3E Relating to taxation

ARTICLE 1 - INCOME TAX

Providing income tax credits for beginning farmers participating in a financial management program approved by the rural finance authority, requiring authority approval and certification; providing an income tax subtraction for certain military pension or retirement income; allowing a refund for the transit pass income tax credit for certain employers; providing a refundable income tax credit for certain film production qualifying expenses, limit; providing an income tax credits for active military service after a certain date in a designated area, bovine tuberculosis testing expenses, qualifying investments in dairy operations; and costs incurred for the rehabilitation of certain certified historic structures; disallowing trade or business expense income tax deductions for fines, penalties, damages or expenses paid to governmental units; defining fine, penalty, damages or expenses

ARTICLE 2 - SALES AND USE TAX

Making permissive commissioner of revenue authority to revoke sales tax permits to certain taxpayers; exempting from the sales and use tax milk sold through vending machines, certain re-refined motor oils, recycled copier and printing papers; exempting from the sales tax products purchased for use as (diesel) fuel for commuter rail systems, requiring payment and later refund; exempting from the sales tax materials, supplies and equipment used in the construction, equipment or improvement of commuter rail transportation systems, county purchase of voting machines, public safety radio communication products and services to include Itasca county, construction materials for low income housing to sole general partner limited partnership nonprofit corporations, and materials and supplies used in the construction of certain hydroelectric generating facilities; authorizing the city of Duluth to increase the rate of tax on the sales of food and beverages; authorizing the use of proceeds of the tax for a new arena at the Duluth entertainment and convention center (DECC); expanding the authority of the city of Hermantown to impose a local sales tax to a local use tax and expanding required uses of the proceeds; requiring referenda on tax rate increases under certain conditions, providing for termination of the additional taxing authority; authorizing and providing for the city of Proctor to impose sales and use tax to be used for construction of and improvements to city streets, public utilities, sidewalks, bikeways and trails; allowing the city of Winona to use sales and use taxes for flood control projects; modifying the date for the local sales tax referendum in Worthington; authorizing and providing for the city of Austin to impose a sales and use tax to finance the capital and administrative costs of flood mitigation projects in the city of Austin, providing for termination of the taxes; authorizing and providing for the cities of Baxter and Brainerd to impose a sales and use tax and a sales tax on motor vehicles and to issue bonds to finance certain Baxter projects relating to acquisition and betterment of water and wastewater facilities, a fire substation and the Paul Bunyan bridge over Excelsior road, certain Brainerd projects relating to constructing an upgraded wastewater treatment facility to serve the cities of Brainerd and Baxter, water infrastructure improvements and trail development, providing for termination of the taxes; authorizing and providing for the city of Breezy Point to impose a sales and use tax and a sales tax on motor vehicles to finance sanitary sewer, storm sewer, street infrastructure and public safety improvements, providing for termination of the taxes; authorizing and providing for the city of Cloquet to impose a sales and use tax and a sales tax on motor vehicles to construct and complete certain park improvement projects, the extension of utilities and other improvements for construction of a city industrial park, providing for termination of the taxes; authorizing and providing for the city of Ely to impose a sales and use tax for certain improvements, providing for termination of the taxes; authorizing and providing for the city of Luverne to impose a sales and use tax and a sales tax on motor vehicles to finance capital improvements and renovation of the Historic Palace theatre and a vacated community hospital for the Minnesota West community and technical college, providing for termination of the taxes; authorizing and providing for the city of Medford to impose a sales and use tax to improve the wastewater system and the wastewater treatment plant, providing for termination of the taxes; authorizing and providing for the city of North Mankato to impose a sales and use tax with voter approval to pay all or part of the capital costs of the city share of the marked trunk highway #14 and county state aid highway #41 interchange project, development of regional parks and hiking and biking trails, expansion of the North Mankato Taylor library, redevelopment of the central business district and lake improvement projects, providing for termination of the taxes; authorizing and providing for the city of Owatonna with voter approval to impose a sales and use tax and a sales tax on motor vehicles to finance the capital costs of certain transportation projects, regional parks and trail developments, West Hills complex, fire hall and library improvement projects and a public safety radio system, providing for termination of the taxes; authorizing the city of Park Rapids to impose by ordinance a sales and use tax to finance the cost of construction and operation of a community center, capital improvement projects and park improvements, specifying certain authorized expenditures and requiring voter approval, providing for termination of the tax; authorizing the city of Thief River Falls to incorporate a nonprofit corporation to operate a community center in the city, exemption from sales and use tax payment on materials, equipment, and supplies used for construction

ARTICLE 3 - FOREIGN OPERATING CORPORATIONS

Modifying the definition of foreign operating corporation; modifying the treatment of certain income from foreign operations

ARTICLE 4 - PROPERTY TAXES

Modifying the property tax abatement process for certain electric generating facilities; increasing school district equalized debt service levy and the debt service appropriation under the debt service equalization program; increasing the operating capital equalizing factor; increasing emergency medical services special taxing districts levy authority; permitting a property tax exemption for pasture land used for livestock grazing under certain conditions; extending the eligibility period for biomass electrical generation facility construction commencement for property tax exemption purposes; extending the exemption from the property tax personal property of certain small biomass generation facilities, governing body approval contingency; modifying the exemption from the property tax personal property of a certain innovative energy project electric generation facility, modifying certain facility qualification requirements, requiring local government approval and owner payment; authorizing a personal property tax exemption for certain attached machinery part of run of river hydroelectric generation facility; indexing the property tax brackets for agricultural homestead property based on first tier valuation limits; establishing an aggregate resource preservation property tax program for the valuation and classification of property containing certain unmined commercial aggregate deposit; specifying qualifying property and certain affidavit and valuation deferment application requirements, requiring a covenant restricting use; providing for county assessor determination of value as agricultural property; subjecting property no longer qualifying to certain additional taxes, additional taxes to be a lien on the property; requiring property owner filing of supplemental affidavits upon the start of mining activity, requiring removal of the property from the program, failure to file to result in loss of the valuation deferment; providing for continuation of the deferment upon sale of the property; modifying the homestead property tax treatment for members of the armed forces to members absent due to active duty, qualification requirement; requiring registration of certain relative homestead properties under agricultural homestead property tax treatment provisions; extending the application of 4d property classification for low income rental property; expanding the definition of agricultural products for property tax classification purposes to short rotation woody crops cultivated using agricultural practices to produce timber or forest products; expanding proposed property tax notice content requirements relating to taxpayer eligibility for special property tax refund from the state; allowing certain counties with qualifying hospitals to receive reimbursement of a portion of gross charges for uncompensated care, formula; extending the date for independent school district (ISD) 535, Rochester, to certify the proposed property tax levy to the county auditor; authorizing independent school districts #750, Rocori and #656, Faribault to lease administrative space under certain conditions; specifying certain levy authority requirements; requiring the commissioner of education to increase the operating capital equalizing factor to reduce the operating capital levy

ARTICLE 5 - DEPARTMENT OF REVENUE PROPERTY TAXES AND AIDS

Removing the requirement for certain lakeshore property to be occupied by the owner to receive homestead (1a) classification; modifying the definition of class 4c property; modifying the residential homestead market value credit and the agricultural homestead market value credit; modifying disparity reduction aid and credit; removing the filing requirement for redemption of lands certificates with the county auditor; specifying calculations for purposes of local government aid payments under conditions of changes in boundaries or form of government and annexation

ARTICLE 6 - DEPARTMENT OF REVENUE SALES AND USE TAXES

Making certain technical corrections relating to sales and purchase, farm machinery, computer, electronic and computer software definitions; defining logging equipment; clarifying tangible personal property sales tax provisions; eliminating the sales tax on prepared food, candy and soft drinks under certain conditions; limiting the total amount of aerial camera package exemption refunded to all taxpayers for all fiscal years; extending the sales tax exemption for sales of certain goods and services to the removal of trees, bushes or shrubs for the construction and maintenance of roads, trails, and firebreaks; modifying the content and form of the sales tax exemption certificate; including equipment and materials used for the generation, transmission and distribution of electrical energy and aerial camera packages and tangible personal property and taxable services and construction materials, supplies and equipment under sales tax exemption refund provisions; prohibiting the transfer of motor vehicle lease credits to others; modifying a certain effective date relating to land clearing contracts; repealing provisions relating to business exemptions and certain rules

ARTICLE 7 - DEPARTMENT OF REVENUE SPECIAL TAXES AND FEES

Authorizing and providing for dry cleaner registration fees to be paid in installments; establishing the deed tax for real property transfers to builders or contractors to obtain financing under certain conditions; modifying the definition of health care provider, eliminating residential care homes and adding housing with services; adding wholesale drug distributor to the list prohibited from separately listing state tax liabilities; defining weighted average retail price for cigarette and tobacco tax purposes; modifying the definition of distilled spirits and defining flavored malt beverage for liquor tax purposes

ARTICLE 8 - DEPARTMENT OF REVENUE MISCELLANEOUS

Modifying the definition of electronic means to include the use of a touch tone telephone to transmit return information in a manner prescribed by the
commissioner of revenue; modifying commissioner assessment procedures; clarifying the authority of the commissioner to assess liability against successor businesses; exempting certain property from commissioner authority to collect assessments; clarifying provisions relating to tax court orders, providing for interest from date of accrual; clarifying extended due date provisions relating to reportable transactions for tax shelters; clarifying the scope of allocation rules for income tax deduction purposes

ARTICLE 9 - PUBLIC FINANCE

Modifying terms and conditions related to the sale of definitive drainage bonds; conforming the maturity date for bonds issued for rural public water or sewer systems to the maturity date for bonds issued for municipal water and wastewater treatment systems; modifying municipal bonds limitations on amounts; modifying the definition of market value for net debt limit determinations; specifying certain town proceedings for the creation of a subordinate service districts; modifying the definition of debt obligation; providing for the authorization of interfund loans; increasing the bonding authority of the metropolitan council to issue certificates of indebtedness, bonds or other obligations for metropolitan area transit and paratransit capital expenditures for the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington, limit; modifying the higher education services office (HESO) exemption from the 120-day issuance and carryforward requirements for student loan bonds; modifying certain limits on issuance of capitol improvement bonds; imposing a time limit and modifying certain conditions for the issuance of the proceeds of revenue bonds for school districts grants by the commissioner of the iron range resources and rehabilitation (IRRRB), authorizing grants to independent school districts #511, Aitkin, #695, Chisholm, #166, Cook County, #182, Crosby-Ironton, #696, Ely, #2154, Eveleth-Gilbert, #318, Grand Rapids, #316, Greenway, #701, Hibbing, #381, Lake Superior, #2711, Mesabi East, #712, Mt. Iron-Buhl, #319, Nashwauk/Keewatin, #2142, St. Louis County, and #706, Virginia; renaming the Carver county housing and redevelopment authority the Carver county community development agency; authorizing the city of Winsted to issue bonds for a public works facility and a city hall, community center and police station facility; modifying office of higher education bond allocations temporary priority from the unified pool; specifying certain unified pool allocation award temporary priority requirements and unified pool total allocations; authorizing the city of Pennock to acquire a certain parcel of real estate and appurtenant building and to expend city funds to improve the building; authorizing the city to convey the improved building and parcel by sale or lease to a private party under certain conditions

ARTICLE 10 - LOCAL DEVELOPMENT

Extending the expiration date for the authority of Hennepin and Ramsey counties to impose mortgage registry and deed taxes; authorizing St. Louis, Dakota and Anoka counties to impose a mortgage registry and deed tax; authorizing St. Louis, Dakota and Anoka counties environmental response fund; prohibiting administrative expenses and consulting costs incurred prior to tax increment financing (TIF) district certification to be paid from tax increments; modifying certain TIF provisions; extending the duration limit for job opportunity building zones for ethanol plants under certain conditions; extending the duration of an economic development tax increment financing (TIF) district in the city of Brooklyn Park; extending the duration of a certain tax increment financing (TIF) districts in the city of Bloomington; authorizing the city of Burnsville to create certain tax increment financing (TIF) districts subject to certain special rules and limits; extending the duration of a the heart of the city tax increment financing district; authorizing and providing for the city of Detroit Lakes to create a redevelopment tax increment financing (TIF) district subject to certain special rules, sunset provision; authorizing the cities of Elgin, Eyota, Byron and Oronoco to act as small cities for tax increment financing (TIF) district revenues use purposes, prohibiting exceeding of the population limit; authorizing the city of Minneapolis to establish a homeless assistance tax increment finance district, specifying qualifications; authorizing the city of New Brighton to expend tax increments outside a TIF district under certain conditions; authorizing the city of Ramsey to create a tax increment financing (TIF) district subject to certain special rules; authorizing the city of St. Michael to create a redevelopment tax increment financing (TIF) district subject to certain restrictions and rules; including certain food service businesses in a small declining population county in the definition of qualified business for job opportunity building zones (JOBZ) purposes; repealing the distribution of certain Burnsville tax increments and certain limitations on the use of TIF or the city of Bloomington

ARTICLE 11 - AIDS AND CREDITS

Modifying the city aid base, city formula aid and city aid distribution for local government aid (LGA) purposes; providing for onetime 2006 additional city aid; providing for county targeted case management aid; appropriating money to the commissioner of revenue to make payments to Mahnomen county and the city of Mahnomen to compensate for the loss of property tax revenue due to the placement of land in trust status; providing for a contingency appropriation to counties for the cost of preparing ballots for constitutional amendments; appropriating money to the commissioner of transportation (DOT) for distribution to the cities of Nisswa and Pequot Lakes to pay for the local share of trunk highway improvement projects

ARTICLE 12 - MINERALS

Defining producer; modifying the occupation tax; requiring the gross income for each mineral, metal or energy resource to be determined separately; requiring the allowable deductions for each mineral, metal or energy resource to be determined separately; modifying the distribution of occupation taxes to the Minnesota minerals 21st century fund; expanding the purpose of the taconite environmental protection fund to include local renewable energy investments undertaken in cooperation with local units of government and mineland areas reforestation, reclamation and development projects, requiring approval by the IRRRB; modifying the distribution of the proceeds of post 2005 increases; modifying distribution of grant and loan fund, requiring a certain amount to be paid to St. Louis county for deposit in the county road and bridge fund for the relocation of St. Louis county road #715 (Pike River road); establishing a public works and local economic development fund for certain specified purposes; authorizing the town of Sylvan in Cass county to impose an aggregate material (gravel) removal tax under certain conditions; authorizing each person with an alternative minimum tax credit to take the credit against the occupation tax; repealing the alternative minimum tax

ARTICLE 13 - MISCELLANEOUS

Modifying the definition of claimant agency under the revenue recapture act; requiring the commissioner of revenue to enter into agreements with the IRS to participate in a tax processing program to electronically process state and federal returns together; increasing the hospital or health care provider credit for research; delaying the final designation of the international economic development zone; delaying the beginning of the zone duration; authorizing cities, counties, towns and other political subdivisions to apply for foreign trade zone powers; prohibiting the commissioner of revenue from disallowing a property tax refund claim for failure to include the cash value of a postsecondary education institution tuition discount, requiring refunds; requiring the commissioners of revenue and employee relations in consultation with affected bargaining units to study the competitiveness of compensation of tax compliance auditors within the department of revenue by a certain date and implement recommendations; requiring the commissioner of revenue to study and implement procedures and services to assist sales and use taxpayers of limited English proficiency in complying with sale and use tax laws, requiring a report to the legislature by a certain date; transferring any money in the tax relief account to the general fund; appropriating money to the commissioner of public safety to reimburse state and local law enforcement agencies for additional law enforcement efforts focused on downtown Minneapolis
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