 12, is amended to read:
251.5 		Subd. 12.Chair lifts, ramps, elevators. Chair lifts,
251.6 	ramps, and Elevators and building materials used to install or
251.7 	construct them chair lifts, ramps, and elevators are exempt, if
251.8 	they are authorized by a physician and installed in or attached
251.9 	to the owner's homestead.  The tax must be imposed and collected
251.10 	as if the rate under section 297A.62, subdivision 1, applied and
251.11 	then refunded in the manner provided in section 297A.75.
251.12 	
EFFECTIVE DATE. This section is effective for sales and
251.13 	purchases made after June 30, 2005.

251.14 	Sec. 27. Minnesota Statutes 2004, section 297A.71, is
251.15 	amended by adding a subdivision to read:
251.16 		Subd. 33.Personal rapid transit system. Materials,
251.17 	equipment, and supplies used in the construction, expansion, or
251.18 	improvement of a personal rapid transit system as defined in
251.19 	section 297A.61, subdivision 37, which provides service to the
251.20 	public on a regular and continuing basis, are exempt, provided
251.21 	that the system is operated independent of any government
251.22 	subsidies.
251.23 	
EFFECTIVE DATE. This section is effective for sales and
251.24 	purchases made after June 30, 2005.

251.25 	Sec. 28. Minnesota Statutes 2004, section 297A.72, is
251.26 	amended by adding a subdivision to read:
251.27 		Subd. 3.Exemption certificate for small businesses. A
251.28 	small business, as defined in section 645.455, subdivision 2,
251.29 	paragraphs (a) to (c), that is located in the state may apply to
251.30 	the commissioner for an exemption certificate to purchase exempt
251.31 	capital equipment without paying the sales tax at the time of
251.32 	the sale.  The business must provide information required by the
251.33 	commissioner to verify that it meets the definition of small
251.34 	business in the preceding calendar year, or in the case of a new
251.35 	business, that it will meet the definition in the first full
251.36 	year of operations.  A decision by the commissioner on whether a
252.1 	business qualifies for this exemption is final.  The exemption
252.2 	certificate must be in the form and meet the requirements
252.3 	imposed under this chapter and chapter 289A on other sales and
252.4 	use tax exemption certificates, but it shall only be in effect
252.5 	for two years from the date of issuance.
252.6 	
EFFECTIVE DATE. This section is effective for
252.7 	applications submitted to the commissioner of revenue after July
252.8 	1, 2005.

252.9 	Sec. 29. Minnesota Statutes 2004, section 297A.75,
252.10 	subdivision 1, is amended to read:
252.11 		Subdivision 1.Tax collected.  The tax on the gross
252.12 	receipts from the sale of the following exempt items must be
252.13 	imposed and collected as if the sale were taxable and the rate
252.14 	under section 297A.62, subdivision 1, applied.  The exempt items
252.15 	include:
252.16 	(1) capital equipment exempt under section 297A.68,
252.17 	subdivision 5;
252.18 	(2) building materials for an agricultural processing
252.19 	facility exempt under section 297A.71, subdivision 13;
252.20 	(3) building materials for mineral production facilities
252.21 	exempt under section 297A.71, subdivision 14;
252.22 	(4) building materials for correctional facilities under
252.23 	section 297A.71, subdivision 3;
252.24 	(5) building materials used in a residence for disabled
252.25 	veterans exempt under section 297A.71, subdivision 11;
252.26 	(6) chair lifts, ramps,elevators,and associated building
252.27 	materials exempt under section 297A.71, subdivision 12;
252.28 	(7) building materials for the Long Lake Conservation
252.29 	Center exempt under section 297A.71, subdivision 17;
252.30 	(8) materials, supplies, fixtures, furnishings, and
252.31 	equipment for a county law enforcement and family service center
252.32 	under section 297A.71, subdivision 26; and
252.33 	(9) materials and supplies for qualified low-income housing
252.34 	under section 297A.71, subdivision 23.
252.35 	
EFFECTIVE DATE. This section is effective for sales and
252.36 	purchases made after June 30, 2005.

253.1 	Sec. 30. [297A.82] MOTOR VEHICLE LEASES.
253.2 		Subdivision 1.Motor vehicle lease price; payment. (a)
253.3 	In the case of a lease of a motor vehicle as provided in section
253.4 	297A.61, subdivision 4, paragraph (k), clause (2), the tax is
253.5 	imposed on the total amount to be paid by the lessee under the
253.6 	lease agreement.  The lessor shall collect the tax in full at
253.7 	the time the lease is executed or, if the tax is included in the
253.8 	lease and the lease is assigned, the tax is due from the
253.9 	original lessor at the time the lease is assigned.  The total
253.10 	amount to be paid by the lessee under the lease agreement equals
253.11 	the agreed-upon value of the vehicle less manufacturer's
253.12 	rebates, the stated residual value of the leased vehicle, and
253.13 	the total value allowed for a vehicle owned by the lessee taken
253.14 	in trade by the lessor, plus the price of any taxable goods and
253.15 	services included in the lease and the rent charge as provided
253.16 	by Code of Federal Regulations, title 12, section 213.4,
253.17 	excluding any rent charge related to the capitalization of the
253.18 	tax.
253.19 	(b) If the total amount paid by the lessee for use of the
253.20 	leased vehicle includes amounts that are not calculated at the
253.21 	time the lease is executed, the tax is imposed and must be
253.22 	collected by the lessor at the time the amounts are paid by the
253.23 	lessee.  In the case of a lease which by its terms may be
253.24 	renewed, the sales tax is due and payable on the total amount to
253.25 	be paid during the initial term of the lease, and then for each
253.26 	subsequent renewal period on the total amount to be paid during
253.27 	the renewal period.
253.28 	(c) If a lease is canceled or rescinded on or before 90
253.29 	days of its execution or if a vehicle is returned to the
253.30 	manufacturer under section 325F.665, the lessor may file a claim
253.31 	for a refund of the total tax paid minus the amount of tax due
253.32 	for the period the vehicle is used by the lessee.
253.33 	(d) If a lessee's obligation to make payments on a lease is
253.34 	canceled more than 90 days after its execution, a credit is
253.35 	allowed against sales tax or motor vehicles sales tax due on a
253.36 	subsequent lease or purchase of a motor vehicle if that lease or
254.1 	purchase is consummated within 30 days of the date the prior
254.2 	lease was canceled.  The amount of the credit is equal to (1)
254.3 	the sales tax paid at the inception of the lease, multiplied by
254.4 	(2) the ratio of the number of full months remaining in the
254.5 	lease at the time of termination compared to the term of the
254.6 	lease used in calculating sales tax paid at the inception of the
254.7 	lease.
254.8 		Subd. 2.Lease originating in another state. When the
254.9 	lease of a motor vehicle as defined in section 297A.61,
254.10 	subdivision 4, paragraph (k), clause (2), originates in another
254.11 	state, the sales tax under subdivision 1 shall be calculated by
254.12 	the lessor on the total amount that is due under the lease
254.13 	agreement after the vehicle is required to be registered in
254.14 	Minnesota.  If the total amount to be paid by the lessee under
254.15 	the lease agreement has already been subjected to tax by another
254.16 	state, a credit for taxes paid in the other state is allowed as
254.17 	provided in section 297A.80.
254.18 	
EFFECTIVE DATE. Subdivision 1 of this section is
254.19 	effective for leases entered into after September 30, 2005.
254.20 	Subdivision 2 of this section is effective for vehicles
254.21 	registering in Minnesota after September 30, 2005.

254.22 	Sec. 31. Minnesota Statutes 2004, section 297A.87,
254.23 	subdivision 2, is amended to read:
254.24 		Subd. 2.Seller's permit or alternate statement.  (a) The
254.25 	operator of an event under subdivision 1 shall obtain one of the
254.26 	following from a person who wishes to do business as a seller at
254.27 	the event:
254.28 	(1) evidence that the person holds a valid seller's permit
254.29 	under section 297A.84; or 
254.30 	(2) a written statement that the person is not offering for
254.31 	sale any item that is taxable under this chapter; or 
254.32 	(3) a written statement that this is the only selling event
254.33 	that the person will be participating in for that calendar year,
254.34 	that the person will be participating for three or fewer days,
254.35 	and that the person will make less than $500 in total sales at
254.36 	the event.  The written statement shall include the person's
255.1 	name, address, and telephone number.
255.2 	(b) The operator shall require the evidence or statement as
255.3 	a prerequisite to participating in the event as a seller.
255.4 	
EFFECTIVE DATE. This section is effective for selling
255.5 	events occurring after June 15, 2005.

255.6 	Sec. 32. Minnesota Statutes 2004, section 297A.87,
255.7 	subdivision 3, is amended to read:
255.8 		Subd. 3.Occasional sale provisions not applicable under
255.9 	limited circumstances.  The isolated and occasional
255.10 	sale provisions provision under section 297A.67, subdivision 23,
255.11 	or applies, provided that the seller only participates for three
255.12 	or fewer days in one event per calendar year, makes $500 or less
255.13 	in sales at the event, and provides the written statement
255.14 	required in subdivision 2, paragraph (a), clause (3).  The
255.15 	isolated and occasional sales provision under section 297A.68,
255.16 	subdivision 25, do does not apply to a seller at an event under
255.17 	this section.
255.18 	
EFFECTIVE DATE. This section is effective for selling
255.19 	events occurring after June 15, 2005.

255.20 	Sec. 33. [297A.981] LOCAL SALES TAXES; CERTAIN CITIES OF
255.21 	THE FIRST CLASS.
255.22 		Subdivision 1.General authority; certain cities. (a)
255.23 	Notwithstanding sections 297A.99 and 477A.016, or any other
255.24 	contrary provision of law, ordinance, or charter, a city of the
255.25 	first class located in the seven-county metropolitan area may
255.26 	impose a local sales tax of one-half of one percent on sale
255.27 	transactions taxable under this chapter that occur within the
255.28 	city.  The tax base is the same as defined in section 297A.99,
255.29 	subdivision 4.  This tax is in addition to any other local sales
255.30 	tax imposed under other general or special law and must not be
255.31 	included when calculating sales tax limits imposed under other
255.32 	law, ordinance, or charter.
255.33 		Subd. 2.Use tax. If the city imposes the tax authorized
255.34 	in subdivision 1, a compensating use tax also applies, at the
255.35 	same rate as the sales tax, on the use, storage, distribution,
255.36 	or consumption of tangible personal property or taxable services.
256.1 		Subd. 3.Use of revenues. (a) Revenues received from
256.2 	taxes imposed under subdivisions 1 and 2, minus the reasonable
256.3 	costs of collection, may be used by the city for any purpose for
256.4 	which the city is authorized to make expenditures.
256.5 		Subd. 4.Collection; enforcement; administration. A tax
256.6 	imposed under this section shall be administered, collected, and
256.7 	enforced by the commissioner of revenue as provided for under
256.8 	section 297A.99, subdivision 9.  The commissioner shall remit
256.9 	the proceeds, minus refunds and the costs of collection, as
256.10 	provided for in section 297A.99, subdivision 11.
256.11 	Subd. 5.  [LOCAL APPROVAL.] The question of imposing the
256.12 	local sales tax must be submitted to the voters at a general or
256.13 	a special election held for this purpose.  If the majority of
256.14 	the votes cast on the question are in the affirmative, the tax
256.15 	shall be imposed on the first day of the next calendar quarter
256.16 	beginning at least 30 days after the day of local approval.
256.17 	
EFFECTIVE DATE. This section is effective July 1, 2005.

256.18 	Sec. 34. Minnesota Statutes 2004, section 297A.99,
256.19 	subdivision 1, is amended to read:
256.20 		Subdivision 1.Authorization; scope.  (a) A political
256.21 	subdivision of this state may impose a general sales tax if
256.22 	permitted by special law or if the political subdivision enacted
256.23 	and imposed the tax before the effective date of section
256.24 	477A.016 and its predecessor provision, or if the tax is allowed
256.25 	under section 297A.981 or subdivision 1a.
256.26 	(b) This section governs the imposition of a general sales
256.27 	tax by the political subdivision.  The provisions of this
256.28 	section preempt the provisions of any special law:
256.29 	(1) enacted before June 2, 1997, or
256.30 	(2) enacted on or after June 2, 1997, that does not
256.31 	explicitly exempt the special law provision from this section's
256.32 	rules by reference.
256.33 	(c) This section does not apply to or preempt a sales tax
256.34 	on motor vehicles or a special excise tax on motor vehicles.
256.35 	
EFFECTIVE DATE. This section is effective for local sales
256.36 	taxes for which the authorizing referendum is held after June
257.1 	30, 2005.

257.2 	Sec. 35. Minnesota Statutes 2004, section 297A.99, is
257.3 	amended by adding a subdivision to read:
257.4 		Subd. 1a.General authority; certain cities. (a) A city
257.5 	or a group of cities acting under a joint powers agreement, may
257.6 	impose a local sales tax of one-half of one percent without
257.7 	authorization under a special law provided that:
257.8 	(1) the city or cities are located outside of the
257.9 	metropolitan counties, as defined in section 473.121,
257.10 	subdivision 4;
257.11 	(2) imposition of the tax is approved by the voters of each
257.12 	city pursuant to subdivision 3, paragraph (a);
257.13 	(3) all the conditions for adoption, use, and termination
257.14 	of the tax contained in this subdivision and subdivisions 3 to
257.15 	12 are met;
257.16 	(4) if the tax is imposed by a group of cities, the cities
257.17 	shall be within five miles of each other; and 
257.18 	(5) imposition of tax under this authority would not
257.19 	increase the total local tax imposed in the city to a rate
257.20 	greater than one-half of one percent.
257.21 	(b) The proceeds of a tax imposed under this subdivision
257.22 	must be dedicated exclusively to pay for specific regional
257.23 	capital projects that provide benefit to persons outside of the
257.24 	city boundaries, as defined in paragraph (c), as well as to the
257.25 	city, and is approved by the voters in the authorizing
257.26 	referendum.  No proceeds may be used for normal maintenance or
257.27 	operating costs of a facility.  The proceeds may be used to pay
257.28 	for collecting and administering the tax, to pay all or part of
257.29 	the capital and administrative costs of the development, design,
257.30 	acquisition, construction, expansion, and improvement, and to
257.31 	secure and pay debt service on bonds or other obligations issued
257.32 	to finance capital costs of any of the following regional
257.33 	projects:
257.34 	(1) regional convention or civic center;
257.35 	(2) regional airport;
257.36 	(3) regional public libraries, regional history centers,
258.1 	and performing arts centers;
258.2 	(4) parks, trails, regional recreational centers, and open
258.3 	space;
258.4 	(5) flood control and protection;
258.5 	(6) regional wastewater project to mitigate surface or
258.6 	groundwater pollution;
258.7 	(7) regional government center or jail owned and operated
258.8 	by two or more local government jurisdictions;
258.9 	(8) lake improvement projects included in a watershed plan;
258.10 	(9) overpasses, arterial and collector roads, or bridges,
258.11 	on, adjacent to, or connecting to a Minnesota state highway; or 
258.12 	(10) railroad overpasses or crossing safety improvements
258.13 	where the road is adjacent to or connecting to a Minnesota state
258.14 	highway.
258.15 	(c) A capital project is considered to be a "regional
258.16 	capital project that provides benefits to persons outside the
258.17 	city boundaries" if it meets one of the following criteria:
258.18 	(1) the project is one of the projects listed in paragraph
258.19 	(b), clauses (8) to (10);
258.20 	(2) the project is funded by more than one city under a
258.21 	joint powers agreement and no more than 80 percent of the
258.22 	revenues for the project will be provided by one city;
258.23 	(3) at least 20 percent of the direct users of the
258.24 	facility, except for a convention or civic center, will be
258.25 	persons from outside of the city; or 
258.26 	(4) at least 20 percent of the benefit derived from the
258.27 	project will accrue to persons residing or businesses located
258.28 	outside of the city boundaries.
258.29 	(d) At least three months prior to holding a referendum to
258.30 	impose the tax, a city must provide to the commissioner of
258.31 	revenue a resolution approved by the city that shows that the
258.32 	tax will fund a project that meets the requirements of
258.33 	paragraphs (a) to (c), the date on which the referendum will be
258.34 	held, the maximum amount raised by the tax that may be used for
258.35 	the specified project, excluding issuance and interest costs for
258.36 	any related bonds, and the maximum time that the tax may be
259.1 	imposed.  The commissioner shall certify that the requirements
259.2 	under this subdivision are met and the city shall provide any
259.3 	additional information the commissioner requests in order to
259.4 	make that determination.  The commissioner's decision is final.
259.5 	(e) The question put to the voters at the referendum
259.6 	authorizing the vote must include information on the specific
259.7 	project to be funded by the proceeds of the tax, the maximum
259.8 	amount of sales tax revenues that will be used to fund each
259.9 	project, not including any issuance and interest costs for
259.10 	related bonds, and the maximum length of time that the tax will
259.11 	be imposed.  The referendum must also include a statement that
259.12 	the sales tax revenues are pledged to pay for the specific
259.13 	capital improvement but the improvement costs and any related
259.14 	bonds are a general obligation of the political subdivision and
259.15 	will be guaranteed by the political subdivision's property tax
259.16 	levy.  If the referendum is not held on the date contained in
259.17 	the resolution, the authority for imposing the tax expires.
259.18 	(f) A city may hold a referendum for more than one project
259.19 	at the same election provided that:
259.20 	(1) all the requirements under this subdivision are met by
259.21 	each project;
259.22 	(2) the question, with information on amount to be raised
259.23 	and the years needed to raise the amount, is stated separately
259.24 	for each project; and 
259.25 	(3) the total amount needed to fund all projects listed on
259.26 	the ballot does not exceed the amount of revenue that can be
259.27 	raised by the imposition of the tax under this subdivision in a
259.28 	12-year period.
259.29 	(g) A city may issue general obligation bonds to pay the
259.30 	costs of projects specified in the referendum authorizing
259.31 	imposition of the tax.  The approval of the question under
259.32 	paragraph (e) meets the requirement for elector approval for
259.33 	issuance of bonds under section 475.58, subdivision 1.  The debt
259.34 	represented by the bonds must not be included in computing any
259.35 	debt limitations applicable to the city, and the levy of taxes
259.36 	required by section 475.61 to pay the principal or any interest
260.1 	on the bonds must not be subject to any levy limitations or be
260.2 	included in computing or applying any levy limitation to the
260.3 	city.
260.4 	(h) The tax, if enacted, expires when the specified revenue
260.5 	has been raised or the maximum time in which the tax is in
260.6 	effect under the resolution is reached, whichever is sooner.
260.7 	Any tax imposed under this subdivision must expire no later than
260.8 	12 years after imposition.  The governing board of the city may,
260.9 	by ordinance, terminate the tax at an earlier date.
260.10 	(i) Except as specifically authorized by this section, a
260.11 	city must not use public funds to prepare or disseminate
260.12 	material regarding the passage of a ballot question under
260.13 	section 297A.99, subdivision 1a, including but not limited to
260.14 	billboards or other signs, newspaper advertising, advertising
260.15 	messages broadcast on radio or television, programming on cable
260.16 	television, except for any legal requirements regarding notice
260.17 	of election.  A city may allow meetings in a public building of
260.18 	proponents of a question involving imposing a local sales tax
260.19 	under section 297A.99, subdivision 1a, if opponents of the
260.20 	question who so request are allowed to meet in a public building
260.21 	on similar terms to those applicable to the proponents.  A city
260.22 	must not allow proponents or opponents of a ballot question on
260.23 	imposition of a local sales tax under section 297A.99,
260.24 	subdivision 1a, to place campaign signs on public property.
260.25 	
EFFECTIVE DATE. This section is effective for local sales
260.26 	taxes for which the authorizing referendum is held after June
260.27 	30, 2004.  If the authorizing referendum was held prior to July
260.28 	1, 2005, the three month prior notice to the commissioner
260.29 	contained in paragraph (d) shall not apply, but the commissioner
260.30 	must still certify that all other provisions of this subdivision
260.31 	are met before the tax may be imposed.

260.32 	Sec. 36. Minnesota Statutes 2004, section 297A.99,
260.33 	subdivision 3, is amended to read:
260.34 		Subd. 3.Requirements for adoption, use, termination.
 260.35 	(a) Imposition of a local sales tax is subject to approval by
260.36 	voters of the political subdivision at a general election.
261.1 	(b) The proceeds of the tax must be dedicated exclusively
261.2 	to payment of the cost of a specific capital improvement which
261.3 	is designated at least 90 days before the referendum on
261.4 	imposition of the tax is conducted.
261.5 	(c) The tax must terminate after the improvement designated
261.6 	under paragraph (b) has been completed.
261.7 	(d) After a sales tax imposed by a political subdivision
261.8 	has expired or been terminated, the political subdivision is
261.9 	prohibited from imposing a local sales tax for a period of one
261.10 	year.  Notwithstanding subdivision 13, this paragraph applies to
261.11 	all local sales taxes in effect at the time of or imposed after
261.12 	May 26, 1999.
261.13 	
EFFECTIVE DATE. This section is effective July 1, 2005.

261.14 	Sec. 37. Minnesota Statutes 2004, section 297A.99,
261.15 	subdivision 4, is amended to read:
261.16 		Subd. 4.Tax base.  (a) The tax applies to sales taxable
261.17 	under this chapter that occur within the political subdivision.
261.18 	(b) Taxable goods or services are subject to a political
261.19 	subdivision's sales tax, if they are performed either:
261.20 	(1) within the political subdivision, or 
261.21 	(2) partly within and partly without the political
261.22 	subdivision and more of the service is performed within the
261.23 	political subdivision, based on the cost of performance sourced
261.24 	to the political subdivision pursuant to section 297A.668.
261.25 	
EFFECTIVE DATE. This section is effective for sales made
261.26 	on or after January 1, 2004.

261.27 	Sec. 38. Minnesota Statutes 2004, section 297A.99,
261.28 	subdivision 9, is amended to read:
261.29 		Subd. 9.Enforcement; collection; and administration.
 261.30 	(a) The commissioner of revenue shall collect the taxes subject
261.31 	to this section.  The commissioner may collect the tax with the
261.32 	state sales and use tax.  All taxes under this section are
261.33 	subject to the same penalties, interest, and enforcement
261.34 	provisions as apply to the state sales and use tax.
261.35 	(b) A request for a refund of state sales tax paid in
261.36 	excess of the amount of tax legally due includes a request for a
262.1 	refund of the political subdivision taxes paid on the goods or
262.2 	services.  The commissioner shall refund to the taxpayer the
262.3 	full amount of the political subdivision taxes paid on exempt
262.4 	sales or use.
262.5 	(c) A political subdivision shall incur a legal debt to the
262.6 	state for refunds of local sales taxes made by the commissioner
262.7 	after a tax has terminated when the amount of the refunds
262.8 	exceeds the amount of local sales taxes collected for but not
262.9 	remitted to the political subdivision.  The commissioner of
262.10 	revenue shall deduct the amount of the debt from the next
262.11 	payment scheduled to be made to the political subdivision under
262.12 	section 273.1384, 273.1398, or sections 477A.011 to 477A.014.
262.13 	The commissioner shall deposit the money in the state treasury
262.14 	and credit it to the general fund.
262.15 	
EFFECTIVE DATE. This section is effective for all refunds
262.16 	made on or after the day following final enactment.

262.17 	Sec. 39. Minnesota Statutes 2004, section 297A.99, is
262.18 	amended by adding a subdivision to read:
262.19 		Subd. 12a.Notification of use tax. Any city or county
262.20 	imposing a local sales and use tax, which maintains an official
262.21 	web site, must display on its main home page a notice that
262.22 	residents and businesses in the city or county may owe a local
262.23 	use tax on purchases of goods and services made outside of the
262.24 	city or county limits.  The notice must provide information,
262.25 	including a link to any relevant Department of Revenue Web site,
262.26 	on how the taxpayer may get information and forms necessary for
262.27 	calculating and paying the tax.  If the city or county provides
262.28 	and bills for sewer, water, garbage collection, or other public
262.29 	utility services, the billing statement must also include a
262.30 	notice that residents and businesses may owe a local use tax on
262.31 	purchases made outside of the city or county limits and provide
262.32 	information on how the taxpayer may get information and forms
262.33 	necessary for calculating and paying the tax.
262.34 	
EFFECTIVE DATE. This section is effective January 1, 2006.

262.35 	Sec. 40. Minnesota Statutes 2004, section 477A.016, is
262.36 	amended to read:
263.1 	477A.016 NEW TAXES PROHIBITED.
263.2 	No county, city, town or other taxing authority shall
263.3 	increase a present tax or impose a new tax on sales or income,
263.4 	except as provided in section 297A.981 or section 297A.99,
263.5 	subdivision 1a.

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

263.7 	Sec. 41. Laws 1998, chapter 389, article 8, section 43,
263.8 	subdivision 3, is amended to read:
263.9 		Subd. 3.Use of revenues. Revenues received from the
263.10 	taxes authorized by subdivisions 1 and 2 must be used by the
263.11 	city to pay for the cost of collecting and administering the
263.12 	taxes and to pay for the following projects:
263.13 	(1) transportation infrastructure improvements including
263.14 	both highway and airport improvements;
263.15 	(2) improvements to the civic center complex;
263.16 	(3) a municipal water, sewer, and storm sewer project
263.17 	necessary to improve regional ground water quality; and
263.18 	(4) construction of a regional recreation and sports center
263.19 	and associated other facilities available for both community and
263.20 	student use, located at or adjacent to the Rochester center.
263.21 	The total amount of capital expenditures or bonds for these
263.22 	projects that may be paid from the revenues raised from the
263.23 	taxes authorized in this section may not exceed $71,500,000.
263.24 	The total amount of capital expenditures or bonds for the
263.25 	project in clause (4) that may be paid from the revenues raised
263.26 	from the taxes authorized in this section may not exceed
263.27 	$20,000,000.
263.28 	[EFFECTIVE DATE; LOCAL APPROVAL.]This section is effective
263.29 	the day after the governing body of Rochester and its chief
263.30 	clerical officer timely complete their compliance with Minnesota
263.31 	Statutes, section 645.021, subdivisions 2 and 3.

263.32 	Sec. 42. Laws 2001, First Special Session chapter 5,
263.33 	article 12, section 95, as amended by Laws 2002, chapter 377,
263.34 	article 3, section 24, and Laws 2003, First Special Session
263.35 	chapter 21, article 8, section 15, is amended to read:
263.36 	Sec. 95REPEALER.
 264.1 	(a) Minnesota Statutes 2000, sections 297A.61, subdivision
264.2 	16; 297A.68, subdivision 21; and 297A.71, subdivision 2, are
264.3 	repealed effective for sales and purchases occurring after June
264.4 	30, 2001, except that the repeal of section 297A.61, subdivision
264.5 	16, paragraph (d), is effective for sales and purchases
264.6 	occurring after July 31, 2001.
264.7 	(b) Minnesota Statutes 2000, sections section 297A.62,
264.8 	subdivision 2, and 297A.64, subdivision 1, are is repealed
264.9 	effective for sales and purchases made after December 31, 2005.
264.10 	(c) Minnesota Statutes 2000, section 297A.71, subdivision
264.11 	15, is repealed effective for sales and purchases made after
264.12 	June 30, 2002.
264.13 	(d) Minnesota Statutes 2000, section 297A.71, subdivision
264.14 	16, is repealed effective for sales and purchases occurring
264.15 	after December 31, 2002.

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

264.18 	Sec. 43. Laws 2002, chapter 377, article 3, section 4, the
264.19 	effective date, is amended to read:

264.20 	EFFECTIVE DATE. With the exception of clause (2), item
264.21 	(ii),This section is effective for sales and purchases made
264.22 	after June 30, 2002. Clause (2), item (ii), is effective for
264.23 	sales and purchases made after June 30, 2002, and before January
264.24 	1, 2006.

264.25 	Sec. 44. CITY OF MANKATO; LOCAL SALES TAX EXPIRATION
264.26 	DATE.
 264.27 	Notwithstanding any other provision of law or municipal
264.28 	charter to the contrary, the city of Mankato may by resolution
264.29 	extend the imposition of the taxes imposed under Laws 1991,
264.30 	chapter 291, article 8, section 27, subdivisions 1 and 2, as
264.31 	needed to pay off existing bonds but no later than December 31,
264.32 	2018.  The proceeds of the tax must be used only to pay off
264.33 	previously issued bonds authorized under Laws 1991, chapter 291,
264.34 	article 8, section 27, and Laws 1996, chapter 471, article 2,
264.35 	section 25, and for renovations and capital improvements of the
264.36 	original projects funded by the sales tax under these laws.

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

265.4 	Sec. 45. ST. CLOUD AREA CITIES; SALES AND USE TAX
265.5 	AUTHORIZED.
 265.6 		Subdivision 1.Sales and use tax
265.7 	authorized. Notwithstanding Minnesota Statutes, sections
265.8 	297A.99, subdivision 3, paragraph (d), and 477A.016, or any
265.9 	other provision of law, ordinance, or city charter, the
265.10 	following cities may, by ordinance, impose a sales and use tax
265.11 	of one-half of one percent for the purposes specified in
265.12 	subdivision 2:
265.13 	(1) the city of St. Cloud, pursuant to the approval of the
265.14 	city voters at the general election held on November 2, 2004;
265.15 	(2) the city of St. Joseph, pursuant to the approval of the
265.16 	city voters at the general election on November 2, 2004;
265.17 	(3) the city of Waite Park, pursuant to the approval of the
265.18 	city voters at the general election held on November 4, 2003;
265.19 	(4) the city of Sartell, pursuant to the approval of the
265.20 	voters of that city at the general election held on November 2,
265.21 	1999; and 
265.22 	(5) the city of St. Augusta, pursuant to the approval of
265.23 	the voters of that city at the next general election.
265.24 	The provisions of Minnesota Statutes, section 297A.99,
265.25 	except subdivision 3, paragraph (d), govern the imposition,
265.26 	administration, collection, and enforcement of the tax
265.27 	authorized under this section, unless specifically provided for
265.28 	otherwise in another subdivision.
265.29 		Subd. 2.Use of revenues. (a) Revenues received from the
265.30 	tax authorized by subdivision 1 by the city of St. Cloud must be
265.31 	used for the cost of collecting and administering the tax and to
265.32 	pay all or part of the capital or administrative costs of the
265.33 	development, acquisition, construction, improvement, and
265.34 	securing and paying debt service on bonds or other obligations
265.35 	issued to finance the following regional projects as approved by
265.36 	the voters and specifically detailed in the referendum
266.1 	authorizing the tax:
266.2 	(1) St. Cloud Regional Airport;
266.3 	(2) regional transportation improvements;
266.4 	(3) community and aquatics centers;
266.5 	(4) regional public libraries; and 
266.6 	(5) acquisition and improvement of regional park land and
266.7 	open space.
266.8 	(b) Revenues received from the tax authorized by
266.9 	subdivision 1 by the cities of Waite Park, Sartell, and St.
266.10 	Augusta must be used for the cost of collecting and
266.11 	administering the tax and to pay all or part of the capital or
266.12 	administrative costs of the development, acquisition,
266.13 	construction, improvement, and securing and paying debt service
266.14 	on bonds or other obligations issued to fund the projects
266.15 	specifically approved by the voters at the referendum
266.16 	authorizing the tax.  The portion of revenues from the city
266.17 	going to fund the regional airport or regional library located
266.18 	in the city of St. Cloud will be as required under the
266.19 	applicable joint powers agreement.
266.20 	(c) The use of revenues received from the taxes authorized
266.21 	in subdivision 1 for projects allowed under paragraphs (a) and
266.22 	(b) are limited to the amount authorized for each project under
266.23 	the enabling referendum.
266.24 	Subd. 3.[ST. CLOUD BONDING AUTHORIZED.] (a) The city of
266.25 	St. Cloud may issue general obligation bonds of up to
266.26 	$30,000,000 to pay for the costs of the regional public library
266.27 	pursuant to the approval of the projects by the city voters at
266.28 	the election held on November 2, 2004.
266.29 	(b) Each city may issue general obligation bonds for
266.30 	another project authorized under subdivision 2 without separate
266.31 	bonding approval at a referendum only if the issuance of bonds
266.32 	for that project was included in the authorizing question.  The
266.33 	amount of bonds issued for a project is limited to the maximum
266.34 	amount of local sales tax revenues that may be spent on the
266.35 	project under the authorizing question.
266.36 	(c) The debt represented by the bonds authorized under this
267.1 	subdivision must not be included in computing any debt
267.2 	limitations applicable to the city, and the levy of taxes
267.3 	required by Minnesota Statutes, section 475.61, to pay the
267.4 	principal or any interest on the bonds must not be subject to
267.5 	any levy limitations or be included in computing or applying any
267.6 	levy limitation applicable to the city.
267.7 		Subd. 4.Termination of tax. (a) The tax imposed in the
267.8 	cities of St. Joseph and St. Cloud under subdivision 1 expires
267.9 	when the city council determines that sufficient funds have been
267.10 	collected from the tax to retire or redeem the bonds and
267.11 	obligations authorized under subdivision 2, paragraph (a), but
267.12 	no later than 11 years after the date the tax is first imposed.
267.13 	(b) The tax imposed in the city of Waite Park expires July
267.14 	1, 2007.  Any funds remaining after completion of the projects
267.15 	specified in subdivision 2 and retirement or redemption of the
267.16 	bonds may be placed in the general fund of the city.  The tax
267.17 	imposed in the city of St. Augusta expires five years after it
267.18 	is first imposed.  Any funds remaining after completion of the
267.19 	projects specified in subdivision 2 and retirement or redemption
267.20 	of the bonds may be placed in the general fund of the city.
267.21 	Each tax imposed under subdivision 1 may expire at an earlier
267.22 	time if the city so determines by ordinance.  The cities may
267.23 	extend the tax beyond the dates in this paragraph upon
267.24 	additional approval of the voters at a subsequent referendum.
267.25 	The tax may not be extended beyond the number of years allowed
267.26 	in paragraph (a).  The tax imposed in the city of Sartell
267.27 	expires December 31, 2006.
267.28 	
EFFECTIVE DATE. This section is effective for the city
267.29 	that approves it the day after compliance by the governing body
267.30 	of each city with Minnesota Statutes, section 645.021,
267.31 	subdivision 3, for sales and purchases made on and after January
267.32 	1, 2006.  Spending may not occur for the purposes authorized in
267.33 	subdivision 2 nor may bonds be issued under subdivision 3 until
267.34 	January 1, 2006.

267.35 	Sec. 46. CITY OF BEMIDJI; LOCAL SALES TAX.
 267.36 	Notwithstanding Minnesota Statutes, sections 297A.99 and
268.1 	477A.03, or any other provision of law, ordinance, or charter to
268.2 	the contrary, the city of Bemidji may impose a sales tax
268.3 	pursuant to the approval of the city voters at a general
268.4 	election on November 5, 2002.  Revenues from the tax must be
268.5 	used for the cost of collecting and administering the tax and to
268.6 	pay all or part of the capital and administrative costs of the
268.7 	acquisition, construction, improvement, and development of parks
268.8 	and trails within the city, as provided for in the city of
268.9 	Bemidji's parks, open space, and trail system plan, adopted by
268.10 	the Bemidji city council on November 21, 2001.  Authorized
268.11 	expenses include, but are not limited to, acquiring property,
268.12 	paying construction expenses related to the development of these
268.13 	facilities and improvements, and securing and paying any debt
268.14 	service on bonds or other obligations issued to finance
268.15 	acquisition, construction, improvement, or development of parks
268.16 	and trails within the city of Bemidji.  All other provisions of
268.17 	section 297A.99 not in conflict with the provisions of this
268.18 	section shall apply to the imposition, collection,
268.19 	administration, and use of revenues from this tax.

268.20 	EFFECTIVE DATE. This section is effective the day after
268.21 	compliance by the city of Bemidji with Minnesota Statutes,
268.22 	section 645.021, subdivision 3.

268.23 	Sec. 47. CITY OF ROCHESTER; LOCAL SALES TAX EXPIRATION
268.24 	DATE.
 268.25 	Notwithstanding Minnesota Statutes, section 297A.99, or any
268.26 	other provision of law or municipal charter to the contrary, the
268.27 	city of Rochester may by resolution extend the taxes imposed
268.28 	under Laws 1998, chapter 389, article 8, section 43, until
268.29 	December 31, 2014.  This extension of the imposition of taxes
268.30 	shall occur notwithstanding either of the total amount
268.31 	limitations on capital expenditures or bonds specified in Laws
268.32 	1998, chapter 389, article 8, section 43.  The proceeds of the
268.33 	tax must be used for the purposes authorized under that law and
268.34 	for regional highway infrastructure improvements jointly
268.35 	undertaken with Olmsted County.  The city and the county may
268.36 	issue general obligation bonds for the purposes authorized under
269.1 	this section.  The county may issue general obligation bonds in
269.2 	an amount not exceeding the amount of sales tax revenue
269.3 	anticipated to be received from the city.  The city may issue
269.4 	additional general obligation bonds, above the amount allowed
269.5 	under Laws 1988, chapter 389, article 8, section 43, equal to
269.6 	the difference between the amount of additional local sales tax
269.7 	raised under this section and the amount anticipated to be given
269.8 	to the county.  No election is required for the issuance of
269.9 	bonds under this subdivision, other than the election held by
269.10 	the city on June 23, 1998.  The bonds shall not be included as
269.11 	net debt of the city or the county.

269.12 	EFFECTIVE DATE. This section is effective the day after
269.13 	compliance by the city of Rochester with Minnesota Statutes,
269.14 	section 645.021, subdivisions 2 and 3.

269.15 	Sec. 48. REPEALER.
 269.16 	Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200,
269.17 	subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5
269.18 	and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1
269.19 	and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200;
269.20 	8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart
269.21 	5; and 8130.8800, subpart 4, are repealed.

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

269.24 	ARTICLE 8
269.25 	SPECIAL TAXES AND FEES

269.26 	Section 1. Minnesota Statutes 2004, section 240.30, is
269.27 	amended by adding a subdivision to read:
269.28 		Subd. 11.Franchise fee. As a condition of operating a
269.29 	card club under this section, the licensee must pay a fee to the
269.30 	commission equal to 15 percent of the gross revenues, less any
269.31 	refunds, for charges imposed under subdivision 4.  Payment,
269.32 	collection, and administration of the fee must be made in the
269.33 	same manner and under the terms provided under section 240.15
269.34 	for the tax on pari-mutuel pools.  The commission shall deposit
269.35 	all of the revenues from the fee in the state treasury and
269.36 	amounts deposited must be credited to the general fund.  The
270.1 	amount of the fee under this subdivision does not reduce the
270.2 	obligation to set aside revenues from the card club under
270.3 	section 240.135.
270.4 	
EFFECTIVE DATE. This section is effective for charges and
270.5 	revenues received after June 30, 2005.

270.6 	Sec. 2. Minnesota Statutes 2004, section 287.04, is
270.7 	amended to read:
270.8 	287.04 EXEMPTIONS.
270.9 	The tax imposed by section 287.035 does not apply to:
270.10 	(a) A decree of marriage dissolution or an instrument made
270.11 	pursuant to it.
270.12 	(b) A mortgage given to correct a misdescription of the
270.13 	mortgaged property.
270.14 	(c) A mortgage or other instrument that adds additional
270.15 	security for the same debt for which mortgage registry tax has
270.16 	been paid.
270.17 	(d) A contract for the conveyance of any interest in real
270.18 	property, including a contract for deed.
270.19 	(e) A mortgage secured by real property subject to the
270.20 	minerals production tax of sections 298.24 to 298.28.
270.21 	(f) The principal amount of a mortgage loan made under a
270.22 	low and moderate income or other affordable housing program, if
270.23 	the mortgagee is a federal, state, or local government agency.
270.24 	(g) Mortgages granted by fraternal benefit societies
270.25 	subject to section 64B.24.
270.26 	(h) A mortgage amendment or extension, as defined in
270.27 	section 287.01.
270.28 	(i) An agricultural mortgage if the proceeds of the loan
270.29 	secured by the mortgage are used to acquire or improve real
270.30 	property classified under section 273.13, subdivision 23,
270.31 	paragraph (a), or (b), clause (1), (2), or (3).
270.32 	(j) A mortgage on an armory building as set forth in
270.33 	section 193.147.

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

270.36 	Sec. 3. Minnesota Statutes 2004, section 295.52,
271.1 	subdivision 4, is amended to read:
271.2 		Subd. 4.Use tax; prescription drugs.  (a) A person that
271.3 	receives prescription drugs for resale or use in Minnesota,
271.4 	other than from a wholesale drug distributor that is subject to
271.5 	tax under subdivision 3, is subject to a tax equal to the price
271.6 	paid to the wholesale drug distributor multiplied by the tax
271.7 	percentage specified in this section.  Liability for the tax is
271.8 	incurred when prescription drugs are received or delivered in
271.9 	Minnesota by the person.
271.10 	(b) A person that receives prescription drugs for use in
271.11 	Minnesota from a nonresident pharmacy required to be registered
271.12 	under section 151.19 is subject to a tax equal to the price paid
271.13 	by the nonresident pharmacy to the wholesale drug distributor or
271.14 	the price received by the nonresident pharmacy, whichever is
271.15 	lower, multiplied by the tax percentage specified in this
271.16 	section.  Liability for the tax is incurred when prescription
271.17 	drugs are received in Minnesota by the person.
271.18 	(c) A tax imposed under this subdivision does not apply to
271.19 	purchases by an individual for personal use or consumption.
271.20 	
EFFECTIVE DATE. This section is effective for purchases
271.21 	made after June 30, 2005.

271.22 	Sec. 4. Minnesota Statutes 2004, section 295.53,
271.23 	subdivision 1, is amended to read:
271.24 		Subdivision 1.Exemptions.  (a) The following payments
271.25 	are excluded from the gross revenues subject to the hospital,
271.26 	surgical center, or health care provider taxes under sections
271.27 	295.50 to 295.59:
271.28 	(1) payments received for services provided under the
271.29 	Medicare program, including payments received from the
271.30 	government, and organizations governed by sections 1833 and 1876
271.31 	of title XVIII of the federal Social Security Act, United States
271.32 	Code, title 42, section 1395, and enrollee deductibles,
271.33 	coinsurance, and co-payments, whether paid by the Medicare
271.34 	enrollee or by a Medicare supplemental coverage as defined in
271.35 	section 62A.011, subdivision 3, clause (10), or by Medicaid
271.36 	payments under title XIX of the federal Social Security Act.
272.1 	Payments for services not covered by Medicare are taxable;
272.2 	(2) payments received for home health care services;
272.3 	(3) payments received from hospitals or surgical centers
272.4 	for goods and services on which liability for tax is imposed
272.5 	under section 295.52 or the source of funds for the payment is
272.6 	exempt under clause (1), (7), (10), or (14);
272.7 	(4) payments received from health care providers for goods
272.8 	and services on which liability for tax is imposed under this
272.9 	chapter or the source of funds for the payment is exempt under
272.10 	clause (1), (7), (10), or (14);
272.11 	(5) amounts paid for legend drugs, other than nutritional
272.12 	products, to a wholesale drug distributor who is subject to tax
272.13 	under section 295.52, subdivision 3, reduced by reimbursements
272.14 	received for legend drugs otherwise exempt under this chapter;
272.15 	(6) payments received by a health care provider or the
272.16 	wholly owned subsidiary of a health care provider for care
272.17 	provided outside Minnesota;
272.18 	(7) payments received from the chemical dependency fund
272.19 	under chapter 254B;
272.20 	(8) payments received in the nature of charitable donations
272.21 	that are not designated for providing patient services to a
272.22 	specific individual or group;
272.23 	(9) payments received for providing patient services
272.24 	incurred through a formal program of health care research
272.25 	conducted in conformity with federal regulations governing
272.26 	research on human subjects.  Payments received from patients or
272.27 	from other persons paying on behalf of the patients are subject
272.28 	to tax;
272.29 	(10) payments received from any governmental agency for
272.30 	services benefiting the public, not including payments made by
272.31 	the government in its capacity as an employer or insurer or
272.32 	payments made by the government for services provided under
272.33 	general assistance medical care, the MinnesotaCare program, or
272.34 	the medical assistance program governed by title XIX of the
272.35 	federal Social Security Act, United States Code, title 42,
272.36 	sections 1396 to 1396v;
273.1 	(11) government payments received by the commissioner of
273.2 	human services for state-operated services;
273.3 	(12) payments received by a health care provider for
273.4 	hearing aids and related equipment or prescription eyewear
273.5 	delivered outside of Minnesota;
273.6 	(13) payments received by an educational institution from
273.7 	student tuition, student activity fees, health care service
273.8 	fees, government appropriations, donations, or grants, and for
273.9 	services identified in and provided under an individualized
273.10 	education plan as defined in section 256B.0625 or Code of
273.11 	Federal Regulations, chapter 34, section 300.340(a).  Fee for
273.12 	service payments and payments for extended coverage are taxable;
273.13 	and 
273.14 	(14) payments received under the federal Employees Health
273.15 	Benefits Act, United States Code, title 5, section 8909(f), as
273.16 	amended by the Omnibus Reconciliation Act of 1990. Enrollee
273.17 	deductibles, coinsurance, and co-payments are subject to tax;
273.18 	and 
273.19 	(15) payments received under the federal Tricare program,
273.20 	Code of Federal Regulations, title 32, section 199.17(a)(7).
273.21 	Enrollee deductibles, coinsurance, and co-payments are subject
273.22 	to tax.
273.23 	(b) Payments received by wholesale drug distributors for
273.24 	legend drugs sold directly to veterinarians or veterinary bulk
273.25 	purchasing organizations are excluded from the gross revenues
273.26 	subject to the wholesale drug distributor tax under sections
273.27 	295.50 to 295.59.
273.28 	
EFFECTIVE DATE. The change made to paragraph (a), clause
273.29 	(14), of this section is effective for enrollee deductibles,
273.30 	coinsurance, and co-payments received under the federal
273.31 	Employees Health Benefits Act on or after the day following
273.32 	final enactment.  Paragraph (a), clause (15), is effective for
273.33 	gross revenues received under the federal Tricare program after
273.34 	December 31, 2004.

273.35 	Sec. 5. Minnesota Statutes 2004, section 295.582, is
273.36 	amended to read:
274.1 	295.582 AUTHORITY.
274.2 		Subdivision 1.Transfer to third-party purchasers. (a) A
274.3 	hospital, surgical center, or health care provider that is
274.4 	subject to a tax under section 295.52, or a pharmacy that has
274.5 	paid additional expense transferred under this section by a
274.6 	wholesale drug distributor, may transfer additional expense
274.7 	generated by section 295.52 obligations on to all third-party
274.8 	contracts for the purchase of health care services on behalf of
274.9 	a patient or consumer.  The additional expense transferred to
274.10 	the third-party purchaser must not exceed the tax percentage
274.11 	specified in section 295.52 multiplied against the gross
274.12 	revenues received under the third-party contract, and the tax
274.13 	percentage specified in section 295.52 multiplied against
274.14 	co-payments and deductibles paid by the individual patient or
274.15 	consumer. A health care provider who chooses to transfer the
274.16 	tax specified in section 295.52 may itemize the tax on patient
274.17 	billings.The expense must not be generated on revenues derived
274.18 	from payments that are excluded from the tax under section
274.19 	295.53.  All third-party purchasers of health care services
274.20 	including, but not limited to, third-party purchasers regulated
274.21 	under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79,
274.22 	or 79A, or under section 471.61 or 471.617, and a pharmacy
274.23 	benefits manager must pay the transferred expense in addition to
274.24 	any payments due under existing contracts with the hospital,
274.25 	surgical center, pharmacy, or health care provider, to the
274.26 	extent allowed under federal law.  A third-party purchaser of
274.27 	health care services includes, but is not limited to, a health
274.28 	carrier or community integrated service network that pays for
274.29 	health care services on behalf of patients or that reimburses,
274.30 	indemnifies, compensates, or otherwise insures patients for
274.31 	health care services and for purposes of this section, a
274.32 	pharmacy benefits manager means an entity that performs pharmacy
274.33 	benefits management.  A third-party purchaser shall comply with
274.34 	this section regardless of whether the third-party purchaser is
274.35 	a for-profit, not-for-profit, or nonprofit entity or whether the
274.36 	health care provider has chosen to itemize the tax on patient
275.1 	billings.  If the third-party purchaser's contract limits
275.2 	provider payment to a specified amount, such as an usual and
275.3 	customary fee schedule, the third-party purchaser must still pay
275.4 	the tax transferred or itemized by a health care provider based
275.5 	upon the contractual fee.  A third-party purchaser is also
275.6 	responsible for reimbursing providers for the percentage tax
275.7 	levied on co-payments or deductibles paid by the insured.  A
275.8 	wholesale drug distributor may transfer additional expense
275.9 	generated by section 295.52 obligations to entities that
275.10 	purchase from the wholesaler, and the entities must pay the
275.11 	additional expense.  Nothing in this section limits the ability
275.12 	of a hospital, surgical center, pharmacy, wholesale drug
275.13 	distributor, or health care provider to recover all or part of
275.14 	the section 295.52 obligation by other methods, including
275.15 	increasing fees or charges. Nothing in this section prohibits a
275.16 	pharmacy from passing on additional fees or charges to a
275.17 	pharmacy benefits manager.
275.18 	(b) Each third-party purchaser regulated under any chapter
275.19 	cited in paragraph (a) shall include with its annual renewal for
275.20 	certification of authority or licensure documentation indicating
275.21 	compliance with paragraph (a). The documentation must include
275.22 	information relating to a third-party purchaser's means for
275.23 	compliance with paragraph (a) for health care providers who
275.24 	itemize the tax on patient billings.
275.25 	(c) Any hospital, surgical center, or health care provider
275.26 	subject to a tax under section 295.52 or a pharmacy that has
275.27 	paid additional expense transferred under this section by a
275.28 	wholesale drug distributor may file a complaint with the
275.29 	commissioner responsible for regulating the third-party
275.30 	purchaser if at any time the third-party purchaser fails to
275.31 	comply with paragraph (a).
275.32 	(d) If the commissioner responsible for regulating the
275.33 	third-party purchaser finds at any time that the third-party
275.34 	purchaser has not complied with paragraph (a), the commissioner
275.35 	may take enforcement action against a third-party purchaser
275.36 	which is subject to the commissioner's regulatory jurisdiction
276.1 	and which does not allow a hospital, surgical center, pharmacy,
276.2 	or provider to pass-through the tax.  The commissioner may by
276.3 	order fine or censure the third-party purchaser or revoke or
276.4 	suspend the certificate of authority or license of the
276.5 	third-party purchaser to do business in this state if the
276.6 	commissioner finds that the third-party purchaser has not
276.7 	complied with this section.  The third-party purchaser may
276.8 	appeal the commissioner's order through a contested case hearing
276.9 	in accordance with chapter 14.
276.10 		Subd. 2.Wholesale drug distributor tax; agreement. A
276.11 	contracting agreement between a health plan company or a
276.12 	pharmacy benefits manager and a resident or nonresident pharmacy
276.13 	registered under chapter 151, may not prohibit:
276.14 	(1) a pharmacy that has paid additional expense transferred
276.15 	under this section by a wholesale drug distributor from
276.16 	exercising its option under this section to transfer such
276.17 	additional expenses generated by the section 295.52 obligations
276.18 	on to the health plan company, a pharmacy benefits manager, or a
276.19 	third-party purchaser; or 
276.20 	(2) a pharmacy that is subject to tax under section 295.52,
276.21 	subdivision 4, from exercising its option under this section to
276.22 	recover all or part of the section 295.52 obligations from the
276.23 	health plan company, a pharmacy benefits manager, or a
276.24 	third-party purchaser by other methods, including increasing
276.25 	fees or charges.

276.26 	Sec. 6. Minnesota Statutes 2004, section 295.60,
276.27 	subdivision 3, is amended to read:
276.28 		Subd. 3.Payment.  (a) Each furrier shall make estimated
276.29 	payments of the taxes for the calendar year in quarterly
276.30 	installments to the commissioner by April 15, July 15, October
276.31 	15, and January 15 of the following calendar year.
276.32 	(b) Estimated tax payments are not required if:
276.33 	(1) the tax for the current calendar year is less than
276.34 	$500; or
276.35 	(2) the tax for the previous calendar year is less than
276.36 	$500, if the taxpayer had a tax liability and was doing business
277.1 	the entire year.
277.2 	(c) Underpayment of estimated installments bear interest at
277.3 	the rate specified in section 270.75, from the due date of the
277.4 	payment until paid or until the due date of the annual return,
277.5 	whichever comes first.  An underpayment of an estimated
277.6 	installment is the difference between the amount paid and the
277.7 	lesser of (1) 90 percent of one-quarter of the tax for the
277.8 	calendar year the tax for the actual gross revenues received
277.9 	during the quarter, or (2) one-quarter of the total tax for the
277.10 	previous calendar year if the taxpayer had a tax liability and
277.11 	was doing business the entire year.
277.12 	
EFFECTIVE DATE. This section is effective for gross
277.13 	revenues received after December 31, 2004.

277.14 	Sec. 7. [295.75] LIQUOR GROSS RECEIPTS TAX.
277.15 		Subdivision 1.Definitions. (a) For purposes of this
277.16 	section, the following terms have the meanings given.
277.17 	(b) "Commissioner" means the commissioner of revenue.
277.18 	(c) "Gross receipts" means the total amount received, in
277.19 	money or by barter or exchange, for all liquor sales at retail
277.20 	as measured by the sales price, but does not include any taxes
277.21 	imposed directly on the consumer that are separately stated on
277.22 	the invoice, bill of sale, or similar document given to the
277.23 	purchaser.
277.24 	(d) "Liquor" means:
277.25 	(1) intoxicating liquor, as defined in section 340A.101,
277.26 	subdivision 14;
277.27 	(2) beverage containing intoxicating liquor; and 
277.28 	(3) 3.2 percent malt liquor, as defined in section
277.29 	340A.101, subdivision 19, when sold at an on-sale or off-sale
277.30 	municipal liquor store or other establishment licensed to sell
277.31 	any type of intoxicating liquor.
277.32 	(e) "Liquor retailer" means a retailer that sells liquor.
277.33 	(f) "Retail sale" has the meaning given in section 297A.61,
277.34 	subdivision 4.
277.35 		Subd. 2.Gross receipts tax imposed. A tax is imposed on
277.36 	each liquor retailer equal to 2.5 percent of gross receipts from
278.1 	retail sales in Minnesota of liquor.
278.2 		Subd. 3.Use tax imposed; credit for taxes paid. (a) A
278.3 	person that receives liquor for use or storage in Minnesota,
278.4 	other than from a liquor retailer that paid the tax under
278.5 	subdivision 2, is subject to tax at the rate imposed under
278.6 	subdivision 2.  Liability for the tax is incurred when the
278.7 	person has possession of the liquor in Minnesota.  The tax must
278.8 	be remitted to the commissioner in the same manner prescribed
278.9 	for the taxes imposed under chapter 297A.
278.10 	(b) A person that has paid taxes to another jurisdiction on
278.11 	the same transaction and is subject to tax under this section is
278.12 	entitled to a credit for the tax legally due and paid to another
278.13 	jurisdiction to the extent of the lesser of (1) the tax actually
278.14 	paid to the other jurisdiction, or (2) the amount of tax imposed
278.15 	by Minnesota on the transaction subject to tax in the other
278.16 	jurisdiction.
278.17 		Subd. 4.Tax collection required. A liquor retailer with
278.18 	nexus in Minnesota, who is not subject to tax under subdivision
278.19 	2, is required to collect the tax imposed under subdivision 3
278.20 	from the purchaser of the liquor and give the purchaser a
278.21 	receipt for the tax paid.  The tax collected must be remitted to
278.22 	the commissioner in the same manner prescribed for the taxes
278.23 	imposed under chapter 297A.
278.24 		Subd. 5.Taxes paid to another jurisdiction; credit. A
278.25 	liquor retailer that has paid taxes to another jurisdiction
278.26 	measured by gross receipts and is subject to tax under this
278.27 	section on the same gross receipts is entitled to a credit for
278.28 	the tax legally due and paid to another jurisdiction to the
278.29 	extent of the lesser of (1) the tax actually paid to the other
278.30 	jurisdiction, or (2) the amount of tax imposed by Minnesota on
278.31 	the gross receipts subject to tax in the other taxing
278.32 	jurisdictions.
278.33 		Subd. 6.Exemptions. All of the exemptions applicable to
278.34 	the taxes imposed under chapter 297A are applicable to the taxes
278.35 	imposed under this section.
278.36 		Subd. 7.Sourcing of sales. All of the provisions of
279.1 	section 297A.668 apply to the taxes imposed by this section.
279.2 		Subd. 8.Payment; reporting. A liquor retailer shall
279.3 	report the tax on a return prescribed by the commissioner of
279.4 	revenue, and shall remit the tax with the return.  The return
279.5 	and the tax must be filed and paid using the filing cycle and
279.6 	due dates provided for taxes imposed under chapter 297A.
279.7 		Subd. 9.Administration. Unless specifically provided
279.8 	otherwise by this section, the audit, assessment, refund,
279.9 	penalty, interest, enforcement, collection remedies, appeal, and
279.10 	administrative provisions of chapters 270 and 289A that are
279.11 	applicable to taxes imposed under chapter 297A apply to taxes
279.12 	imposed under this section.
279.13 		Subd. 10.Interest on overpayments. Interest must be
279.14 	paid on an overpayment refunded or credited to the taxpayer from
279.15 	the date of payment of the tax until the date the refund is paid
279.16 	or credited.  For purposes of this subdivision, the date of
279.17 	payment is the due date of the return or the date of actual
279.18 	payment of the tax, whichever is later.
279.19 		Subd. 11.Deposit of revenues. The commissioner shall
279.20 	deposit all revenues, including penalties and interest, derived
279.21 	from the tax imposed by this section in the general fund.
279.22 	
EFFECTIVE DATE. This section is effective for sales and
279.23 	purchases occurring on or after January 1, 2006.

279.24 	Sec. 8. Minnesota Statutes 2004, section 296A.22, is
279.25 	amended by adding a subdivision to read:
279.26 		Subd. 9.Abatement of penalty. (a) The commissioner may
279.27 	by written order abate any penalty imposed under this section,
279.28 	if in the commissioner's opinion there is reasonable cause to do
279.29 	so.
279.30 	(b) A request for abatement of penalty must be filed with
279.31 	the commissioner within 60 days of the date the notice stating
279.32 	that a penalty has been imposed was mailed to the taxpayer's
279.33 	last known address.
279.34 	(c) If the commissioner issues an order denying a request
279.35 	for abatement of penalty, the taxpayer may file an
279.36 	administrative appeal as provided in section 296A.25 or appeal
280.1 	to Tax Court as provided in section 271.06.  If the commissioner
280.2 	does not issue an order on the abatement request within 60 days
280.3 	from the date the request is received, the taxpayer may appeal
280.4 	to Tax Court as provided in section 271.06.
280.5 	
EFFECTIVE DATE. This section is effective for penalties
280.6 	imposed on or after the day following final enactment.

280.7 	Sec. 9. Minnesota Statutes 2004, section 297E.01,
280.8 	subdivision 5, is amended to read:
280.9 		Subd. 5.Distributor.  "Distributor" means a distributor
280.10 	as defined in section 349.12, subdivision 11, or a person or
280.11 	linked bingo game provider who markets, sells, or provides
280.12 	gambling product to a person or entity for resale or use at the
280.13 	retail level.
280.14 	
EFFECTIVE DATE. This section is effective the day
280.15 	following final enactment.

280.16 	Sec. 10. Minnesota Statutes 2004, section 297E.01,
280.17 	subdivision 7, is amended to read:
280.18 		Subd. 7.Gambling product.  "Gambling product" means
280.19 	bingo hard cards, bingo paper, or sheets, or linked bingo paper
280.20 	sheets; pull-tabs; tipboards; paddletickets and paddleticket
280.21 	cards; raffle tickets; or any other ticket, card, board,
280.22 	placard, device, or token that represents a chance, for which
280.23 	consideration is paid, to win a prize.
280.24 	
EFFECTIVE DATE. This section is effective the day
280.25 	following final enactment.

280.26 	Sec. 11. Minnesota Statutes 2004, section 297E.01, is
280.27 	amended by adding a subdivision to read:
280.28 		Subd. 9a.Linked bingo game. "Linked bingo game" means a
280.29 	bingo game played at two or more locations where licensed
280.30 	organizations are authorized to conduct bingo, when there is a
280.31 	common prize pool and a common selection of numbers or symbols
280.32 	conducted at one location, and when the results of the selection
280.33 	are transmitted to all participating locations by satellite,
280.34 	telephone, or other means by a linked bingo game provider.
280.35 	
EFFECTIVE DATE. This section is effective the day
280.36 	following final enactment.

281.1 	Sec. 12. Minnesota Statutes 2004, section 297E.01, is
281.2 	amended by adding a subdivision to read:
281.3 		Subd. 9b.Linked bingo game provider. "Linked bingo game
281.4 	provider" means any person who provides the means to link bingo
281.5 	prizes in a linked bingo game, who provides linked bingo paper
281.6 	sheets to the participating organizations, who provides linked
281.7 	bingo prize management, and who provides the linked bingo game
281.8 	system.
281.9 	
EFFECTIVE DATE. This section is effective the day
281.10 	following final enactment.

281.11 	Sec. 13. Minnesota Statutes 2004, section 297E.06,
281.12 	subdivision 2, is amended to read:
281.13 		Subd. 2.Business records.  An organization shall
281.14 	maintain records supporting the gambling activity reported to
281.15 	the commissioner.  Records include, but are not limited to, the
281.16 	following items:
281.17 	(1) all winning and unsold tickets, cards, or stubs for
281.18 	pull-tab, tipboard, paddlewheel, and raffle games;
281.19 	(2) all reports and statements, including checker's
281.20 	records, for each bingo occasion;
281.21 	(3) all cash journals and ledgers, deposit slips, register
281.22 	tapes, and bank statements supporting gambling activity
281.23 	receipts;
281.24 	(4) all invoices that represent purchases of gambling
281.25 	product;
281.26 	(5) all canceled checks or copies of substitute checks as
281.27 	defined in Public Law 108-100, section 3, check recorders,
281.28 	journals and ledgers, vouchers, invoices, bank statements, and
281.29 	other documents supporting gambling activity expenditures; and
281.30 	(6) all organizational meeting minutes.
281.31 	All records required to be kept by this section must be
281.32 	preserved by the organization for at least 3-1/2 years and may
281.33 	be inspected by the commissioner of revenue at any reasonable
281.34 	time without notice or a search warrant.
281.35 	
EFFECTIVE DATE. This section is effective July 1, 2005.

281.36 	Sec. 14. Minnesota Statutes 2004, section 297E.07, is
282.1 	amended to read:
282.2 	297E.07 INSPECTION RIGHTS.
282.3 	At any reasonable time, without notice and without a search
282.4 	warrant, the commissioner may enter a place of business of a
282.5 	manufacturer, distributor, or organization, or linked bingo game
282.6 	provider; any site from which pull-tabs or tipboards or other
282.7 	gambling equipment or gambling product are being manufactured,
282.8 	stored, or sold; or any site at which lawful gambling is being
282.9 	conducted, and inspect the premises, books, records, and other
282.10 	documents required to be kept under this chapter to determine
282.11 	whether or not this chapter is being fully complied with.  If
282.12 	the commissioner is denied free access to or is hindered or
282.13 	interfered with in making an inspection of the place of
282.14 	business, books, or records, the permit of the distributor may
282.15 	be revoked by the commissioner, and the license of the
282.16 	manufacturer, the distributor, or the organization, or linked
282.17 	bingo game provider may be revoked by the board.

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

282.20 	Sec. 15. Minnesota Statutes 2004, section 297F.08,
282.21 	subdivision 12, is amended to read:
282.22 		Subd. 12.Cigarettes in interstate commerce.  (a) A
282.23 	person may not transport or cause to be transported from this
282.24 	state cigarettes for sale in another state without first
282.25 	affixing to the cigarettes the stamp required by the state in
282.26 	which the cigarettes are to be sold or paying any other excise
282.27 	tax on the cigarettes imposed by the state in which the
282.28 	cigarettes are to be sold.
282.29 	(b) A person may not affix to cigarettes the stamp required
282.30 	by another state or pay any other excise tax on the cigarettes
282.31 	imposed by another state if the other state prohibits stamps
282.32 	from being affixed to the cigarettes, prohibits the payment of
282.33 	any other excise tax on the cigarettes, or prohibits the sale of
282.34 	the cigarettes.
282.35 	(c) Not later than 15 days after the end of each calendar
282.36 	quarter, a person who transports or causes to be transported
283.1 	from this state cigarettes for sale in another state shall
283.2 	submit to the commissioner a report identifying the quantity and
283.3 	style of each brand of the cigarettes transported or caused to
283.4 	be transported in the preceding calendar quarter, and the name
283.5 	and address of each recipient of the cigarettes. This reporting
283.6 	requirement only applies to cigarettes manufactured by companies
283.7 	that are not original or subsequent participating manufacturers
283.8 	in the Master Settlement Agreement with other states.
283.9 	(d) For purposes of this section, "person" has the meaning
283.10 	given in section 297F.01, subdivision 12.  Person does not
283.11 	include any common or contract carrier, or public warehouse that
283.12 	is not owned, in whole or in part, directly or indirectly by
283.13 	such person, and does not include a manufacturer that has
283.14 	entered into is an original or subsequent participating
283.15 	manufacturer in the Master Settlement Agreement with other
283.16 	states.
283.17 	
EFFECTIVE DATE. This section is effective the day
283.18 	following final enactment.

283.19 	Sec. 16. Minnesota Statutes 2004, section 297F.08, is
283.20 	amended by adding a subdivision to read:
283.21 		Subd. 13.Bond. The commissioner may require the
283.22 	furnishing of a corporate surety bond or a certified check in an
283.23 	amount suitable to guarantee payment of the tax stamps purchased
283.24 	by a distributor.  The bond or certified check may be required
283.25 	when the commissioner determines that a distributor is (1)
283.26 	delinquent in the filing of any return required under this
283.27 	chapter, or (2) delinquent in the payment of any uncontested tax
283.28 	liability under this chapter.  The distributor shall furnish the
283.29 	bond or certified check for a period of two years, after which,
283.30 	if the distributor has not been delinquent in the filing of any
283.31 	returns required under this chapter, or delinquent in the paying
283.32 	of any tax under this chapter, a bond or certified check is no
283.33 	longer required.  The commissioner at any time may apply the
283.34 	bond or certified check to any unpaid taxes or fees, including
283.35 	interest and penalties, owed to the department by the
283.36 	distributor.
284.1 	
EFFECTIVE DATE. This section is effective the day
284.2 	following final enactment.

284.3 	Sec. 17. Minnesota Statutes 2004, section 297F.09,
284.4 	subdivision 1, is amended to read:
284.5 		Subdivision 1.Monthly return; cigarette distributor.  On
284.6 	or before the 18th day of each calendar month, a distributor
284.7 	with a place of business in this state shall file a return with
284.8 	the commissioner showing the quantity of cigarettes manufactured
284.9 	or brought in from outside the state or purchased during the
284.10 	preceding calendar month and the quantity of cigarettes sold or
284.11 	otherwise disposed of in this state and outside this state
284.12 	during that month.  A licensed distributor outside this state
284.13 	shall in like manner file a return showing the quantity of
284.14 	cigarettes shipped or transported into this state during the
284.15 	preceding calendar month.  Returns must be made in the form and
284.16 	manner prescribed by the commissioner and must contain any other
284.17 	information required by the commissioner.  The return must be
284.18 	accompanied by a remittance for the full unpaid tax liability
284.19 	shown by it. The return for the May liability and 85 percent of
284.20 	the estimated June liability is due on the date payment of the
284.21 	tax is due.For distributors subject to the accelerated tax
284.22 	payment requirements in subdivision 10, the return for the May
284.23 	liability is due two business days before June 30th of the year
284.24 	and the return for the June liability is due on or before August
284.25 	18th of the year.
284.26 	
EFFECTIVE DATE. This section is effective the day
284.27 	following final enactment.

284.28 	Sec. 18. Minnesota Statutes 2004, section 297F.09,
284.29 	subdivision 2, is amended to read:
284.30 		Subd. 2.Monthly return; tobacco products distributor.
 284.31 	On or before the 18th day of each calendar month, a distributor
284.32 	with a place of business in this state shall file a return with
284.33 	the commissioner showing the quantity and wholesale sales price
284.34 	of each tobacco product:
284.35 	(1) brought, or caused to be brought, into this state for
284.36 	sale; and
285.1 	(2) made, manufactured, or fabricated in this state for
285.2 	sale in this state, during the preceding calendar month.
285.3 	Every licensed distributor outside this state shall in like
285.4 	manner file a return showing the quantity and wholesale sales
285.5 	price of each tobacco product shipped or transported to
285.6 	retailers in this state to be sold by those retailers, during
285.7 	the preceding calendar month.  Returns must be made in the form
285.8 	and manner prescribed by the commissioner and must contain any
285.9 	other information required by the commissioner.  The return must
285.10 	be accompanied by a remittance for the full tax liability
285.11 	shown. The return for the May liability and 85 percent of the
285.12 	estimated June liability is due on the date payment of the tax
285.13 	is due.For distributors subject to the accelerated tax payment
285.14 	requirements in subdivision 10, the return for the May liability
285.15 	is due two business days before June 30th of the year and the
285.16 	return for the June liability is due on or before August 18th of
285.17 	the year.
285.18 	
EFFECTIVE DATE. This section is effective the day
285.19 	following final enactment.

285.20 	Sec. 19. Minnesota Statutes 2004, section 297F.14,
285.21 	subdivision 4, is amended to read:
285.22 		Subd. 4.Bad debt. The commissioner may adopt rules
285.23 	providing a refund of the tax paid under this chapter if the tax
285.24 	paid qualifies as a bad debt under section 166(a) of the
285.25 	Internal Revenue Code.For any reporting period, a taxpayer may
285.26 	offset against taxes payable under this chapter the amount of
285.27 	taxes previously paid under this chapter that is attributable to
285.28 	a bad debt.  The taxes must have been included in a transaction
285.29 	the consideration for which was a debt owed to the taxpayer and
285.30 	which became uncollectible, but only in proportion to the
285.31 	portion of debt that became uncollectible.  To qualify for
285.32 	offset under this subdivision, the debt must have qualified as a
285.33 	bad debt under section 166(a) of the Internal Revenue Code.  The
285.34 	taxpayer may claim the offset within the time period prescribed
285.35 	in section 297F.17, subdivision 6.  If the taxpayer is no longer
285.36 	liable for taxes imposed under this chapter, the commissioner
286.1 	shall refund to the taxpayer the amount of the taxes
286.2 	attributable to the bad debt.  Any recovery of the tax claimed
286.3 	as a refund or credit must be reported to the commissioner on
286.4 	the tax return for the month in which the recovery is made.  If
286.5 	the taxpayer is no longer required to file returns under this
286.6 	chapter, the taxpayer must reimburse the commissioner for tax
286.7 	recovered in the month following the recovery.
286.8 	
EFFECTIVE DATE. This section is effective for claims
286.9 	filed on or after July 1, 2005.

286.10 	Sec. 20. [297F.25] CIGARETTE SALES TAX.
286.11 		Subdivision 1.Imposition. A tax is imposed on
286.12 	distributors on the sale of cigarettes by a cigarette
286.13 	distributor to a retailer or cigarette subjobber for resale in
286.14 	this state.  The tax is equal to 6.5 percent of the weighted
286.15 	average retail price.  The weighted average retail price must be
286.16 	expressed in cents per pack when rounded to the nearest
286.17 	one-tenth of a cent.  The weighted average retail price must be
286.18 	determined annually, with new rates published by May 1, and
286.19 	effective for sales on or after August 1.  The weighted average
286.20 	retail price must be established by surveying cigarette
286.21 	retailers statewide in a manner and time determined by the
286.22 	commissioner.  The determination of the commissioner pursuant to
286.23 	this subdivision is not a "rule" and is not subject to the
286.24 	Administrative Procedure Act contained in chapter 14.  As of
286.25 	August 1, 2005, the tax is 20 cents per pack of 20 cigarettes.
286.26 	For packs of cigarettes with other than 20 cigarettes, the tax
286.27 	must be adjusted proportionally.
286.28 		Subd. 2.Payment. Each taxpayer must remit payments of
286.29 	the taxes to the commissioner on the same dates prescribed under
286.30 	section 297F.09, subdivision 1, for cigarette tax returns,
286.31 	including the accelerated remittance of the June liability.
286.32 		Subd. 3.Return. A taxpayer must file a return with the
286.33 	commissioner on the same dates prescribed under section 297F.09,
286.34 	subdivision 1, for cigarette tax returns.  Notwithstanding any
286.35 	other provisions of this chapter, the tax due on the return is
286.36 	based upon actual stamps purchased during the reporting period.
287.1 		Subd. 4.Form of return. The return must contain the
287.2 	information and be in the form prescribed by the commissioner.
287.3 		Subd. 5.Tax as debt. The tax that is required to be
287.4 	paid by the distributor is a debt from the retailer or cigarette
287.5 	subjobber to the distributor recoverable at law in the same
287.6 	manner as other debts.  A cigarette retailer or subjobber must
287.7 	pay the tax imposed under subdivision 1 to the distributor
287.8 	before the 12th day of the month following the month in which
287.9 	the cigarettes were purchased from the distributor.
287.10 		Subd. 6.Sales tax stamp. Payment of the tax imposed
287.11 	under section 297F.05 and by this section must be evidenced by a
287.12 	dual-purpose single stamp affixed to each package.
287.13 		Subd. 7.Administration. The stamping, audit,
287.14 	assessment, interest, penalty, appeal, refund, and collection
287.15 	provisions applicable to the taxes imposed under this chapter
287.16 	apply to taxes imposed under this section.
287.17 		Subd. 8.Deposit of revenues. Notwithstanding the
287.18 	provisions of section 297F.10, the commissioner shall deposit
287.19 	all revenues, including penalties and interest, derived from the
287.20 	tax imposed by this section, in the general fund.
287.21 	
EFFECTIVE DATE. This section is effective for all sales
287.22 	made on or after August 1, 2005.

287.23 	Sec. 21. Minnesota Statutes 2004, section 297G.09, is
287.24 	amended by adding a subdivision to read:
287.25 		Subd. 9.Quarterly and annual payments and returns. (a)
287.26 	If a manufacturer, wholesaler, brewer, or importer has an
287.27 	average liquor tax liability equal to or less than $500 per
287.28 	month in any quarter of a calendar year, and has substantially
287.29 	complied with the state tax laws during the preceding four
287.30 	calendar quarters, the manufacturer, wholesaler, brewer, or
287.31 	importer may request authorization to file and pay the taxes
287.32 	quarterly in subsequent calendar quarters.  The authorization
287.33 	remains in effect during the period in which the manufacturer's,
287.34 	wholesaler's, brewer's, or importer's quarterly returns reflect
287.35 	liquor tax liabilities of less than $1,500 and there is
287.36 	continued compliance with state tax laws.
288.1 	(b) If a manufacturer, wholesaler, brewer, or importer has
288.2 	an average liquor tax liability equal to or less than $100 per
288.3 	month during a calendar year, and has substantially complied
288.4 	with the state tax laws during that period, the manufacturer,
288.5 	wholesaler, brewer, or importer may request authorization to
288.6 	file and pay the taxes annually in subsequent years.  The
288.7 	authorization remains in effect during the period in which the
288.8 	manufacturer's, wholesaler's, brewer's, or importer's annual
288.9 	returns reflect liquor tax liabilities of less than $1,200 and
288.10 	there is continued compliance with state tax laws.
288.11 	(c) The commissioner may also grant quarterly or annual
288.12 	filing and payment authorizations to manufacturers, wholesalers,
288.13 	brewers, or importers if the commissioner concludes that the
288.14 	manufacturer's, wholesaler's, brewer's, or importer's future tax
288.15 	liabilities will be less than the monthly totals identified in
288.16 	paragraphs (a) and (b).  An authorization granted under this
288.17 	paragraph is subject to the same conditions as an authorization
288.18 	granted under paragraphs (a) and (b).
288.19 	(d) The annual tax return and payments must be filed and
288.20 	paid on or before the 18th day of January following the calendar
288.21 	year.  The quarterly returns and payments must be filed and paid
288.22 	on or before April 18 for the quarter ending March 31, on or
288.23 	before July 18 for the quarter ending June 30, on or before
288.24 	October 18 for the quarter ending September 30, and on or before
288.25 	January 18 for the quarter ending December 31.
288.26 	
EFFECTIVE DATE. This section is effective for tax returns
288.27 	and payments due on or after January 1, 2006.

288.28 	Sec. 22. Minnesota Statutes 2004, section 297I.01, is
288.29 	amended by adding a subdivision to read:
288.30 		Subd. 6a.Direct business. (a) "Direct business" means
288.31 	all insurance provided by an insurance company or its agents,
288.32 	and specifically includes stop-loss insurance purchased in
288.33 	connection with a self-insurance plan for employee health
288.34 	benefits or for other purposes, but excludes:
288.35 	(1) reinsurance in which an insurance company assumes the
288.36 	liability of another insurance company; and 
289.1 	(2) self-insurance.
289.2 	(b) For purposes of this subdivision, an insurance company
289.3 	includes a nonprofit health service corporation, health
289.4 	maintenance organization, and community integrated service
289.5 	network.
289.6 	
EFFECTIVE DATE. This section is effective for insurance
289.7 	premiums received after December 31, 2005.

289.8 	Sec. 23. Minnesota Statutes 2004, section 297I.01, is
289.9 	amended by adding a subdivision to read:
289.10 		Subd. 13a.Reinsurance. "Reinsurance" is insurance
289.11 	whereby an insurance company, for a consideration, agrees to
289.12 	indemnify another insurance company against all or part of the
289.13 	loss which the latter may sustain under the policy or policies
289.14 	which it has issued.
289.15 	
EFFECTIVE DATE. This section is effective the day
289.16 	following final enactment.

289.17 	Sec. 24. Minnesota Statutes 2004, section 297I.05,
289.18 	subdivision 4, is amended to read:
289.19 		Subd. 4.Mutual property and casualty companies with
289.20 	total assets less than $1,600,000,000 on december 31, 1989.  A
289.21 	tax is imposed on mutual property and casualty companies that
289.22 	had total assets greater than $5,000,000 at the end of the
289.23 	calendar year but that had total assets less than $1,600,000,000
289.24 	on December 31, 1989.  The rate of tax is equal to:
289.25 	(1) two percent of gross premiums less return premiums on
289.26 	all direct business received by the insurer or agents of the
289.27 	insurer in Minnesota the tax under subdivision 14 for life
289.28 	insurance, in cash or otherwise, during the year; and
289.29 	(2) 1.26 percent of gross premiums less return premiums on
289.30 	all other direct business received by the insurer or agents of
289.31 	the insurer in Minnesota, in cash or otherwise, during the year.
289.32 	
EFFECTIVE DATE. This section is effective for premiums
289.33 	received after December 31, 2007.

289.34 	Sec. 25. Minnesota Statutes 2004, section 297I.05,
289.35 	subdivision 5, is amended to read:
289.36 		Subd. 5.Health maintenance organizations, nonprofit
290.1 	health service plan corporations, and community integrated
290.2 	service networks.  (a) Health maintenance organizations,
290.3 	community integrated service networks, and nonprofit health care
290.4 	service plan corporations are exempt from the tax imposed under
290.5 	this section for premiums received in calendar years 2001 to
290.6 	2003.
290.7 	(b) For calendar years after 2003,A tax is imposed on
290.8 	health maintenance organizations, community integrated service
290.9 	networks, and nonprofit health care service plan corporations.
290.10 	The rate of tax is equal to one percent of gross premiums less
290.11 	return premiums on all direct business received by the
290.12 	organization, network, or corporation or its agents in
290.13 	Minnesota, in cash or otherwise,in the calendar year.
290.14 	(c) In approving the premium rates as required in sections
290.15 	62L.08, subdivision 8, and 62A.65, subdivision 3, the
290.16 	commissioners of health and commerce shall ensure that any
290.17 	exemption from tax as described in paragraph (a) is reflected in
290.18 	the premium rate.
290.19 	(d) (b) The commissioner shall deposit all revenues,
290.20 	including penalties and interest, collected under this chapter
290.21 	from health maintenance organizations, community integrated
290.22 	service networks, and nonprofit health service plan corporations
290.23 	in the health care access fund.  Refunds of overpayments of tax
290.24 	imposed by this subdivision must be paid from the health care
290.25 	access fund.  There is annually appropriated from the health
290.26 	care access fund to the commissioner the amount necessary to
290.27 	make any refunds of the tax imposed under this subdivision.
290.28 	
EFFECTIVE DATE. This section is effective January 1, 2005.

290.29 	Sec. 26. Minnesota Statutes 2004, section 297I.05, is
290.30 	amended by adding a subdivision to read:
290.31 		Subd. 14.Life insurance. A tax is imposed on life
290.32 	insurance.  The rate of the tax equals 1.5 percent of gross
290.33 	premiums less return premiums on all direct business received by
290.34 	the insurer or agents of the insurer in Minnesota for life
290.35 	insurance, in cash or otherwise, during the year.
290.36 	
EFFECTIVE DATE. This section is effective for premiums
291.1 	received after December 31, 2007.

291.2 	Sec. 27. Minnesota Statutes 2004, section 298.24,
291.3 	subdivision 1, is amended to read:
291.4 		Subdivision 1.Effective date. This section is effective for direct
293.7 	reduced ore produced after the day following final enactment.

293.8 	Sec. 28. Minnesota Statutes 2004, section 298.75, is
293.9 	amended by adding a subdivision to read:
 293.10 		Subd. 10.Tax may be imposed, cass county. (a) If Cass
293.11 	County does not impose a tax under this section, the town of
293.12 	Sylvan in Cass County may impose the aggregate materials tax
293.13 	under this section.
293.14 	(b) For purposes of exercising the powers contained in this
293.15 	section, the "town" is deemed to be the "county." 
293.16 	(c) All provisions in this section apply to the town of
293.17 	Sylvan, except that in lieu of the distribution of the tax
293.18 	proceeds under subdivision 7, all proceeds of the tax must be
293.19 	retained by the town.
293.20 	(d) If Cass County imposes an aggregate materials tax under
293.21 	this section, the tax imposed by the town of Sylvan under this
293.22 	subdivision is repealed on the effective date of the Cass County
293.23 	tax.
293.24 	
EFFECTIVE DATE. This section is effective the day after
293.25 	the governing body of the town of Sylvan and its chief clerical
293.26 	officer comply with Minnesota Statutes, section 645.021,
293.27 	subdivisions 2 and 3.

293.28 	Sec. 29. Minnesota Statutes 2004, section 473.843,
293.29 	subdivision 5, is amended to read:
 293.30 		Subd. 5.Penalties; enforcement. The audit, penalty, and
293.31 	enforcement provisions applicable to corporate franchise taxes
293.32 	imposed under chapter 290 apply to the fees imposed under this
293.33 	section.  The commissioner of revenue shall administer the
293.34 	provisions.
293.35 	
EFFECTIVE DATE. This section is effective the day
293.36 	following final enactment.

294.1 	Sec. 30. [FLOOR STOCKS TAX.]
 294.2 		Subdivision 1.Cigarettes. A floor stocks cigarette
294.3 	sales tax is imposed on every person engaged in the business in
294.4 	this state as a distributor, retailer, subjobber, vendor,
294.5 	manufacturer, or manufacturer's representative of cigarettes, on
294.6 	the stamped cigarettes and unaffixed stamps in the person's
294.7 	possession or under the person's control at 12:01 a.m. on August
294.8 	1, 2005.  The tax is imposed at the rate of 20 cents per pack of
294.9 	20 cigarettes.  For packs of cigarettes with other than 20
294.10 	cigarettes, the tax shall be adjusted proportionally.
294.11 	Each distributor, by August 10, 2005, shall file a return
294.12 	with the commissioner, in the form the commissioner prescribes,
294.13 	showing the stamped cigarettes and unaffixed stamps on hand at
294.14 	12:01 a.m. on August 1, 2005, and the amount of tax due on the
294.15 	cigarettes and unaffixed stamps.  The tax imposed by this
294.16 	section is due and payable by September 7, 2005, and after that
294.17 	date bears interest at the rate of one percent a month.
294.18 	Each retailer, subjobber, vendor, manufacturer, or
294.19 	manufacturer's representative, by August 10, 2005, shall file a
294.20 	return with the commissioner, in the form the commissioner
294.21 	prescribes, showing the cigarettes on hand at 12:01 a.m. on
294.22 	August 1, 2005, and the amount of tax due on the cigarettes.
294.23 	The tax imposed by this section is due and payable by September
294.24 	7, 2005, and after that date bears interest at the rate of one
294.25 	percent a month.
294.26 		Subd. 2.Audit and enforcement. The tax imposed by this
294.27 	section is subject to the audit, assessment, penalty, and
294.28 	collection provisions applicable to the taxes imposed under
294.29 	Minnesota Statutes, chapter 297F.  The commissioner may require
294.30 	a distributor to receive and maintain copies of floor stocks tax
294.31 	returns filed by all persons requesting a credit for returned
294.32 	cigarettes.
294.33 		Subd. 3.Deposit of proceeds. The revenue from the tax
294.34 	imposed under this section shall be deposited by the
294.35 	commissioner in the state treasury and credited to the general
294.36 	fund.
295.1 	
EFFECTIVE DATE. This section is effective August 1, 2005.

295.2 	Sec. 31. [REPEALER.]
 295.3 	Minnesota Statutes 2004, section 297E.12, subdivision 10,
295.4 	is repealed effective the day following final enactment.

295.5 	ARTICLE 9
295.6 	ECONOMIC DEVELOPMENT

295.7 	Section 1. Minnesota Statutes 2004, section 272.02,
295.8 	subdivision 64, is amended to read:
295.9 		Subd. 64.Job opportunity building zone property.  (a)
295.10 	Improvements to real property, and personal property, classified
295.11 	under section 273.13, subdivision 24, and located within a job
295.12 	opportunity building zone, designated under section 469.314, are
295.13 	exempt from ad valorem taxes levied under chapter 275.
295.14 	(b) Improvements to real property, and tangible personal
295.15 	property, of an agricultural production facility located within
295.16 	an agricultural processing facility zone, designated under
295.17 	section 469.314, is exempt from ad valorem taxes levied under
295.18 	chapter 275.
295.19 	(c) For property to qualify for exemption under paragraph
295.20 	(a), the occupant must be a qualified business, as defined in
295.21 	section 469.310.
295.22 	(d) The exemption applies beginning for the first
295.23 	assessment year after designation of the job opportunity
295.24 	building zone by the commissioner of employment and economic
295.25 	development.  The exemption applies to each assessment year that
295.26 	begins during the duration of the job opportunity building zone
295.27 	and to property .  To be exempt, the property must be occupied by
295.28 	July 1 of the assessment year by a qualified business that has
295.29 	signed the business subsidy agreement and relocation agreement,
295.30 	if required, by July 1 of the assessment year.  This exemption
295.31 	does not apply to:
295.32 	(1) the levy under section 475.61 or similar levy
295.33 	provisions under any other law to pay general obligation bonds;
295.34 	or
295.35 	(2) a levy under section 126C.17, if the levy was approved
295.36 	by the voters before the designation of the job opportunity
296.1 	building zone.
296.2 	
EFFECTIVE DATE. This section is effective for taxes
296.3 	payable in 2006 and thereafter.

296.4 	Sec. 2. Minnesota Statutes 2004, section 272.0212,
296.5 	subdivision 1, is amended to read:
296.6 		Subdivision 1.Exemption.  All qualified property in a
296.7 	zone is exempt to the extent and for a period up to the duration
296.8 	provided by the zone designation and under sections 469.1731 to
296.9 	469.1735.
296.10 	
EFFECTIVE DATE. This section is effective for development
296.11 	agreements approved after the day following final enactment and
296.12 	beginning for property taxes payable in 2006.

296.13 	Sec. 3. Minnesota Statutes 2004, section 272.0212,
296.14 	subdivision 2, is amended to read:
296.15 		Subd. 2.Limits on exemption. (a) Property in a zone is
296.16 	not exempt under this section from the following:
296.17 	(1) special assessments;
296.18 	(2) ad valorem property taxes specifically levied for the
296.19 	payment of principal and interest on debt obligations; and
296.20 	(3) all taxes levied by a school district, except school
296.21 	referendum levies as defined in section 126C.17.
296.22 	(b) The city may limit the property tax exemption to a
296.23 	shorter period than the duration of the zone or to a percentage
296.24 	of the property taxes payable or both.
296.25 	
EFFECTIVE DATE. This section is effective for development
296.26 	agreements approved after the day following final enactment and
296.27 	beginning for property taxes payable in 2006.

296.28 	Sec. 4. Minnesota Statutes 2004, section 289A.56, is
296.29 	amended by adding a subdivision to read:
296.30 		Subd. 7.Biotechnology and health sciences industry zone
296.31 	refunds. Notwithstanding subdivision 3, for refunds payable
296.32 	under section 297A.68, subdivision 38, interest is computed from
296.33 	90 days after the refund claim is filed with the commissioner.
296.34 	
EFFECTIVE DATE. This section is effective for refund
296.35 	claims filed on or after July 1, 2005.

296.36 	Sec. 5. Minnesota Statutes 2004, section 297A.68,
297.1 	subdivision 37, is amended to read:
297.2 		Subd. 37.Job opportunity building zones.  (a) Purchases
297.3 	of tangible personal property or taxable services by a qualified
297.4 	business, as defined in section 469.310, are exempt if the
297.5 	property or services are primarily used or consumed in a job
297.6 	opportunity building zone designated under section 469.314. For
297.7 	purposes of this subdivision, aircraft that are operated under a
297.8 	Federal Aviation Administration Restricted Airworthiness
297.9 	Certificate according to Code of Federal Regulations, title 14,
297.10 	part 21, section 21.25(b)(3), relating to aerial surveying, and
297.11 	that are based, maintained, and dispatched from a job
297.12 	opportunity building zone, and any aerial camera package,
297.13 	including any camera, computer, and navigation device contained
297.14 	in the package, that is used in the aircraft, qualify as
297.15 	primarily used or consumed in a job opportunity building zone if
297.16 	the imagery acquired from the aerial camera package is returned
297.17 	to the job opportunity building zone for processing.
297.18 	(b) Purchase and use of construction materials and supplies
297.19 	for construction of improvements to real property in a job
297.20 	opportunity building zone are exempt if the improvements after
297.21 	completion of construction are to be used in the conduct of a
297.22 	qualified business, as defined in section 469.310.  This
297.23 	exemption applies regardless of whether the purchases are made
297.24 	by the business or a contractor. The exemption does not apply
297.25 	unless the business subsidy agreement entered into pursuant to
297.26 	section 469.313 requires the prevailing wage to be paid on the
297.27 	construction project.
297.28 	(c) The exemptions under this subdivision apply to a local
297.29 	sales and use tax regardless of whether the local sales tax is
297.30 	imposed on the sales taxable as defined under this chapter.
297.31 	(d) This subdivision applies to sales, if the purchase was
297.32 	made and delivery received during the duration of the zone.
297.33 	
EFFECTIVE DATE. The amendment to paragraph (a) is
297.34 	effective for sales made after June 30, 2005.

297.35 	Sec. 6. Minnesota Statutes 2004, section 297A.68,
297.36 	subdivision 38, is amended to read:
298.1 		Subd. 38.Biotechnology and health sciences industry
298.2 	zone.  (a) Purchases of tangible personal property or taxable
298.3 	services by a qualified business, as defined in section 469.330,
298.4 	are exempt if the property or services are primarily used or
298.5 	consumed in a biotechnology and health sciences industry zone
298.6 	designated under section 469.334.
298.7 	(b) Purchase and use of construction materials and ,
298.8 	supplies for , or equipment used or consumed in the construction
298.9 	of improvements to real property in a biotechnology and health
298.10 	sciences industry zone are exempt if the improvements after
298.11 	completion of construction are to be used in the conduct of a
298.12 	qualified business, as defined in section 469.330.  This
298.13 	exemption applies regardless of whether the purchases are made
298.14 	by the business or a contractor.
298.15 	(c) The exemptions under this subdivision apply to a local
298.16 	sales and use tax regardless of whether the local sales tax is
298.17 	imposed on the sales taxable as defined under this chapter.
298.18 	(d)(1) The tax on sales of goods or services exempted under
298.19 	this subdivision are imposed and collected as if the applicable
298.20 	rate under section 297A.62 applied.  Upon application by the
298.21 	purchaser, on forms prescribed by the commissioner, a refund
298.22 	equal to the tax paid must be paid to the purchaser.  The
298.23 	application must include sufficient information to permit the
298.24 	commissioner to verify the sales tax paid and the eligibility of
298.25 	the claimant to receive the credit.  No more than two
298.26 	applications for refunds may be filed under this subdivision in
298.27 	a calendar year.  The provisions of section 289A.40 apply to the
298.28 	refunds payable under this subdivision.
298.29 	(2) The amount required to make the refunds is annually
298.30 	appropriated to the commissioner of revenue.
298.31 	(3) The aggregate amount refunded to a qualified business
298.32 	must not exceed the amount allocated to the qualified business
298.33 	under section 469.335.
298.34 	(e) This subdivision applies only to sales made during the
298.35 	duration of the designation of the zone.
298.36 	
EFFECTIVE DATE. This section is effective for sales made
299.1 	after December 31, 2003.

299.2 	Sec. 7. Minnesota Statutes 2004, section 469.169, is
299.3 	amended by adding a subdivision to read:
299.4 		Subd. 17.Additional border city allocations. (a) In
299.5 	addition to tax reductions authorized in subdivisions 7 to 16,
299.6 	the commissioner shall allocate $750,000 for tax reductions to
299.7 	border city enterprise zones in cities located on the western
299.8 	border of the state.  The commissioner shall make allocations to
299.9 	zones in cities on the western border on a per capita basis.
299.10 	Allocations made under this subdivision may be used for tax
299.11 	reductions as provided in section 469.171, or for other offsets
299.12 	of taxes imposed on or remitted by businesses located in the
299.13 	enterprise zone, but only if the municipality determines that
299.14 	the granting of the tax reduction or offset is necessary in
299.15 	order to retain a business within or attract a business to the
299.16 	zone.  Any portion of the allocation provided in this paragraph
299.17 	may alternatively be used for tax reductions under section
299.18 	469.1732 or 469.1734.
299.19 	(b) The commissioner shall allocate $750,000 for tax
299.20 	reductions under section 469.1732 or 469.1734 to cities with
299.21 	border city enterprise zones located on the western border of
299.22 	the state.  The commissioner shall allocate this amount among
299.23 	the cities on a per capita basis.  Any portion of the allocation
299.24 	provided in this paragraph may alternatively be used for tax
299.25 	reductions as provided in section 469.171.
299.26 	
EFFECTIVE DATE. This section is effective the day
299.27 	following final enactment.

299.28 	Sec. 8. Minnesota Statutes 2004, section 469.176,
299.29 	subdivision 4l, is amended to read:
299.30 		Subd. 4l.Prohibited facilities.  (a) No tax increment
299.31 	from any district may be used for:
299.32 	(1) a commons area used as a public park; or 
299.33 	(2) a facility used for social, recreational, or conference
299.34 	purposes; or 
299.35 	(3) a property that includes a casino or other facility
299.36 	conducting class III gaming as defined in United States Code,
300.1 	title 25, section 2703, regardless of whether it is conducted by
300.2 	an Indian tribe or tribal business.
300.3 	(b) This subdivision does not apply to a privately owned
300.4 	facility for conference purposes or a parking structure.
300.5 	
EFFECTIVE DATE. This section is effective for
300.6 	expenditures of increment made after June 30, 2005, regardless
300.7 	of when the request for certification of the district was made.

300.8 	Sec. 9. Minnesota Statutes 2004, section 469.176,
300.9 	subdivision 7, is amended to read:
300.10 		Subd. 7.Parcels not includable in districts.  (a) The
300.11 	authority may request inclusion in a tax increment financing
300.12 	district and the county auditor may certify the original tax
300.13 	capacity of a parcel or a part of a parcel that qualified under
300.14 	the provisions of section 273.111 or 273.112 or chapter 473H for
300.15 	taxes payable in any of the five calendar years before the
300.16 	filing of the request for certification only for:
300.17 	(1) a district in which 85 percent or more of the planned
300.18 	buildings and facilities (determined on the basis of square
300.19 	footage) are a qualified manufacturing facility or a qualified
300.20 	distribution facility or a combination of both; or
300.21 	(2) a qualified housing district.
300.22 	(b)(1) A distribution facility means buildings and other
300.23 	improvements to real property that are used to conduct
300.24 	activities in at least each of the following categories:
300.25 	(i) to store or warehouse tangible personal property;
300.26 	(ii) to take orders for shipment, mailing, or delivery;
300.27 	(iii) to prepare personal property for shipment, mailing,
300.28 	or delivery; and
300.29 	(iv) to ship, mail, or deliver property.
300.30 	(2) A manufacturing facility includes space used for
300.31 	manufacturing or producing tangible personal property, including
300.32 	processing resulting in the change in condition of the property,
300.33 	and space necessary for and related to the manufacturing
300.34 	activities.
300.35 	(3) To be a qualified facility, the owner or operator of a
300.36 	manufacturing or distribution facility must agree to pay and pay
301.1 	90 percent or more of the employees of the facility at a rate
301.2 	equal to or greater than 160 percent of the federal minimum wage
301.3 	for individuals over the age of 20.
301.4 	(c) The authority may not request inclusion in a tax
301.5 	increment financing district and the county auditor may not
301.6 	certify the original tax capacity of a parcel or a part of a
301.7 	parcel that contains or is expected to contain uses, facilities,
301.8 	properties, or businesses containing class III gaming, as
301.9 	defined in United States Code, title 25, section 2703,
301.10 	regardless of whether it is conducted by an Indian tribe or
301.11 	tribal business.
301.12 	
EFFECTIVE DATE. This section is effective for parcels for
301.13 	which the request for certification is made after June 30, 2005.

301.14 	Sec. 10. Minnesota Statutes 2004, section 469.310,
301.15 	subdivision 11, is amended to read:
301.16 		Subd. 11.Qualified business.  (a) "Qualified business"
301.17 	means A person carrying on a trade or business at a place of
301.18 	business located within a job opportunity building zone is a
301.19 	qualified business for the purposes of sections 469.310 to
301.20 	469.320 according to the criteria in paragraphs (b) to (f).
301.21 	(b) A person is a qualified business only on those parcels
301.22 	of land for which the person has entered into a business subsidy
301.23 	agreement, as required under section 469.313, with the
301.24 	appropriate local government unit in which the parcels are
301.25 	located.
301.26 	(c) Prior to execution of the business subsidy agreement,
301.27 	the local government unit must consider the following factors:
301.28 	(1) how wages plus benefits compare to 110 percent of the
301.29 	statewide poverty rate for a family of four;
301.30 	(2) how wages compare to the regional industry average;
301.31 	(3) the number of jobs that will be provided relative to
301.32 	overall employment in the community;
301.33 	(4) the economic outlook for the industry the business will
301.34 	engage in;
301.35 	(5) sales that will be generated from outside the state of
301.36 	Minnesota;
302.1 	(6) how the business will build on existing regional
302.2 	strengths or diversify the regional economy;
302.3 	(7) how the business will increase capital investment in
302.4 	the zone; and 
302.5 	(8) any other criteria the commissioner deems necessary.
302.6 	(b) (d) A person that relocates a trade or business from
302.7 	outside a job opportunity building zone into a zone is not a
302.8 	qualified business,unless the business meets all of the
302.9 	requirements of paragraphs (b) and (c) and:
302.10 	(1) (i) increases full-time employment in the first full
302.11 	year of operation within the job opportunity building zone by at
302.12 	least a minimum of five jobs or 20 percent, whichever is
302.13 	greater,measured relative to the operations that were relocated
302.14 	and maintains the required level of employment for each year the
302.15 	zone designation applies; or 
302.16 	(ii) makes a capital investment in the property located
302.17 	within a zone equivalent to ten percent of the gross revenues of
302.18 	operation that were relocated in the immediately preceding
302.19 	taxable year;and
302.20 	(2) enters a binding written agreement with the
302.21 	commissioner that:
302.22 	(i) pledges the business will meet the requirements of
302.23 	clause (1);
302.24 	(ii) provides for repayment of all tax benefits enumerated
302.25 	under section 469.315 to the business under the procedures in
302.26 	section 469.319, if the requirements of clause (1) are not met
302.27 	for the taxable year or for taxes payable during the year in
302.28 	which the requirements were not met; and
302.29 	(iii) contains any other terms the commissioner determines
302.30 	appropriate.
302.31 	(e) The commissioner may waive the requirements under
302.32 	paragraph (d), clause (1), if the commissioner determines that
302.33 	the qualified business will substantially achieve the factors
302.34 	under this subdivision.
302.35 	(f) A business is not a qualified business if, at its
302.36 	location or locations in the zone, the business is primarily
303.1 	engaged in making retail sales to purchasers who are physically
303.2 	present at the business's zone location.
303.3 	(g) A qualifying business must pay each employee
303.4 	compensation, including benefits not mandated by law, that on an
303.5 	annualized basis is equal to at least 110 percent of the federal
303.6 	poverty level for a family of four.
303.7 	
EFFECTIVE DATE. This section is effective the day
303.8 	following final enactment and applies to any business entering a
303.9 	business subsidy agreement for a job opportunity development
303.10 	zone after that date, except that paragraph (b) is effective
303.11 	retroactively from June 9, 2003.

303.12 	Sec. 11. Minnesota Statutes 2004, section 469.310, is
303.13 	amended by adding a subdivision to read:
303.14 		Subd. 13.Relocation payroll percentage. "Relocation
303.15 	payroll percentage" is a fraction, the numerator of which is the
303.16 	zone payroll of the business for the tax year minus the payroll
303.17 	from the relocated operations in the last full year of
303.18 	operations prior to the relocation, and the denominator of which
303.19 	is the zone payroll of the business for the tax year.  The
303.20 	relocation payroll percentage of a business that is not a
303.21 	relocating business is 100 percent.
303.22 	
EFFECTIVE DATE. This section is effective the day
303.23 	following final enactment but applies only to qualified
303.24 	businesses with business subsidy agreements that are fully
303.25 	executed after June 30, 2005.

303.26 	Sec. 12. Minnesota Statutes 2004, section 469.315, is
303.27 	amended to read:
303.28 	469.315 TAX INCENTIVES AVAILABLE IN ZONES.
303.29 	Qualified businesses that operate in a job opportunity
303.30 	building zone, individuals who invest in a qualified business
303.31 	that operates in a job opportunity building zone, and property
303.32 	located in a job opportunity building zone qualify for:
303.33 	(1) exemption from individual income taxes as provided
303.34 	under section 469.316;
303.35 	(2) exemption from corporate franchise taxes as provided
303.36 	under section 469.317;
304.1 	(3) exemption from the state sales and use tax and any
304.2 	local sales and use taxes on qualifying purchases as provided in
304.3 	section 297A.68, subdivision 37;
304.4 	(4) exemption from the state sales tax on motor vehicles
304.5 	and any local sales tax on motor vehicles as provided under
304.6 	section 297B.03;
304.7 	(5) exemption from the property tax as provided in section
304.8 	272.02, subdivision 64;
304.9 	(6) exemption from the wind energy production tax under
304.10 	section 272.029, subdivision 7; and
304.11 	(7) the jobs credit allowed under section 469.318.
304.12 	The sales tax exemption under section 297A.68, subdivision 37,
304.13 	paragraph (b), is not "financial assistance" under section
304.14 	116J.871 or a "business subsidy" under section 116J.993 unless
304.15 	the business subsidy agreement entered into pursuant to section
304.16 	469.313 requires the payment of the prevailing wage.

304.17 	EFFECTIVE DATE. This section is effective retroactively
304.18 	from January 1, 2004.

304.19 	Sec. 13. Minnesota Statutes 2004, section 469.316, is
304.20 	amended to read:
304.21 	469.316 INDIVIDUAL INCOME TAX EXEMPTION.
304.22 		Subdivision 1.Application. An individual, estate, or
304.23 	trust operating a trade or business in a job opportunity
304.24 	building zone, and an individual, estate, or trust making a
304.25 	qualifying investment in a qualified business operating in a job
304.26 	opportunity building zone qualifies for the exemptions from
304.27 	taxes imposed under chapter 290, as provided in this section.
304.28 	The exemptions provided under this section apply only to the
304.29 	extent that the income otherwise would be taxable under chapter
304.30 	290.  Subtractions under this section from federal taxable
304.31 	income, alternative minimum taxable income, or any other base
304.32 	subject to tax are limited to the amount that otherwise would be
304.33 	included in the tax base absent the exemption under this
304.34 	section.  This section applies only to taxable years beginning
304.35 	during the duration of the job opportunity building zone.
304.36 		Subd. 2.Rents. An individual, estate, or trust is
305.1 	exempt from the taxes imposed under chapter 290 on net rents
305.2 	derived from real or tangible personal property used by a
305.3 	qualified business and located in a zone for a taxable year in
305.4 	which the zone was designated a job opportunity building zone.
305.5 	If tangible personal property was used both within and outside
305.6 	of the zone by the qualified business, the exemption amount for
305.7 	the net rental income must be multiplied by a fraction, the
305.8 	numerator of which is the number of days the property was used
305.9 	in the zone and the denominator of which is the total days the
305.10 	property is rented by the qualified business.
305.11 		Subd. 3.Business income. An individual, estate, or
305.12 	trust is exempt from the taxes imposed under chapter 290 on net
305.13 	income from the operation of a qualified business in a job
305.14 	opportunity building zone.  If the trade or business is carried
305.15 	on within and without the zone and the individual is not a
305.16 	resident of Minnesota, or the taxpayer is an estate or trust,
305.17 	the exemption must be apportioned based on the zone percentage
305.18 	and the relocation payroll percentage for the taxable year.  If
305.19 	the trade or business is carried on within and without the zone
305.20 	and the individual is a resident of Minnesota, the exemption
305.21 	must be apportioned based on the zone percentage and the
305.22 	relocation payroll percentage for the taxable year, except the
305.23 	ratios under section 469.310, subdivision 7, clause (1), items
305.24 	(i) and (ii), must use the denominators of the property and
305.25 	payroll factors determined under section 290.191.  No
305.26 	subtraction is allowed under this section in excess of 20
305.27 	percent of the sum of the job opportunity building zone payroll
305.28 	and the adjusted basis of the property at the time that the
305.29 	property is first used in the job opportunity building zone by
305.30 	the business.
305.31 		Subd. 4.Capital gains. (a) An individual, estate, or
305.32 	trust is exempt from the taxes imposed under chapter 290 on:
305.33 	(1) net gain derived on a sale or exchange of real property
305.34 	located in the zone and used by a qualified business.  If the
305.35 	property was held by the individual, estate, or trust during a
305.36 	period when the zone was not designated, the gain must be
306.1 	prorated based on the percentage of time, measured in calendar
306.2 	days, that the real property was held by the individual, estate,
306.3 	or trust during the period the zone designation was in effect to
306.4 	the total period of time the real property was held by the
306.5 	individual;
306.6 	(2) net gain derived on a sale or exchange of tangible
306.7 	personal property used by a qualified business in the zone.  If
306.8 	the property was held by the individual, estate, or trust during
306.9 	a period when the zone was not designated, the gain must be
306.10 	prorated based on the percentage of time, measured in calendar
306.11 	days, that the property was held by the individual, estate, or
306.12 	trust during the period the zone designation was in effect to
306.13 	the total period of time the property was held by the
306.14 	individual.  If the tangible personal property was used outside
306.15 	of the zone during the period of the zone's designation, the
306.16 	exemption must be multiplied by a fraction, the numerator of
306.17 	which is the number of days the property was used in the zone
306.18 	during the time of the designation and the denominator of which
306.19 	is the total days the property was held during the time of the
306.20 	designation; and
306.21 	(3) net gain derived on a sale of an ownership interest in
306.22 	a qualified business operating in the job opportunity building
306.23 	zone, meeting the requirements of paragraph (b).  The exemption
306.24 	on the gain must be multiplied by the zone percentage of the
306.25 	business for the taxable year prior to the sale.
306.26 	(b) A qualified business meets the requirements of
306.27 	paragraph (a), clause (3), if it is a corporation, an S
306.28 	corporation, or a partnership, and for the taxable year its job
306.29 	opportunity building zone percentage exceeds 25 percent.  For
306.30 	purposes of paragraph (a), clause (3), the zone percentage must
306.31 	be calculated by modifying the ratios under section 469.310,
306.32 	subdivision 7, clause (1), items (i) and (ii), to use the
306.33 	denominators of the property and payroll factors determined
306.34 	under section 290.191.  Upon the request of an individual,
306.35 	estate, or trust holding an ownership interest in the entity,
306.36 	the entity must certify to the owner, in writing, the job
307.1 	opportunity building zone percentage needed to determine the
307.2 	exemption.
307.3 	
EFFECTIVE DATE. This section is effective for tax years
307.4 	beginning after December 31, 2003, except that changes in
307.5 	subdivision 3 relating to the relocation payroll percentage are
307.6 	effective the day following final enactment and apply only to
307.7 	qualified businesses with business subsidy agreements that are
307.8 	fully executed after June 30, 2005.

307.9 	Sec. 14. Minnesota Statutes 2004, section 469.317, is
307.10 	amended to read:
307.11 	469.317 CORPORATE FRANCHISE TAX EXEMPTION.
307.12 	(a) A qualified business is exempt from taxation under
307.13 	section 290.02, the alternative minimum tax under section
307.14 	290.0921, and the minimum fee under section 290.0922, on the
307.15 	portion of its income attributable to operations within the
307.16 	zone.  This exemption is determined as follows:
307.17 	(1) for purposes of the tax imposed under section 290.02,
307.18 	by multiplying its taxable net income by its zone percentage and
307.19 	by its relocation payroll percentage and subtracting the result
307.20 	in determining taxable income;
307.21 	(2) for purposes of the alternative minimum tax under
307.22 	section 290.0921, by multiplying its alternative minimum taxable
307.23 	income by its zone percentage and by its relocation payroll
307.24 	percentage and reducing alternative minimum taxable income by
307.25 	this amount; and
307.26 	(3) for purposes of the minimum fee under section 290.0922,
307.27 	by excluding property and payroll in the zone from the
307.28 	computations of the fee or by exempting the entity under section
307.29 	290.0922, subdivision 2, clause (7).
307.30 	(b) No subtraction is allowed under this section in excess
307.31 	of 20 percent of the sum of the corporation's job opportunity
307.32 	building zone payroll and the adjusted basis of the property at
307.33 	the time that the property is first used in the job opportunity
307.34 	building zone by the corporation.
307.35 	(c) This section applies only to taxable years beginning
307.36 	during the duration of the job opportunity building zone.

308.1 	EFFECTIVE DATE. This section is effective the day
308.2 	following final enactment but applies only to qualified
308.3 	businesses with business subsidy agreements that are fully
308.4 	executed after June 30, 2005.

308.5 	Sec. 15. Minnesota Statutes 2004, section 469.319,
308.6 	subdivision 1, is amended to read:
308.7 		Subdivision 1.Repayment obligation.  A business must
308.8 	repay the amount of the total tax reduction listed in section
308.9 	469.315 and any refund under section 469.318 in excess of tax
308.10 	liability, received during the two years immediately before it
308.11 	ceased to operate in the zone, if the business:
308.12 	(1) received tax reductions authorized by section 469.315;
308.13 	and
308.14 	(2)(i) did not meet the goals specified in an agreement
308.15 	entered into with the applicant that states any obligation the
308.16 	qualified business must fulfill in order to be eligible for tax
308.17 	benefits.  The commissioner of employment and economic
308.18 	development may extend for up to one year the period for meeting
308.19 	any goals provided in an agreement.  The applicant may extend
308.20 	the period for meeting other goals by documenting in writing the
308.21 	reason for the extension and attaching a copy of the document to
308.22 	its next annual report to the commissioner of employment and
308.23 	economic development; or
308.24 	(ii) ceased to operate its facility located within the job
308.25 	opportunity building zone or otherwise ceases to be or is not a
308.26 	qualified business.
308.27 	
EFFECTIVE DATE. This section is effective the day
308.28 	following final enactment.

308.29 	Sec. 16. Minnesota Statutes 2004, section 469.319, is
308.30 	amended by adding a subdivision to read:
308.31 		Subd. 6.Reconciliation. Where this section is
308.32 	inconsistent with section 116J.994, subdivision 3, paragraph
308.33 	(e), or 6, or any other provisions of sections 116J.993 to
308.34 	116J.995, this section prevails.
308.35 	
EFFECTIVE DATE. This section is effective the day
308.36 	following final enactment.

309.1 	Sec. 17. Minnesota Statutes 2004, section 469.320,
309.2 	subdivision 3, is amended to read:
309.3 		Subd. 3.Remedies.  If the commissioner determines, based
309.4 	on a report filed under subdivision 1 or other available
309.5 	information, that a zone or subzone is failing to meet its
309.6 	performance goals, the commissioner may take any actions the
309.7 	commissioner determines appropriate, including modification of
309.8 	the boundaries of the zone or a subzone or termination of the
309.9 	zone or a subzone.  Before taking any action, the commissioner
309.10 	shall consult with the applicant and the affected local
309.11 	government units, including notifying them of the proposed
309.12 	actions to be taken. The commissioner shall publish any order
309.13 	modifying a zone in the State Register and on the Internet.The
309.14 	applicant may appeal the commissioner's order under the
309.15 	contested case procedures of chapter 14.
309.16 	
EFFECTIVE DATE. This section is effective the day
309.17 	following final enactment.

309.18 	Sec. 18. Minnesota Statutes 2004, section 469.330,
309.19 	subdivision 11, is amended to read:
309.20 		Subd. 11.Qualified business.  (a) "Qualified business"
309.21 	means a person carrying on a trade or business at a
309.22 	biotechnology and health sciences industry facility located
309.23 	within a biotechnology and health sciences industry zone. A
309.24 	person is a qualified business only on those parcels of land for
309.25 	which it has entered into a business subsidy agreement, as
309.26 	required under section 469.333, with the appropriate local
309.27 	government unit in which the parcels are located.
309.28 	(b) A person that relocates a biotechnology and health
309.29 	sciences industry facility from outside a biotechnology and
309.30 	health sciences industry zone into a zone is not a qualified
309.31 	business, unless the business:
309.32 	(1)(i) increases full-time employment in the first full
309.33 	year of operation within the biotechnology and health sciences
309.34 	industry zone by at least 20 percent measured relative to the
309.35 	operations that were relocated and maintains the required level
309.36 	of employment for each year the zone designation applies; or
310.1 	(ii) makes a capital investment in the property located
310.2 	within a zone equivalent to ten percent of the gross revenues of
310.3 	operation that were relocated in the immediately preceding
310.4 	taxable year; and
310.5 	(2) enters a binding written agreement with the
310.6 	commissioner that:
310.7 	(i) pledges the business will meet the requirements of
310.8 	clause (1);
310.9 	(ii) provides for repayment of all tax benefits enumerated
310.10 	under section 469.336 to the business under the procedures in
310.11 	section 469.340, if the requirements of clause (1) are not met;
310.12 	and
310.13 	(iii) contains any other terms the commissioner determines
310.14 	appropriate.
310.15 	
EFFECTIVE DATE. This section is effective retroactively
310.16 	from June 9, 2003.

310.17 	Sec. 19. Minnesota Statutes 2004, section 469.335, is
310.18 	amended to read:
310.19 	469.335 APPLICATION FOR TAX BENEFITS.
310.20 	(a) To claim a tax credit or exemption against a state tax
310.21 	under section 469.336, clauses (2) through (5), a business must
310.22 	apply to the commissioner for a tax credit certificate.  As a
310.23 	condition of its application, the business must agree to furnish
310.24 	information to the commissioner that is sufficient to verify the
310.25 	eligibility for any credits or exemptions claimed.  The total
310.26 	amount of the state tax credits and exemptions allowed for the
310.27 	specified period may not exceed the amount of the tax credit
310.28 	certificates provided by the commissioner to the business.  The
310.29 	commissioner must verify to the commissioner of revenue the
310.30 	amount of tax exemptions or credits for which each business is
310.31 	eligible.
310.32 	(b) A tax credit certificate issued under this section may
310.33 	specify the particular tax exemptions or credits against a state
310.34 	tax that the qualified business is eligible to claim under
310.35 	section 469.336, clauses (2) through (5), and the amount of each
310.36 	exemption or credit allowed.
311.1 	(c) The commissioner may issue $1,000,000 of tax credits or
311.2 	exemptions in fiscal year 2004.  Any tax credits or exemptions
311.3 	not awarded in fiscal year 2004 may be awarded in fiscal year
311.4 	2005. Any tax credits or exemptions not awarded in fiscal year
311.5 	2004 or 2005 do not cancel and may be awarded in fiscal years
311.6 	2006 and 2007.
311.7 	(d) A qualified business must use the tax credits or tax
311.8 	exemptions granted under this section by the later of the end of
311.9 	the state fiscal year or the taxpayer's tax year in which the
311.10 	credits or exemptions are granted.

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

311.13 	Sec. 20. Minnesota Statutes 2004, section 469.337, is
311.14 	amended to read:
311.15 	469.337 CORPORATE FRANCHISE TAX EXEMPTION.
311.16 	(a) A qualified business is exempt from taxation under
311.17 	section 290.02, the alternative minimum tax under section
311.18 	290.0921, and the minimum fee under section 290.0922, on the
311.19 	portion of its income attributable to operations of a qualified
311.20 	business within the biotechnology and health sciences industry
311.21 	zone.  This exemption is determined as follows:
311.22 	(1) for purposes of the tax imposed under section 290.02,
311.23 	by multiplying its taxable net income by its zone percentage and
311.24 	subtracting the result in determining taxable income;
311.25 	(2) for purposes of the alternative minimum tax under
311.26 	section 290.0921, by multiplying its alternative minimum taxable
311.27 	income by its zone percentage and reducing alternative minimum
311.28 	taxable income by this amount; and
311.29 	(3) for purposes of the minimum fee under section 290.0922,
311.30 	by excluding zone property and payroll in the zone from the
311.31 	computations of the fee. The qualified business is exempt from
311.32 	the minimum fee if all of its property is located in the zone
311.33 	and all of its payroll is zone payroll.
311.34 	(b) No subtraction is allowed under this section in excess
311.35 	of 20 percent of the sum of the corporation's biotechnology and
311.36 	health sciences industry zone payroll and the adjusted basis of
312.1 	the property at the time that the property is first used in the
312.2 	biotechnology and health sciences industry zone by the
312.3 	corporation.
312.4 	(c) No reduction in tax is allowed in excess of the amount
312.5 	allocated under section 469.335.

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

312.8 	Sec. 21. Minnesota Statutes 2004, section 469.340,
312.9 	subdivision 1, is amended to read:
312.10 		Subdivision 1.Repayment obligation.  A business must
312.11 	repay the amount of the tax reduction listed in section 469.336
312.12 	and any refunds under sections 469.338 and 469.339 in excess of
312.13 	tax liability, received during the two years immediately before
312.14 	it ceased to operate in the zone, if the business:
312.15 	(1) received tax reductions authorized by section 469.336;
312.16 	and
312.17 	(2)(i) did not meet the goals specified in an agreement
312.18 	entered into with the applicant that states any obligation the
312.19 	qualified business must fulfill in order to be eligible for tax
312.20 	benefits.  The commissioner of employment and economic
312.21 	development may extend for up to one year the period for meeting
312.22 	any goals provided in an agreement.  The applicant may extend
312.23 	the period for meeting other goals by documenting in writing the
312.24 	reason for the extension and attaching a copy of the document to
312.25 	its next annual report to the commissioner of employment and
312.26 	economic development; or
312.27 	(ii) ceased to operate its facility located within the
312.28 	biotechnology and health sciences industry zone or otherwise
312.29 	ceases to be or is not a qualified business.
312.30 	
EFFECTIVE DATE. This section is effective the day
312.31 	following final enactment.

312.32 	Sec. 22. FERGUS FALLS; ECONOMIC DEVELOPMENT.
 312.33 	Notwithstanding the time limits in Minnesota Statutes 2004,
312.34 	section 272.02, subdivision 39, the holding of property by the
312.35 	city of Fergus Falls for later resale for economic development
312.36 	purposes is considered a public purpose for purposes of
313.1 	Minnesota Statutes, section 272.02, subdivision 8, for a period
313.2 	not to exceed 15 years.  The other requirements of Minnesota
313.3 	Statutes, section 272.02, subdivision 39, apply to property held
313.4 	by the city under this section.

313.5 	EFFECTIVE DATE. This section is effective the day after
313.6 	approval by the governing body of the city of Fergus Falls and
313.7 	compliance with Minnesota Statutes, section 645.021, subdivision
313.8 	3.

313.9 	Sec. 23. CITY OF TAYLORS FALLS; BORDER CITY DEVELOPMENT
313.10 	ZONE.
 313.11 		Subdivision 1.Authorization. The governing body of the
313.12 	city of Taylors Falls may designate all or any part of the city
313.13 	as a border city development zone.
313.14 		Subd. 2.Application of general law. (a) Minnesota
313.15 	Statutes, sections 469.1731 to 469.1735, apply to the border
313.16 	city development zones designated under this section.  The
313.17 	governing body of the city may exercise the powers granted under
313.18 	Minnesota Statutes, sections 469.1731 to 469.1735, including
313.19 	powers that apply outside of the zones.
313.20 	(b) The allocation under subdivision 3 for purposes of
313.21 	Minnesota Statutes, section 469.1735, subdivision 2, is
313.22 	appropriated to the commissioner of revenue.
313.23 		Subd. 3.Allocation of state tax reductions. (a) The
313.24 	cumulative total amount of the state portion of the tax
313.25 	reductions for all years of the program under Minnesota
313.26 	Statutes, sections 469.1731 to 469.1735, for the city of Taylors
313.27 	Falls, is limited to $100,000.
313.28 	(b) This allocation may be used for tax reductions provided
313.29 	in Minnesota Statutes, section 469.1732 or 469.1734, or for
313.30 	reimbursements under Minnesota Statutes, section 469.1735,
313.31 	subdivision 3, but only if the governing body of the city of
313.32 	Taylors Falls determines that the tax reduction or offset is
313.33 	necessary to enable a business to expand within the city or to
313.34 	attract a business to the city.
313.35 	(c) The commissioner of revenue may waive the limit under
313.36 	this subdivision using the same rules and standards provided in
314.1 	Minnesota Statutes, section 469.169, subdivision 12, paragraph
314.2 	(b).
314.3 	[EFFECTIVE DATE; LOCAL APPROVAL.]This section is effective
314.4 	upon approval by a majority of the voters of the city of Taylors
314.5 	Falls voting on the question at a general election.

314.6 	Sec. 24. REVISOR'S INSTRUCTION.
 314.7 	The revisor shall renumber Minnesota Statutes, section
314.8 	469.310, subdivision 11, as section 469.3135, and insert the
314.9 	following definition of "qualified business" in Minnesota
314.10 	Statutes, section 469.310:  "'Qualified business' means the
314.11 	entity described in section 469.3135." 

314.12 	Sec. 25. REPEALER.
 314.13 	Minnesota Statutes 2004, section 272.02, subdivision 65, is
314.14 	repealed effective for taxes payable in 2006 and thereafter.
314.15 	Minnesota Statutes 2004, section 477A.08, is repealed effective
314.16 	for aid payable in 2005 and thereafter.

314.17 	ARTICLE 10
314.18 	TAX SHELTERS

314.19 	Section 1. [270.103] EQUITABLE ACTIONS.
314.20 	(a) The commissioner may bring a civil action to enjoin any
314.21 	person from taking action or failing to take action that is
314.22 	subject to penalty under section 289A.60, subdivisions 7, 20,
314.23 	20a, 26, 27, and 28.
314.24 	(b) In any action under paragraph (a), the court may enjoin
314.25 	the person from engaging in the conduct, if the court finds that:
314.26 	(1) the person has engaged in the specified conduct; and 
314.27 	(2) injunctive relief is appropriate to prevent recurrence
314.28 	of the conduct.

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

314.31 	Sec. 2. [289A.121] TAX SHELTERS SPECIAL RULES.
314.32 		Subdivision 1.Scope. The provisions of this section
314.33 	apply to a tax shelter that:
314.34 	(1) is organized in this state;
314.35 	(2) is doing business in this state;
314.36 	(3) is deriving income from sources in this state; or 
315.1 	(4) has one or more investors that are Minnesota taxpayers
315.2 	under chapter 290.
315.3 		Subd. 2.Definitions. (a) For purposes of this section,
315.4 	the definitions under sections 6111 and 6112 of the Internal
315.5 	Revenue Code, including the regulations under those sections,
315.6 	apply.
315.7 	(b) The term "tax shelter" includes any reportable
315.8 	transaction under subdivision 5.
315.9 		Subd. 3.Registration. (a) Any tax shelter organizer
315.10 	required to register a tax shelter under section 6111 of the
315.11 	Internal Revenue Code must register the shelter with the
315.12 	commissioner.
315.13 	(b) A tax shelter organizer subject to this subdivision
315.14 	must send a duplicate of the federal registration information,
315.15 	along with any other information the commissioner requires, to
315.16 	the commissioner not later than the day on which interests in
315.17 	that tax shelter are first offered for sale.
315.18 	(c) In addition to the requirements under paragraph (b),
315.19 	any listed transactions must be registered with the commissioner
315.20 	by the latest of:
315.21 	(1) 60 days after entering into the transaction;
315.22 	(2) 60 days after the transaction becomes a listed
315.23 	transaction; or 
315.24 	(3) December 31, 2005.
315.25 		Subd. 4.Registration number. (a) Any person required to
315.26 	register under section 6111 of the Internal Revenue Code who
315.27 	receives a tax registration number from the Secretary of the
315.28 	Treasury must, within 30 days after requested by the
315.29 	commissioner, file a statement of that registration number with
315.30 	the commissioner.
315.31 	(b) Any person who sells or otherwise transfers an interest
315.32 	in a tax shelter must, in the same time and manner required
315.33 	under section 6111(b) of the Internal Revenue Code, furnish to
315.34 	each investor who purchases or otherwise acquires an interest in
315.35 	the tax shelter the identification number assigned under federal
315.36 	law to the tax shelter.
316.1 	(c) Any person claiming any deduction, credit, or other tax
316.2 	benefit by reason of a tax shelter must include on the return of
316.3 	tax on which the deduction, credit, or other benefit is claimed
316.4 	the identification number assigned under federal law to the tax
316.5 	shelter.
316.6 		Subd. 5.Reportable transactions. (a) For each taxable
316.7 	year in which a taxpayer must make a disclosure statement under
316.8 	Code of Federal Regulations, title 26, section 1.6011-4, for a
316.9 	reportable transaction, including a listed transaction, in which
316.10 	the taxpayer participated in a taxable year for which a return
316.11 	is required under chapter 290, the taxpayer must file a copy of
316.12 	the disclosure with the commissioner.
316.13 	(b) Any taxpayer that is a member of a unitary business
316.14 	group that includes any person that must make a disclosure
316.15 	statement under Code of Federal Regulations, title 26, section
316.16 	1.6011-4, must file a disclosure under this subdivision.
316.17 	(c) Disclosure under this subdivision is required for any
316.18 	transaction entered into after December 31, 2001, that the
316.19 	Internal Revenue Service determines is a listed transaction at
316.20 	any time, and must be made in the manner prescribed by the
316.21 	commissioner.  For transactions in which the taxpayer
316.22 	participated for taxable years ending before December 31, 2005,
316.23 	disclosure must be made by the due date of the first return
316.24 	required under chapter 290 after the enactment of this section.
316.25 	With respect to transactions in which the taxpayer participated
316.26 	for taxable years ending on and after December 31, 2005,
316.27 	disclosure must be made in the time and manner prescribed in the
316.28 	Code of Federal Regulations, title 26, section 1.6011-4(e).
316.29 	(d) Notwithstanding paragraphs (a) to (c), no disclosure is
316.30 	required for transactions entered into after December 31, 2001,
316.31 	and before January 1, 2006, (1) if the taxpayer has filed an
316.32 	amended income tax return which reverses the tax benefits of the
316.33 	potential tax avoidance transaction, or (2) as a result of a
316.34 	federal audit the Internal Revenue Service has determined the
316.35 	tax treatment of the transaction and an amended return has been
316.36 	filed to reflect the federal treatment.
317.1 		Subd. 6.Abusive shelters; lists of investors. (a) Any
317.2 	person required to maintain a list under section 6112 of the
317.3 	Internal Revenue Code with respect to a potentially abusive tax
317.4 	shelter must furnish the list to the commissioner no later than
317.5 	when required under federal law.  The list required under this
317.6 	subdivision must include the same information required with
317.7 	respect to a potentially abusive tax shelter under Code of
317.8 	Federal Regulations, title 26, section 301.6112-1, and any other
317.9 	information the commissioner requires.
317.10 	(b) For transactions entered into on or after December 31,
317.11 	2001, that become listed transactions at any time, the list must
317.12 	be furnished to the commissioner by the latest of:
317.13 	(1) 60 days after entering into the transaction;
317.14 	(2) 60 days after the transaction becomes a listed
317.15 	transaction; or 
317.16 	(3) December 31, 2005.
317.17 	
EFFECTIVE DATE. This section is effective the day
317.18 	following final enactment.

317.19 	Sec. 3. Minnesota Statutes 2004, section 289A.38, is
317.20 	amended by adding a subdivision to read:
317.21 		Subd. 15.Reportable transactions. If a taxpayer fails
317.22 	to include on any return or statement for any taxable year any
317.23 	information with respect to a reportable transaction, as
317.24 	required by federal law and under section 289A.121, subdivision
317.25 	5, the commissioner may recompute the tax, including a refund,
317.26 	within six years after the return is filed with respect to the
317.27 	taxable year in which the taxpayer participated in the
317.28 	reportable transaction.  If tax is assessable solely because of
317.29 	this section, the assessable deficiency is limited to the items
317.30 	that were not disclosed as required under section 289A.121,
317.31 	subdivision 5.
317.32 	
EFFECTIVE DATE. This section is effective the day
317.33 	following final enactment.

317.34 	Sec. 4. Minnesota Statutes 2004, section 289A.60,
317.35 	subdivision 4, is amended to read:
317.36 		Subd. 4.Substantial understatement of liability;
318.1 	penalty. (a) The commissioner of revenue shall impose a penalty
318.2 	for substantial understatement of any tax payable to the
318.3 	commissioner, except a tax imposed under chapter 297A.
318.4 	(b) There must be added to the tax an amount equal to 20
318.5 	percent of the amount of any underpayment attributable to the
318.6 	understatement.  There is a substantial understatement of tax
318.7 	for the period if the amount of the understatement for the
318.8 	period exceeds the greater of:
318.9 	(1) ten percent of the tax required to be shown on the
318.10 	return for the period; or
318.11 	(2) (a) (i) $10,000 in the case of a mining company or a
318.12 	corporation, other than an S corporation as defined in section
318.13 	290.9725, when the tax is imposed by chapter 290 or section
318.14 	298.01 or 298.015, or
318.15 	(b) (ii) $5,000 in the case of any other taxpayer, and in
318.16 	the case of a mining company or a corporation any tax not
318.17 	imposed by chapter 290 or section 298.01 or 298.015.
318.18 	(c) For a corporation, other than an S corporation, that
318.19 	has been contacted by the commissioner regarding the use of a
318.20 	potentially abusive tax shelter, as defined under section
318.21 	289A.121, there is also a substantial understatement of tax for
318.22 	any taxable year if the amount of the understatement for the
318.23 	taxable year exceeds the lesser of:
318.24 	(1) ten percent of the tax required to be shown on the
318.25 	return for the taxable year (or, if greater, $2,500); or 
318.26 	(2) $5,000,000.
318.27 	(d) The term "understatement" means the excess of the
318.28 	amount of the tax required to be shown on the return for the
318.29 	period, over the amount of the tax imposed that is shown on the
318.30 	return.  The amount of the understatement shall be reduced by
318.31 	that part of the understatement that is attributable to the tax
318.32 	treatment of any item by the taxpayer if there is or was
318.33 	substantial authority for the treatment, or any item with
318.34 	respect to which the relevant facts affecting the item's tax
318.35 	treatment are adequately disclosed in the return or in a
318.36 	statement attached to the return.  The special rules in cases
319.1 	involving tax shelters provided in section 6662(d)(2)(C) of the
319.2 	Internal Revenue Code shall apply and shall apply to a tax
319.3 	shelter the principal purpose of which is the avoidance or
319.4 	evasion of state taxes.  The commissioner may abate all or any
319.5 	part of the addition to the tax provided by this section on a
319.6 	showing by the taxpayer that there was reasonable cause for the
319.7 	understatement, or part of it, and that the taxpayer acted in
319.8 	good faith.  The additional tax and penalty shall bear interest
319.9 	at the rate specified in section 270.75 from the time the tax
319.10 	should have been paid until paid.
319.11 	(e) For taxpayers that have been contacted by the
319.12 	commissioner regarding the use of a potentially abusive tax
319.13 	shelter within the meaning of section 298A.121, the amount of
319.14 	the understatement is reduced by that part of the understatement
319.15 	that is attributable to the tax treatment of any item by the
319.16 	taxpayer if the taxpayer had reasonable belief that the tax
319.17 	treatment was more likely than not the proper treatment or if
319.18 	any item with respect to which the relevant facts affecting the
319.19 	item's tax treatment are adequately disclosed in the return or
319.20 	in a statement attached to the return.
319.21 	
EFFECTIVE DATE. This section is effective for taxpayers
319.22 	contacted by the commissioner after the day following final
319.23 	enactment.

319.24 	Sec. 5. Minnesota Statutes 2004, section 289A.60,
319.25 	subdivision 7, is amended to read:
319.26 		Subd. 7.Penalty for frivolous return. (a) If a taxpayer
319.27 	files what purports to be a tax return or a claim for refund but
319.28 	which does not contain information on which the substantial
319.29 	correctness of the purported return or claim for refund may be
319.30 	judged or contains information that on its face shows that the
319.31 	purported return or claim for refund is substantially incorrect
319.32 	and the conduct is due to a position that is frivolous or a
319.33 	desire that appears on the purported return or claim for refund
319.34 	to delay or impede the administration of Minnesota tax laws,
319.35 	then the individual shall pay a penalty of the greater of $1,000
319.36 	or 25 percent of the amount of tax required to be shown on the
320.1 	return.  In a proceeding involving the issue of whether or not a
320.2 	person is liable for this penalty, the burden of proof is on the
320.3 	commissioner.
320.4 	(b) If the taxpayer has been contacted by the commissioner
320.5 	of revenue regarding the use of a potentially abusive tax
320.6 	shelter within the meaning of section 289A.121, the penalty
320.7 	under this subdivision is the greater of $5,000 or 25 percent of
320.8 	the amount of tax required to be shown on the return.
320.9 	
EFFECTIVE DATE. This section is effective for returns or
320.10 	claims filed after the day following final enactment.

320.11 	Sec. 6. Minnesota Statutes 2004, section 289A.60,
320.12 	subdivision 20, is amended to read:
320.13 		Subd. 20.Penalty for promoting abusive tax shelters.
 320.14 	Any person who:
320.15 	(1)(i) organizes or assists in the organization of a
320.16 	partnership or other entity, an investment plan or arrangement,
320.17 	or any other plan or arrangement, or (ii) participates in the
320.18 	sale of any interest in an entity or plan or arrangement
320.19 	referred to in clause (i); and
320.20 	(2) makes or furnishes in connection with the organization
320.21 	or sale a statement with respect to the allowability of a
320.22 	deduction or credit, the excludability of income, or the
320.23 	securing of any other tax benefit by reason of holding an
320.24 	interest in the entity or participating in the plan or
320.25 	arrangement that the person knows or has reason to know is false
320.26 	or fraudulent concerning any material matter, shall pay a
320.27 	penalty equal to the greater of $1,000 or 20 50 percent of the
320.28 	gross income derived or to be derived by the person from the
320.29 	activity.
320.30 	The penalty imposed by this subdivision is in addition to
320.31 	any other penalty provided by this section.  The penalty must be
320.32 	collected in the same manner as any delinquent income tax.  In a
320.33 	proceeding involving the issue of whether or not any person is
320.34 	liable for this penalty, the burden of proof is upon the
320.35 	commissioner.
320.36 	
EFFECTIVE DATE. This section is effective for
321.1 	transactions entered into after the day following final
321.2 	enactment.

321.3 	Sec. 7. Minnesota Statutes 2004, section 289A.60, is
321.4 	amended by adding a subdivision to read:
321.5 		Subd. 20a.Aiding and abetting understating of tax
321.6 	liability. (a) A penalty in the amount under paragraph (b) for
321.7 	each document is imposed on each person who:
321.8 	(1) aids or assists in, procures, or advises with respect
321.9 	to, the preparation or presentation of any portion of a return,
321.10 	affidavit, claim, or other document;
321.11 	(2) knows or has reason to believe that the portion of a
321.12 	return, affidavit, claim, or other document will be used in
321.13 	connection with any material matter arising under the Minnesota
321.14 	individual income or corporate franchise tax; and 
321.15 	(3) knows that the portion, if so used, would result in an
321.16 	understatement of the liability for tax of another person.
321.17 	(b)(1) Except as provided in clause (2), the amount of the
321.18 	penalty imposed by this subdivision is $1,000.
321.19 	(2) If the return, affidavit, claim, or other document
321.20 	relates to the tax liability of a corporation, the amount of the
321.21 	penalty imposed by paragraph (a) is $10,000.
321.22 	(3) If any person is subject to a penalty under paragraph
321.23 	(a) for any document relating to any taxpayer for any taxable
321.24 	period or taxable event, the person is not subject to a penalty
321.25 	under paragraph (a) for any other document relating to the
321.26 	taxpayer for the taxable period or event.
321.27 	(c) For purposes of this subdivision, "procures" includes
321.28 	(i) ordering or otherwise causing any other person to do an act,
321.29 	and (ii) knowing of, and not attempting to prevent,
321.30 	participation by any other person in an act.
321.31 	(d) The penalty under this subdivision applies whether or
321.32 	not the understatement is with the knowledge or consent of the
321.33 	persons authorized or required to present the return, affidavit,
321.34 	claim, or other document.
321.35 	(e) For purposes of paragraph (a), clause (1), a person
321.36 	furnishing typing, reproducing, or other mechanical assistance
322.1 	with respect to a document is not treated as having aided or
322.2 	assisted in the preparation of the document by reason of the
322.3 	assistance.
322.4 	(f)(1) Except as provided by clause (2), the penalty
322.5 	imposed by this section is in addition to any other penalty
322.6 	provided by law.
322.7 	(2) No penalty applies under subdivision 20 to any person
322.8 	for any document for which a penalty is assessed on the person
322.9 	under this subdivision.
322.10 	
EFFECTIVE DATE. This section is effective for documents
322.11 	prepared after the day following final enactment.

322.12 	Sec. 8. Minnesota Statutes 2004, section 289A.60, is
322.13 	amended by adding a subdivision to read:
322.14 		Subd. 26.Tax shelter penalties; registration and
322.15 	listing. (a) For purposes of this subdivision, "material
322.16 	advisor" has the meaning given it under Code of Federal
322.17 	Regulations, title 26, section 301.6112-1(c)(2).
322.18 	(b) The penalties in this subdivision apply in connection
322.19 	with the use of tax shelters, as defined under section 289A.121.
322.20 	(c) A person who fails to register a tax shelter, including
322.21 	providing all of the required information under section
322.22 	289A.121, subdivision 3, is subject to a penalty of $15,000.  If
322.23 	the tax shelter is a listed shelter and disclosure is not made
322.24 	as required by section 289A.121, subdivision 5, a penalty
322.25 	applies equal to the greater of:
322.26 	(1) $100,000;
322.27 	(2) 50 percent of the gross income that the organizer or
322.28 	material advisor derived from that activity; or 
322.29 	(3) 75 percent of the gross income that the organizer or
322.30 	material advisor derived from that activity if the organizer or
322.31 	material advisor intentionally failed to act.
322.32 	(d) Any person who fails to supply a tax shelter
322.33 	registration number required under section 289A.121, subdivision
322.34 	4, paragraph (b), is subject to a penalty of $100 for each
322.35 	failure.  Any person who fails to include a tax shelter
322.36 	registration number on a return as required under section
323.1 	289A.121, subdivision 4, paragraph (c), is subject to a penalty
323.2 	of $250 for each failure, unless the failure was due to
323.3 	reasonable cause.  The penalties under this paragraph are in
323.4 	addition to any penalties under paragraph (c).
323.5 	(e) The person required to maintain or provide a list under
323.6 	section 289A.121, subdivision 6, is subject to a penalty equal
323.7 	to:
323.8 	(1) for reportable transactions, $10,000 for each day after
323.9 	the 20th day that the organizer or material advisor failed to
323.10 	make the list available to the commissioner after written
323.11 	request for that list was made; and 
323.12 	(2) for listed transactions, the greater of:
323.13 	(i) $100,000; or 
323.14 	(ii) 50 percent of the gross income that the organizer or
323.15 	material advisor derived from that activity.
323.16 	(f) The penalty imposed by this subdivision is in addition
323.17 	to any penalty imposed under this section.
323.18 	
EFFECTIVE DATE. This section is effective for taxable
323.19 	years beginning after December 31, 2000.

323.20 	Sec. 9. Minnesota Statutes 2004, section 289A.60, is
323.21 	amended by adding a subdivision to read:
323.22 		Subd. 27.Failure to report; reportable transaction. (a)
323.23 	Any large entity or high net worth individual who fails to
323.24 	include on any return or statement any information with respect
323.25 	to a reportable transaction that is required under section 6011
323.26 	of the Internal Revenue Code and under section 289A.121, to be
323.27 	included with that return or statement must pay a penalty for
323.28 	each omission in the amount determined under paragraph (b).
323.29 	(b) The penalty is $15,000, except for a listed transaction
323.30 	the penalty is $30,000.
323.31 	(c) For purposes of this subdivision:
323.32 	(1) "High net worth individual" means, for a transaction,
323.33 	an individual whose net worth exceeds $2,000,000 immediately
323.34 	before the transaction.
323.35 	(2) "Large entity" means, for any taxable year, a person,
323.36 	other than an individual, with gross receipts in excess of
324.1 	$10,000,000 for either the taxable year in which the reportable
324.2 	transaction occurs or in the preceding taxable year.  Rules
324.3 	similar to the rules of section 448(c)(2) and 448(c)(3) of the
324.4 	Internal Revenue Code, other than section 448(c)(3)(A) of the
324.5 	Internal Revenue Code, apply.
324.6 	(3) "Reportable transaction" means a reportable transaction
324.7 	under section 289A.121, subdivision 5.
324.8 	(4) Except as provided in regulations prescribed by the
324.9 	Secretary of the Treasury, the term "listed transaction" means a
324.10 	reportable transaction, as defined in clause (3), that is the
324.11 	same as, or substantially similar to, a transaction specifically
324.12 	identified by the Secretary of the Treasury for purposes of
324.13 	section 6011 of the Internal Revenue Code for federal income tax
324.14 	purposes as a tax avoidance transaction.
324.15 	(d) The penalty imposed by this subdivision is in addition
324.16 	to any penalty imposed under this section.
324.17 	
EFFECTIVE DATE. This section is effective for taxable
324.18 	years beginning after December 31, 2000.

324.19 	Sec. 10. Minnesota Statutes 2004, section 289A.60, is
324.20 	amended by adding a subdivision to read:
324.21 		Subd. 28.Reportable transaction understatement. (a) If
324.22 	a taxpayer has a reportable transaction understatement for any
324.23 	taxable year, an amount equal to 20 percent of the amount of the
324.24 	understatement must be added to the tax.
324.25 	(b)(1) For purposes of this subdivision, "reportable
324.26 	transaction understatement" means the product of:
324.27 	(i) the amount of the increase, if any, in taxable income
324.28 	that results from a difference between the proper tax treatment
324.29 	of an item to which this section applies and the taxpayer's
324.30 	treatment of that item as shown on the taxpayer's tax return;
324.31 	and 
324.32 	(ii) the highest rate of tax imposed on the taxpayer under
324.33 	section 290.06.
324.34 	(2) For purposes of clause (1)(i), any reduction of the
324.35 	excess of deductions allowed for the taxable year over gross
324.36 	income for that year, and any reduction in the amount of capital
325.1 	losses which would, without regard to section 1211 of the
325.2 	Internal Revenue Code, be allowed for that year, must be treated
325.3 	as an increase in taxable income.
325.4 	(c) This subdivision applies to any item that is
325.5 	attributable to:
325.6 	(1) any listed transaction under section 289A.121; and 
325.7 	(2) any reportable transaction, other than a listed
325.8 	transaction, if a significant purpose of that transaction is the
325.9 	avoidance or evasion of federal income tax liability.
325.10 	(d) The penalty imposed by this subdivision is in addition
325.11 	to any penalty imposed under this section.
325.12 	
EFFECTIVE DATE. This section is effective for taxable
325.13 	years beginning after December 31, 2000.

325.14 	Sec. 11. Minnesota Statutes 2004, section 289A.60, is
325.15 	amended by adding a subdivision to read:
325.16 		Subd. 29.Addition to tax. (a) If a taxpayer has been
325.17 	contacted by the commissioner regarding the use of a potentially
325.18 	abusive tax shelter and has a deficiency, there must be added to
325.19 	the tax an amount equal to 100 percent of the interest payable
325.20 	under section 270.75 for the period beginning on the last date
325.21 	prescribed by law for the payment of that tax, determined
325.22 	without regard to extensions, and ending on the date the notice
325.23 	of proposed assessment is mailed.
325.24 	(b) "Potentially abusive tax shelter" means:
325.25 	(1) any tax shelter, as defined in section 6111 of the
325.26 	Internal Revenue Code, for which registration is required under
325.27 	section 289A.121; or 
325.28 	(2) any entity, investment plan or arrangement, or other
325.29 	plan or arrangement which is of a type that the Secretary of the
325.30 	Treasury determines by regulations as having a potential for tax
325.31 	avoidance or evasion.
325.32 	(c) The penalty imposed by this subdivision is in addition
325.33 	to any other penalty imposed under this section and to the
325.34 	interest computation for purposes of section 270.75.
325.35 	
EFFECTIVE DATE. This section is effective for notices of
325.36 	proposed assessments mailed after the day following final
326.1 	enactment.

326.2 	Sec. 12. Minnesota Statutes 2004, section 289A.60, is
326.3 	amended by adding a subdivision to read:
326.4 		Subd. 30.Authority to abate tax shelter penalties. (a)
326.5 	Notwithstanding section 270.07, the commissioner may abate all
326.6 	or any portion of any penalty imposed by subdivisions 20, 20a,
326.7 	and 26 to 29 for any violation, only if all of the following
326.8 	apply:
326.9 	(1) the violation is for a reportable transaction, other
326.10 	than a listed transaction, as defined under Code of Federal
326.11 	Regulations, title 26, section 6011-4;
326.12 	(2) the person on whom the penalty is imposed has a history
326.13 	of complying with the requirements of this chapter and chapter
326.14 	290;
326.15 	(3) the violation is due to an unintentional mistake of
326.16 	fact;
326.17 	(4) imposing the penalty would be against equity and good
326.18 	conscience; and 
326.19 	(5) abating the penalty would promote compliance with the
326.20 	requirements of chapter 290.
326.21 	(b) The exercise of authority under paragraph (a) is at the
326.22 	sole discretion of the commissioner and may not be delegated.
326.23 	Notwithstanding any other law or rule, a determination under
326.24 	this subdivision may not be reviewed in any administrative or
326.25 	judicial proceeding.

326.26 	Sec. 13. Minnesota Statutes 2004, section 289A.60, is
326.27 	amended by adding a subdivision to read:
326.28 		Subd. 31.Interest computation. For an amended return
326.29 	filed after December 31, 2005, and before the taxpayer is
326.30 	contacted by the Internal Revenue Service or the commissioner
326.31 	regarding a potentially abusive tax shelter, then, for taxable
326.32 	years beginning after December 31, 2001, with respect to any
326.33 	understatement of tax related to using reportable transactions
326.34 	as defined in section 289A.121, the taxpayer is subject to
326.35 	interest at a rate of 150 percent of the applicable rate under
326.36 	section 270.75.
327.1 	
EFFECTIVE DATE. This section is effective for taxable
327.2 	years beginning after December 31, 2005.

327.3 	Sec. 14. VOLUNTARY COMPLIANCE INITIATIVE.
 327.4 		Subdivision 1.Establishment. The commissioner of
327.5 	revenue shall establish and administer a voluntary compliance
327.6 	initiative for taxpayers subject to Minnesota Statutes, section
327.7 	289A.60, subdivision 26, 27, or 28.
327.8 		Subd. 2.Time period; scope. (a) The commissioner shall
327.9 	conduct the voluntary compliance initiative from July 1, 2005,
327.10 	to December 31, 2005, under Minnesota Statutes, section 270.07.
327.11 	(b) The voluntary compliance initiative applies to tax
327.12 	liabilities and penalties attributable to an abusive tax
327.13 	avoidance transaction for taxable years beginning before January
327.14 	1, 2005.  An abusive tax avoidance transaction means a listed
327.15 	transaction, a potentially abusive tax shelter, or a reportable
327.16 	transaction as those terms are used in Minnesota Statutes,
327.17 	section 289A.121.
327.18 		Subd. 3.Eligibility. (a) No person may participate in
327.19 	the voluntary compliance initiative, if:
327.20 	(1) the taxpayer was convicted of a crime in connection
327.21 	with an abusive tax avoidance transaction or transactions;
327.22 	(2) a criminal complaint was filed against the taxpayer in
327.23 	connection with an abusive tax avoidance transaction or
327.24 	transactions;
327.25 	(3) the taxpayer is the subject of a criminal investigation
327.26 	in connection with an abusive tax avoidance transaction or
327.27 	transactions; or 
327.28 	(4) the taxpayer was eligible to participate in the
327.29 	Internal Revenue Service's Offshore Voluntary Compliance
327.30 	Initiative, as set forth in Revenue Procedure 2003-11.
327.31 	(b) A person not disqualified under paragraph (a) may
327.32 	participate in the voluntary compliance initiative.
327.33 		Subd. 4.Election; commissioner authority. (a) An
327.34 	eligible taxpayer that meets the requirements of subdivision 3
327.35 	with respect to any taxable year may elect to participate in the
327.36 	voluntary compliance program under either subdivision 5 or 6 for
328.1 	a particular tax avoidance period.  The election must be made
328.2 	separately for each taxable year and in the form and manner
328.3 	prescribed by the commissioner, and once made is irrevocable.
328.4 	(b) The commissioner of revenue may issue forms and
328.5 	instructions and take other actions necessary, including the use
328.6 	of agreements under Minnesota Statutes, section 270.67, to
328.7 	implement the voluntary compliance initiative.
328.8 		Subd. 5.Participation without right of appeal. (a) A
328.9 	person participating in the voluntary compliance initiative
328.10 	under this subdivision waives the right to an administrative
328.11 	appeal, to a claim for refund, or to file an action in district
328.12 	court or tax court.  The person participating must:
328.13 	(1) file an amended return for each taxable year for which
328.14 	the taxpayer has filed a tax return using an abusive tax
328.15 	avoidance transaction to underreport the taxpayer's tax
328.16 	liability for the taxable year.  Each amended return must report
328.17 	all income from all sources, without regard to the abusive tax
328.18 	avoidance transactions; and 
328.19 	(2) pay taxes and interest due in full, except that the
328.20 	commissioner of revenue may enter into an installment payment
328.21 	agreement under Minnesota Statutes, section 270.67, before the
328.22 	taxpayer files an amended return.
328.23 	(b) The commissioner of revenue shall abate all penalties
328.24 	imposed under Minnesota Statutes, chapter 289A, which could have
328.25 	been assessed in connection with the use of an abusive tax
328.26 	avoidance transaction, for each taxable year for which the
328.27 	taxpayer elects to participate in the voluntary compliance
328.28 	initiative under this subdivision, to the extent those penalties
328.29 	are a result of underreporting of tax liabilities attributable
328.30 	to the use of abusive tax avoidance transactions, for which a
328.31 	participating person files an amended return in compliance with
328.32 	paragraph (a).
328.33 	(c) No criminal action must be brought against a taxpayer
328.34 	for the taxable years reported under the voluntary compliance
328.35 	initiative with respect to the issues for which a taxpayer
328.36 	voluntarily complies under this chapter.
329.1 	(d) A person filing an amended return under this
329.2 	subdivision of the voluntary compliance initiative may not file
329.3 	a claim for refund, an administrative appeal, or an action in
329.4 	district court with regard to the amount of taxes or interest
329.5 	paid with the amended return.  Nothing in this subdivision
329.6 	precludes a taxpayer from filing a claim for credit or refund
329.7 	for the same taxable year in which a tax avoidance transaction
329.8 	was reported if the credit or refund is not attributable to the
329.9 	tax avoidance transaction.
329.10 		Subd. 6.Participation with right of appeal. (a) A
329.11 	person participating in the voluntary compliance initiative who
329.12 	does not waive the right to an administrative appeal, a claim
329.13 	for refund, or an action in district court must:
329.14 	(1) file an amended return for each taxable year for which
329.15 	the taxpayer has filed a tax return using an abusive tax
329.16 	avoidance transaction to underreport the taxpayer's tax
329.17 	liability for that taxable year.  Each amended return must
329.18 	report all income from all sources, without regard to the
329.19 	abusive tax avoidance transactions; and 
329.20 	(2) pay taxes and interest due in full, except that the
329.21 	commissioner of revenue may enter into an installment payment
329.22 	agreement pursuant to Minnesota Statutes, section 270.67, prior
329.23 	to the taxpayer filing an amended return.
329.24 	(b) The commissioner of revenue shall abate all penalties
329.25 	imposed under Minnesota Statutes, chapter 289A, except for the
329.26 	penalty for substantial understatement of tax liability under
329.27 	Minnesota Statutes, section 289A.60, subdivision 4, determined
329.28 	without regard to paragraph (e) of that section, which could
329.29 	have been assessed in connection with the use of an abusive tax
329.30 	avoidance transaction, for each taxable year for which the
329.31 	taxpayer elects to participate in the voluntary compliance
329.32 	initiative under this subdivision, to the extent those penalties
329.33 	apply to underreporting of tax liabilities attributable to the
329.34 	use of abusive tax avoidance transactions for which a
329.35 	participating person files an amended return in compliance with
329.36 	paragraph (a).
330.1 	(c) No criminal action must be brought against a taxpayer
330.2 	for the taxable years reported under the voluntary compliance
330.3 	initiative with respect to the issues for which a taxpayer
330.4 	voluntarily complies under this chapter.
330.5 	(d) The taxpayer may file a claim for refund, an
330.6 	administrative appeal, or an action in district court only after
330.7 	the earlier of the following occurs:
330.8 	(1) the date the commissioner of revenue takes action on
330.9 	the claim for refund for the taxable year;
330.10 	(2) the later of:
330.11 	(i) 180 days after the date of a final determination by the
330.12 	Internal Revenue Service with respect to the transaction or
330.13 	transactions to which Minnesota Statutes, chapter 290, applies;
330.14 	or 
330.15 	(ii) four years after the date the claim for refund was
330.16 	filed, or one year after full payment of all tax was made,
330.17 	including penalty and interest, whichever is later.
330.18 	(e)(1) The taxpayer is subject to the substantial
330.19 	understatement penalty under Minnesota Statutes, section
330.20 	289A.60, subdivision 4.  The penalty may be assessed:
330.21 	(i) when the commissioner of revenue takes action on the
330.22 	claim for refund; or 
330.23 	(ii) when a federal determination becomes final for the
330.24 	same issue, in which case the penalty must be assessed, and may
330.25 	not be abated, if the penalty was assessed at the federal level.
330.26 	(2) In determining the amount of the underpayment of tax,
330.27 	Code of Federal Regulations, title 26, section 1.6664-2(c)(2),
330.28 	relating to qualified amended returns, applies.  The
330.29 	underpayment is the difference between the amount of tax on the
330.30 	original return and the correct amount of tax for the taxable
330.31 	year.  The underpayment must not be less than the amount of the
330.32 	claim for refund filed by the taxpayer under paragraph (d) that
330.33 	was denied.
330.34 	(3) The penalty is due and payable upon notice and demand
330.35 	by the commissioner of revenue.  Only after the taxpayer has
330.36 	paid all amounts due, including the penalty, and the claim is
331.1 	denied in whole or in part, may the taxpayer file an appeal
331.2 	under Minnesota Statutes, section 270.07, in conjunction with
331.3 	the appeal filed under paragraph (d).
331.4 		Subd. 7.Commissioner orders and penalties. After
331.5 	December 31, 2005, the commissioner of revenue may issue an
331.6 	order of assessment within the time period permitted under
331.7 	Minnesota Statutes, section 289A.38, upon an amended return
331.8 	filed under this section for an underreported amount of tax, may
331.9 	impose penalties on an underreported amount of tax on an amended
331.10 	return filed under this chapter, or seek initiation of a
331.11 	criminal action against any person based on any underreported
331.12 	amount of tax on an amended return filed under this chapter.
331.13 		Subd. 8.Penalty relief; exception. For purposes of this
331.14 	section, if the commissioner subsequently determines that the
331.15 	correct amount of Minnesota income tax was not paid for the
331.16 	taxable year for a participant in the voluntary compliance
331.17 	initiative, then the penalty relief under this section does not
331.18 	apply to any portion of the underpayment attributable to a tax
331.19 	avoidance transaction not paid to the state.
331.20 	
EFFECTIVE DATE. This section is effective the day
331.21 	following final enactment.

331.22 	Sec. 15. APPROPRIATION.
 331.23 	For purposes of administering the voluntary compliance
331.24 	initiative and the tax shelter registration and compliance
331.25 	provisions of this act, $....... is appropriated from the
331.26 	general fund for fiscal year 2006 and $....... for fiscal year
331.27 	2007 to the commissioner of revenue.  $....... is added to the
331.28 	base budget.

331.29 	ARTICLE 11
331.30 	MISCELLANEOUS

331.31 	Section 1. [15.60] PUBLIC SAFETY OFFICERS; AMERICAN
331.32 	FLAG.
331.33 	(a) A public employer may not forbid a peace officer or
331.34 	firefighter from wearing a patch or pin depicting the flag of
331.35 	the United States of America on the employee's uniform,
331.36 	according to customary and standard flag etiquette.  However, a
332.1 	public employer may limit the size of a flag patch worn on a
332.2 	uniform to no more than three inches by five inches.
332.3 	(b) For purposes of this section:
332.4 	(1) "peace officer" has the meaning given in section
332.5 	626.84, subdivision 1, paragraph (c) or (f);
332.6 	(2) "firefighter" means a person as defined in section
332.7 	299A.41, subdivision 4, clause (3) or (4); and 
332.8 	(3) "public employer" has the meaning given in section
332.9 	179A.03, subdivision 15, and also includes a municipal fire
332.10 	department and an independent nonprofit firefighting corporation.
332.11 	(c) The commissioner of finance or the commissioner of
332.12 	revenue must suspend disbursement, not to exceed $10,000, of any
332.13 	state appropriation or aid to any public employer whom the
332.14 	commissioner determines is not complying with paragraph (a)
332.15 	until the commissioner determines that the employer is in
332.16 	compliance.

332.17 	Sec. 2. Minnesota Statutes 2004, section 16D.10, is
332.18 	amended to read:
332.19 	16D.10 CASE REVIEWER.
332.20 		Subdivision 1.Duties. The commissioner shall make a
332.21 	case reviewer available to debtors.  The reviewer must be
332.22 	available to answer a debtor's questions concerning the
332.23 	collection process and to review the collection activity taken.
332.24 	If the reviewer reasonably believes that the particular action
332.25 	being taken is unreasonable or unfair, the reviewer may make
332.26 	recommendations to the commissioner in regard to the collection
332.27 	action.
332.28 		Subd. 2.Authority to issue debtor assistance order. On
332.29 	application filed by a debtor with the case reviewer, in the
332.30 	form, manner, and in the time prescribed by the commissioner,
332.31 	and after thorough investigation, the case reviewer may issue a
332.32 	debtor assistance order if, in the determination of the case
332.33 	reviewer, the manner in which the state debt collection laws are
332.34 	being administered is creating or will create an unjust and
332.35 	inequitable result for the debtor.  Debtor assistance orders are
332.36 	governed by the provisions relating to taxpayer assistance
333.1 	orders under section 270.273.
333.2 		Subd. 3.Transfer of duties to taxpayer rights advocate.
 333.3 	All duties and authority of the case reviewer under subdivisions
333.4 	1 and 2 are transferred to the taxpayer rights advocate.
333.5 	
EFFECTIVE DATE. This section is effective the day
333.6 	following final enactment.

333.7 	Sec. 3. Minnesota Statutes 2004, section 270.02,
333.8 	subdivision 3, is amended to read:
333.9 		Subd. 3.Powers, organization, assistants.  Subject to
333.10 	the provisions of this chapter and other applicable laws the
333.11 	commissioner shall have power to organize the department with
333.12 	such divisions and other agencies as the commissioner deems
333.13 	necessary and to appoint one deputy commissioner, a department
333.14 	secretary, directors of divisions, and such other officers,
333.15 	employees, and agents as the commissioner may deem necessary to
333.16 	discharge the functions of the department, define the duties of
333.17 	such officers, employees, and agents, and delegate to them any
333.18 	of the commissioner's powers or duties, subject to the
333.19 	commissioner's control and under such conditions as the
333.20 	commissioner may prescribe.  Appointments to exercise delegated
333.21 	power to sign documents which require the signature of the
333.22 	commissioner or a delegate by law shall be by written order
333.23 	filed with the secretary of state. The delegations of authority
333.24 	granted by the commissioner remain in effect until revoked by
333.25 	the commissioner or a successor commissioner.
333.26 	
EFFECTIVE DATE. This section is effective the day
333.27 	following final enactment.

333.28 	Sec. 4. Minnesota Statutes 2004, section 270.30,
333.29 	subdivision 1, is amended to read:
333.30 		Subdivision 1.Scope. (a) This section applies to a
333.31 	person who offers,provides, or facilitates the provision of
333.32 	refund anticipation loans, as part of or in connection with the
333.33 	provision of tax preparation services.
333.34 	(b) This section does not apply to:
333.35 	(1) a tax preparer who provides tax preparation services
333.36 	for fewer than six clients in a calendar year;
334.1 	(2) the provision by a person of tax preparation services
334.2 	to a spouse, parent, grandparent, child, or sibling; and 
334.3 	(3) the provision of services by an employee for an
334.4 	employer.

334.5 	Sec. 5. Minnesota Statutes 2004, section 270.30,
334.6 	subdivision 5, is amended to read:
334.7 		Subd. 5.Itemized bill required.  A tax preparer must
334.8 	provide an itemized statement of the charges for services, at
334.9 	least separately stating the charges for:
334.10 	(1) return preparation; and 
334.11 	(2) electronic filing; and 
334.12 	(3) providing or facilitating a refund anticipation loan.

334.13 	Sec. 6. Minnesota Statutes 2004, section 270.30, is
334.14 	amended by adding a subdivision to read:
334.15 		Subd. 5a.Nongame wildlife checkoff. A tax preparer must
334.16 	give written notice of the option to contribute to the nongame
334.17 	wildlife management account in section 290.431 to corporate
334.18 	clients that file an income tax return and to individual clients
334.19 	who file an income tax return or property tax refund claim
334.20 	form.  This notification must:
334.21 	(1) state substantially the following:  "You can help
334.22 	preserve Minnesota's nongame wildlife, such as bald eagles and
334.23 	loons, by donating to the nongame wildlife fund.  If you wish to
334.24 	donate, enter the amount on the appropriate line provided by
334.25 	your tax preparer or otherwise notify your tax preparer.  This
334.26 	amount will decrease your refund or increase the amount you
334.27 	owe"; and 
334.28 	(2) be included with information sent to the client at the
334.29 	same time as the preliminary worksheets or other documents used
334.30 	in preparing the client's return and must include a line for
334.31 	displaying contributions.
334.32 	
EFFECTIVE DATE. This section is effective for returns
334.33 	prepared for taxable years beginning after December 31, 2004.

334.34 	Sec. 7. Minnesota Statutes 2004, section 270.30,
334.35 	subdivision 6, is amended to read:
334.36 		Subd. 6.Enforcement; penalties.  The commissioner may
335.1 	impose an administrative penalty of not more than $1,000 per
335.2 	violation of subdivision 3, 4, or 5.  The commissioner may
335.3 	terminate a tax preparer's authority to transmit returns
335.4 	electronically to the state, if the commissioner determines the
335.5 	tax preparer engaged in a pattern and practice of violating this
335.6 	section.  Imposition of a penalty under this subdivision is
335.7 	subject to the contested case procedure under chapter 14.  The
335.8 	commissioner shall collect the penalty in the same manner as the
335.9 	income tax. Penalties imposed under this subdivision are public
335.10 	data.

335.11 	Sec. 8. Minnesota Statutes 2004, section 270.30, is
335.12 	amended by adding a subdivision to read:
335.13 		Subd. 6a.Exchange of data; state board of
335.14 	accountancy. The State Board of Accountancy shall refer to the
335.15 	commissioner complaints it receives about tax preparers who are
335.16 	not subject to the jurisdiction of the State Board of
335.17 	Accountancy and who are alleged to have violated the provisions
335.18 	of subdivisions 3 to 5.

335.19 	Sec. 9. Minnesota Statutes 2004, section 270.30, is
335.20 	amended by adding a subdivision to read:
335.21 		Subd. 6b.Exchange of data; lawyers board of professional
335.22 	responsibility. The Lawyers Board of Professional
335.23 	Responsibility may refer to the commissioner complaints it
335.24 	receives about tax preparers who are not subject to its
335.25 	jurisdiction and who are alleged to have violated the provisions
335.26 	of subdivisions 3 to 5.

335.27 	Sec. 10. Minnesota Statutes 2004, section 270.30, is
335.28 	amended by adding a subdivision to read:
335.29 		Subd. 6c.Exchange of data; commissioner. The
335.30 	commissioner shall refer complaints about tax preparers who are
335.31 	alleged to have violated the provisions of subdivisions 3 to 5
335.32 	to:
335.33 	(1) the State Board of Accountancy, if the tax preparer is
335.34 	under its jurisdiction; and 
335.35 	(2) the Lawyers Board of Professional Responsibility, if
335.36 	the tax preparer is under its jurisdiction.

336.1 	Sec. 11. Minnesota Statutes 2004, section 270.30, is
336.2 	amended by adding a subdivision to read:
336.3 		Subd. 6d.Data private. Information exchanged on
336.4 	individuals under subdivisions 6a to 6c are private data under
336.5 	section 13.02, subdivision 12, until such time as a penalty is
336.6 	imposed as provided in section 326A.08 or by the Lawyers Board
336.7 	of Professional Responsibility.

336.8 	Sec. 12. Minnesota Statutes 2004, section 270.30,
336.9 	subdivision 8, is amended to read:
336.10 		Subd. 8.Exemptions; enforcement provisions. (a) The
336.11 	provisions of subdivisions 6 and 7 this section, except for
336.12 	subdivision 4,do not apply to:
336.13 	(1) an attorney admitted to practice under section 481.01;
336.14 	(2) a certified public accountant holding a certificate
336.15 	under section 326A.04 or a person issued a permit to practice
336.16 	under section 326A.05or other person who is subject to the
336.17 	jurisdiction of the State Board of Accountancy;
336.18 	(3) a person designated as a registered accounting
336.19 	practitioner under Minnesota Rules, part 1105.6600, or a
336.20 	registered accounting practitioner firm issued a permit under
336.21 	Minnesota Rules, part 1105.7100;
336.22 	(4) an enrolled agent who has passed the special enrollment
336.23 	examination administered by the Internal Revenue Service; and 
336.24 	(5) (4) any fiduciary, or the regular employees of a
336.25 	fiduciary, while acting on behalf of the fiduciary estate, the
336.26 	testator, trustor, grantor, or beneficiaries of them;
336.27 	(5) a tax preparer who provides tax preparation services
336.28 	for fewer than six clients in a calendar year;
336.29 	(6) tax preparation services to a spouse, parent,
336.30 	grandparent, child, or sibling of the tax preparer; and 
336.31 	(7) the preparation by an employee of the tax return of the
336.32 	employee's employer.

336.33 	Sec. 13. [270.301] PUBLICATION OF NAMES OF TAX PREPARERS
336.34 	SUBJECT TO PENALTIES.
336.35 		Subdivision 1.Publication of list. Notwithstanding any
336.36 	other law, the commissioner must publish as provided in this
337.1 	section a list or lists of tax preparers subject to penalties.
337.2 		Subd. 2.Required and excluded tax preparers. (a)
337.3 	Subject to the limitations of paragraph (b), the commissioner
337.4 	must publish lists of tax preparers who have been convicted
337.5 	under section 289A.63.
337.6 	(b) For the purposes of this section, tax preparers are not
337.7 	subject to publication if:
337.8 	(1) an administrative or court action contesting the
337.9 	penalty has been filed or served and is unresolved at the time
337.10 	when notice would be given under subdivision 3;
337.11 	(2) an appeal period to contest the penalty has not
337.12 	expired; or 
337.13 	(3) the commissioner has been notified that the tax
337.14 	preparer is deceased.
337.15 		Subd. 3.Notice to tax preparer. (a) At least 30 days
337.16 	before publishing the name of a tax preparer subject to penalty,
337.17 	the commissioner shall mail a written notice to the tax
337.18 	preparer, detailing the amount and nature of each penalty and
337.19 	the intended publication of the information listed in
337.20 	subdivision 4 related to the penalty.  The notice must be mailed
337.21 	by first class and certified mail addressed to the last known
337.22 	address of the tax preparer.  The notice must include
337.23 	information regarding the exceptions listed in subdivision 2,
337.24 	paragraph (b), and must state that the tax preparer's
337.25 	information will not be published if the tax preparer provides
337.26 	information establishing that subdivision 2, paragraph (b),
337.27 	prohibits publication of the tax preparer's name.
337.28 	(b) Thirty days after the notice is mailed and if the tax
337.29 	preparer has not proved to the commissioner that subdivision 2,
337.30 	paragraph (b), prohibits publication, the commissioner may
337.31 	publish in a list of tax preparers subject to penalty the
337.32 	information about the tax preparer that is listed in subdivision
337.33 	4.
337.34 		Subd. 4.Form of list. The list may be published by any
337.35 	medium or method.  The list must contain the name, associated
337.36 	business name or names, address or addresses, and violation or
338.1 	violations for which a penalty was imposed of each tax preparer
338.2 	subject to penalty.
338.3 		Subd. 5.Removal from list. The commissioner shall
338.4 	remove the name of a tax preparer from the list of tax preparers
338.5 	published under this section:
338.6 	(1) when the commissioner determines that the name was
338.7 	included on the list in error;
338.8 	(2) within 90 days after the preparer has fully paid all
338.9 	fines imposed, served any suspension, and demonstrated to the
338.10 	satisfaction of the commissioner that the preparer has
338.11 	successfully completed any remedial actions required by the
338.12 	commissioner, the State Board of Accountancy, or the Lawyers
338.13 	Board of Professional Responsibility; or 
338.14 	(3) when the commissioner has been notified that the tax
338.15 	preparer is deceased.
338.16 		Subd. 6.Names published in error. If the commissioner
338.17 	publishes a name under subdivision 1 in error, the tax preparer
338.18 	whose name was erroneously published has a right to request a
338.19 	retraction and apology.  If the tax preparer so requests, the
338.20 	commissioner shall publish a retraction and apology
338.21 	acknowledging that the tax preparer's name was published in
338.22 	error.  The retraction and apology must appear in the same
338.23 	medium and the same format as the original list that contained
338.24 	the name listed in error.
338.25 		Subd. 7.Payment of damages. Actions against the
338.26 	commissioner of revenue or the state of Minnesota arising out of
338.27 	the implementation of this program must be brought under section
338.28 	270.276.
338.29 	
EFFECTIVE DATE. The provision of this section requiring
338.30 	the commissioner to publish the names of tax preparers applies
338.31 	only to publishing the names of those tax preparers who commit a
338.32 	crime under section 289A.63 on or after August 1, 2005.

338.33 	Sec. 14. Minnesota Statutes 2004, section 270.65, is
338.34 	amended to read:
338.35 	270.65 DATE OF ASSESSMENT; DEFINITION.
338.36 	For purposes of taxes administered by the commissioner, the
339.1 	term "date of assessment" means the date a liability reported on
339.2 	a return was entered into the records of the commissioner or the
339.3 	date a return should have been filed, whichever is later; or, in
339.4 	the case of taxes determined by the commissioner, "date of
339.5 	assessment" means the date of the order assessing taxes or date
339.6 	of the return made by the commissioner; or, in the case of an
339.7 	amended return filed by the taxpayer, the assessment date is the
339.8 	date additional liability reported on the return, if any, was
339.9 	entered into the records of the commissioner; or, in the case of
339.10 	a consent agreement signed by the taxpayer under section 270.67,
339.11 	subdivision 3, the assessment date is the notice date shown on
339.12 	the agreement;or, in the case of a check from a taxpayer that
339.13 	is dishonored and results in an erroneous refund being given to
339.14 	the taxpayer, remittance of the check is deemed to be an
339.15 	assessment and the "date of assessment" is the date the check
339.16 	was received by the commissioner.

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

339.19 	Sec. 15. Minnesota Statutes 2004, section 270.67,
339.20 	subdivision 4, is amended to read:
339.21 		Subd. 4.Offer-in-compromise and installment payment
339.22 	program.  (a) In implementing the authority provided in
339.23 	subdivision 2 or in sections 8.30 and 16D.15 to accept offers of
339.24 	installment payments or offers-in-compromise of tax liabilities,
339.25 	the commissioner of revenue shall prescribe guidelines for
339.26 	employees of the Department of Revenue to determine whether an
339.27 	offer-in-compromise or an offer to make installment payments is
339.28 	adequate and should be accepted to resolve a dispute.  In
339.29 	prescribing the guidelines, the commissioner shall develop and
339.30 	publish schedules of national and local allowances designed to
339.31 	provide that taxpayers entering into a compromise or payment
339.32 	agreement have an adequate means to provide for basic living
339.33 	expenses.  The guidelines must provide that the taxpayer's
339.34 	ownership interest in a motor vehicle, to the extent of the
339.35 	value allowed in section 550.37, will not be considered as an
339.36 	asset; in the case of an offer related to a joint tax liability
340.1 	of spouses, that value of two motor vehicles must be excluded.
340.2 	The guidelines must provide that employees of the department
340.3 	shall determine, on the basis of the facts and circumstances of
340.4 	each taxpayer, whether the use of the schedules is appropriate
340.5 	and that employees must not use the schedules to the extent the
340.6 	use would result in the taxpayer not having adequate means to
340.7 	provide for basic living expenses.  The guidelines must provide
340.8 	that:
340.9 	(1) an employee of the department shall not reject an
340.10 	offer-in-compromise or an offer to make installment payments
340.11 	from a low-income taxpayer solely on the basis of the amount of
340.12 	the offer; and
340.13 	(2) in the case of an offer-in-compromise which relates
340.14 	only to issues of liability of the taxpayer:
340.15 	(i) the offer must not be rejected solely because the
340.16 	commissioner is unable to locate the taxpayer's return or return
340.17 	information for verification of the liability; and
340.18 	(ii) the taxpayer shall not be required to provide an
340.19 	audited, reviewed, or compiled financial statement.
340.20 	(b) The commissioner shall establish procedures:
340.21 	(1) that require presentation of a counteroffer or a
340.22 	written rejection of the offer by the commissioner if the amount
340.23 	offered by the taxpayer in an offer-in-compromise or an offer to
340.24 	make installment payments is not accepted by the commissioner;
340.25 	(2) for an administrative review of any written rejection
340.26 	of a proposed offer-in-compromise or installment agreement made
340.27 	by a taxpayer under this section before the rejection is
340.28 	communicated to the taxpayer;
340.29 	(3) that allow a taxpayer to request reconsideration of any
340.30 	written rejection of the offer or agreement to the commissioner
340.31 	of revenue to determine whether the rejection is reasonable and
340.32 	appropriate under the circumstances; and
340.33 	(4) that provide for notification to the taxpayer when an
340.34 	offer-in-compromise has been accepted, and issuance of
340.35 	certificates of release of any liens imposed under section
340.36 	270.69 related to the liability which is the subject of the
341.1 	compromise.
341.2 	(c) Each compromise proposal must be accompanied by a
341.3 	nonrefundable payment of $250.  If the compromise proposal is
341.4 	accepted, the payment must be applied to the accepted compromise
341.5 	amount.  If the compromise is rejected, the payment must be
341.6 	applied to the outstanding tax debts of the taxpayer pursuant to
341.7 	section 270.652.  In cases of financial hardship, upon
341.8 	presentation of information establishing an inability to make
341.9 	the $250 payment, the commissioner may waive this requirement.
341.10 	
EFFECTIVE DATE. This section is effective for offers in
341.11 	compromise submitted after August 31, 2005.

341.12 	Sec. 16. Minnesota Statutes 2004, section 270.69,
341.13 	subdivision 4, is amended to read:
341.14 		Subd. 4.Period of limitations.  The lien imposed by this
341.15 	section shall, notwithstanding any other provision of law to the
341.16 	contrary, be enforceable from the time the lien arises and for
341.17 	ten years from the date of filing the notice of lien, which must
341.18 	be filed by the commissioner within five years after the date of
341.19 	assessment of the tax or final administrative or judicial
341.20 	determination of the assessment.  A notice of lien filed in one
341.21 	county may be transcribed to the secretary of state or to any
341.22 	other county within ten years after the date of its filing, but
341.23 	the transcription shall not extend the period during which the
341.24 	lien is enforceable.  A notice of lien may be renewed by the
341.25 	commissioner before the expiration of the ten-year period for an
341.26 	additional ten years.  The taxpayer must receive written notice
341.27 	of the renewal.
341.28 	
EFFECTIVE DATE. This section is effective the day
341.29 	following final enactment.

341.30 	Sec. 17. Minnesota Statutes 2004, section 270A.03,
341.31 	subdivision 5, is amended to read:
341.32 		Subd. 5.Debt.  "Debt" means a legal obligation of a
341.33 	natural person to pay a fixed and certain amount of money, which
341.34 	equals or exceeds $25 and which is due and payable to a claimant
341.35 	agency.  The term includes criminal fines imposed under section
341.36 	609.10 or 609.125, fines imposed for petty misdemeanors as
342.1 	defined in section 609.02, subdivision 4a,and restitution.  The
342.2 	term also includes the co-payment for the appointment of a
342.3 	district public defender imposed under section 611.17, paragraph
342.4 	(c).  A debt may arise under a contractual or statutory
342.5 	obligation, a court order, or other legal obligation, but need
342.6 	not have been reduced to judgment.
342.7 	A debt includes any legal obligation of a current recipient
342.8 	of assistance which is based on overpayment of an assistance
342.9 	grant where that payment is based on a client waiver or an
342.10 	administrative or judicial finding of an intentional program
342.11 	violation; or where the debt is owed to a program wherein the
342.12 	debtor is not a client at the time notification is provided to
342.13 	initiate recovery under this chapter and the debtor is not a
342.14 	current recipient of food support, transitional child care, or
342.15 	transitional medical assistance.
342.16 	A debt does not include any legal obligation to pay a
342.17 	claimant agency for medical care, including hospitalization if
342.18 	the income of the debtor at the time when the medical care was
342.19 	rendered does not exceed the following amount:
342.20 	(1) for an unmarried debtor, an income of $8,800 or less;
342.21 	(2) for a debtor with one dependent, an income of $11,270
342.22 	or less;
342.23 	(3) for a debtor with two dependents, an income of $13,330
342.24 	or less;
342.25 	(4) for a debtor with three dependents, an income of
342.26 	$15,120 or less;
342.27 	(5) for a debtor with four dependents, an income of $15,950
342.28 	or less; and
342.29 	(6) for a debtor with five or more dependents, an income of
342.30 	$16,630 or less.
342.31 	The income amounts in this subdivision shall be adjusted
342.32 	for inflation for debts incurred in calendar years 2001 and
342.33 	thereafter.  The dollar amount of each income level that applied
342.34 	to debts incurred in the prior year shall be increased in the
342.35 	same manner as provided in section 1(f) of the Internal Revenue
342.36 	Code of 1986, as amended through December 31, 2000, except that
343.1 	for the purposes of this subdivision the percentage increase
343.2 	shall be determined from the year starting September 1, 1999,
343.3 	and ending August 31, 2000, as the base year for adjusting for
343.4 	inflation for debts incurred after December 31, 2000.
343.5 	Debt also includes an agreement to pay a MinnesotaCare
343.6 	premium, regardless of the dollar amount of the premium
343.7 	authorized under section 256L.15, subdivision 1a.

343.8 	Sec. 18. Minnesota Statutes 2004, section 270A.03,
343.9 	subdivision 7, is amended to read:
343.10 		Subd. 7.Refund.  "Refund" means an individual income tax
343.11 	refund or political contribution refund, pursuant to chapter
343.12 	290, or a property tax credit or refund, pursuant to chapter
343.13 	290A, or a sustainable forest tax payment to a claimant under
343.14 	chapter 290C.
343.15 	For purposes of this chapter, lottery prizes, as set forth
343.16 	in section 349A.08, subdivision 8, and amounts granted to
343.17 	persons by the legislature on the recommendation of the joint
343.18 	senate-house of representatives Subcommittee on Claims shall be
343.19 	treated as refunds.
343.20 	In the case of a joint property tax refund payable to
343.21 	spouses under chapter 290A, the refund shall be considered as
343.22 	belonging to each spouse in the proportion of the total refund
343.23 	that equals each spouse's proportion of the total income
343.24 	determined under section 290A.03, subdivision 3.  In the case of
343.25 	a joint income tax refund under chapter 289A, the refund shall
343.26 	be considered as belonging to each spouse in the proportion of
343.27 	the total refund that equals each spouse's proportion of the
343.28 	total taxable income determined under section 290.01,
343.29 	subdivision 29.  The commissioner shall remit the entire refund
343.30 	to the claimant agency, which shall, upon the request of the
343.31 	spouse who does not owe the debt, determine the amount of the
343.32 	refund belonging to that spouse and refund the amount to that
343.33 	spouse.  For court fines, fees, and surcharges and court-ordered
343.34 	restitution under section 611A.04, subdivision 2, the notice
343.35 	provided by the commissioner of revenue under section 270A.07,
343.36 	subdivision 2, paragraph (b), serves as the appropriate legal
344.1 	notice to the spouse who does not owe the debt.
344.2 	
EFFECTIVE DATE. This section is effective for political
344.3 	contribution refund claims based on contributions made on or
344.4 	after July 1, 2005.

344.5 	Sec. 19. Minnesota Statutes 2004, section 289A.08,
344.6 	subdivision 16, is amended to read:
344.7 		Subd. 16.Tax refund or return preparers; electronic
344.8 	filing; paper filing fee imposed.  (a) A "tax refund or return
344.9 	preparer," as defined in section 289A.60, subdivision 13,
344.10 	paragraph (g) (h), who prepared more than 500 100 Minnesota
344.11 	individual income tax returns for the prior calendar year must
344.12 	file all Minnesota individual income tax returns prepared for
344.13 	the current calendar year by electronic means.
344.14 	(b) For tax returns prepared for the tax year beginning in
344.15 	2001, the "500" in paragraph (a) is reduced to 250.
344.16 	(c) For tax returns prepared for tax years beginning after
344.17 	December 31, 2001, the "500" in paragraph (a) is reduced to 100.
344.18 	(d) Paragraph (a) does not apply to a return if the
344.19 	taxpayer has indicated on the return that the taxpayer did not
344.20 	want the return filed by electronic means.
344.21 	(e) (c) For each return that is not filed electronically by
344.22 	a tax refund or return preparer under this subdivision,
344.23 	including returns filed under paragraph (d) (b), a paper filing
344.24 	fee of $5 is imposed upon the preparer.  The fee is collected
344.25 	from the preparer in the same manner as income tax.  The fee
344.26 	does not apply to returns that the commissioner requires to be
344.27 	filed in paper form.

344.28 	Sec. 20. Minnesota Statutes 2004, section 289A.37,
344.29 	subdivision 5, is amended to read:
344.30 		Subd. 5.Sufficiency of notice.  An order of assessment,
344.31 	sent postage prepaid by United States mail to the taxpayer at
344.32 	the taxpayer's last known address, or sent by electronic mail to
344.33 	the taxpayer's last known electronic mailing address as provided
344.34 	for in section 325L.08,is sufficient even if the taxpayer is
344.35 	deceased or is under a legal disability, or, in the case of a
344.36 	corporation, has terminated its existence, unless the department
345.1 	has been provided with a new address by a party authorized to
345.2 	receive notices of assessment.
345.3 	
EFFECTIVE DATE. This section is effective the day
345.4 	following final enactment.

345.5 	Sec. 21. Minnesota Statutes 2004, section 289A.50,
345.6 	subdivision 1, is amended to read:
345.7 		Subdivision 1.General right to refund.  (a) Subject to
345.8 	the requirements of this section and section 289A.40, a taxpayer
345.9 	who has paid a tax in excess of the taxes lawfully due and who
345.10 	files a written claim for refund will be refunded or credited
345.11 	the overpayment of the tax determined by the commissioner to be
345.12 	erroneously paid.
345.13 	(b) The claim must specify the name of the taxpayer, the
345.14 	date when and the period for which the tax was paid, the kind of
345.15 	tax paid, the amount of the tax that the taxpayer claims was
345.16 	erroneously paid, the grounds on which a refund is claimed, and
345.17 	other information relative to the payment and in the form
345.18 	required by the commissioner.  An income tax, estate tax, or
345.19 	corporate franchise tax return, or amended return claiming an
345.20 	overpayment constitutes a claim for refund.
345.21 	(c) When, in the course of an examination, and within the
345.22 	time for requesting a refund, the commissioner determines that
345.23 	there has been an overpayment of tax, the commissioner shall
345.24 	refund or credit the overpayment to the taxpayer and no demand
345.25 	is necessary.  If the overpayment exceeds $1, the amount of the
345.26 	overpayment must be refunded to the taxpayer.  If the amount of
345.27 	the overpayment is less than $1, the commissioner is not
345.28 	required to refund.  In these situations, the commissioner does
345.29 	not have to make written findings or serve notice by mail to the
345.30 	taxpayer.
345.31 	(d) If the amount allowable as a credit for withholding,
345.32 	estimated taxes, or dependent care exceeds the tax against which
345.33 	the credit is allowable, the amount of the excess is considered
345.34 	an overpayment. The refund allowed by section 290.06,
345.35 	subdivision 23, is also considered an overpayment.The
345.36 	requirements of section 270.10, subdivision 1, do not apply to
346.1 	the refunding of such an overpayment shown on the original
346.2 	return filed by a taxpayer.
346.3 	(e) If the entertainment tax withheld at the source exceeds
346.4 	by $1 or more the taxes, penalties, and interest reported in the
346.5 	return of the entertainment entity or imposed by section
346.6 	290.9201, the excess must be refunded to the entertainment
346.7 	entity.  If the excess is less than $1, the commissioner need
346.8 	not refund that amount.
346.9 	(f) If the surety deposit required for a construction
346.10 	contract exceeds the liability of the out-of-state contractor,
346.11 	the commissioner shall refund the difference to the contractor.
346.12 	(g) An action of the commissioner in refunding the amount
346.13 	of the overpayment does not constitute a determination of the
346.14 	correctness of the return of the taxpayer.
346.15 	(h) There is appropriated from the general fund to the
346.16 	commissioner of revenue the amount necessary to pay refunds
346.17 	allowed under this section.
346.18 	
EFFECTIVE DATE. This section is effective for political
346.19 	contribution refund claims based on contributions made on or
346.20 	after July 1, 2005.

346.21 	Sec. 22. Minnesota Statutes 2004, section 289A.60,
346.22 	subdivision 2a, is amended to read:
346.23 		Subd. 2a.Penalties for extended delinquency.  (a) If an
346.24 	individual income tax is not paid within 180 days after the date
346.25 	of filing of a return or, in the case of taxes assessed by the
346.26 	commissioner, within 180 days after the assessment date or, if
346.27 	appealed, within 180 days after final resolution of the appeal,
346.28 	an extended delinquency penalty of five percent of the tax
346.29 	remaining unpaid is added to the amount due.
346.30 	(b) If a corporate franchise, fiduciary income, mining
346.31 	company, estate, partnership, S corporation, or nonresident
346.32 	entertainer tax return is not filed within 30 days after written
346.33 	demand for the filing of a delinquent return, an extended
346.34 	delinquency penalty of five percent of the tax not paid prior to
346.35 	the demand is added to the tax,or in the case of an individual
346.36 	income tax return, a minimum penalty of $100 or the five percent
347.1 	penalty is imposed, whichever amount is greater.
347.2 	
EFFECTIVE DATE. This section is effective for returns
347.3 	originally due on or after August 1, 2005.

347.4 	Sec. 23. Minnesota Statutes 2004, section 289A.60,
347.5 	subdivision 6, is amended to read:
347.6 		Subd. 6.Penalty for failure to file,false or fraudulent
347.7 	return, evasion.  If a person, with intent to evade or defeat a
347.8 	tax or payment of tax, fails to file a return,files a false or
347.9 	fraudulent return, or attempts in any other manner to evade or
347.10 	defeat a tax or payment of tax, there is imposed on the person a
347.11 	penalty equal to 50 percent of the tax, less amounts paid by the
347.12 	person on the basis of the false or fraudulent return, if any,
347.13 	due for the period to which the return related.
347.14 	
EFFECTIVE DATE. This section is effective the day
347.15 	following final enactment.

347.16 	Sec. 24. Minnesota Statutes 2004, section 289A.60,
347.17 	subdivision 11, is amended to read:
347.18 		Subd. 11.Penalties relating to information reports,
347.19 	withholding.  (a) When a person required under section 289A.09,
347.20 	subdivision 2, to give a statement to an employee or payee and a
347.21 	duplicate statement to the commissioner, or to give a
347.22 	reconciliation of the statements and quarterly returns to the
347.23 	commissioner, gives a false or fraudulent statement to an
347.24 	employee or payee or a false or fraudulent duplicate statement
347.25 	or reconciliation of statements and quarterly returns to the
347.26 	commissioner, or fails to give a statement or the reconciliation
347.27 	in the manner, when due, and showing the information required by
347.28 	section 289A.09, subdivision 2, or rules prescribed by the
347.29 	commissioner under that section, that person is liable for a
347.30 	penalty of $50 for an act or failure to act.  The total amount
347.31 	imposed on the delinquent person for failures during a calendar
347.32 	year must not exceed $25,000.
347.33 	(b) In addition to any other penalty provided by law, an
347.34 	employee who gives a withholding exemption certificate or a
347.35 	residency affidavit to an employer that the employee has reason
347.36 	to know contains a materially incorrect statement decreases the
348.1 	amount withheld under section 290.92 and as of the time the
348.2 	certificate or affidavit was given to the employer there was no
348.3 	reasonable basis for the statements in the certificate or
348.4 	affidavit is liable to the commissioner of revenue for a penalty
348.5 	of $500 for each instance.
348.6 	(c) In addition to any other penalty provided by law, an
348.7 	employer who fails to submit a copy of a withholding exemption
348.8 	certificate or a residency affidavit required by section 290.92,
348.9 	subdivision 5a, clause (1)(a), (1)(b), or (2) is liable to the
348.10 	commissioner of revenue for a penalty of $50 for each instance.
348.11 	(d) An employer or payor who fails to file an application
348.12 	for a withholding account number, as required by section 290.92,
348.13 	subdivision 24, is liable to the commissioner for a penalty of
348.14 	$100.
348.15 	
EFFECTIVE DATE. This section is effective for
348.16 	certificates and affidavits given to employers after December
348.17 	31, 2005.

348.18 	Sec. 25. Minnesota Statutes 2004, section 289A.60,
348.19 	subdivision 13, is amended to read:
348.20 		Subd. 13.Penalties for tax return preparers.  (a) If an
348.21 	understatement of liability with respect to a return or claim
348.22 	for refund is due to a willful attempt in any manner to
348.23 	understate the liability for a tax by a person who is a tax
348.24 	return preparer with respect to the return or claim, the person
348.25 	shall pay to the commissioner a penalty of $500.  If a part of a
348.26 	property tax refund claim is excessive due to a willful attempt
348.27 	in any manner to overstate the claim for relief allowed under
348.28 	chapter 290A by a person who is a tax refund or return preparer,
348.29 	the person shall pay to the commissioner a penalty of $500 with
348.30 	respect to the claim.  These penalties may not be assessed
348.31 	against the employer of a tax return preparer unless the
348.32 	employer was actively involved in the willful attempt to
348.33 	understate the liability for a tax or to overstate the claim for
348.34 	refund.  These penalties are income tax liabilities and may be
348.35 	assessed at any time as provided in section 289A.38, subdivision
348.36 	5.
349.1 	(b) A civil action in the name of the state of Minnesota
349.2 	may be commenced to enjoin any person who is a tax return
349.3 	preparer doing business in this state from further engaging in
349.4 	any conduct described in paragraph (c).  An action under this
349.5 	paragraph must be brought by the attorney general in the
349.6 	district court for the judicial district of the tax return
349.7 	preparer's residence or principal place of business, or in which
349.8 	the taxpayer with respect to whose tax return the action is
349.9 	brought resides.  The court may exercise its jurisdiction over
349.10 	the action separate and apart from any other action brought by
349.11 	the state of Minnesota against the tax return preparer or any
349.12 	taxpayer.
349.13 	(c) In an action under paragraph (b), if the court finds
349.14 	that a tax return preparer has:
349.15 	(1) engaged in any conduct subject to a civil penalty under
349.16 	section 289A.60 or a criminal penalty under section 289A.63;
349.17 	(2) misrepresented the preparer's eligibility to practice
349.18 	before the Department of Revenue, or otherwise misrepresented
349.19 	the preparer's experience or education as a tax return preparer;
349.20 	(3) guaranteed the payment of any tax refund or the
349.21 	allowance of any tax credit; or
349.22 	(4) engaged in any other fraudulent or deceptive conduct
349.23 	that substantially interferes with the proper administration of
349.24 	state tax law, and injunctive relief is appropriate to prevent
349.25 	the recurrence of that conduct,
349.26 	the court may enjoin the person from further engaging in that
349.27 	conduct.
349.28 	(d) If the court finds that a tax return preparer has
349.29 	continually or repeatedly engaged in conduct described in
349.30 	paragraph (c), and that an injunction prohibiting that conduct
349.31 	would not be sufficient to prevent the person's interference
349.32 	with the proper administration of state tax laws, the court may
349.33 	enjoin the person from acting as a tax return preparer.  The
349.34 	court may not enjoin the employer of a tax return preparer for
349.35 	conduct described in paragraph (c) engaged in by one or more of
349.36 	the employer's employees unless the employer was also actively
350.1 	involved in that conduct.
350.2 	(e) The commissioner may terminate or suspend a tax
350.3 	preparer's authority to transmit returns electronically to the
350.4 	state, if the commissioner determines that the tax preparer has
350.5 	engaged in a pattern and practice of conduct in violation of
350.6 	paragraph (a) of this subdivision or has been convicted under
350.7 	section 289A.63.
350.8 	(f) For purposes of this subdivision, the term
350.9 	"understatement of liability" means an understatement of the net
350.10 	amount payable with respect to a tax imposed by state tax law,
350.11 	or an overstatement of the net amount creditable or refundable
350.12 	with respect to a tax.  The determination of whether or not
350.13 	there is an understatement of liability must be made without
350.14 	regard to any administrative or judicial action involving the
350.15 	taxpayer.  For purposes of this subdivision, the amount
350.16 	determined for underpayment of estimated tax under either
350.17 	section 289A.25 or 289A.26 is not considered an understatement
350.18 	of liability.
350.19 	(f) (g) For purposes of this subdivision, the term
350.20 	"overstatement of claim" means an overstatement of the net
350.21 	amount refundable with respect to a claim for property tax
350.22 	relief provided by chapter 290A.  The determination of whether
350.23 	or not there is an overstatement of a claim must be made without
350.24 	regard to administrative or judicial action involving the
350.25 	claimant.
350.26 	(g) (h) For purposes of this section, the term "tax refund
350.27 	or return preparer" means an individual who prepares for
350.28 	compensation, or who employs one or more individuals to prepare
350.29 	for compensation, a return of tax, or a claim for refund of
350.30 	tax.  The preparation of a substantial part of a return or claim
350.31 	for refund is treated as if it were the preparation of the
350.32 	entire return or claim for refund.  An individual is not
350.33 	considered a tax return preparer merely because the individual:
350.34 	(1) gives typing, reproducing, or other mechanical
350.35 	assistance;
350.36 	(2) prepares a return or claim for refund of the employer,
351.1 	or an officer or employee of the employer, by whom the
351.2 	individual is regularly and continuously employed;
351.3 	(3) prepares a return or claim for refund of any person as
351.4 	a fiduciary for that person; or
351.5 	(4) prepares a claim for refund for a taxpayer in response
351.6 	to a tax order issued to the taxpayer.

351.7 	Sec. 26. Minnesota Statutes 2004, section 290.01,
351.8 	subdivision 6, is amended to read:
351.9 		Subd. 6.Taxpayer.  The term "taxpayer" means any person
351.10 	or corporation subject to a tax imposed by this chapter. For
351.11 	purposes of section 290.06, subdivision 23, the term "taxpayer"
351.12 	means an individual eligible to vote in Minnesota under section
351.13 	201.014.
351.14 	
EFFECTIVE DATE. This section is effective for political
351.15 	contribution refund claims based on contributions that are made
351.16 	on or after July 1, 2005.

351.17 	Sec. 27. Minnesota Statutes 2004, section 290.92,
351.18 	subdivision 1, is amended to read:
351.19 		Subdivision 1.Definitions.  (1)  [WAGES.] For purposes
351.20 	of this section, the term "wages" means the same as that term is
351.21 	defined in section 3401(a) and (f) of the Internal Revenue Code.
351.22 	(2)  [PAYROLL PERIOD.] For purposes of this section the
351.23 	term "payroll period" means a period for which a payment of
351.24 	wages is ordinarily made to the employee by the employee's
351.25 	employer, and the term "miscellaneous payroll period" means a
351.26 	payroll period other than a daily, weekly, biweekly,
351.27 	semimonthly, monthly, quarterly, semiannual, or annual payroll
351.28 	period.
351.29 	(3)  [EMPLOYEE.] For purposes of this section the term
351.30 	"employee" means any resident individual performing services for
351.31 	an employer, either within or without, or both within and
351.32 	without the state of Minnesota, and every nonresident individual
351.33 	performing services within the state of Minnesota, the
351.34 	performance of which services constitute, establish, and
351.35 	determine the relationship between the parties as that of
351.36 	employer and employee.  As used in the preceding sentence, the
352.1 	term "employee" includes an officer of a corporation, and an
352.2 	officer, employee, or elected official of the United States, a
352.3 	state, or any political subdivision thereof, or the District of
352.4 	Columbia, or any agency or instrumentality of any one or more of
352.5 	the foregoing.
352.6 	(4)  [EMPLOYER.] For purposes of this section the term
352.7 	"employer" means any person, including individuals, fiduciaries,
352.8 	estates, trusts, partnerships, limited liability companies, and
352.9 	corporations transacting business in or deriving any income from
352.10 	sources within the state of Minnesota for whom an individual
352.11 	performs or performed any service, of whatever nature, as the
352.12 	employee of such person, except that if the person for whom the
352.13 	individual performs or performed the services does not have
352.14 	legal control of the payment of the wages for such services, the
352.15 	term "employer," except for purposes of paragraph (1), means the
352.16 	person having legal control of the payment of such wages.  As
352.17 	used in the preceding sentence, the term "employer" includes any
352.18 	corporation, individual, estate, trust, or organization which is
352.19 	exempt from taxation under section 290.05 and further includes,
352.20 	but is not limited to, officers of corporations who have legal 
352.21 	control, either individually or jointly with another or others,
352.22 	of the payment of the wages.
352.23 	(5)  [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For
352.24 	purposes of this section, the term "number of withholding
352.25 	exemptions claimed" means the number of withholding exemptions
352.26 	claimed in a withholding exemption certificate in effect under
352.27 	subdivision 5, except that if no such certificate is in effect,
352.28 	the number of withholding exemptions claimed shall be considered
352.29 	to be zero.
352.30 	
EFFECTIVE DATE. This section is effective the day
352.31 	following final enactment.

352.32 	Sec. 28. Minnesota Statutes 2004, section 325D.33,
352.33 	subdivision 6, is amended to read:
352.34 		Subd. 6.Violations.  If the commissioner determines that
352.35 	a distributor is violating any provision of this chapter, the
352.36 	commissioner must give the distributor a written warning
353.1 	explaining the violation and an explanation of what must be done
353.2 	to comply with this chapter.  Within ten days of issuance of the
353.3 	warning, the distributor must notify the commissioner that the
353.4 	distributor has complied with the commissioner's recommendation
353.5 	or request that the commissioner set the issue for a hearing
353.6 	pursuant to chapter 14.  If a hearing is requested, the hearing
353.7 	shall be scheduled within 20 days of the request and the
353.8 	recommendation of the administrative law judge shall be issued
353.9 	within five working days of the close of the hearing.  The
353.10 	commissioner's final determination shall be issued within five
353.11 	working days of the receipt of the administrative law judge's
353.12 	recommendation.  If the commissioner's final determination is
353.13 	adverse to the distributor and the distributor does not comply
353.14 	within ten days of receipt of the commissioner's final
353.15 	determination, the commissioner may order the distributor to
353.16 	immediately cease the stamping of cigarettes.  As soon as
353.17 	practicable after the order, the commissioner must remove the
353.18 	meter and any unapplied cigarette stamps from the premises of
353.19 	the distributor.
353.20 	If within ten days of issuance of the written warning the
353.21 	distributor has not complied with the commissioner's
353.22 	recommendation or requested a hearing, the commissioner may
353.23 	order the distributor to immediately cease the stamping of
353.24 	cigarettes and remove the meter and unapplied stamps from the
353.25 	distributor's premises.
353.26 	If, within any 12-month period, the commissioner has issued
353.27 	three written warnings to any distributor, even if the
353.28 	distributor has complied within ten days, the commissioner shall
353.29 	notify the distributor of the commissioner's intent to revoke
353.30 	the distributor's license for a continuing course of conduct
353.31 	contrary to this chapter.  For purposes of this paragraph, a
353.32 	written warning that was ultimately resolved by removal of the
353.33 	warning by the commissioner is not deemed to be a warning.  The
353.34 	commissioner must notify the distributor of the date and time of
353.35 	a hearing pursuant to chapter 14 at least 20 days before the
353.36 	hearing is held.  The hearing must provide an opportunity for
354.1 	the distributor to show cause why the license should not be
354.2 	revoked.  If the commissioner revokes a distributor's license,
354.3 	the commissioner shall not issue a new license to that
354.4 	distributor for 180 days.
354.5 	
EFFECTIVE DATE. This section is effective the day
354.6 	following final enactment.

354.7 	Sec. 29. [459.21] GAMBLING SUBSIDIES; REFERENDUM
354.8 	APPROVAL.
354.9 	No city or county may provide an exemption from a tax or
354.10 	fee, an abatement of a tax, or fee or any other type of public
354.11 	subsidy to an enterprise engaged in gambling, unless the
354.12 	question of whether to provide the exemption, abatement, or
354.13 	subsidy has been submitted to the voters at a special or general
354.14 	election and a majority of the votes cast on the question are in
354.15 	the affirmative.
354.16 	For purposes of this section, the following terms have the
354.17 	meanings given:
354.18 	(1) "Gambling" means conducting class III gaming as defined
354.19 	in United States Code, title 25, section 2703.
354.20 	(2) "Public subsidy" does not include (i) construction of
354.21 	public infrastructure unless the predominant use of the
354.22 	infrastructure is to serve an enterprise engaged in gambling or
354.23 	(ii) the use, maintenance, or reconstruction (without expansion)
354.24 	of preexisting infrastructure.

354.25 	EFFECTIVE DATE. This section is effective the day
354.26 	following enactment.

354.27 	Sec. 30. Minnesota Statutes 2004, section 645.44, is
354.28 	amended by adding a subdivision to read:
354.29 		Subd. 19.Fee and tax. (a) "Tax" means any fee, charge,
354.30 	exaction, or assessment imposed by a governmental entity on an
354.31 	individual, person, entity, transaction, good, service, or other
354.32 	thing.  It excludes a price that an individual or entity chooses
354.33 	voluntarily to pay in return for receipt of goods or services
354.34 	provided by the governmental entity.  A government good or
354.35 	service does not include access to or the authority to engage in
354.36 	private market transactions with a nongovernmental party, such
355.1 	as licenses to engage in a trade, profession, or business or to
355.2 	improve private property.
355.3 	(b) For purposes of applying the laws of this state, a
355.4 	"fee," "charge," or other similar term that satisfies the
355.5 	functional requirements of paragraph (a) must be treated as a
355.6 	tax for all purposes, regardless of whether the statute or law
355.7 	names or describes it as a tax.  The provisions of this
355.8 	subdivision do not preempt or supersede limitations under
355.9 	statute or law that apply to fees, charges, or assessments.
355.10 	
EFFECTIVE DATE. This section is effective the day
355.11 	following final enactment.

355.12 	Sec. 31. TAX REFORM COMMISSION.
 355.13 		Subdivision 1.Commission established. A tax reform
355.14 	action commission is established in the legislative branch to
355.15 	study the Minnesota tax and revenue system and to make
355.16 	recommendations to the legislature.
355.17 		Subd. 2.Membership. (a) The commission consists of 15
355.18 	members, appointed as follows:
355.19 	(1) three members appointed by the governor, two from the
355.20 	executive branch and one from private life;
355.21 	(2) four members appointed by the majority leader of the
355.22 	senate, two members of the senate and two from private life;
355.23 	(3) two members appointed by the minority leader of the
355.24 	senate, one member of the senate and one from private life;
355.25 	(4) four members appointed by the speaker of the house of
355.26 	representatives, two members of the house of representatives and
355.27 	two from private life; and 
355.28 	(5) two members appointed by the minority leader of the
355.29 	house of representatives, one member of the house of
355.30 	representatives and one from private life.
355.31 	(b) The appointing authority shall select members who are
355.32 	of recognized standing and distinction and who possess
355.33 	demonstrated capacity to discharge the duties of the
355.34 	commission.  In making appointments, the appointing authorities
355.35 	shall attempt to appoint some individuals to the commission who
355.36 	have special experience or knowledge in taxation, economics, and
356.1 	accounting.
356.2 	(c) The governor shall designate a member of the commission
356.3 	as its chair who shall determine its duties and supervise its
356.4 	staff.
356.5 	(d) The appointing authorities shall appoint members of the
356.6 	commission not more than 30 days after enactment of this
356.7 	section.  Members serve for the life of the commission.  A
356.8 	vacancy in the commission membership does not affect the power
356.9 	of the remaining members to execute the duties of the
356.10 	commission.  A vacancy in commission membership is filled in the
356.11 	same manner in which the original appointment was made.
356.12 		Subd. 3.Duties; report. (a) The commission shall study
356.13 	and evaluate the Minnesota state and local tax and revenue
356.14 	system with a goal of making long-term improvements in the
356.15 	system for the citizens of the state, given standard principles
356.16 	of good tax policy and the background of expected demographic
356.17 	and economic changes in the state, nation, and world.  The
356.18 	commission's recommendations must be done on a revenue neutral
356.19 	basis.  In particular, the commission shall examine:
356.20 	(1) the mix of state revenues between tax revenues and fees
356.21 	and charges for services used or benefits received;
356.22 	(2) the implications of likely demographic and economic
356.23 	changes, affecting both (i) the demands for state and local
356.24 	government services and (ii) taxes and other revenues; and 
356.25 	(3) the extent to which the existing tax system and the
356.26 	commission's proposal satisfy the following basic tax policy
356.27 	principles:
356.28 	(i) equity or fairness, including measures based on ability
356.29 	to pay, equal treatment of equals, and payment for benefits
356.30 	received;
356.31 	(ii) neutrality or efficiency, the extent to which the
356.32 	effects on private market decisions are minimized;
356.33 	(iii) revenue adequacy, the extent to which the revenues
356.34 	are stable and predictable and grow with increases in income or
356.35 	economic activity;
356.36 	(iv) competitiveness, the extent to which negative effects
357.1 	on the state's attractiveness as a location for investment,
357.2 	working, and living are minimized;
357.3 	(v) simplicity, the extent to which it is easy to
357.4 	understand;
357.5 	(vi) ease of compliance and administration, the extent to
357.6 	which taxpayers can easily comply and the government can easily
357.7 	administer it; and 
357.8 	(vii) visibility or accountability, the extent to which the
357.9 	taxes or other charges are clear and apparent to their payers as
357.10 	a cost of government and that the government officials imposing
357.11 	the tax are accountable, through election or otherwise, to the
357.12 	principal payers of the tax.
357.13 	(b) The commission shall report to the legislature as
357.14 	provided in this paragraph.  Each report must include the
357.15 	commission's evaluation of the tax or taxes, its recommendations
357.16 	for reform and improvement of the tax or taxes on a revenue
357.17 	neutral basis, its rationale for the proposed changes, and a
357.18 	draft bill implementing the commission's recommendation for
357.19 	introduction in the legislature.  The reports must be submitted
357.20 	by the following dates:
357.21 	(1) corporate and other business taxation, including the
357.22 	credit for increasing research activities, by July 1, 2007;
357.23 	(2) general sales and motor vehicle sales and special
357.24 	excise taxes by July 1, 2008;
357.25 	(3) individual income taxation by July 1, 2009; and 
357.26 	(4) estate, insurance premium, MinnesotaCare, and all other
357.27 	taxes not covered by clauses (1) to (3) by July 1, 2010.
357.28 		Subd. 4.Per diem and expenses. Members of the
357.29 	commission may be compensated and receive reimbursement for
357.30 	expenses, as provided for members of advisory councils under
357.31 	Minnesota Statutes, section 15.059, subdivision 3.  This
357.32 	subdivision does not apply to members of the legislature or
357.33 	state employees.
357.34 	Subd 5.[STAFF.] The commission may employ staff as it
357.35 	deems appropriate to carry out its duties or use existing
357.36 	legislative and executive branch staff.  All staff are in the
358.1 	unclassified state service.  Legislative staff and the
358.2 	Department of Revenue staff must provide research, bill
358.3 	drafting, and other services to the commission upon its
358.4 	request.  The commission may contract with consultants for
358.5 	research and other services and enter other contracts, as it
358.6 	deems necessary or appropriate to carry out its duties.  These
358.7 	contracts are not subject to the requirements of Minnesota
358.8 	Statutes, chapter 16C.
358.9 		Subd. 6.Expiration. The commission terminates 30 days
358.10 	after transmitting its final report to the legislature under
358.11 	subdivision 3, paragraph (b).
358.12 	
EFFECTIVE DATE. This section is effective the day
358.13 	following final enactment.

358.14 	Sec. 32. TRANSFER.
 358.15 	On July 1, 2005, the commissioner of finance shall transfer
358.16 	$3,408,000 and any additional amount from the tax relief account
358.17 	under Minnesota Statutes, section 16A.1522, subdivision 4, to
358.18 	the general fund.

358.19 	Sec. 33. APPROPRIATION.
 358.20 	(a) $125,000 in fiscal year 2006 and $125,000 in fiscal
358.21 	year 2007 are appropriated from the general fund to the
358.22 	commissioner of revenue to make grants to one or more nonprofit
358.23 	organizations, qualifying under section 501(c)(3) of the
358.24 	Internal Revenue Code of 1986, to coordinate, facilitate,
358.25 	encourage, and aid in the provision of taxpayer assistance
358.26 	services.  This is a onetime appropriation and is not added to
358.27 	the base.
358.28 	(b) "Taxpayer assistance services" mean accounting and tax
358.29 	preparation services provided by volunteers to low-income and
358.30 	disadvantaged Minnesota residents to help them file federal and
358.31 	state income tax returns and Minnesota property tax refund
358.32 	claims and to provide personal representation before the
358.33 	Department of Revenue and Internal Revenue Service.

358.34 	Sec. 34. REPEALER.
 358.35 	(a) Minnesota Statutes 2004, section 10A.322, subdivision
358.36 	4, is repealed effective July 1, 2005.
359.1 	(b) Minnesota Statutes 2004, section 16A.1522, subdivision
359.2 	4, is repealed effective July 2, 2005.
359.3 	(c) Minnesota Statutes 2004, section 290.06, subdivision
359.4 	23, is repealed effective for contributions made after June 30,
359.5 	2005.