1.1 	A bill for an act
1.2 	relating to the financing and operation of state and local government; making 
1.3 	policy, technical, administrative, enforcement, collection, refund, and other 
1.4 	changes to income, franchise, property, sales and use, motor vehicle sales, health 
1.5 	care provider, cigarette and tobacco products, insurance premiums, aggregate 
1.6 	removal, mortgage, deed, production, estate, gambling, and other taxes and 
1.7 	tax-related provisions; providing a homestead credit state refund; providing 
1.8 	for aids to local governments; increasing property tax refunds; providing 
1.9 	and changing income and franchise tax credits, subtractions, apportionment, 
1.10 	and alternative minimum taxes; adding an income tax bracket and rate; 
1.11 	requiring tax withholding; modifying taxation of certain compensation paid 
1.12 	to nonresidents; providing for taxation of foreign operating corporations; 
1.13 	modifying and authorizing sales tax exemptions; prohibiting new local sales 
1.14 	taxes; modifying and authorizing local government sales taxes; imposing a 
1.15 	surcharge on certain admissions; modifying property tax exemptions, tax bases, 
1.16 	levies, valuation, classes, class rates, credits, statements, abatement, truth in 
1.17 	taxation, payment options, and appeals; extending and establishing certain 
1.18 	property tax deferral programs; changing tax increment financing provisions; 
1.19 	changing certain border city allocation and JOBZ requirements; establishing a 
1.20 	FARMZ program; changing provisions relating to fiscal disparities, state debt 
1.21 	collection procedures, sustainable forest incentives programs, tax-forfeited 
1.22 	land sales, leases, exchanges, and use of proceeds; changing distributions of 
1.23 	production tax proceeds; providing for purchase of forest lands; providing for 
1.24 	higher education grants in the taconite assistance area; providing for taxation of 
1.25 	gifts; conforming provisions to certain changes in federal laws; changing and 
1.26 	imposing powers, duties, and requirements on certain local governments and 
1.27 	authorities and state departments or agencies; transferring money to the budget 
1.28 	reserve account; providing for state funds and accounts; providing for bioscience, 
1.29 	land conservation, film production costs reimbursement, and Lignocellulosic 
1.30 	ethanol production grants; authorizing release of certain data; requiring studies; 
1.31 	appropriating money;amending Minnesota Statutes 2006, sections 16A.152, 
1.32 	subdivisions 1b, 2, by adding a subdivision; 16D.04, subdivisions 1, 2; 16D.11, 
1.33 	subdivisions 2, 7; 37.13, by adding a subdivision; 62I.06, subdivision 6; 
1.34 	71A.04, subdivision 1; 97A.061, subdivision 2; 127A.48, subdivision 3; 268.19, 
1.35 	subdivision 1; 270.071, subdivision 7; 270.072, subdivisions 2, 3, 6; 270.074, 
1.36 	subdivision 3; 270.076, subdivision 1; 270.41, subdivisions 1, 2, 3, 5, by adding 
1.37 	a subdivision; 270.44; 270.45; 270.46; 270.47; 270.48; 270.50; 270A.03, 
1.38 	subdivision 5; 270B.15; 270C.03, subdivision 1; 270C.306; 270C.34, subdivision 
1.39 	1; 270C.446, subdivision 2; 270C.56, subdivision 1; 270C.63, subdivision 9; 
2.1 	272.02, subdivision 64, by adding subdivisions; 272.115, subdivision 1; 273.05, 
2.2 	by adding a subdivision; 273.11, subdivision 1a, by adding a subdivision; 
2.3 	273.111, subdivision 3, by adding a subdivision; 273.117; 273.121; 273.123, 
2.4 	subdivisions 2, 3, 7; 273.124, subdivisions 1, 13, 14, 21; 273.125, subdivision 
2.5 	8; 273.128, subdivision 1, by adding a subdivision; 273.13, subdivisions 22, 
2.6 	23, 24, 25, 33, by adding a subdivision; 273.1384, subdivision 1; 273.1398, 
2.7 	subdivision 4; 273.33, subdivision 2; 273.37, subdivision 2; 273.371, subdivision 
2.8 	1; 274.01, subdivision 1; 274.13, subdivision 1; 275.065, subdivisions 3, 5a, by 
2.9 	adding subdivisions; 275.067; 276.04, subdivision 2, by adding a subdivision; 
2.10 	277.01, subdivision 2; 278.05, subdivision 6; 279.01, subdivision 1, by adding 
2.11 	a subdivision; 279.37, subdivision 1a; 280.39; 287.22; 287.2205; 289A.02, 
2.12 	subdivision 7; 289A.08, subdivisions 3, 11, 13; 289A.09, subdivision 2; 289A.12, 
2.13 	subdivisions 4, 14, by adding a subdivision; 289A.18, subdivision 1; 289A.31, 
2.14 	subdivision 7; 289A.40, subdivisions 2, 4; 289A.56, by adding a subdivision; 
2.15 	289A.60, subdivisions 8, 12, 25, 27, by adding subdivisions; 290.01, subdivisions 
2.16 	5, 19, as amended, 19b, 19c, 19d, 31, as amended; 290.06, subdivisions 2c, 2d, 
2.17 	33, by adding a subdivision; 290.067, subdivisions 1, 2b; 290.0671, subdivision 
2.18 	7; 290.0677, subdivision 1; 290.091, subdivision 3; 290.0921, subdivision 
2.19 	3; 290.17, subdivisions 2, 4, by adding a subdivision; 290.191, subdivisions 
2.20 	2, 3, 5, 8; 290.21, subdivision 4; 290.92, by adding a subdivision; 290A.03, 
2.21 	subdivisions 7, 13, 15, as amended; 290A.04, subdivisions 2a, 2h, 3, 4, by 
2.22 	adding a subdivision; 290B.03, subdivisions 1, 2; 290B.04, subdivisions 3, 4; 
2.23 	290B.05, subdivision 1; 290B.07; 290C.02, subdivision 3; 290C.04; 290C.05; 
2.24 	290C.07; 290C.11; 291.005, subdivision 1; 291.03, subdivision 1, by adding 
2.25 	subdivisions; 291.215, subdivision 1; 295.52, subdivisions 4, 4a; 295.54, 
2.26 	subdivision 2; 296A.18, subdivision 4; 297A.61, subdivisions 3, 4, 7, 10, 12, 
2.27 	24, by adding subdivisions; 297A.63, subdivision 1; 297A.665; 297A.668, by 
2.28 	adding a subdivision; 297A.669, subdivisions 3, 13, 14, by adding subdivisions; 
2.29 	297A.67, subdivisions 7, 8, 9; 297A.68, subdivisions 11, 16, 35, by adding a 
2.30 	subdivision; 297A.69, subdivisions 2, 3; 297A.70, subdivisions 3, 7, 8, by 
2.31 	adding subdivisions; 297A.71, subdivision 23, by adding subdivisions; 297A.72; 
2.32 	297A.75, subdivisions 1, 2, 3, by adding a subdivision; 297A.90, subdivision 
2.33 	2; 297A.99, subdivision 1; 297B.03; 297B.035, subdivision 1; 297E.02, by 
2.34 	adding a subdivision; 297F.01, subdivision 19, by adding a subdivision; 297F.05, 
2.35 	subdivisions 3, 4, by adding a subdivision; 297F.06, subdivision 4; 297F.21, 
2.36 	subdivision 3; 297F.25, by adding a subdivision; 297I.06, subdivisions 1, 2; 
2.37 	297I.15, by adding a subdivision; 297I.20, subdivision 2; 297I.40, subdivision 5; 
2.38 	298.22, by adding a subdivision; 298.2214, subdivision 2; 298.28, subdivision 
2.39 	4, by adding a subdivision; 298.292, subdivision 2; 298.2961, subdivision 4; 
2.40 	298.75, by adding a subdivision; 424A.10, subdivision 3; 435.193; 469.169, 
2.41 	by adding a subdivision; 469.1734, subdivision 6; 469.174, subdivisions 10, 
2.42 	10a, 27; 469.175, subdivisions 1, 3; 469.176, subdivisions 1, 2, 4l, 7; 469.1761, 
2.43 	subdivision 1; 469.1763, subdivision 2; 469.177, subdivision 1; 469.178, 
2.44 	subdivision 7; 469.1791, subdivision 3; 469.1813, subdivision 1a; 469.310, by 
2.45 	adding a subdivision; 469.312, by adding subdivisions; 469.314, subdivision 
2.46 	1; 469.3201; 473F.01, subdivision 2; 473F.08, subdivisions 5, 7a; 477A.011, 
2.47 	subdivisions 34, 36; 477A.0124, subdivision 5; 477A.013, subdivisions 8, 9, by 
2.48 	adding a subdivision; 477A.03; 477A.12, subdivision 1; 477A.14, subdivision 
2.49 	1; Laws 1973, chapter 393, section 1; Laws 1980, chapter 511, section 1, 
2.50 	subdivision 2, as amended; Laws 1994, chapter 587, article 9, section 14, 
2.51 	subdivisions 1, 2, 3; Laws 1995, chapter 264, article 5, sections 44, subdivision 
2.52 	4, as amended; 45, subdivision 1, as amended; Laws 2005, First Special Session 
2.53 	chapter 3, article 5, section 39; Laws 2006, chapter 236, article 1, section 21; 
2.54 	proposing coding for new law in Minnesota Statutes, chapters 84; 270; 270C; 
2.55 	273; 274; 290; 290C; 295; 297A; 383D; 383E; 469; proposing coding for new 
2.56 	law as Minnesota Statutes, chapter 290D; repealing Minnesota Statutes 2006, 
2.57 	sections 270.073; 270.41, subdivision 4; 270.43; 270.51; 270.52; 270.53; 290.01, 
2.58 	subdivision 6b; 290.0921, subdivision 7; 290.191, subdivision 4; 290A.04, 
3.1 	subdivisions 2, 2b; 295.60; 297A.61, subdivision 20; 297A.668, subdivision 
3.2 	6; 297A.67, subdivision 22; 383A.80, subdivision 4; 383B.80, subdivision 
3.3 	4; 469.174, subdivision 29; 473F.08, subdivision 3a; Laws 1973, chapter 393, 
3.4 	section 2; Laws 1994, chapter 587, article 9, section 8, subdivision 1, as amended.
3.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

3.6 	ARTICLE 1
3.7 	HOMESTEAD CREDIT STATE REFUND
3.8 	HOMEOWNERS AND RENTERS

3.9 	Section 1. Minnesota Statutes 2006, section 273.1384, subdivision 1, is amended to 
3.10 	read:
3.11 		Subdivision 1.Residential homestead market value credit. (a) Each county 
3.12 	auditor shall determine a homestead credit for each class 1a, 1b, and 2a homestead 
3.13 	property within the county equal to 0.4 percent of the first $76,000 of market value 
3.14 	of the property minus .09 percent of the market value in excess of $76,000. The credit 
3.15 	amount may not be less than zero. In the case of an agricultural or resort homestead, only 
3.16 	the market value of the house, garage, and immediately surrounding one acre of land is 
3.17 	eligible in determining the property's homestead credit. In the case of a property that 
3.18 	is classified as part homestead and part nonhomestead, (i) the credit shall apply only 
3.19 	to the homestead portion of the property, but (ii) if a portion of a property is classified 
3.20 	as nonhomestead solely because not all the owners occupy the property, not all the 
3.21 	owners have qualifying relatives occupying the property, or solely because not all the 
3.22 	spouses of owners occupy the property, the credit amount shall be initially computed as 
3.23 	if that nonhomestead portion were also in the homestead class and then prorated to the 
3.24 	owner-occupant's percentage of ownership. For the purpose of this section, when an 
3.25 	owner-occupant's spouse does not occupy the property, the percentage of ownership for 
3.26 	the owner-occupant spouse is one-half of the couple's ownership percentage.
3.27 	(b) For property taxes payable in 2008 and thereafter, the county auditor shall 
3.28 	determine the amount of the homestead credit under paragraph (a) and this paragraph. 
3.29 	The county auditor shall report the amount of the credit to the taxpayer on the property 
3.30 	tax statement or in another manner, as authorized by the commissioner of revenue. The 
3.31 	amount of the credit allowed for the property taxes payable year is to be computed as the 
3.32 	following percentage of the credit amount under paragraph (a):
3.33 	(1) for property taxes payable in 2008, 100 percent;
3.34 	(2) for property taxes payable in 2009, 60 percent;
3.35 	(3) for property taxes payable in 2010, 30 percent; and
3.36 	(4) for property taxes payable in 2011 or thereafter, no credit is allowed.

4.1 	EFFECTIVE DATE. This section is effective beginning for property taxes payable 
4.2 	in 2008.

4.3 	Sec. 2. Minnesota Statutes 2006, section 276.04, subdivision 2, is amended to read:
4.4 		Subd. 2.Contents of tax statements. (a) The treasurer shall provide for the 
4.5 	printing of the tax statements. The commissioner of revenue shall prescribe the form 
4.6 	of the property tax statement and its contents. The statement must contain a tabulated 
4.7 	statement of the dollar amount due to each taxing authority and the amount of the state 
4.8 	tax from the parcel of real property for which a particular tax statement is prepared. The 
4.9 	dollar amounts attributable to the county, the state tax, the voter approved school tax, the 
4.10 	other local school tax, the township or municipality, and the total of the metropolitan 
4.11 	special taxing districts as defined in section 275.065, subdivision 3, paragraph (i), must 
4.12 	be separately stated. The amounts due all other special taxing districts, if any, may be 
4.13 	aggregated except that any levies made by the regional rail authorities in the county of 
4.14 	Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A 
4.15 	shall be listed on a separate line directly under the appropriate county's levy. If the county 
4.16 	levy under this paragraph includes an amount for a lake improvement district as defined 
4.17 	under sections 103B.501 to 103B.581, the amount attributable for that purpose must be 
4.18 	separately stated from the remaining county levy amount. In the case of Ramsey County, 
4.19 	if the county levy under this paragraph includes an amount for public library service 
4.20 	under section 134.07, the amount attributable for that purpose may be separated from the 
4.21 	remaining county levy amount. The amount of the tax on homesteads qualifying under the 
4.22 	senior citizens' property tax deferral program under chapter 290B is the total amount of 
4.23 	property tax before subtraction of the deferred property tax amount. The amount of the 
4.24 	tax on contamination value imposed under sections 270.91 to 270.98, if any, must also 
4.25 	be separately stated. The dollar amounts, including the dollar amount of any special 
4.26 	assessments, may be rounded to the nearest even whole dollar. For purposes of this section 
4.27 	whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar. 
4.28 	The amount of market value excluded under section 273.11, subdivision 16, if any, must 
4.29 	also be listed on the tax statement.
4.30 	(b) The property tax statements for manufactured homes and sectional structures 
4.31 	taxed as personal property shall contain the same information that is required on the 
4.32 	tax statements for real property.
4.33 	(c) Real and personal property tax statements must contain the following information 
4.34 	in the order given in this paragraph. The information must contain the current year tax 
5.1 	information in the right column with the corresponding information for the previous year 
5.2 	in a column on the left:
5.3 	(1) the property's estimated market value under section 273.11, subdivision 1;
5.4 	(2) the property's taxable market value after reductions under section 273.11, 
5.5 	subdivisions 1a and 16;
5.6 	(3) the property's gross tax, calculated by adding the property's total property tax to 
5.7 	the sum of the aids enumerated in clause (4); any items required by the commissioner of 
5.8 	revenue under section 273.1384, subdivision 1, paragraph (b); and
5.9 	(4) a total of the following aids:
5.10 	(i) education aids payable under chapters 122A, 123A, 123B, 124D, 125A, 126C, 
5.11 	and 127A;
5.12 	(ii) local government aids for cities, towns, and counties under sections 477A.011 to 
5.13 	477A.04; and
5.14 	(iii) disparity reduction aid under section 273.1398;
5.15 	(5) for homestead residential and agricultural properties, the credits under section 
5.16 	273.1384;
5.17 	(6) any credits received under sections 273.119; 273.123; 273.135; 273.1391; 
5.18 	273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit received 
5.19 	under section 273.135 must be separately stated and identified as "taconite tax relief"; and
5.20 	(7) (4) the net tax payable in the manner required in paragraph (a).
5.21 	(d) If the county uses envelopes for mailing property tax statements and if the county 
5.22 	agrees, a taxing district may include a notice with the property tax statement notifying 
5.23 	taxpayers when the taxing district will begin its budget deliberations for the current 
5.24 	year, and encouraging taxpayers to attend the hearings. If the county allows notices to 
5.25 	be included in the envelope containing the property tax statement, and if more than 
5.26 	one taxing district relative to a given property decides to include a notice with the tax 
5.27 	statement, the county treasurer or auditor must coordinate the process and may combine 
5.28 	the information on a single announcement.
5.29 	The commissioner of revenue shall certify to the county auditor the actual or 
5.30 	estimated aids enumerated in paragraph (c), clause (4), that local governments will receive 
5.31 	in the following year. The commissioner must certify this amount by January 1 of each 
5.32 	year.

5.33 	EFFECTIVE DATE. This section is effective for taxes payable in 2008 and 
5.34 	thereafter.

5.35 	Sec. 3. Minnesota Statutes 2006, section 290A.03, subdivision 13, is amended to read:
6.1 		Subd. 13.Property taxes payable. "Property taxes payable" means the property 
6.2 	tax exclusive of special assessments, penalties, and interest payable on a claimant's 
6.3 	homestead after deductions made under sections 273.135, 273.1384,273.1391, 273.42, 
6.4 	subdivision 2, and any other state paid property tax credits in any calendar year, and 
6.5 	after any refund claimed and allowable under section 290A.04, subdivision 2h, that is 
6.6 	first payable in the year that the property tax is payable. Beginning for property taxes 
6.7 	payable in 2008, the amount of the credit under section 273.1384, subdivision 1, must 
6.8 	not be deducted in computing property taxes payable. In the case of a claimant who 
6.9 	makes ground lease payments, "property taxes payable" includes the amount of the 
6.10 	payments directly attributable to the property taxes assessed against the parcel on which 
6.11 	the house is located. No apportionment or reduction of the "property taxes payable" shall 
6.12 	be required for the use of a portion of the claimant's homestead for a business purpose if 
6.13 	the claimant does not deduct any business depreciation expenses for the use of a portion 
6.14 	of the homestead in the determination of federal adjusted gross income. For homesteads 
6.15 	which are manufactured homes as defined in section 273.125, subdivision 8, and for 
6.16 	homesteads which are park trailers taxed as manufactured homes under section 168.012, 
6.17 	subdivision 9, "property taxes payable" shall also include 19 percent of the gross rent paid 
6.18 	in the preceding year for the site on which the homestead is located. When a homestead 
6.19 	is owned by two or more persons as joint tenants or tenants in common, such tenants 
6.20 	shall determine between them which tenant may claim the property taxes payable on the 
6.21 	homestead. If they are unable to agree, the matter shall be referred to the commissioner of 
6.22 	revenue whose decision shall be final. Property taxes are considered payable in the year 
6.23 	prescribed by law for payment of the taxes. 
6.24 	In the case of a claim relating to "property taxes payable," the claimant must have 
6.25 	owned and occupied the homestead on January 2 of the year in which the tax is payable 
6.26 	and (i) the property must have been classified as homestead property pursuant to section 
6.27 	273.124, on or before December 15 of the assessment year to which the "property taxes 
6.28 	payable" relate; or (ii) the claimant must provide documentation from the local assessor 
6.29 	that application for homestead classification has been made on or before December 15 
6.30 	of the year in which the "property taxes payable" were payable and that the assessor has 
6.31 	approved the application. 

6.32 	EFFECTIVE DATE. This section is effective beginning for refund claims based on 
6.33 	property taxes payable in 2008.

6.34 	Sec. 4. Minnesota Statutes 2006, section 290A.04, subdivision 2a, is amended to read:
7.1 		Subd. 2a.Renters. (a) A claimant whose rent constituting property taxes exceeds 
7.2 	the percentage of the household income stated below must pay an amount equal to the 
7.3 	percent of income shown for the appropriate household income level along with the 
7.4 	percent to be paid by the claimant of the remaining amount of rent constituting property 
7.5 	taxes. The state refund equals the amount of rent constituting property taxes that remain, 
7.6 	up to the maximum state refund amount shown below.

7.7
7.8	Household Income
	Percent of Income
	Percent Paid by 
Claimant
	Maximum State 
Refund
	
7.9	$0 to 3,589
	1.0 percent
	5 percent
	$1,190
	
7.10	 $0 to 4,579
			$1,500
	
7.11	3,590 to 4,779
	1.0 percent
	10 percent
	$1,190
	
7.12	4,580 to 6,099
			$1,500
	
7.13	4,780 to 5,969
	1.1 percent
	10 percent
	$1,190
	
7.14	6,100 to 7,619
			$1,500
	
7.15	5,970 to 8,369
	1.2 percent
	10 percent
	$1,190
	
7.16	7,620 to 10,669
			$1,500
	
7.17	8,370 to 10,759
	1.3 percent
	15 percent
	$1,190
	
7.18	10,670 to 13,729
			$1,500
	
7.19	10,760 to 11,949
	1.4 percent
	15 percent
	$1,190
	
7.20	13,730 to 15,239
			$1,500
	
7.21	11,950 to 13,139
	1.4 percent
	20 percent
	$1,190
	
7.22	15,240 to 16,769
			$1,500
	
7.23	13,140 to 15,539
	1.5 percent
	20 percent
	$1,190
	
7.24	16,770 to 19,829
			$1,500
	
7.25	15,540 to 16,729
	1.6 percent
	20 percent
	$1,190
	
7.26	19,830 to 21,349
			$1,500
	
7.27	16,730 to 17,919
	1.7 percent
	25 percent
	$1,190
	
7.28	21,350 to 22,859
			$1,500
	
7.29	17,920 to 20,319
	1.8 percent
	25 percent
	$1,190
	
7.30	22,860 to 25,929
			$1,500
	
7.31	20,320 to 21,509
	1.9 percent
	30 percent
	$1,190
	
7.32	25,930 to 27,439
			$1,500
	
7.33	21,510 to 22,699
	2.0 percent
	30 percent
	$1,190
	
7.34	27,440 to 28,959
			$1,500
	
7.35	22,700 to 23,899
	2.2 percent
	30 percent
	$1,190
	
7.36	28,960 to 30,499
			$1,500
	
7.37	23,900 to 25,089
	2.4 percent
	30 percent
	$1,190
	
7.38	30,500 to 32,009
			$1,500
	
7.39	25,090 to 26,289
	2.6 percent
	35 percent
	$1,190
	
7.40	32,010 to 33,539
			$1,500
	
7.41	26,290 to 27,489
	2.7 percent
	35 percent
	$1,190
	
7.42	33,540 to 35,079
			$1,500
	
8.1	27,490 to 28,679
	2.8 percent
	35 percent
	$1,190
	
8.2	35,080 to 36,589
			$1,500
	
8.3	28,680 to 29,869
	2.9 percent
	40 percent
	$1,190
	
8.4	36,590 to 38,109
			$1,500
	
8.5	29,870 to 31,079
	3.0 percent
	40 percent
	$1,190
	
8.6	38,110 to 39,649
			$1,500
	
8.7	31,080 to 32,269
	3.1 percent
	40 percent
	$1,190
	
8.8	39,650 to 41,169
			$1,500
	
8.9	32,270 to 33,459
	3.2 percent
	40 percent
	$1,190
	
8.10	41,170 to 42,689
			$1,500
	
8.11	33,460 to 34,649
	3.3 percent
	45 percent
	$1,080
	
8.12	42,690 to 49,729
			$1,370
	
8.13	34,650 to 35,849
	3.4 percent
	45 percent
	$ 960
	
8.14	49,730 to 51,459
			$1,220
	
8.15	35,850 to 37,049
	3.5 percent
	45 percent
	$ 830
	
8.16	51,460 to 53,189
			$1,050
	
8.17	37,050 to 38,239
	3.5 percent
	50 percent
	$ 720
	
8.18	53,190 to 54,899
			$910
	
8.19	38,240 to 39,439
	3.5 percent
	50 percent
	$ 600
	
8.20	54,900 to 56,609
			$760
	
8.21	38,440 to 40,629
	3.5 percent
	50 percent
	$ 360
	
8.22	56,610 to 58,319
			$450
	
8.23	40,630 to 41,819
	3.5 percent
	50 percent
	$ 120
	
8.24	58,320 to 60,000
			$150
	
8.25 	(b) The payment made to a claimant is the amount of the state refund calculated 
8.26 	under this subdivision. No payment is allowed if the claimant's household income is 
8.27 	$41,820$60,000 or more.

8.28 	EFFECTIVE DATE. This section is effective beginning for claims filed for rent 
8.29 	paid after December 31, 2006.

8.30 	Sec. 5. Minnesota Statutes 2006, section 290A.04, subdivision 2h, is amended to read:
8.31 		Subd. 2h.Additional refund. (a) If the gross property taxes payable on a 
8.32 	homestead increase more than 12 percent over the property taxes payable in the prior year 
8.33 	on the same property that is owned and occupied by the same owner on January 2 of both 
8.34 	years, and the amount of that increase is $100 or more, a claimant who is a homeowner 
8.35 	shall be allowed an additional refund equal to 60 percent of the amount of the increase 
8.36 	over the greater of 12 percent of the prior year's property taxes payable or $100. This 
8.37 	subdivision shall not apply to any increase in the gross property taxes payable attributable 
8.38 	to improvements made to the homestead after the assessment date for the prior year's 
9.1 	taxes. This subdivision shall not apply to any increase in the gross property taxes payable 
9.2 	attributable to the termination of valuation exclusions under section  273.11, subdivision 
9.3 	16, or to the reduction in and elimination of the homestead market value credit under 
9.4 	section 273.1384, subdivision 1, paragraph (b). 
9.5 	The maximum refund allowed under this subdivision is $1,000.
9.6 	(b) For purposes of this subdivision "gross property taxes payable" means property 
9.7 	taxes payable determined without regard to the refund allowed under this subdivision.
9.8 	(c) In addition to the other proofs required by this chapter, each claimant under 
9.9 	this subdivision shall file with the property tax refund return a copy of the property tax 
9.10 	statement for taxes payable in the preceding year or other documents required by the 
9.11 	commissioner.
9.12 	(d) Upon request, the appropriate county official shall make available the names and 
9.13 	addresses of the property taxpayers who may be eligible for the additional property tax 
9.14 	refund under this section. The information shall be provided on a magnetic computer 
9.15 	disk. The county may recover its costs by charging the person requesting the information 
9.16 	the reasonable cost for preparing the data. The information may not be used for any 
9.17 	purpose other than for notifying the homeowner of potential eligibility and assisting the 
9.18 	homeowner, without charge, in preparing a refund claim.

9.19 	EFFECTIVE DATE. This section is effective for claims based on property taxes 
9.20 	payable in 2008 and thereafter.

9.21 	Sec. 6. Minnesota Statutes 2006, section 290A.04, is amended by adding a subdivision 
9.22 	to read:
9.23 		Subd. 2k.Homestead credit state refund. (a) A claimant who is a homeowner 
9.24 	is entitled to a state refund of the amount of the property taxes payable in excess of two 
9.25 	percent of the claimant's household income, based on the percentage and maximum for the 
9.26 	appropriate household income level shown below. The refund amount determined from the 
9.27 	table must be reduced further by the amount of the homestead market value credit under 
9.28 	section 273.1384, subdivision 1, paragraph (b), but not to an amount that is less than zero.

9.29	Household Income
	Refund Percentage
	Maximum State Refund
	
9.30	0 to $5,399
	90 percent
	$2,500
	
9.31	5,400 to 18,899
	85 percent
	2,500
	
9.32	18,900 to 26,999
	80 percent
	2,500
	
9.33	27,000 to 32,399
	75 percent
	2,500
	
9.34	32,400 to 37,799
	70 percent
	2,500
	
9.35	37,800 to 45,899
	65 percent
	2,500
	
9.36	45,900 to 64,699
	60 percent
	2,500
	
10.1	64,700 to 80,899
	55 percent
	2,300
	
10.2	80,900 to 94,399
	50 percent
	2,100
	
10.3	94,400 to 99,299
	45 percent
	1,900
	
10.4	99,300 to 104,099
	40 percent
	1,700
	
10.5	104,100 to 115,599
	30 percent
	1,500
	
10.6	115,600 to 127,199
	30 percent
	1,250
	
10.7	127,200 to 134,099
	25 percent
	1,000
	
10.8	134,100 to 138,799
	25 percent
	750
	
10.9	138,800 to 144,399
	25 percent
	500
	
10.10	144,400 to 150,000
	25 percent
	250

10.11 	(b) No payment is allowed under paragraph (a) if the claimant's household income 
10.12 	is more than $150,000.

10.13 	EFFECTIVE DATE. This section is effective beginning for claims based on 
10.14 	property taxes payable in 2008.

10.15 	Sec. 7. Minnesota Statutes 2006, section 290A.04, subdivision 3, is amended to read:
10.16 		Subd. 3.Table. The commissioner of revenue shall construct and make available 
10.17 	to taxpayers a comprehensive table showing the property taxes to be paid and refund 
10.18 	allowed at various levels of income and assessment. The table shall follow the schedule 
10.19 	of income percentages, maximums and other provisions specified in subdivision 2 this 
10.20 	section, except that the commissioner may graduate the transition between income 
10.21 	brackets. All refunds shall be computed in accordance with tables prepared and issued 
10.22 	by the commissioner of revenue.
10.23 	The commissioner shall include on the form an appropriate space or method for the 
10.24 	claimant to identify if the property taxes paid are for a manufactured home, as defined in 
10.25 	section  273.125, subdivision 8, paragraph (c), or a park trailer taxed as a manufactured 
10.26 	home under section  168.012, subdivision 9.

10.27 	Sec. 8. Minnesota Statutes 2006, section 290A.04, subdivision 4, is amended to read:
10.28 		Subd. 4.Inflation adjustment. Beginning for property tax refunds payable in 
10.29 	calendar year 2002 2009, the commissioner shall annually adjust the dollar amounts of 
10.30 	the income thresholds and the maximum refunds under subdivisions 2 and 2a and 2k for 
10.31 	inflation. The commissioner shall make the inflation adjustments in accordance with 
10.32 	section 1(f) of the Internal Revenue Code, except that for purposes of this subdivision 
10.33 	the percentage increase shall be determined from the year ending on June 30, 2000 2007, 
10.34 	to the year ending on June 30 of the year preceding that in which the refund is payable. 
11.1 	The commissioner shall use the appropriate percentage increase to annually adjust the 
11.2 	income thresholds and maximum refunds under subdivisions 2 and 2a and 2k for inflation 
11.3 	without regard to whether or not the income tax brackets are adjusted for inflation in that 
11.4 	year. The commissioner shall round the thresholds and the maximum amounts, as adjusted 
11.5 	to the nearest $10 amount. If the amount ends in $5, the commissioner shall round it up 
11.6 	to the next $10 amount.
11.7 	The commissioner shall annually announce the adjusted refund schedule at the same 
11.8 	time provided under section  290.06. The determination of the commissioner under this 
11.9 	subdivision is not a rule under the Administrative Procedure Act. 

11.10 	EFFECTIVE DATE. This section is effective beginning for claims based on 
11.11 	property taxes payable in 2009.

11.12 	Sec. 9. REPEALER.
 11.13 	Minnesota Statutes 2006, section 290A.04, subdivisions 2 and 2b, are repealed.

11.14 	EFFECTIVE DATE. This section is effective for claims based on property taxes 
11.15 	payable in 2008 and later.

11.16 	ARTICLE 2
11.17 	AIDS TO LOCAL GOVERNMENTS

11.18 	Section 1. Minnesota Statutes 2006, section 477A.011, subdivision 34, is amended to 
11.19 	read:
11.20 		Subd. 34.City revenue need. (a) For a city with a population equal to or greater 
11.21 	than 2,500, "city revenue need" is the sum of (1) 5.0734098 times the pre-1940 housing 
11.22 	percentage; plus (2) 19.141678 times the population decline percentage; plus (3) 
11.23 	2504.06334 times the road accidents factor; plus (4) 355.0547; minus (5) the metropolitan 
11.24 	area factor; minus (6) 49.10638 times the household size.
11.25 	(b) For a city with a population less than 2,500, "city revenue need" is the sum of (1) 
11.26 	2.387 times the pre-1940 housing percentage 300; plus (2) 2.67591 times the commercial 
11.27 	industrial percentage; plus (3) 3.16042 times the population decline percentage; plus 
11.28 	(4) 1.206 times the transformed population; minus (5) 62.772. 0.31 multiplied by the 
11.29 	difference between the city's population and 100. The city revenue need for a city with a 
11.30 	population less than 2,500 may not exceed 500.
11.31 	(c) For a city with a population of 2,500 or more and a population in one of the most 
11.32 	recently available five years that was less than 2,500, "city revenue need" is the sum of (1) 
11.33 	its city revenue need calculated under paragraph (a) multiplied by its transition factor; 
12.1 	plus (2) its city revenue need calculated under the formula in paragraph (b) multiplied 
12.2 	by the difference between one and its transition factor. For purposes of this paragraph, a 
12.3 	city's "transition factor" is equal to 0.2 multiplied by the number of years that the city's 
12.4 	population estimate has been 2,500 or more. This provision only applies for aids payable 
12.5 	in calendar years 2006 to 2008 to cities with a 2002 population of less than 2,500. It 
12.6 	applies to any city for aids payable in 2009 and thereafter.
12.7 	(d) The city revenue need cannot be less than zero.
12.8 	(e) For calendar year 20052008 and subsequent years, the city revenue need for 
12.9 	a city, as determined in paragraphs (a) to (d), is multiplied by the ratio of the annual 
12.10 	implicit price deflator for government consumption expenditures and gross investment for 
12.11 	state and local governments as prepared by the United States Department of Commerce, 
12.12 	for the most recently available year to the 20032000 implicit price deflator for state 
12.13 	and local government purchases.

12.14 	EFFECTIVE DATE. This section is effective for aids payable in 2008.

12.15 	Sec. 2. Minnesota Statutes 2006, section 477A.011, subdivision 36, is amended to read:
12.16 		Subd. 36.City aid base. (a) Except as otherwise provided in this subdivision, 
12.17 	"city aid base" is zero.
12.18 	(b) The city aid base for any city with a population less than 500 is increased by 
12.19 	$40,000 for aids payable in calendar year 1995 and thereafter, and the maximum amount 
12.20 	of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
12.21 	increased by $40,000 for aids payable in calendar year 1995 only, provided that:
12.22 	(i) the average total tax capacity rate for taxes payable in 1995 exceeds 200 percent;
12.23 	(ii) the city portion of the tax capacity rate exceeds 100 percent; and
12.24 	(iii) its city aid base is less than $60 per capita.
12.25 	(c) The city aid base for a city is increased by $20,000 in 1998 and thereafter and 
12.26 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
12.27 	paragraph (c), is also increased by $20,000 in calendar year 1998 only, provided that:
12.28 	(i) the city has a population in 1994 of 2,500 or more;
12.29 	(ii) the city is located in a county, outside of the metropolitan area, which contains a 
12.30 	city of the first class;
12.31 	(iii) the city's net tax capacity used in calculating its 1996 aid under section 
12.32 	477A.013 is less than $400 per capita; and
12.33 	(iv) at least four percent of the total net tax capacity, for taxes payable in 1996, of 
12.34 	property located in the city is classified as railroad property.
13.1 	(d) The city aid base for a city is increased by $200,000 in 1999 and thereafter and 
13.2 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
13.3 	paragraph (c), is also increased by $200,000 in calendar year 1999 only, provided that:
13.4 	(i) the city was incorporated as a statutory city after December 1, 1993;
13.5 	(ii) its city aid base does not exceed $5,600; and
13.6 	(iii) the city had a population in 1996 of 5,000 or more.
13.7 	(e) The city aid base for a city is increased by $450,000 in 1999 to 2008 and the 
13.8 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
13.9 	paragraph (c), is also increased by $450,000 in calendar year 1999 only, provided that:
13.10 	(i) the city had a population in 1996 of at least 50,000;
13.11 	(ii) its population had increased by at least 40 percent in the ten-year period ending 
13.12 	in 1996; and
13.13 	(iii) its city's net tax capacity for aids payable in 1998 is less than $700 per capita.
13.14 	(f) The city aid base for a city is increased by $150,000 for aids payable in 2000 and 
13.15 	thereafter, and the maximum amount of total aid it may receive under section 477A.013, 
13.16 	subdivision 9, paragraph (c), is also increased by $150,000 in calendar year 2000 only, 
13.17 	provided that:
13.18 	(1) the city has a population that is greater than 1,000 and less than 2,500;
13.19 	(2) its commercial and industrial percentage for aids payable in 1999 is greater 
13.20 	than 45 percent; and
13.21 	(3) the total market value of all commercial and industrial property in the city 
13.22 	for assessment year 1999 is at least 15 percent less than the total market value of all 
13.23 	commercial and industrial property in the city for assessment year 1998.
13.24 	(g) The city aid base for a city is increased by $200,000 in 2000 and thereafter, and 
13.25 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
13.26 	paragraph (c), is also increased by $200,000 in calendar year 2000 only, provided that:
13.27 	(1) the city had a population in 1997 of 2,500 or more;
13.28 	(2) the net tax capacity of the city used in calculating its 1999 aid under section 
13.29 	477A.013 is less than $650 per capita;
13.30 	(3) the pre-1940 housing percentage of the city used in calculating 1999 aid under 
13.31 	section 477A.013 is greater than 12 percent;
13.32 	(4) the 1999 local government aid of the city under section 477A.013 is less than 
13.33 	20 percent of the amount that the formula aid of the city would have been if the need 
13.34 	increase percentage was 100 percent; and
13.35 	(5) the city aid base of the city used in calculating aid under section 477A.013
13.36 	is less than $7 per capita.
14.1 	(h) The city aid base for a city is increased by $102,000 in 2000 and thereafter, and 
14.2 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
14.3 	paragraph (c), is also increased by $102,000 in calendar year 2000 only, provided that:
14.4 	(1) the city has a population in 1997 of 2,000 or more;
14.5 	(2) the net tax capacity of the city used in calculating its 1999 aid under section 
14.6 	477A.013 is less than $455 per capita;
14.7 	(3) the net levy of the city used in calculating 1999 aid under section 477A.013 is 
14.8 	greater than $195 per capita; and
14.9 	(4) the 1999 local government aid of the city under section 477A.013 is less than 
14.10 	38 percent of the amount that the formula aid of the city would have been if the need 
14.11 	increase percentage was 100 percent.
14.12 	(i) The city aid base for a city is increased by $32,000 in 2001 and thereafter, and 
14.13 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
14.14 	paragraph (c), is also increased by $32,000 in calendar year 2001 only, provided that:
14.15 	(1) the city has a population in 1998 that is greater than 200 but less than 500;
14.16 	(2) the city's revenue need used in calculating aids payable in 2000 was greater 
14.17 	than $200 per capita;
14.18 	(3) the city net tax capacity for the city used in calculating aids available in 2000 
14.19 	was equal to or less than $200 per capita;
14.20 	(4) the city aid base of the city used in calculating aid under section 477A.013
14.21 	is less than $65 per capita; and
14.22 	(5) the city's formula aid for aids payable in 2000 was greater than zero.
14.23 	(j) The city aid base for a city is increased by $7,200 in 2001 and thereafter, and 
14.24 	the maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
14.25 	paragraph (c), is also increased by $7,200 in calendar year 2001 only, provided that:
14.26 	(1) the city had a population in 1998 that is greater than 200 but less than 500;
14.27 	(2) the city's commercial industrial percentage used in calculating aids payable in 
14.28 	2000 was less than ten percent;
14.29 	(3) more than 25 percent of the city's population was 60 years old or older according 
14.30 	to the 1990 census;
14.31 	(4) the city aid base of the city used in calculating aid under section 477A.013
14.32 	is less than $15 per capita; and
14.33 	(5) the city's formula aid for aids payable in 2000 was greater than zero.
14.34 	(k) The city aid base for a city is increased by $45,000 in 2001 and thereafter and 
14.35 	by an additional $50,000 in calendar years 2002 to 2011, and the maximum amount of 
14.36 	total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is also 
15.1 	increased by $45,000 in calendar year 2001 only, and by $50,000 in calendar year 2002 
15.2 	only, provided that:
15.3 	(1) the net tax capacity of the city used in calculating its 2000 aid under section 
15.4 	477A.013 is less than $810 per capita;
15.5 	(2) the population of the city declined more than two percent between 1988 and 1998;
15.6 	(3) the net levy of the city used in calculating 2000 aid under section 477A.013 is 
15.7 	greater than $240 per capita; and
15.8 	(4) the city received less than $36 per capita in aid under section 477A.013, 
15.9 	subdivision 9, for aids payable in 2000.
15.10 	(l) The city aid base for a city with a population of 10,000 or more which is located 
15.11 	outside of the seven-county metropolitan area is increased in 2002 and thereafter, and the 
15.12 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
15.13 	paragraph (b) or (c), is also increased in calendar year 2002 only, by an amount equal to 
15.14 	the lesser of:
15.15 	(1)(i) the total population of the city, as determined by the United States Bureau of 
15.16 	the Census, in the 2000 census, (ii) minus 5,000, (iii) times 60; or
15.17 	(2) $2,500,000.
15.18 	(m) The city aid base is increased by $50,000 in 2002 and thereafter, and the 
15.19 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
15.20 	paragraph (c), is also increased by $50,000 in calendar year 2002 only, provided that:
15.21 	(1) the city is located in the seven-county metropolitan area;
15.22 	(2) its population in 2000 is between 10,000 and 20,000; and
15.23 	(3) its commercial industrial percentage, as calculated for city aid payable in 2001, 
15.24 	was greater than 25 percent.
15.25 	(n) The city aid base for a city is increased by $150,000 in calendar years 2002 to 
15.26 	2011 and by an additional $75,000 in calendar years 2008 to 2013 and the maximum 
15.27 	amount of total aid it may receive under section 477A.013, subdivision 9, paragraph (c), is 
15.28 	also increased by $150,000 in calendar year 2002 only and by $75,000 in calendar year 
15.29 	2008 only, provided that:
15.30 	(1) the city had a population of at least 3,000 but no more than 4,000 in 1999;
15.31 	(2) its home county is located within the seven-county metropolitan area;
15.32 	(3) its pre-1940 housing percentage is less than 15 percent; and
15.33 	(4) its city net tax capacity per capita for taxes payable in 2000 is less than $900 
15.34 	per capita.
15.35 	(o) The city aid base for a city is increased by $200,000 beginning in calendar 
15.36 	year 2003 and the maximum amount of total aid it may receive under section 477A.013, 
16.1 	subdivision 9, paragraph (c), is also increased by $200,000 in calendar year 2003 only, 
16.2 	provided that the city qualified for an increase in homestead and agricultural credit aid 
16.3 	under Laws 1995, chapter 264, article 8, section 18.
16.4 	(p) The city aid base for a city is increased by $200,000 in 2004 only and the 
16.5 	maximum amount of total aid it may receive under section 477A.013, subdivision 9, is 
16.6 	also increased by $200,000 in calendar year 2004 only, if the city is the site of a nuclear 
16.7 	dry cask storage facility.
16.8 	(q) The city aid base for a city is increased by $10,000 in 2004 and thereafter and the 
16.9 	maximum total aid it may receive under section 477A.013, subdivision 9, is also increased 
16.10 	by $10,000 in calendar year 2004 only, if the city was included in a federal major disaster 
16.11 	designation issued on April 1, 1998, and its pre-1940 housing stock was decreased by 
16.12 	more than 40 percent between 1990 and 2000.
16.13 	(r) The city aid base for a city is increased by $25,000 $30,000 in 2006 2008 only 
16.14 	and the maximum total aid it may receive under section 477A.013, subdivision 9, is also 
16.15 	increased by $25,000 $30,000 in calendar year 2006 2008 only if the city had a population 
16.16 	in 2003 of at least 1,000 and has a state park for which the city provides rescue services 
16.17 	and which comprised at least 14 percent of the total geographic area included within the 
16.18 	city boundaries in 2000.
16.19 	(s) The city aid base for a city with a population less than 5,000 is increased in 
16.20 	2006 and thereafter and the minimum and maximum amount of total aid it may receive 
16.21 	under this section is also increased in calendar year 2006 only by an amount equal to 
16.22 	$6 multiplied by its population.
16.23 	(t) The city aid base for a city is increased by $80,000 in 2007 only and the minimum 
16.24 	and maximum amount of total aid it may receive under section 477A.013, subdivision 9, 
16.25 	is also increased by $80,000 in calendar year 2007 only, if:
16.26 	(1) as of May 1, 2006, at least 25 percent of the tax capacity of the city is proposed 
16.27 	to be placed in trust status as tax-exempt Indian land;
16.28 	(2) the placement of the land is being challenged administratively or in court; and 
16.29 	(3) due to the challenge, the land proposed to be placed in trust is still on the tax 
16.30 	rolls as of May 1, 2006.
16.31 	(u) The city aid base for a city is increased by $100,000 in 2007 and thereafter and 
16.32 	the minimum and maximum total amount of aid it may receive under this section is also 
16.33 	increased in calendar year 2007 only, provided that:
16.34 	(1) the city has a 2004 estimated population greater than 200 but less than 2,000;
16.35 	(2) its city net tax capacity for aids payable in 2006 was less than $300 per capita;
17.1 	(3) the ratio of its pay 2005 tax levy compared to its city net tax capacity for aids 
17.2 	payable in 2006 was greater than 110 percent; and
17.3 	(4) it is located in a county where at least 15,000 acres of land are classified as 
17.4 	tax-exempt Indian reservations according to the 2004 abstract of tax-exempt property.
17.5 	(v) The city aid base for a city is increased by $140,000 in 2008 and thereafter, and 
17.6 	the maximum total aid it may receive under section 477A.013, subdivision 9, is also 
17.7 	increased by $140,000 in calendar year 2008 only if the city had a population in 2005 of 
17.8 	less than 3,000 and the city's boundaries as of 2007 were formed by the consolidation 
17.9 	of two cities and one township in 2002.
17.10 	(w) The city aid base for a city is increased by $100,000 in 2008 and thereafter, and 
17.11 	the maximum total aid it may receive under section 477A.013, subdivision 9, is also 
17.12 	increased by $100,000 in calendar year 2008 only if the city had a city net tax capacity for 
17.13 	aids payable in 2007 of less than $150 per capita and the city experienced flooding on 
17.14 	March 14, 2007, that resulted in evacuation of at least 40 homes.

17.15 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
17.16 	June 30, 2007.

17.17 	Sec. 3. Minnesota Statutes 2006, section 477A.0124, subdivision 5, is amended to read:
17.18 		Subd. 5.County transition aid. (a) For 2005, a county is eligible for transition 
17.19 	aid equal to the amount, if any, by which:
17.20 	(1) the difference between:
17.21 	(i) the aid the county received under subdivision 1 in 2004, divided by the total aid 
17.22 	paid to all counties under subdivision 1, multiplied by $205,000,000; and
17.23 	(ii) the amount of aid the county is certified to receive in 2005 under subdivisions 
17.24 	3 and 4;
17.25 	exceeds:
17.26 	(2) three percent of the county's adjusted net tax capacity.
17.27 	A county's aid under this paragraph may not be less than zero.
17.28 	(b) In 2006, a county is eligible to receive two-thirds of the transition aid it received 
17.29 	in 2005.
17.30 	(c) In 2007 and thereafter, a county is eligible to receive one-third of the transition 
17.31 	aid it received in 2005.
17.32 	(d) No county shall receive aid under this subdivision after 2007. In 2008 only, a 
17.33 	county that in 2003 was directed to construct new court facilities by the tenth judicial 
18.1 	district of the State of Minnesota is eligible to receive $250,000 in transition aid, provided 
18.2 	that construction of the facilities commences before July 1, 2008.

18.3 	EFFECTIVE DATE. This section is effective for aids payable in 2008 and 
18.4 	thereafter.

18.5 	Sec. 4. Minnesota Statutes 2006, section 477A.013, subdivision 8, is amended to read:
18.6 		Subd. 8.City formula aid. In calendar year 2004 and subsequent years, the 
18.7 	formula aid for a city is equal to the need increase percentage multiplied by the difference 
18.8 	between (1) the city's revenue need multiplied by its population, and (2) the sum of the 
18.9 	city's net tax capacity multiplied by the tax effort rate; the taconite aids under sections 
18.10 	298.28 and 298.282 to any city except a city directly impacted by a taconite mine or plant, 
18.11 	multiplied by the following percentages:
18.12 	(i) zero percent for aids payable in 2004;
18.13 	(ii) 25 percent for aids payable in 2005;
18.14 	(iii) 50 percent for aids payable in 2006;
18.15 	(iv) 75 percent for aids payable in 2007; and
18.16 	(v) 100 percent for aids payable in 2008 and thereafter.
18.17 	For purposes of this subdivision, "a city directly impacted by a taconite mine or 
18.18 	plant" means: (1) Babbit, (2) Eveleth, (3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6) 
18.19 	Silver Bay, or (7) Virginia.
18.20 	No city may have a formula aid amount less than zero. The need increase percentage 
18.21 	must be the same for all cities.
18.22 	The applicable need increase percentage must be calculated by the Department of 
18.23 	Revenue so that the total of the aid under subdivision 9 equals the total amount available 
18.24 	for aid under section 477A.03 after the subtraction under section 477A.014, subdivisions 
18.25 	4 and 5.

18.26 	EFFECTIVE DATE. This section is effective beginning with aids payable in 2008.

18.27 	Sec. 5. Minnesota Statutes 2006, section 477A.013, subdivision 9, is amended to read:
18.28 		Subd. 9.City aid distribution. (a) In calendar year 2002 and thereafter 2008, each 
18.29 	city shall receive an aid distribution equal to the sum of (1) the city formula aid under 
18.30 	subdivision 8, and (2) its city aid base, and (3) one-half of the difference between its total 
18.31 	aid in the previous year under this section and its city aid base in the previous year. For aids 
18.32 	payable in 2009 and thereafter, each city shall receive an aid distribution equal to the sum 
19.1 	of (1) the city formula aid under subdivision 8, (2) its city aid base, and (3) its formula aid 
19.2 	under subdivision 8 in the previous year, prior to any adjustments under this subdivision.
19.3 	(b) For aids payable in 2008, the total aid for any city shall not exceed the sum of (1) 
19.4 	25 percent of its net levy for the year prior to the aid distribution plus (2) its total aid in the 
19.5 	previous year. For aids payable in 2005 2009 and thereafter, the total aid for any city shall 
19.6 	not exceed the sum of (1) ten percent of the city's net levy for the year prior to the aid 
19.7 	distribution plus (2) its total aid in the previous year. For aids payable in 2005 2008 and 
19.8 	thereafter, the total aid for any city with a population of 2,500 or more may not decrease 
19.9 	frombe less than its total aid under this section in the previous year by an amount greater 
19.10 	thanminus the lesser of (1) $15 multiplied by its population, or (2) ten percent of its net 
19.11 	levy in the year prior to the aid distribution.
19.12 	(c) For aids payable in 2004 only, the total aid for a city with a population less than 
19.13 	2,500 may not be less than the amount it was certified to receive in 2003 minus the greater 
19.14 	of (1) the reduction to this aid payment in 2003 under Laws 2003, First Special Session 
19.15 	chapter 21, article 5, or (2) five percent of its 2003 aid amount. For aids payable in 2008 
19.16 	only, the total aid for a city with a population less than 2,500 must not be less than the 
19.17 	amount it would otherwise be certified to receive in 2008 if this act was not enacted. For 
19.18 	aids payable in 20052008 and thereafter, the total aid for a city with a population less 
19.19 	than 2,500 must not be less than the amount it was certified to receive in the previous year 
19.20 	minus the lesser of (1) $15 multiplied by its population, or (2) five percent of its 2003 
19.21 	certified aid amount.
19.22 	(d) If a city's net tax capacity used in calculating aid under this section has decreased 
19.23 	in any year by more than 25 percent from its net tax capacity in the previous year due to 
19.24 	property becoming tax-exempt Indian land, the city's maximum allowed aid increase 
19.25 	under paragraph (b) shall be increased by an amount equal to (1) the city's tax rate in the 
19.26 	year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease 
19.27 	resulting from the property becoming tax exempt.

19.28 	EFFECTIVE DATE. This section is effective for aids payable in 2008 and 
19.29 	thereafter.

19.30 	Sec. 6. Minnesota Statutes 2006, section 477A.013, is amended by adding a 
19.31 	subdivision to read:
19.32 		Subd. 11.Towns. In 2008 and subsequent years, each town that levied a property 
19.33 	tax in the previous year shall receive a distribution equal to $3 multiplied by its population.

20.1 	EFFECTIVE DATE. This section is effective for aids payable in calendar year 
20.2 	2008 and thereafter.

20.3 	Sec. 7. Minnesota Statutes 2006, section 477A.03, is amended to read:
20.4 	477A.03 APPROPRIATION.
20.5 		Subd. 2.Annual appropriation. A sum sufficient to discharge the duties imposed 
20.6 	by sections 477A.011 to 477A.014 is annually appropriated from the general fund to the 
20.7 	commissioner of revenue. 
20.8 		Subd. 2a.Cities. For aids payable in 2004, the total aids paid under section 
20.9 	477A.013, subdivision 9, are limited to $429,000,000. For aids payable in 2005, the 
20.10 	total aids paid under section 477A.013, subdivision 9, are limited to $437,052,000. For 
20.11 	aids payable in 2006 and thereafter 2008, the total aids paid under section 477A.013, 
20.12 	subdivision 9, is limited to $485,052,000 $545,052,000. For aids payable in 2009 and 
20.13 	thereafter, the total aids paid under section 477A.013, subdivision 9, are the amounts 
20.14 	certified to be paid in the previous year, adjusted for inflation as provided under 
20.15 	subdivision 5.
20.16 		Subd. 2b.Counties. (a) For aids payable in calendar year 2005 and thereafter
20.17 	2008, the total aids paid to counties under section 477A.0124, subdivision 3, are limited 
20.18 	to $100,500,000 $112,500,000. For aids payable in 2009 and thereafter, the total aids 
20.19 	paid under section 477A.0124, subdivision 3, are the amounts certified to be paid in the 
20.20 	previous year, adjusted for inflation as provided under subdivision 5. Each calendar year, 
20.21 	$500,000 shall be retained by the commissioner of revenue to make reimbursements 
20.22 	to the commissioner of finance for payments made under section 611.27. For calendar 
20.23 	year 2004, the amount shall be in addition to the payments authorized under section 
20.24 	477A.0124, subdivision 1. For calendar year 2005 and subsequent years, The amount shall 
20.25 	be deducted from the appropriation under this paragraph. The reimbursements shall be to 
20.26 	defray the additional costs associated with court-ordered counsel under section 611.27. 
20.27 	Any retained amounts not used for reimbursement in a year shall be included in the next 
20.28 	distribution of county need aid that is certified to the county auditors for the purpose of 
20.29 	property tax reduction for the next taxes payable year.
20.30 	(b) For aids payable in 2005, the total aids under section 477A.0124, subdivision 
20.31 	4, are limited to $105,000,000. For aids payable in 2006 and thereafter 2008, the total 
20.32 	aid under section 477A.0124, subdivision 4, is limited to $105,132,923 $116,669,054. 
20.33 	For aids payable in 2009 and thereafter, the total aids paid under section 477A.0124, 
20.34 	subdivision 4, are the amounts certified to be paid in the previous year, adjusted for 
20.35 	inflation as provided under subdivision 5. The commissioner of finance shall bill the 
21.1 	commissioner of revenue for the cost of preparation of local impact notes as required by 
21.2 	section 3.987, not to exceed $207,000 in fiscal year 2004 and thereafter. The commissioner 
21.3 	of education shall bill the commissioner of revenue for the cost of preparation of local 
21.4 	impact notes for school districts as required by section 3.987, not to exceed $7,000 in fiscal 
21.5 	year 2004 and thereafter. The commissioner of revenue shall deduct the amounts billed 
21.6 	under this paragraph from the appropriation under this paragraph. The amounts deducted 
21.7 	are appropriated to the commissioner of finance and the commissioner of education for the 
21.8 	preparation of local impact notes.
21.9 		Subd. 5.Inflation adjustment. (a) In 2009 and thereafter, the amount paid under 
21.10 	subdivision 2a shall each be increased by an amount as provided in paragraphs (b) and (c).
21.11 	(b) Unless the requirements of paragraph (c) are met, the increase shall be one 
21.12 	percent above the amount certified to be paid under those subdivisions in the previous year.
21.13 	(c) If the legislature adopts a new formula proposed by the study in section 13 
21.14 	that all city organizations representing at least 40 cities in the state support, the increase 
21.15 	shall be equal to:
21.16 	(1) the amount certified to be paid under that subdivision in the previous year, 
21.17 	multiplied by
21.18 	(2) one plus the percentage increase in the implicit price deflator for state and 
21.19 	local government purchases of goods and services prepared by the Bureau of Economic 
21.20 	Analysis of the United States Department of Commerce for the 12-month period ending 
21.21 	March 31 of the previous year.
21.22 	The increase under this provision in any year may not be less than 2.5 percent or 
21.23 	greater than 5.0 percent.
21.24 	(d) In 2009 to 2010, the amounts paid under subdivision 2b, paragraphs (a) and (b) 
21.25 	shall be increased by the greater of (1) one percent over the amount paid in the previous 
21.26 	year, or (2) the inflation amount applied to the city appropriation under this subdivision. In 
21.27 	2011 and thereafter, the increase shall be equal to:
21.28 	(1) the amount certified to be paid under that subdivision in the previous year, 
21.29 	multiplied by
21.30 	(2) one plus the percentage increase in the implicit price deflator for state and 
21.31 	local government purchases of goods and services prepared by the Bureau of Economic 
21.32 	Analysis of the United States Department of Commerce for the 12-month period ending 
21.33 	March 31 of the previous year.
21.34 	The increase under this provision in any year may not be less than 2.5 percent or 
21.35 	greater than 5.0 percent.

22.1 	EFFECTIVE DATE. This section is effective for aids payable in calendar year 
22.2 	2008 and thereafter.

22.3 	Sec. 8. Minnesota Statutes 2006, section 477A.12, subdivision 1, is amended to read:
22.4 		Subdivision 1.Types of land; payments. (a) As an offset for expenses incurred 
22.5 	by counties and towns in support of natural resources lands, the following amounts are 
22.6 	annually appropriated to the commissioner of natural resources from the general fund for 
22.7 	transfer to the commissioner of revenue. The commissioner of revenue shall pay the 
22.8 	transferred funds to counties as required by sections 477A.11 to 477A.145. The amounts 
22.9 	are:
22.10 	(1) for acquired natural resources land, $3, as adjusted for inflation under section 
22.11 	477A.145, multiplied by the total number of acres of acquired natural resources land or, 
22.12 	at the county's option three-fourths of one percent of the appraised value of all acquired 
22.13 	natural resources land in the county, whichever is greater;
22.14 	(2) 75 cents, as adjusted for inflation under section 477A.145, multiplied by the 
22.15 	number of acres of county-administered other natural resources land;
22.16 	(3) 75 cents $3, as adjusted for inflation under section 477A.145, multiplied by 
22.17 	the total number of acres of land utilization project land that is located entirely within a 
22.18 	wildlife management area as described in section 86A.05, subdivision 8; and 75 cents, as 
22.19 	adjusted for inflation under section 477A.145, multiplied by the total number of acres of 
22.20 	land utilization project land not located within a wildlife management area; and
22.21 	(4) 37.5 cents, as adjusted for inflation under section 477A.145, multiplied by the 
22.22 	number of acres of commissioner-administered other natural resources land located in 
22.23 	each county as of July 1 of each year prior to the payment year.
22.24 	(b) The amount determined under paragraph (a), clause (1), is payable for land 
22.25 	that is acquired from a private owner and owned by the Department of Transportation 
22.26 	for the purpose of replacing wetland losses caused by transportation projects, but only 
22.27 	if the county contains more than 500 acres of such land at the time the certification is 
22.28 	made under subdivision 2.

22.29 	EFFECTIVE DATE. This section is effective for payments in 2008 and thereafter.

22.30 	Sec. 9. Minnesota Statutes 2006, section 477A.14, subdivision 1, is amended to read:
22.31 		Subdivision 1.General distribution. Except as provided in subdivision 2 or in 
22.32 	section 97A.061, subdivision 5, 40 percent of the total payment to the county shall be 
22.33 	deposited in the county general revenue fund to be used to provide property tax levy 
22.34 	reduction. The remainder shall be distributed by the county in the following priority:
23.1 	(a) 37.5 cents, as adjusted for inflation under section 477A.145, for each acre 
23.2 	of county-administered other natural resources land shall be deposited in a resource 
23.3 	development fund to be created within the county treasury for use in resource 
23.4 	development, forest management, game and fish habitat improvement, and recreational 
23.5 	development and maintenance of county-administered other natural resources land. Any 
23.6 	county receiving less than $5,000 annually for the resource development fund may elect to 
23.7 	deposit that amount in the county general revenue fund;
23.8 	(b) From the funds remaining, within 30 days of receipt of the payment to the county, 
23.9 	the county treasurer shall pay each organized township 30 cents, as adjusted for inflation 
23.10 	under section 477A.145, for each acre of acquired natural resources land, each acre of 
23.11 	land utilization project land located entirely within a wildlife management area, and each 
23.12 	acre of land described in section 477A.12, subdivision 1, paragraph (b), and 7.5 cents, as 
23.13 	adjusted for inflation under section 477A.145, for each acre of other natural resources land 
23.14 	and each acre of land utilization project land not located within a wildlife management 
23.15 	area, located within its boundaries. Payments for natural resources lands not located in 
23.16 	an organized township shall be deposited in the county general revenue fund. Payments 
23.17 	to counties and townships pursuant to this paragraph shall be used to provide property 
23.18 	tax levy reduction, except that of the payments for natural resources lands not located in 
23.19 	an organized township, the county may allocate the amount determined to be necessary 
23.20 	for maintenance of roads in unorganized townships. Provided that, if the total payment 
23.21 	to the county pursuant to section 477A.12 is not sufficient to fully fund the distribution 
23.22 	provided for in this clause, the amount available shall be distributed to each township and 
23.23 	the county general revenue fund on a pro rata basis; and
23.24 	(c) Any remaining funds shall be deposited in the county general revenue fund. 
23.25 	Provided that, if the distribution to the county general revenue fund exceeds $35,000, the 
23.26 	excess shall be used to provide property tax levy reduction.

23.27 	EFFECTIVE DATE. This section is effective for payments in 2008 and thereafter.

23.28 	Sec. 10. UTILITY PROPERTY; TAX BASE ADJUSTMENTS FOR 
23.29 	CALCULATION OF SCHOOL DISTRICT AIDS AND LEVIES.
 23.30 	For purposes of calculating school levies and aids for fiscal years 2009, 2010, and 
23.31 	2011 only, the commissioner of revenue shall compute the adjusted net tax capacity and 
23.32 	referendum market value as if the tax base changes resulting from the amendments to 
23.33 	Minnesota Rules, chapter 8100, including the phase-in provisions of Minnesota Rules, 
23.34 	part 8100.0800, were effective one year earlier.

24.1 	EFFECTIVE DATE. This section is effective for revenue for fiscal years 2009, 
24.2 	2010, and 2011.

24.3 	Sec. 11. UTILITY PROPERTY; TAX BASE ADJUSTMENTS FOR 
24.4 	CALCULATION OF COUNTY AND CITY AIDS.
 24.5 	For purposes of calculating aid for cities under section 477A.013, and for counties 
24.6 	under section 477A.0124, for payment in 2008, 2009, and 2010 only, the commissioner 
24.7 	of revenue shall calculate the adjusted net tax capacity of cities and counties, as defined 
24.8 	in sections 477A.011 and 477A.0124, as if the tax base changes resulting from the 
24.9 	amendments to Minnesota Rules, chapter 8100, including the phase-in provisions of 
24.10 	Minnesota Rules, part 8100.0800, were effective one year earlier.

24.11 	EFFECTIVE DATE. This section is effective for aids payable in 2008, 2009, 
24.12 	and 2010.

24.13 	Sec. 12. MAHNOMEN COUNTY; COUNTY PROPERTY TAX 
24.14 	REIMBURSEMENT, CITY AND SCHOOL DISTRICT TAX BASE 
24.15 	ADJUSTMENTS.
 24.16 		Subdivision 1.Aid appropriation. $250,000 is appropriated in fiscal year 2009 
24.17 	from the general fund to the commissioner of revenue to make a payment in calendar year 
24.18 	2008 to the county of Mahnomen to compensate for the loss of property tax revenue due 
24.19 	to the pending placement of property, located in the city of Mahnomen, into trust status by 
24.20 	the United States Department of the Interior, Bureau of Indian Affairs.
24.21 		Subd. 2.School district, county, and city tax base adjustments. (a) The 
24.22 	commissioner of revenue must reduce the referendum market value and adjusted net 
24.23 	tax capacity used to calculate school levies beginning with taxes payable in 2008 and 
24.24 	subsequent years for Independent School District No. 432, Mahnomen, by the amounts 
24.25 	attributable to the property that is pending placement into trust status by the United States 
24.26 	Department of the Interior, Bureau of Indian Affairs. This adjustment shall be made for 
24.27 	each assessment year that the property remains on the tax rolls.
24.28 	(b) The commissioner of revenue must reduce the county and city net tax capacities 
24.29 	used to calculate aids under sections 477A.011 to 477A.03, beginning with aids payable in 
24.30 	2008 for the county of Mahnomen and the city of Mahnomen, by the amounts attributable 
24.31 	to property that is pending placement into trust status by the United States Department of 
24.32 	the Interior, Bureau of Indian Affairs. This adjustment shall be made for each assessment 
24.33 	year that the property remains on the tax rolls.

25.1 	EFFECTIVE DATE. This section is effective for aids and levies payable in 2008 
25.2 	and thereafter.

25.3 	Sec. 13. STUDY OF CITY LOCAL GOVERNMENT AID PROGRAM.
 25.4 	The commissioner of revenue shall work with representatives of all major city 
25.5 	organizations, representing at least 40 cities on this issue, to study the current local 
25.6 	government aid formula for cities, along with alternatives proposed by the various 
25.7 	interest groups, and provide a written report with recommendations to the legislature, in 
25.8 	compliance with Minnesota Statutes, sections 3.195 and 3.197, by February 1, 2008. 
25.9 	The study must list the alternatives considered and any recommended changes for 
25.10 	which consensus has been reached. If there is no consensus on proposed changes, the 
25.11 	commissioner shall report this. The commissioner shall allocate minimal staff time to the 
25.12 	study, but must provide staff to organize and chair any meetings of the study group and 
25.13 	provide modeling assistance for the final proposed changes.

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

25.15 	ARTICLE 3
25.16 	PROPERTY TAXES

25.17 	Section 1. Minnesota Statutes 2006, section 97A.061, subdivision 2, is amended to 
25.18 	read:
25.19 		Subd. 2.Allocation. (a) Except as provided in subdivision 3, the county treasurer 
25.20 	shall allocate the payment among the county, towns, and school districts on the same basis 
25.21 	as if the payments were taxes on the land received in the year. Payment of a town's or a 
25.22 	school district's allocation must be made by the county treasurer to the town or school 
25.23 	district within 30 days of receipt of the payment to the county. The county's share of the 
25.24 	payment shall be deposited in the county general revenue fund.
25.25 	(b) The county treasurer of a county with a population over 39,000 but less than 
25.26 	42,000 in the 1950 federal census shall allocate the payment only among the towns and 
25.27 	school districts on the same basis as if the payments were taxes on the lands received 
25.28 	in the current year.
25.29 	(c) If a town received a payment in calendar year 2006 or thereafter under this 
25.30 	subdivision, and subsequently incorporated as a city, the city will continue to receive any 
25.31 	future year's allocations that would have been made to the town had it not incorporated, 
25.32 	provided the city does not pass ordinances prohibiting hunting.

26.1 	EFFECTIVE DATE. This section is effective for aid payments made in 2007 
26.2 	and thereafter.

26.3 	Sec. 2. Minnesota Statutes 2006, section 127A.48, subdivision 3, is amended to read:
26.4 		Subd. 3.Agricultural lands. For purposes of determining the adjusted net tax 
26.5 	capacity of agricultural lands for the calculation of adjusted net tax capacities, the market 
26.6 	value of agricultural lands must be the price for which the property would sell in an 
26.7 	arm's-length transaction. When agricultural land that is enrolled under section 273.111 
26.8 	is sold, and the purchaser changes its use in a manner that would result in a change of 
26.9 	classification of the property, the assessment/sales ratio study under this subdivision must 
26.10 	take into account that changed classification as soon as practicable. A change in status 
26.11 	from homestead to nonhomestead or from nonhomestead to homestead is not a change in 
26.12 	classification under this subdivision.

26.13 	EFFECTIVE DATE. This section is effective for the first study prepared following 
26.14 	the day following final enactment.

26.15 	Sec. 3. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision 
26.16 	to read:
26.17 		Subd. 85.Modular homes used as models by dealers. (a) A modular home 
26.18 	is exempt if it:
26.19 	(1) is owned by a modular home dealer and is located on land owned or leased 
26.20 	by that dealer;
26.21 	(2) is a single-family model home;
26.22 	(3) is not available for sale and is used exclusively as a model;
26.23 	(4) is not permanently connected to any utilities except electricity; and
26.24 	(5) is situated on a temporary foundation.
26.25 	(b) The exemption under this subdivision is allowable for up to five assessment 
26.26 	years after the date it becomes located on the property, provided that the modular home 
26.27 	continues to meet all of the criteria under this subdivision each year. The owner of a 
26.28 	modular model home must notify the county assessor within 60 days that it has been 
26.29 	constructed or located on the property and must again notify the assessor if the modular 
26.30 	home ceases to meet any of the criteria. If more than one modular home is constructed or 
26.31 	situated on a property, the owner must notify the assessor within 60 days for each of the 
26.32 	models placed on the property.
26.33 	(c) For purposes of this subdivision, a "modular home" means a building or 
26.34 	structural unit that has been in whole or substantial part manufactured or constructed at an 
27.1 	off-site location to be wholly or partially assembled on-site as a single family dwelling. 
27.2 	Construction of the modular home must comply with applicable standards adopted in 
27.3 	Minnesota Rules authorized under Minnesota Statutes, chapter 16B. A modular home does 
27.4 	not include a structure subject to the requirements of the National Manufactured Home 
27.5 	Construction and Safety Standards Act of 1974 or prefabricated buildings, as defined in 
27.6 	Minnesota Statutes, section 327.31, subdivision 6.

27.7 	EFFECTIVE DATE. This section is effective for assessment year 2007 and 
27.8 	thereafter, for taxes payable in 2008 and thereafter. The five-year assessment time period 
27.9 	begins with the 2007 assessment for a modular model home currently situated provided 
27.10 	it meets all of the criteria and the county assessor is notified within 90 days of the day 
27.11 	following final enactment.

27.12 	Sec. 4. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision 
27.13 	to read:
27.14 		Subd. 86.Electric generation facility; personal property. (a) Notwithstanding 
27.15 	subdivision 9, clause (a), attached machinery and other personal property which is part of 
27.16 	a simple-cycle combustion-turbine electric generation facility that exceeds 150 megawatts 
27.17 	of installed capacity and that meets the requirements of this subdivision is exempt. At 
27.18 	the time of construction, the facility must:
27.19 	(1) utilize natural gas as a primary fuel;
27.20 	(2) be owned by an electric generation and transmission cooperative;
27.21 	(3) be located within one mile of an existing 16-inch natural gas pipeline and a 
27.22 	69-kilovolt and a 230-kilovolt high-voltage electric transmission line;
27.23 	(4) be designed to provide peaking, emergency backup, or contingency services;
27.24 	(5) have received a certificate of need under section 216B.243 demonstrating 
27.25 	demand for its capacity; and
27.26 	(6) have received by resolution the approval from the governing bodies of the county 
27.27 	and the city in which the proposed facility is to be located for the exemption of personal 
27.28 	property under this subdivision.
27.29 	(b) Construction of the facility must be commenced after January 1, 2008, and 
27.30 	before January 1, 2012. Property eligible for this exemption does not include electric 
27.31 	transmission lines and interconnections or gas pipelines and interconnections appurtenant 
27.32 	to the property or the facility.

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

28.1 	Sec. 5. Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision 
28.2 	to read:
28.3 		Subd. 87.Apprenticeship training facilities. Property used exclusively for a 
28.4 	state-approved apprenticeship program through the Department of Labor and Industry and 
28.5 	owned by a 501(c)(3) nonprofit corporation is exempt, provided the program participants 
28.6 	receive no compensation.

28.7 	EFFECTIVE DATE. This section is effective for assessment year 2007 and 
28.8 	thereafter, for taxes payable in 2008 and thereafter.

28.9 	Sec. 6. Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:
28.10 		Subdivision 1.Requirement. Except as otherwise provided in subdivision 5, 
28.11 	whenever any real estate is sold for a consideration in excess of $1,000, whether by 
28.12 	warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor, 
28.13 	grantee or the legal agent of either shall file a certificate of value with the county auditor 
28.14 	in the county in which the property is located when the deed or other document is 
28.15 	presented for recording. Contract for deeds are subject to recording under section 507.235, 
28.16 	subdivision 1. Value shall, in the case of any deed not a gift, be the amount of the full 
28.17 	actual consideration thereof, paid or to be paid, including the amount of any lien or liens 
28.18 	assumed. The items and value of personal property transferred with the real property 
28.19 	must be listed and deducted from the sale price. The certificate of value shall include the 
28.20 	classification to which the property belongs for the purpose of determining the fair market 
28.21 	value of the property, and shall include any proposed change in use of the property known 
28.22 	to the person filing the certificate that could change the classification of the property. The 
28.23 	certificate shall include financing terms and conditions of the sale which are necessary 
28.24 	to determine the actual, present value of the sale price for purposes of the sales ratio 
28.25 	study. The commissioner of revenue shall promulgate administrative rules specifying the 
28.26 	financing terms and conditions which must be included on the certificate. Pursuant to the 
28.27 	authority of the commissioner of revenue in section 270C.306, the certificate of value 
28.28 	must include the Social Security number or the federal employer identification number 
28.29 	of the grantors and grantees. The identification numbers of the grantors and grantees are 
28.30 	private data on individuals or nonpublic data as defined in section 13.02, subdivisions 9 
28.31 	and 12, but, notwithstanding that section, the private or nonpublic data may be disclosed to 
28.32 	the commissioner of revenue for purposes of tax administration. The information required 
28.33 	to be shown on the certificate of value is limited to the information required as of the date 
28.34 	of the acknowledgment on the deed or other document to be recorded.

29.1 	EFFECTIVE DATE. This section is effective for the first assessment/sales ratio 
29.2 	study prepared following the day following final enactment.

29.3 	Sec. 7. Minnesota Statutes 2006, section 273.11, subdivision 1a, is amended to read:
29.4 		Subd. 1a.Limited market value. In the case of all property classified as 
29.5 	agricultural homestead or nonhomestead, residential homestead or nonhomestead, timber, 
29.6 	or noncommercial seasonal residential recreational, the assessor shall compare the value 
29.7 	with the taxable portion of the value determined in the preceding assessment.
29.8 	For assessment years 2004, 2005, and 2006 through 2008, the amount of the increase 
29.9 	shall not exceed the greater of (1) 15 percent of the value in the preceding assessment, 
29.10 	or (2) 25 percent of the difference between the current assessment and the preceding 
29.11 	assessment.
29.12 	For assessment year 2007 2009, the amount of the increase shall not exceed the 
29.13 	greater of (1) 15 percent of the value in the preceding assessment, or (2) 33 percent of the 
29.14 	difference between the current assessment and the preceding assessment.
29.15 	For assessment year 2008 2010, the amount of the increase shall not exceed the 
29.16 	greater of (1) 15 percent of the value in the preceding assessment, or (2) 50 percent of the 
29.17 	difference between the current assessment and the preceding assessment.
29.18 	This limitation shall not apply to increases in value due to improvements. For 
29.19 	purposes of this subdivision, the term "assessment" means the value prior to any exclusion 
29.20 	under subdivision 16.
29.21 	The provisions of this subdivision shall be in effect through assessment year 2008
29.22 	2010 as provided in this subdivision.
29.23 	For purposes of the assessment/sales ratio study conducted under section 127A.48, 
29.24 	and the computation of state aids paid under chapters 122A, 123A, 123B, 124D, 125A, 
29.25 	126C, 127A, and 477A, market values and net tax capacities determined under this 
29.26 	subdivision and subdivision 16, shall be used.

29.27 	EFFECTIVE DATE. This section is effective for assessment year 2007 and 
29.28 	thereafter, for taxes payable in 2008 and thereafter.

29.29 	Sec. 8. Minnesota Statutes 2006, section 273.11, is amended by adding a subdivision to 
29.30 	read:
29.31 		Subd. 16a.Valuation exclusion for certain improvements. (a) Improvements to 
29.32 	homestead property made after January 2, 2008, shall be excluded from the value of the 
29.33 	property for assessment purposes provided that (1) the house is at least 50 years old at the 
30.1 	time of the improvement and (2) the assessor's estimated market value of the property on 
30.2 	January 2 of the current year does not exceed $400,000.
30.3 	(b) The age of a residence is the number of years since the original year of its 
30.4 	construction. In the case of an owner-occupied duplex or triplex, the improvement is 
30.5 	eligible regardless of which portion of the property was improved.
30.6 	(c) If the property lies in a jurisdiction that is subject to a building permit process, a 
30.7 	building permit must have been issued prior to commencement of the improvement. 
30.8 	The improvements for a single project or in any one year must add at least $15,000 
30.9 	market value to the property to be eligible for exclusion under this subdivision. Only 
30.10 	improvements to the structure which is the residence of the qualifying homesteader, or 
30.11 	construction of or improvements to no more than one two-car garage per residence, 
30.12 	qualify for the provisions of this subdivision. Whenever a building permit is issued for 
30.13 	property currently classified as homestead, the issuing jurisdiction shall notify the property 
30.14 	owner of the possibility of valuation exclusion under this subdivision. The assessor shall 
30.15 	require an application, including documentation of the age of the house from the owner, 
30.16 	if unknown by the assessor. The application may be filed subsequent to the date of the 
30.17 	building permit provided that the application must be filed within two years of the date the 
30.18 	building permit was issued for the improvement. If the property lies in a jurisdiction that 
30.19 	is not subject to a building permit process, the application must be filed within two years 
30.20 	of the date the improvement was made. The assessor may require proof from the taxpayer 
30.21 	of the date the improvement was made. Applications must be received prior to July 1 of 
30.22 	any year in order to be effective for taxes payable in the following year.
30.23 	(d) In the case of a residence that is relocated, the relocation must be from a location 
30.24 	within the state and the only improvements eligible for exclusion under this subdivision 
30.25 	are (1) those for which building permits were issued to the homeowner after the residence 
30.26 	was relocated to its present site, and (2) those undertaken during or after the year the 
30.27 	residence is initially occupied by the homeowner, excluding any market value increase 
30.28 	relating to basic improvements that are necessary to install the residence on its foundation 
30.29 	and connect it to utilities at its present site.
30.30 	(e) No exclusion for an improvement may be granted by a local board of review or 
30.31 	county board of equalization, and no abatement of the taxes for qualifying improvements 
30.32 	may be granted by the county board unless (1) a building permit was issued prior to the 
30.33 	commencement of the improvement if the jurisdiction requires a building permit, and 
30.34 	(2) an application was completed.
30.35 	(f) The assessor shall note the qualifying value of each improvement on the 
30.36 	property's record, and the sum of those amounts must be subtracted from the value of the 
31.1 	property in each year for ten years after the improvement has been made. After ten years, 
31.2 	the amount of the qualifying value shall be added back as follows:
31.3 	(1) 50 percent in the two subsequent assessment years if the qualifying value is equal 
31.4 	to or less than $20,000 market value; or
31.5 	(2) 33-1/3 percent in the three subsequent assessment years if the qualifying value is 
31.6 	greater than $20,000 market value.
31.7 	(g) If an application is filed after the first assessment date at which an improvement 
31.8 	could have been subject to the valuation exclusion under this subdivision, the ten-year 
31.9 	period during which the value is subject to exclusion is reduced by the number of years 
31.10 	that have elapsed since the property would have qualified initially. The valuation 
31.11 	exclusion terminates whenever (1) the property is sold, or (2) the property is reclassified to 
31.12 	a class that does not qualify for treatment under this subdivision. Improvements made by 
31.13 	an occupant who is the purchaser of the property under a conditional purchase contract 
31.14 	do not qualify under this subdivision unless the seller of the property is a governmental 
31.15 	entity. The qualifying value of the property must be computed based upon the increase 
31.16 	from that structure's market value as of January 2 preceding the acquisition of the property 
31.17 	by the governmental entity.
31.18 	(h) The total qualifying value for a homestead may not exceed $75,000. The term 
31.19 	"qualifying value" means the increase in estimated market value resulting from the 
31.20 	improvement. The maximum qualifying value under this subdivision may result from no 
31.21 	more than two separate improvements to the homestead.
31.22 	(i) If 50 percent or more of the square footage of a structure is voluntarily razed 
31.23 	or removed, the valuation increase attributable to any subsequent improvements to the 
31.24 	remaining structure does not qualify for the exclusion under this subdivision. If a structure 
31.25 	is unintentionally or accidentally destroyed by a natural disaster, the property is eligible 
31.26 	for an exclusion under this subdivision provided that the structure was not completely 
31.27 	destroyed. The qualifying value on property destroyed by a natural disaster must be 
31.28 	computed based upon the increase from that structure's market value as determined on 
31.29 	January 2 of the year in which the disaster occurred. A property receiving benefits under 
31.30 	the homestead disaster provisions under section 273.123 is not disqualified from receiving 
31.31 	an exclusion under this subdivision. If any combination of improvements made to a 
31.32 	structure after January 2, 2008, increase the size of the structure by 100 percent or more, 
31.33 	the valuation increase attributable to the portion of the improvement that causes the 
31.34 	structure's size to exceed 100 percent does not qualify for exclusion under this subdivision.

31.35 	EFFECTIVE DATE. This section is effective for improvements made after January 
31.36 	2, 2008.

32.1 	Sec. 9. Minnesota Statutes 2006, section 273.111, is amended by adding a subdivision 
32.2 	to read:
32.3 		Subd. 16.Applications; denied by county. For applications filed for the 2007 and 
32.4 	2008 assessment years, all applications for deferment of taxes and assessment under this 
32.5 	section that have been denied by the county shall be forwarded to the commissioner of 
32.6 	revenue by the county assessor within 30 days of denial. The assessor shall also provide 
32.7 	the commissioner with a list of any property owners that requested an application and 
32.8 	were denied, including names and addresses, and the reason for the denial. For the 
32.9 	purpose of monitoring compliance with this section, the commissioner shall compile a 
32.10 	report identifying all denied applications and requests for applications that were denied, 
32.11 	the reason for the denial, and any commissioner action or recommendation. A report must 
32.12 	be submitted to the chairs of the house and senate tax committees on or before February 
32.13 	1, 2008, and February 1, 2009, in compliance with Minnesota Statutes, sections 3.195 
32.14 	and 3.197.

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

32.16 	Sec. 10. Minnesota Statutes 2006, section 273.123, subdivision 7, is amended to read:
32.17 		Subd. 7.Local option; other property. The owner of homestead property 
32.18 	not qualifying for an adjustment in valuation pursuant to subdivisions 1 to 5 or of 
32.19 	nonhomestead property may receive a reduction in the amount of taxes payable on the 
32.20 	property for the year in which the destruction occurs and in the following year if:
32.21 	(a) 50 percent or more of the homestead dwelling or other structure, as established 
32.22 	by the county assessor, is:
32.23 	(1) unintentionally or accidentally destroyed, or
32.24 	(2) destroyed by arson or vandalism, by someone other than the owner,
32.25 	and the homestead is uninhabitable or the other structure is not usable;
32.26 	(b) the owner of the property makes written application to the county assessor as 
32.27 	soon as practical after the damage has occurred; and
32.28 	(c) the owner of the property makes written application to the county board.
32.29 	The county board may grant a reduction in the amount of property tax which the 
32.30 	owner must pay on the qualifying property in the year of destruction and in the following 
32.31 	year. Any reduction in the amount of tax payable which is authorized by county board 
32.32 	action shall be calculated based upon the number of months that the home is uninhabitable 
32.33 	or the other structure is unusable. The amount of net tax due from the taxpayer shall be 
32.34 	multiplied by a fraction, the numerator of which is the number of months the dwelling 
33.1 	was occupied by that taxpayer, or the number of months the other structure was used by 
33.2 	the taxpayer, and the denominator of which is 12. For purposes of this subdivision, if a 
33.3 	structure is occupied or used for a fraction of a month, it is considered a month. "Net tax" 
33.4 	is defined as the amount of tax after the subtraction of all of the state paid property tax 
33.5 	credits. If application is made following payment of all property taxes due for the year of 
33.6 	destruction, the amount of the reduction granted by the county board shall be refunded to 
33.7 	the taxpayer by the county treasurer as soon as practical.
33.8 	Any reductions or refunds approved by the county board shall not be subject to 
33.9 	approval by the commissioner of revenue.
33.10 	The county board may levy in the following year the amount of tax dollars lost to the 
33.11 	county government as a result of the reductions granted pursuant to this subdivision.

33.12 	EFFECTIVE DATE. This section is effective for destruction that occurs in calendar 
33.13 	year 2006 and thereafter.

33.14 	Sec. 11. Minnesota Statutes 2006, section 273.124, subdivision 1, is amended to read:
33.15 		Subdivision 1.General rule. (a) Residential real estate that is occupied and used 
33.16 	for the purposes of a homestead by its owner, who must be a Minnesota resident, is 
33.17 	a residential homestead.
33.18 	Agricultural land, as defined in section 273.13, subdivision 23, that is occupied and 
33.19 	used as a homestead by its owner, who must be a Minnesota resident, is an agricultural 
33.20 	homestead.
33.21 	Dates for establishment of a homestead and homestead treatment provided to 
33.22 	particular types of property are as provided in this section.
33.23 	Property held by a trustee under a trust is eligible for homestead classification if the 
33.24 	requirements under this chapter are satisfied.
33.25 	The assessor shall require proof, as provided in subdivision 13, of the facts upon 
33.26 	which classification as a homestead may be determined. Notwithstanding any other law, 
33.27 	the assessor may at any time require a homestead application to be filed in order to verify 
33.28 	that any property classified as a homestead continues to be eligible for homestead status. 
33.29 	Notwithstanding any other law to the contrary, the Department of Revenue may, upon 
33.30 	request from an assessor, verify whether an individual who is requesting or receiving 
33.31 	homestead classification has filed a Minnesota income tax return as a resident for the most 
33.32 	recent taxable year for which the information is available.
33.33 	When there is a name change or a transfer of homestead property, the assessor may 
33.34 	reclassify the property in the next assessment unless a homestead application is filed to 
33.35 	verify that the property continues to qualify for homestead classification.
34.1 	(b) For purposes of this section, homestead property shall include property which 
34.2 	is used for purposes of the homestead but is separated from the homestead by a road, 
34.3 	street, lot, waterway, or other similar intervening property. The term "used for purposes 
34.4 	of the homestead" shall include but not be limited to uses for gardens, garages, or other 
34.5 	outbuildings commonly associated with a homestead, but shall not include vacant land 
34.6 	held primarily for future development. In order to receive homestead treatment for 
34.7 	the noncontiguous property, the owner must use the property for the purposes of the 
34.8 	homestead, and must apply to the assessor, both by the deadlines given in subdivision 
34.9 	9. After initial qualification for the homestead treatment, additional applications for 
34.10 	subsequent years are not required.
34.11 	(c) Residential real estate that is occupied and used for purposes of a homestead by a 
34.12 	relative of the owner is a homestead but only to the extent of the homestead treatment 
34.13 	that would be provided if the related owner occupied the property. For purposes of this 
34.14 	paragraph and paragraph (g), "relative" means a parent, stepparent, child, stepchild, 
34.15 	grandparent, grandchild, brother, sister, uncle, aunt, nephew, or niece. This relationship 
34.16 	may be by blood or marriage. Property that has been classified as seasonal residential 
34.17 	recreational property at any time during which it has been owned by the current owner or 
34.18 	spouse of the current owner will not be reclassified as a homestead unless it is occupied as 
34.19 	a homestead by the owner; this prohibition also applies to property that, in the absence of 
34.20 	this paragraph, would have been classified as seasonal residential recreational property at 
34.21 	the time when the residence was constructed. Neither the related occupant nor the owner of 
34.22 	the property may claim a property tax refund under chapter 290A for a homestead occupied 
34.23 	by a relative. In the case of a residence located on agricultural land, only the house, 
34.24 	garage, and immediately surrounding one acre of land shall be classified as a homestead 
34.25 	under this paragraph, except as provided in paragraph (d). In the case of nonagricultural 
34.26 	property, this paragraph only applies to applications approved before July 1, 2007.
34.27 	(d) Agricultural property that is occupied and used for purposes of a homestead by 
34.28 	a relative of the owner, is a homestead, only to the extent of the homestead treatment 
34.29 	that would be provided if the related owner occupied the property, and only if all of the 
34.30 	following criteria are met:
34.31 	(1) the relative who is occupying the agricultural property is a son, daughter, 
34.32 	grandson, granddaughter, father, or mother of the owner of the agricultural property or a 
34.33 	son, daughter, grandson, or granddaughter of the spouse of the owner of the agricultural 
34.34 	property;
34.35 	(2) the owner of the agricultural property must be a Minnesota resident;
35.1 	(3) the owner of the agricultural property must not receive homestead treatment on 
35.2 	any other agricultural property in Minnesota; and
35.3 	(4) the owner of the agricultural property is limited to only one agricultural 
35.4 	homestead per family under this paragraph.
35.5 	Neither the related occupant nor the owner of the property may claim a property 
35.6 	tax refund under chapter 290A for a homestead occupied by a relative qualifying under 
35.7 	this paragraph. For purposes of this paragraph, "agricultural property" means the house, 
35.8 	garage, other farm buildings and structures, and agricultural land.
35.9 	Application must be made to the assessor by the owner of the agricultural property to 
35.10 	receive homestead benefits under this paragraph. The assessor may require the necessary 
35.11 	proof that the requirements under this paragraph have been met.
35.12 	(e) In the case of property owned by a property owner who is married, the assessor 
35.13 	must not deny homestead treatment in whole or in part if only one of the spouses occupies 
35.14 	the property and the other spouse is absent due to: (1) marriage dissolution proceedings, 
35.15 	(2) legal separation, (3) employment or self-employment in another location, or (4) other 
35.16 	personal circumstances causing the spouses to live separately, not including an intent to 
35.17 	obtain two homestead classifications for property tax purposes. To qualify under clause 
35.18 	(3), the spouse's place of employment or self-employment must be at least 50 miles distant 
35.19 	from the other spouse's place of employment, and the homesteads must be at least 50 miles 
35.20 	distant from each other. Homestead treatment, in whole or in part, shall not be denied to 
35.21 	the owner's spouse who previously occupied the residence with the owner if the absence 
35.22 	of the owner is due to one of the exceptions provided in this paragraph.
35.23 	(f) The assessor must not deny homestead treatment in whole or in part if:
35.24 	(1) in the case of a property owner who is not married, the owner is absent due to 
35.25 	residence in a nursing home, boarding care facility, or an elderly assisted living facility 
35.26 	property as defined in section 273.13, subdivision 25a, and the property is not otherwise 
35.27 	occupied; or
35.28 	(2) in the case of a property owner who is married, the owner or the owner's spouse 
35.29 	or both are absent due to residence in a nursing home, boarding care facility, or an elderly 
35.30 	assisted living facility property as defined in section 273.13, subdivision 25a, and the 
35.31 	property is not occupied or is occupied only by the owner's spouse.
35.32 	(g) If an individual is purchasing property with the intent of claiming it as a 
35.33 	homestead and is required by the terms of the financing agreement to have a relative 
35.34 	shown on the deed as a co-owner, the assessor shall allow a full homestead classification. 
35.35 	This provision only applies to first-time purchasers, whether married or single, or to a 
35.36 	person who had previously been married and is purchasing as a single individual for the 
36.1 	first time. The application for homestead benefits must be on a form prescribed by the 
36.2 	commissioner and must contain the data necessary for the assessor to determine if full 
36.3 	homestead benefits are warranted.
36.4 	(h) If residential or agricultural real estate is occupied and used for purposes of a 
36.5 	homestead by a child of a deceased owner and the property is subject to jurisdiction of 
36.6 	probate court, the child shall receive relative homestead classification under paragraph (c) 
36.7 	or (d) to the same extent they would be entitled to it if the owner was still living, until 
36.8 	the probate is completed. For purposes of this paragraph, "child" includes a relationship 
36.9 	by blood or by marriage.
36.10 	(i) If a single-family home, duplex, or triplex classified as either residential 
36.11 	homestead or agricultural homestead is also used to provide licensed child care, the 
36.12 	portion of the property used for licensed child care must be classified as a part of the 
36.13 	homestead property.

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

36.15 	Sec. 12. Minnesota Statutes 2006, section 273.124, subdivision 14, is amended to read:
36.16 		Subd. 14.Agricultural homesteads; special provisions. (a) Real estate of less than 
36.17 	ten acres that is the homestead of its owner must be classified as class 2a under section 
36.18 	273.13, subdivision 23, paragraph (a), if:
36.19 	(1) the parcel on which the house is located is contiguous on at least two sides to (i) 
36.20 	agricultural land, (ii) land owned or administered by the United States Fish and Wildlife 
36.21 	Service, or (iii) land administered by the Department of Natural Resources on which in 
36.22 	lieu taxes are paid under sections 477A.11 to 477A.14;
36.23 	(2) its owner also owns a noncontiguous parcel of agricultural land that is at least 
36.24 	20 acres;
36.25 	(3) the noncontiguous land is located not farther than four townships or cities, or a 
36.26 	combination of townships or cities from the homestead; and
36.27 	(4) the agricultural use value of the noncontiguous land and farm buildings is equal 
36.28 	to at least 50 percent of the market value of the house, garage, and one acre of land.
36.29 	Homesteads initially classified as class 2a under the provisions of this paragraph shall 
36.30 	remain classified as class 2a, irrespective of subsequent changes in the use of adjoining 
36.31 	properties, as long as the homestead remains under the same ownership, the owner owns a 
36.32 	noncontiguous parcel of agricultural land that is at least 20 acres, and the agricultural use 
36.33 	value qualifies under clause (4). Homestead classification under this paragraph is limited 
36.34 	to property that qualified under this paragraph for the 1998 assessment.
37.1 	(b)(i) Agricultural property consisting of at least 40 acres shall be classified as the 
37.2 	owner's homestead, to the same extent as other agricultural homestead property, if all 
37.3 	of the following criteria are met:
37.4 	(1) the property consists of at least 40 acres including undivided government lots 
37.5 	and correctional 40's, or at least 20 acres if used exclusively and intensively for raising 
37.6 	or cultivating agricultural products as defined under section 273.13, subdivision 23, 
37.7 	paragraph (e);
37.8 	(1)(2) the owner, the owner's spouse, the son or daughter of the owner or owner's 
37.9 	spouse, or the grandson or granddaughter of the owner or the owner's spouse, is actively 
37.10 	farming the agricultural property, either on the person's own behalf as an individual or 
37.11 	on behalf of a partnership operating a family farm, family farm corporation, joint family 
37.12 	farm venture, or limited liability company of which the person is a partner, shareholder, or 
37.13 	member;
37.14 	(2)(3) both the owner of the agricultural property and the person who is actively 
37.15 	farming the agricultural property under clause (1) (2), are Minnesota residents;
37.16 	(3)(4) neither the owner nor the spouse of the owner claims another agricultural 
37.17 	homestead in Minnesota; and
37.18 	(4)neither(5) the owner norand the person actively farming the property lives 
37.19 	farther than four townships or cities, or a combination of four townships or cities, from 
37.20 	the agricultural property must live either in the county where the agricultural property is 
37.21 	located or in a county contiguous to the county where the agricultural property is located, 
37.22 	except that if the owner or the owner's spouse is required to live in employer-provided 
37.23 	housing, the owner or owner's spouse, whichever is actively farming the agricultural 
37.24 	property, may live more than four townships or cities, or combination of four townships 
37.25 	or citiesfurther from the agricultural property than in the county or county contiguous 
37.26 	to the property.
37.27 	The relationship under this paragraph may be either by blood or marriage.
37.28 	(ii) Real property held by a trustee under a trust is eligible for agricultural homestead 
37.29 	classification under this paragraph if the qualifications in clause (i) are met, except that 
37.30 	"owner" means the grantor of the trust.
37.31 	(iii) Property containing the residence of an owner who owns qualified property 
37.32 	under clause (i) shall be classified as part of the owner's agricultural homestead, if that 
37.33 	property is also used for noncommercial storage or drying of agricultural crops.
37.34 	(c) Noncontiguous land shall be included as part of a homestead under section 
37.35 	273.13, subdivision 23, paragraph (a), only if the homestead is classified as class 2a 
37.36 	and the detached land is located in the same township or city, or not farther than four 
38.1 	townships or cities or combination thereof fromcounty or in a county contiguous to the 
38.2 	homestead. Any taxpayer of these noncontiguous lands must notify the county assessor 
38.3 	that the noncontiguous land is part of the taxpayer's homestead, and, if the homestead is 
38.4 	located in another county, the taxpayer must also notify the assessor of the other county.
38.5 	(d) Agricultural land used for purposes of a homestead and actively farmed by a 
38.6 	person holding a vested remainder interest in it must be classified as a homestead under 
38.7 	section 273.13, subdivision 23, paragraph (a). If agricultural land is classified class 2a, 
38.8 	any other dwellings on the land used for purposes of a homestead by persons holding 
38.9 	vested remainder interests who are actively engaged in farming the property, and up to 
38.10 	one acre of the land surrounding each homestead and reasonably necessary for the use of 
38.11 	the dwelling as a home, must also be assessed class 2a.
38.12 	(e) Agricultural land and buildings that were class 2a homestead property under 
38.13 	section 273.13, subdivision 23, paragraph (a), for the 1997 assessment shall remain 
38.14 	classified as agricultural homesteads for subsequent assessments if:
38.15 	(1) the property owner abandoned the homestead dwelling located on the agricultural 
38.16 	homestead as a result of the April 1997 floods;
38.17 	(2) the property is located in the county of Polk, Clay, Kittson, Marshall, Norman, 
38.18 	or Wilkin;
38.19 	(3) the agricultural land and buildings remain under the same ownership for the 
38.20 	current assessment year as existed for the 1997 assessment year and continue to be used 
38.21 	for agricultural purposes;
38.22 	(4) the dwelling occupied by the owner is located in Minnesota and is within 30 
38.23 	miles of one of the parcels of agricultural land that is owned by the taxpayer; and
38.24 	(5) the owner notifies the county assessor that the relocation was due to the 1997 
38.25 	floods, and the owner furnishes the assessor any information deemed necessary by the 
38.26 	assessor in verifying the change in dwelling. Further notifications to the assessor are not 
38.27 	required if the property continues to meet all the requirements in this paragraph and any 
38.28 	dwellings on the agricultural land remain uninhabited.
38.29 	(f) Agricultural land and buildings that were class 2a homestead property under 
38.30 	section 273.13, subdivision 23, paragraph (a), for the 1998 assessment shall remain 
38.31 	classified agricultural homesteads for subsequent assessments if:
38.32 	(1) the property owner abandoned the homestead dwelling located on the agricultural 
38.33 	homestead as a result of damage caused by a March 29, 1998, tornado;
38.34 	(2) the property is located in the county of Blue Earth, Brown, Cottonwood, 
38.35 	LeSueur, Nicollet, Nobles, or Rice;
39.1 	(3) the agricultural land and buildings remain under the same ownership for the 
39.2 	current assessment year as existed for the 1998 assessment year;
39.3 	(4) the dwelling occupied by the owner is located in this state and is within 50 miles 
39.4 	of one of the parcels of agricultural land that is owned by the taxpayer; and
39.5 	(5) the owner notifies the county assessor that the relocation was due to a March 29, 
39.6 	1998, tornado, and the owner furnishes the assessor any information deemed necessary by 
39.7 	the assessor in verifying the change in homestead dwelling. For taxes payable in 1999, the 
39.8 	owner must notify the assessor by December 1, 1998. Further notifications to the assessor 
39.9 	are not required if the property continues to meet all the requirements in this paragraph 
39.10 	and any dwellings on the agricultural land remain uninhabited.
39.11 	(g) Agricultural property consisting of at least 40 acres of a family farm corporation, 
39.12 	joint family farm venture, family farm limited liability company, or partnership operating 
39.13 	a family farm as described under subdivision 8 shall be classified homestead, to the same 
39.14 	extent as other agricultural homestead property, if all of the following criteria are met:
39.15 	(1) the property consists of at least 40 acres including undivided government lots 
39.16 	and correctional 40's, or at least 20 acres if used exclusively and intensively for raising 
39.17 	or cultivating agricultural products as defined under section 273.13, subdivision 23, 
39.18 	paragraph (e);
39.19 	(1)(2) a shareholder, member, or partner of that entity is actively farming the 
39.20 	agricultural property;
39.21 	(2)(3) that shareholder, member, or partner who is actively farming the agricultural 
39.22 	property is a Minnesota resident;
39.23 	(3)(4) neither that shareholder, member, or partner, nor the spouse of that 
39.24 	shareholder, member, or partner claims another agricultural homestead in Minnesota; and
39.25 	(4)(5) that shareholder, member, or partner does not live farther than four townships 
39.26 	or cities, or a combination of four townships or cities, from the agricultural property
39.27 	lives in the county where the agricultural property is located or in a county contiguous to 
39.28 	the county where the property is located.
39.29 	Homestead treatment applies under this paragraph for property leased to a family 
39.30 	farm corporation, joint farm venture, limited liability company, or partnership operating a 
39.31 	family farm if legal title to the property is in the name of an individual who is a member, 
39.32 	shareholder, or partner in the entity.
39.33 	(h) To be eligible for the special agricultural homestead under this subdivision, an 
39.34 	initial full application must be submitted to the county assessor where the property is 
39.35 	located. Owners and the persons who are actively farming the property shall be required 
40.1 	to complete only a one-page abbreviated version of the application in each subsequent 
40.2 	year provided that none of the following items have changed since the initial application:
40.3 	(1) the day-to-day operation, administration, and financial risks remain the same;
40.4 	(2) the owners and the persons actively farming the property continue to live within 
40.5 	the four townships or city criteriathe county or a contiguous county and are Minnesota 
40.6 	residents;
40.7 	(3) the same operator of the agricultural property is listed with the Farm Service 
40.8 	Agency;
40.9 	(4) a Schedule F or equivalent income tax form was filed for the most recent year;
40.10 	(5) the property's acreage is unchanged; and
40.11 	(6) none of the property's acres have been enrolled in a federal or state farm program 
40.12 	since the initial application.
40.13 	The owners and any persons who are actively farming the property must include 
40.14 	the appropriate Social Security numbers, and sign and date the application. If any of the 
40.15 	specified information has changed since the full application was filed, the owner must 
40.16 	notify the assessor, and must complete a new application to determine if the property 
40.17 	continues to qualify for the special agricultural homestead. The commissioner of revenue 
40.18 	shall prepare a standard reapplication form for use by the assessors.

40.19 	EFFECTIVE DATE. The portion of this section relating to the 40 acres requirement 
40.20 	is effective for assessment year 2007, taxes payable in 2008 and thereafter. The remaining 
40.21 	portion relating to contiguous counties is effective for assessment year 2008 and thereafter, 
40.22 	taxes payable in 2009 and thereafter.

40.23 	Sec. 13. Minnesota Statutes 2006, section 273.125, subdivision 8, is amended to read:
40.24 		Subd. 8.Manufactured homes; sectional structures. (a) In this section, 
40.25 	"manufactured home" means a structure transportable in one or more sections, which is 
40.26 	built on a permanent chassis, and designed to be used as a dwelling with or without a 
40.27 	permanent foundation when connected to the required utilities, and contains the plumbing, 
40.28 	heating, air conditioning, and electrical systems in it. Manufactured home includes any 
40.29 	accessory structure that is an addition or supplement to the manufactured home and, when 
40.30 	installed, becomes a part of the manufactured home.
40.31 	(b) Except as provided in paragraph (c), a manufactured home that meets each of the 
40.32 	following criteria must be valued and assessed as an improvement to real property, the 
40.33 	appropriate real property classification applies, and the valuation is subject to review and 
40.34 	the taxes payable in the manner provided for real property:
40.35 	(1) the owner of the unit holds title to the land on which it is situated;
41.1 	(2) the unit is affixed to the land by a permanent foundation or is installed at its 
41.2 	location in accordance with the Manufactured Home Building Code in sections 327.31
41.3 	to 327.34, and rules adopted under those sections, or is affixed to the land like other real 
41.4 	property in the taxing district; and
41.5 	(3) the unit is connected to public utilities, has a well and septic tank system, or is 
41.6 	serviced by water and sewer facilities comparable to other real property in the taxing 
41.7 	district.
41.8 	(c) A manufactured home that meets each of the following criteria must be assessed 
41.9 	at the rate provided by the appropriate real property classification but must be treated as 
41.10 	personal property, and the valuation is subject to review and the taxes payable in the 
41.11 	manner provided in this section:
41.12 	(1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit 
41.13 	is located in a manufactured home park but is not the homestead of the park owner;
41.14 	(2) the unit is affixed to the land by a permanent foundation or is installed at its 
41.15 	location in accordance with the Manufactured Home Building Code contained in sections 
41.16 	327.31 to 327.34, and the rules adopted under those sections, or is affixed to the land like 
41.17 	other real property in the taxing district; and
41.18 	(3) the unit is connected to public utilities, has a well and septic tank system, or is 
41.19 	serviced by water and sewer facilities comparable to other real property in the taxing 
41.20 	district.
41.21 	(d) Sectional structures must be valued and assessed as an improvement to real 
41.22 	property if the owner of the structure holds title to the land on which it is located or is a 
41.23 	qualifying lessee of the land under section 273.19. In this paragraph "sectional structure" 
41.24 	means a building or structural unit that has been in whole or substantial part manufactured 
41.25 	or constructed at an off-site location to be wholly or partially assembled on-site alone or 
41.26 	with other units and attached to a permanent foundation.
41.27 	(e) The commissioner of revenue may adopt rules under the Administrative 
41.28 	Procedure Act to establish additional criteria for the classification of manufactured homes 
41.29 	and sectional structures under this subdivision.
41.30 	(f) A storage shed, deck, or similar improvement constructed on property that is 
41.31 	leased or rented as a site for a manufactured home, sectional structure, park trailer, or 
41.32 	travel trailer is taxable as provided in this section. In the case of property that is leased or 
41.33 	rented as a site for a travel trailer, a storage shed, deck, or similar improvement on the 
41.34 	site that is considered personal property under this paragraph is taxable only if its total 
41.35 	estimated market value is over $500 $1,000. The property is taxable as personal property 
41.36 	to the lessee of the site if it is not owned by the owner of the site. The property is taxable 
42.1 	as real estate if it is owned by the owner of the site. As a condition of permitting the owner 
42.2 	of the manufactured home, sectional structure, park trailer, or travel trailer to construct 
42.3 	improvements on the leased or rented site, the owner of the site must obtain the permanent 
42.4 	home address of the lessee or user of the site. The site owner must provide the name 
42.5 	and address to the assessor upon request.

42.6 	EFFECTIVE DATE. This section is effective for assessment year 2007 and 
42.7 	thereafter, for taxes payable in 2008 and thereafter.

42.8 	Sec. 14. Minnesota Statutes 2006, section 273.128, subdivision 1, is amended to read:
42.9 		Subdivision 1.Requirement Requirements. Low-income rental property In order 
42.10 	to be classified as class 4d low-income rental housing under section 273.13, subdivision 
42.11 	25, is entitled to valuation under this section ifthe property must meet the requirements of 
42.12 	subdivision 4, if applicable, and at least 7520 percent of the units in the rental housing 
42.13 	property must meet any of the following qualifications:
42.14 	(1) the units are subject to a housing assistance payments contract under Section 8 
42.15 	of the United States Housing Act of 1937, as amended;
42.16 	(2) the units are rent-restricted and income-restricted units of a qualified low-income 
42.17 	housing project receiving tax credits under section 42(g) of the Internal Revenue Code of 
42.18 	1986, as amended;
42.19 	(3) the units are financed by the Rural Housing Service of the United States 
42.20 	Department of Agriculture and receive payments under the rental assistance program 
42.21 	pursuant to section 521(a) of the Housing Act of 1949, as amended; or
42.22 	(4) the units are subject to rent and income restrictions under the terms of financial 
42.23 	assistance provided to the rental housing property by the federal government or the 
42.24 	state of Minnesota, or a local unit of government, as evidenced by a document recorded 
42.25 	against the property.
42.26 	The restrictions must require assisted units to be occupied by residents whose 
42.27 	household income at the time of initial occupancy does not exceed 60 percent of the 
42.28 	greater of area or state median income, adjusted for family size, as determined by the 
42.29 	United States Department of Housing and Urban Development. The restriction must also 
42.30 	require the rents for assisted units to not exceed 30 percent of 60 percent of the greater of 
42.31 	area or state median income, adjusted for family size, as determined by the United States 
42.32 	Department of Housing and Urban Development.

42.33 	EFFECTIVE DATE. This section is effective for property taxes levied in 2007, 
42.34 	payable in 2008, and thereafter.

43.1 	Sec. 15. Minnesota Statutes 2006, section 273.128, is amended by adding a subdivision 
43.2 	to read:
43.3 		Subd. 4.Participation in crime-free multihousing program. (a) In addition 
43.4 	to the requirements in subdivision 1, if the property qualifies under paragraph (b), the 
43.5 	owners or managers must complete the three phases of the city's or county's crime-free 
43.6 	multihousing program and the qualifying property must be annually certified by the police 
43.7 	or sheriff as participating in the program. If a qualifying property is not certified within 
43.8 	one year after it is first determined to be a qualifying property under paragraph (b), or does 
43.9 	not annually maintain its certification in the program, the city or county shall notify the 
43.10 	property owner that the qualifying property must comply with the requirements of this 
43.11 	subdivision to maintain its classification as class 4d property. If a qualifying property is 
43.12 	not in compliance within one year after receiving the notice from the city or county, the 
43.13 	city or county shall issue a second notice and require the owners to enter into a plan to 
43.14 	achieve compliance within one year. If, upon expiration of the one-year time period, 
43.15 	the qualifying property has not been certified by the police or sheriff as completing the 
43.16 	program, the city or county shall notify the commissioner of the Housing Finance Agency 
43.17 	and the commissioner shall remove the property from the list of class 4d properties 
43.18 	certified to the county or city assessor under subdivision 3. Once removed from the list, 
43.19 	the property is not eligible for class 4d classification until it complies with this subdivision 
43.20 	and its compliance has been certified to the Housing Finance Agency by the city or county. 
43.21 	Certification to the Housing Finance Agency must be made by May 15 to be effective for 
43.22 	taxes payable in the following year.
43.23 	(b) A property is a qualifying property for purposes of this subdivision's requirements 
43.24 	if it satisfies each of the following requirements:
43.25 	(1) the property is located in a city or county that offers a crime-free multihousing 
43.26 	program through its city police or county sheriff;
43.27 	(2) over the preceding three-year period, the number of police or sheriff calls to 
43.28 	the property exceeded the city's or county's average number of calls for multiunit rental 
43.29 	properties for the period by at least 25 percent, adjusted for the number of rental units;
43.30 	(3) the police or sheriff department has requested, in writing, the owners or managers 
43.31 	of the property to enroll in the crime-free multihousing program and the owners or 
43.32 	managers refused or failed to enroll within 60 days after the request, or failed to complete 
43.33 	phases one and three within 90 days and all three phases of the program within a one-year 
43.34 	time period; and
43.35 	(4) the governing body of the city or county, by resolution, determines the property 
43.36 	is a qualifying property under clauses (1) to (3).
44.1 	(c) Calls for police or emergency assistance in response to domestic abuse or 
44.2 	medical assistance shall not be counted toward the number of calls in paragraph (b), 
44.3 	clause (2). For purposes of this subdivision, "domestic abuse" has the meaning given in 
44.4 	section 518B.01, subdivision 2.
44.5 	(d) Low-income qualifying rental housing property classified as class 4d property 
44.6 	for taxes payable in 2007 must meet the requirements of this section by May 15, 2010.

44.7 	EFFECTIVE DATE. This section is effective for property taxes levied in 2007, 
44.8 	payable in 2008, and thereafter.

44.9 	Sec. 16. Minnesota Statutes 2006, section 273.13, subdivision 22, is amended to read:
44.10 		Subd. 22.Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) 
44.11 	and (c), real estate which is residential and used for homestead purposes is class 1a. In the 
44.12 	case of a duplex or triplex in which one of the units is used for homestead purposes, the 
44.13 	entire property is deemed to be used for homestead purposes. The market value of class 1a 
44.14 	property must be determined based upon the value of the house, garage, and land.
44.15 	The first $500,000 of market value of class 1a property has a net class rate of 
44.16 	one percent of its market value; and the market value of class 1a property that exceeds 
44.17 	$500,000 has a class rate of 1.25 percent of its market value.
44.18 	(b) Class 1b property includes homestead real estate or homestead manufactured 
44.19 	homes used for the purposes of a homestead by
44.20 	(1) any person who is blind as defined in section 256D.35, or the blind person and 
44.21 	the blind person's spouse; or
44.22 	(2) any person, hereinafter referred to as "veteran," who:
44.23 	(i) served in the active military or naval service of the United States; and
44.24 	(ii) is entitled to compensation under the laws and regulations of the United States 
44.25 	for permanent and total service-connected disability due to the loss, or loss of use, by 
44.26 	reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both 
44.27 	lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or 
44.28 	a wheelchair; and
44.29 	(iii) has acquired a special housing unit with special fixtures or movable facilities 
44.30 	made necessary by the nature of the veteran's disability, or the surviving spouse of the 
44.31 	deceased veteran for as long as the surviving spouse retains the special housing unit 
44.32 	as a homestead; or
44.33 	(3) any person who is permanently and totally disabled.
45.1 	Property is classified and assessed under clause (3) only if the government agency or 
45.2 	income-providing source certifies, upon the request of the homestead occupant, that the 
45.3 	homestead occupant satisfies the disability requirements of this paragraph.
45.4 	Property is classified and assessed pursuant to clause (1) only if the commissioner of 
45.5 	revenue certifies to the assessor that the homestead occupant satisfies the requirements of 
45.6 	this paragraph.
45.7 	Permanently and totally disabled for the purpose of this subdivision means a 
45.8 	condition which is permanent in nature and totally incapacitates the person from working 
45.9 	at an occupation which brings the person an income. The first $32,000 $50,000 market 
45.10 	value of class 1b property has a net class rate of .45 percent of its market value. The 
45.11 	remaining market value of class 1b property has a class rate using the rates for class 1a or 
45.12 	class 2a property, whichever is appropriate, of similar market value.
45.13 	(c) Class 1c property is commercial use real and personal property that abuts 
45.14 	a lakeshore linepublic water as defined in section 103G.005, subdivision 15, and is 
45.15 	devoted to temporary and seasonal residential occupancy for recreational purposes but 
45.16 	not devoted to commercial purposes for more than 250 days in the year preceding the 
45.17 	year of assessment, and that includes a portion used as a homestead by the owner, which 
45.18 	includes a dwelling occupied as a homestead by a shareholder of a corporation that owns 
45.19 	the resort, a partner in a partnership that owns the resort, or a member of a limited liability 
45.20 	company that owns the resort even if the title to the homestead is held by the corporation, 
45.21 	partnership, or limited liability company. For purposes of this clause, property is devoted 
45.22 	to a commercial purpose on a specific day if any portion of the property, excluding the 
45.23 	portion used exclusively as a homestead, is used for residential occupancy and a fee is 
45.24 	charged for residential occupancy. Class 1c property must contain three or more rental 
45.25 	units. A "rental unit" is defined as a cabin, condominium, townhouse, sleeping room, 
45.26 	or individual camping site equipped with water and electrical hookups for recreational 
45.27 	vehicles. Class 1c property must provide recreational activities such as the rental of ice 
45.28 	fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment; 
45.29 	provide marina services, launch services, or guide services; or sell bait and fishing tackle. 
45.30 	Any unit in which the right to use the property is transferred to an individual or entity 
45.31 	by deeded interest, or the sale of shares or stock, no longer qualifies for class 1c even 
45.32 	though it may remain available for rent. A camping pad offered for rent by a property 
45.33 	that otherwise qualifies for class 1c is also class 1c, regardless of the term of the rental 
45.34 	agreement, as long as the use of the camping pad does not exceed 250 days. The portion of 
45.35 	the property used as a homestead is class 1a property under paragraph (a). The remainder 
45.36 	of the property is classified as follows: the first $500,000$600,000 of market value is tier 
46.1 	I, the next $1,700,000 of market value is tier II, and any remaining market value is tier 
46.2 	III. The class rates for class 1c are: tier I, 0.55 0.50 percent; tier II, 1.0 percent; and tier 
46.3 	III, 1.25 percent. If a class 1c resort property has any market value in tier III, the entire 
46.4 	property must meet the requirements of subdivision 25, paragraph (d), clause (1), to 
46.5 	qualify for class 1c treatment under this paragraph. Owners of real and personal property 
46.6 	devoted to temporary and seasonal residential occupancy for recreation purposes in which 
46.7 	all or a portion of the property was devoted to commercial purposes for not more than 250 
46.8 	days in the year preceding the year of assessment desiring classification as class 1c, must 
46.9 	submit a declaration to the assessor designating the cabins or units occupied for 250 days 
46.10 	or less in the year preceding the year of assessment by January 15 of the assessment year. 
46.11 	Those cabins or units and a proportionate share of the land on which they are located must 
46.12 	be designated as class 1c as otherwise provided. The remainder of the cabins or units and 
46.13 	a proportionate share of the land on which they are located must be designated as class 
46.14 	3a commercial. The owner of property desiring designation as class 1c property must 
46.15 	provide guest registers or other records demonstrating that the units for which class 1c 
46.16 	designation is sought were not occupied for more than 250 days in the year preceding the 
46.17 	assessment if so requested. The portion of a property operated as a (1) restaurant, (2) bar, 
46.18 	(3) gift shop, (4) conference center or meeting room, and (5) other nonresidential facility 
46.19 	operated on a commercial basis not directly related to temporary and seasonal residential 
46.20 	occupancy for recreation purposes does not qualify for class 1c.
46.21 	(d) Class 1d property includes structures that meet all of the following criteria:
46.22 	(1) the structure is located on property that is classified as agricultural property under 
46.23 	section 273.13, subdivision 23;
46.24 	(2) the structure is occupied exclusively by seasonal farm workers during the time 
46.25 	when they work on that farm, and the occupants are not charged rent for the privilege of 
46.26 	occupying the property, provided that use of the structure for storage of farm equipment 
46.27 	and produce does not disqualify the property from classification under this paragraph;
46.28 	(3) the structure meets all applicable health and safety requirements for the 
46.29 	appropriate season; and
46.30 	(4) the structure is not salable as residential property because it does not comply 
46.31 	with local ordinances relating to location in relation to streets or roads.
46.32 	The market value of class 1d property has the same class rates as class 1a property 
46.33 	under paragraph (a).

46.34 	EFFECTIVE DATE. The portion of this section increasing the market value of 
46.35 	the first tier of class 1c resorts and striking the language relating to class 1b veterans' 
47.1 	homesteads is effective for taxes payable in 2008 and thereafter. The remaining portion of 
47.2 	this section relating to class 1c resorts is effective for taxes payable in 2009 and thereafter.

47.3 	Sec. 17. Minnesota Statutes 2006, section 273.13, subdivision 23, is amended to read:
47.4 		Subd. 23.Class 2. (a) Class 2a property is agricultural land including any 
47.5 	improvements that is homesteaded. The market value of the house and garage and 
47.6 	immediately surrounding one acre of land has the same class rates as class 1a property 
47.7 	under subdivision 22. The value of the remaining land including improvements up to the 
47.8 	first tier valuation limit of agricultural homestead property has a net class rate of 0.55 0.50
47.9 	percent of market value. The remaining property over the first tier has a class rate of one 
47.10 	percent of market value. For purposes of this subdivision, the "first tier valuation limit of 
47.11 	agricultural homestead property" and "first tier" means the limit certified under section 
47.12 	273.11, subdivision 23.
47.13 	(b) Class 2b property is (1) unplatted real estate, rural in character and used 
47.14 	exclusively for growing trees for timber, lumber, and wood and wood products; (2) 
47.15 	real estate, that is not improved with a structure and is used exclusively for growing 
47.16 	trees for timber, lumber, and wood and wood products, if the owner has participated or 
47.17 	is participating in a cost-sharing program for afforestation, reforestation, or timber stand 
47.18 	improvement on that particular property, administered or coordinated by the commissioner 
47.19 	of natural resources; (3), and that consists of at least ten acres, including land used for 
47.20 	growing trees for timber, lumber, and wood products, but not including land used for 
47.21 	agricultural purposes, provided that the presence of a structure, other than a minor, 
47.22 	ancillary nonresidential structure, does not disqualify property from the classification 
47.23 	under this clause; (2) real estate that is nonhomestead agricultural land; or (4) (3) a landing 
47.24 	area or public access area of a privately owned public use airport. Class 2b property has a 
47.25 	net class rate of one percent of market value.
47.26 	(c) Agricultural land as used in this section means contiguous acreage of ten acres or 
47.27 	more, used during the preceding year for agricultural purposes. "Agricultural purposes" as 
47.28 	used in this section means the raising or cultivation of agricultural products. "Agricultural 
47.29 	purposes" also includes enrollment in the Reinvest in Minnesota program under sections 
47.30 	103F.501 to 103F.535 or the federal Conservation Reserve Program as contained in Public 
47.31 	Law 99-198 if the property was classified as agricultural (i) under this subdivision for 
47.32 	the assessment year 2002 or (ii) in the year prior to its enrollment. Contiguous acreage 
47.33 	on the same parcel, or contiguous acreage on an immediately adjacent parcel under the 
47.34 	same ownership, may also qualify as agricultural land, but only if it is pasture, timber, 
47.35 	waste, unusable wild land, or land included in state or federal farm programs. Agricultural 
48.1 	classification for property shall be determined excluding the house, garage, and 
48.2 	immediately surrounding one acre of land, and shall not be based upon the market value of 
48.3 	any residential structures on the parcel or contiguous parcels under the same ownership. 
48.4 	(d) Real estate, excluding the house, garage, and immediately surrounding one acre 
48.5 	of land, of less than ten acres which is exclusively and intensively used for raising or 
48.6 	cultivating agricultural products, shall be considered as agricultural land.
48.7 	Land shall be classified as agricultural even if all or a portion of the agricultural use 
48.8 	of that property is the leasing to, or use by another person for agricultural purposes.
48.9 	Classification under this subdivision is not determinative for qualifying under 
48.10 	section 273.111. 
48.11 	The property classification under this section supersedes, for property tax purposes 
48.12 	only, any locally administered agricultural policies or land use restrictions that define 
48.13 	minimum or maximum farm acreage.
48.14 	(e) The term "agricultural products" as used in this subdivision includes production 
48.15 	for sale of:
48.16 	(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing 
48.17 	animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, 
48.18 	bees, and apiary products by the owner;
48.19 	(2) fish bred for sale and consumption if the fish breeding occurs on land zoned 
48.20 	for agricultural use;
48.21 	(3) the commercial boarding of horses if the boarding is done in conjunction with 
48.22 	raising or cultivating agricultural products as defined in clause (1);
48.23 	(4) property which is owned and operated by nonprofit organizations used for 
48.24 	equestrian activities, excluding racing;
48.25 	(5) game birds and waterfowl bred and raised for use on a shooting preserve licensed 
48.26 	under section 97A.115; 
48.27 	(6) insects primarily bred to be used as food for animals;
48.28 	(7) trees, grown for sale as a crop, and not sold for timber, lumber, wood, or wood 
48.29 	products; and
48.30 	(8) maple syrup taken from trees grown by a person licensed by the Minnesota 
48.31 	Department of Agriculture under chapter 28A as a food processor.
48.32 	(f) If a parcel used for agricultural purposes is also used for commercial or industrial 
48.33 	purposes, including but not limited to:
48.34 	(1) wholesale and retail sales;
48.35 	(2) processing of raw agricultural products or other goods;
48.36 	(3) warehousing or storage of processed goods; and
49.1 	(4) office facilities for the support of the activities enumerated in clauses (1), (2), 
49.2 	and (3),
49.3 	the assessor shall classify the part of the parcel used for agricultural purposes as class 
49.4 	1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its 
49.5 	use. The grading, sorting, and packaging of raw agricultural products for first sale is 
49.6 	considered an agricultural purpose. A greenhouse or other building where horticultural 
49.7 	or nursery products are grown that is also used for the conduct of retail sales must be 
49.8 	classified as agricultural if it is primarily used for the growing of horticultural or nursery 
49.9 	products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of 
49.10 	those products. Use of a greenhouse or building only for the display of already grown 
49.11 	horticultural or nursery products does not qualify as an agricultural purpose.
49.12 	The assessor shall determine and list separately on the records the market value of 
49.13 	the homestead dwelling and the one acre of land on which that dwelling is located. If any 
49.14 	farm buildings or structures are located on this homesteaded acre of land, their market 
49.15 	value shall not be included in this separate determination.
49.16 	(g) To qualify for classification under paragraph (b), clause (4) (3), a privately 
49.17 	owned public use airport must be licensed as a public airport under section 360.018. For 
49.18 	purposes of paragraph (b), clause (4) (3), "landing area" means that part of a privately 
49.19 	owned public use airport properly cleared, regularly maintained, and made available to the 
49.20 	public for use by aircraft and includes runways, taxiways, aprons, and sites upon which 
49.21 	are situated landing or navigational aids. A landing area also includes land underlying 
49.22 	both the primary surface and the approach surfaces that comply with all of the following: 
49.23 	(i) the land is properly cleared and regularly maintained for the primary purposes of 
49.24 	the landing, taking off, and taxiing of aircraft; but that portion of the land that contains 
49.25 	facilities for servicing, repair, or maintenance of aircraft is not included as a landing area;
49.26 	(ii) the land is part of the airport property; and
49.27 	(iii) the land is not used for commercial or residential purposes.
49.28 	The land contained in a landing area under paragraph (b), clause (4) (3), must be described 
49.29 	and certified by the commissioner of transportation. The certification is effective until 
49.30 	it is modified, or until the airport or landing area no longer meets the requirements of 
49.31 	paragraph (b), clause (4) (3). For purposes of paragraph (b), clause (4) (3), "public access 
49.32 	area" means property used as an aircraft parking ramp, apron, or storage hangar, or an 
49.33 	arrival and departure building in connection with the airport.

49.34 	EFFECTIVE DATE. This section is effective for assessment year 2007 and 
49.35 	thereafter, for taxes payable in 2008 and thereafter.

50.1 	Sec. 18. Minnesota Statutes 2006, section 273.13, subdivision 24, is amended to read:
50.2 		Subd. 24.Class 3. (a) Commercial and industrial property and utility real and 
50.3 	personal property is class 3a.
50.4 	(1) Except as otherwise provided, each parcel of commercial, industrial, or utility 
50.5 	real property has a class rate of 1.5 percent of the first tier of market value, and 2.0 percent 
50.6 	of the remaining market value. In the case of contiguous parcels of property owned by the 
50.7 	same person or entity, only the value equal to the first-tier value of the contiguous parcels 
50.8 	qualifies for the reduced class rate, except that contiguous parcels owned by the same 
50.9 	person or entity shall be eligible for the first-tier value class rate on each separate business 
50.10 	operated by the owner of the property, provided the business is housed in a separate 
50.11 	structure. For the purposes of this subdivision, the first tier means the first $150,000 of 
50.12 	market value. Real property owned in fee by a utility for transmission line right-of-way 
50.13 	shall be classified at the class rate for the higher tier.
50.14 	For purposes of this subdivision, parcels are considered to be contiguous even if 
50.15 	they are separated from each other by a road, street, waterway, or other similar intervening 
50.16 	type of property. Connections between parcels that consist of power lines or pipelines do 
50.17 	not cause the parcels to be contiguous. Property owners who have contiguous parcels of 
50.18 	property that constitute separate businesses that may qualify for the first-tier class rate shall 
50.19 	notify the assessor by July 1, for treatment beginning in the following taxes payable year.
50.20 	(2) All Personal property that is: (i) part of an electric generation, transmission, or 
50.21 	distribution system; or (ii), including tools, implements, and machinery, has a class rate 
50.22 	of 3.0 percent.
50.23 	(3) Personal property that is either: (i) part of a pipeline system transporting 
50.24 	or distributing water, gas, crude oil, or petroleum products; and (iii) not described in 
50.25 	clause (3), and all, including tools, implements, and machinery, or (ii) part of an electric 
50.26 	transmission or distribution system, including tools, implements, and machinery, has a 
50.27 	class rate of 2.25 percent.
50.28 	(4) Railroad operating property has a class rate as provided under clause (1) for 
50.29 	the first tier of market value and the remaining market value. In the case of multiple 
50.30 	parcels in one county that are owned by one person or entity, only one first tier amount 
50.31 	is eligible for the reduced rate.
50.32 	(3) The entire market value of personal property that is: (i) tools, implements, and 
50.33 	machinery of an electric generation, transmission, or distribution system; (ii) tools, 
50.34 	implements, and machinery of a pipeline system transporting or distributing water, gas, 
50.35 	crude oil, or petroleum products; or (iii) the (5) Personal property consisting of mains 
50.36 	and pipes used in the distribution of steam or hot or chilled water for heating or cooling 
51.1 	buildings, has a class rate as provided under clause (1) for the remaining market value 
51.2 	in excess of the first tier.
51.3 	(b) Employment property defined in section 469.166, during the period provided 
51.4 	in section 469.170, shall constitute class 3b. The class rates for class 3b property are 
51.5 	determined under paragraph (a). 

51.6 	EFFECTIVE DATE. This section is effective for taxes levied in 2007, payable 
51.7 	in 2008, and thereafter.

51.8 	Sec. 19. Minnesota Statutes 2006, section 273.13, subdivision 25, is amended to read:
51.9 		Subd. 25.Class 4. (a) Class 4a is residential real estate containing four or more 
51.10 	units and used or held for use by the owner or by the tenants or lessees of the owner 
51.11 	as a residence for rental periods of 30 days or more, excluding property qualifying for 
51.12 	class 4d. Class 4a also includes hospitals licensed under sections 144.50 to 144.56, other 
51.13 	than hospitals exempt under section 272.02, and contiguous property used for hospital 
51.14 	purposes, without regard to whether the property has been platted or subdivided. The 
51.15 	market value of class 4a property has a class rate of 1.25 percent.
51.16 	(b) Class 4b includes:
51.17 	(1) residential real estate containing less than four units that does not qualify as class 
51.18 	4bb, other than seasonal residential recreational property;
51.19 	(2) manufactured homes not classified under any other provision;
51.20 	(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead 
51.21 	farm classified under subdivision 23, paragraph (b) containing two or three units; and
51.22 	(4)is unimproved property that is classified residential as determined under 
51.23 	subdivision 33.
51.24 	The market value of class 4b property has a class rate of 1.25 percent.
51.25 	(c) Class 4bb includes:
51.26 	(1) nonhomestead residential real estate containing one unit fewer than four units, 
51.27 	other than seasonal residential recreational property; and
51.28 	(2) a single family dwelling, garage, and surrounding one acre of property on a 
51.29 	nonhomestead farm classified under subdivision 23, paragraph (b), containing fewer 
51.30 	than four units; and
51.31 	(3) manufactured homes not classified under any other provision.
51.32 	Class 4bb property has the same class rates as class 1a property under subdivision 22.
51.33 	Property that has been classified as seasonal residential recreational property at 
51.34 	any time during which it has been owned by the current owner or spouse of the current 
51.35 	owner does not qualify for class 4bb.
52.1 	(d) Class 4c property includes:
52.2 	(1) except as provided in subdivision 22, paragraph (c), or subdivision 23, paragraph 
52.3 	(b), clause (1), real and personal property devoted to temporary and seasonal residential 
52.4 	occupancy for recreation purposes, including real and personal property devoted to 
52.5 	temporary and seasonal residential occupancy for recreation purposes and not devoted to 
52.6 	commercial purposes for more than 250 days in the year preceding the year of assessment. 
52.7 	For purposes of this clause, property is devoted to a commercial purpose on a specific 
52.8 	day if any portion of the property is used for residential occupancy, and a fee is charged 
52.9 	for residential occupancy. Class 4c property must contain three or more rental units. A 
52.10 	"rental unit" is defined as a cabin, condominium, townhouse, sleeping room, or individual 
52.11 	camping site equipped with water and electrical hookups for recreational vehicles. Class 
52.12 	4c property must provide recreational activities such as renting ice fishing houses, boats 
52.13 	and motors, snowmobiles, downhill or cross-country ski equipment; provide marina 
52.14 	services, launch services, or guide services; or sell bait and fishing tackle. A camping 
52.15 	pad offered for rent by a property that otherwise qualifies for class 4c is also class 4c 
52.16 	regardless of the term of the rental agreement, as long as the use of the camping pad 
52.17 	does not exceed 250 days. In order for a property to be classified as class 4c, seasonal 
52.18 	residential recreational for commercial purposes, at least 40 percent of the annual gross 
52.19 	lodging receipts related to the property must be from business conducted during 90 
52.20 	consecutive days and either (i) at least 60 percent of all paid bookings by lodging guests 
52.21 	during the year must be for periods of at least two consecutive nights; or (ii) at least 20 
52.22 	percent of the annual gross receipts must be from charges for rental of fish houses, boats 
52.23 	and motors, snowmobiles, downhill or cross-country ski equipment, or charges for marina 
52.24 	services, launch services, and guide services, or the sale of bait and fishing tackle. For 
52.25 	purposes of this determination, a paid booking of five or more nights shall be counted as 
52.26 	two bookings. Class 4c also includes commercial use real property used exclusively 
52.27 	for recreational purposes in conjunction with class 4c property devoted to temporary 
52.28 	and seasonal residential occupancy for recreational purposes, up to a total of two acres, 
52.29 	provided the property is not devoted to commercial recreational use for more than 250 
52.30 	days in the year preceding the year of assessment and is located within two miles of the 
52.31 	class 4c property with which it is used. Owners of real and personal property devoted to 
52.32 	temporary and seasonal residential occupancy for recreation purposes and all or a portion 
52.33 	of which was devoted to commercial purposes for not more than 250 days in the year 
52.34 	preceding the year of assessment desiring classification as class 1c or 4c, must submit a 
52.35 	declaration to the assessor designating the cabins or units occupied for 250 days or less in 
52.36 	the year preceding the year of assessment by January 15 of the assessment year. Those 
53.1 	cabins or units and a proportionate share of the land on which they are located willmust be 
53.2 	designated class 1c or 4c as otherwise provided. The remainder of the cabins or units and 
53.3 	a proportionate share of the land on which they are located will be designated as class 3a. 
53.4 	The owner of property desiring designation as class 1c or 4c property must provide guest 
53.5 	registers or other records demonstrating that the units for which class 1c or 4c designation 
53.6 	is sought were not occupied for more than 250 days in the year preceding the assessment if 
53.7 	so requested. The portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, 
53.8 	(4) conference center or meeting room, and (4)(5) other nonresidential facility operated 
53.9 	on a commercial basis not directly related to temporary and seasonal residential occupancy 
53.10 	for recreation purposes shalldoes not qualify for class 1c or 4c;
53.11 	(2) qualified property used as a golf course if:
53.12 	(i) it is open to the public on a daily fee basis. It may charge membership fees or 
53.13 	dues, but a membership fee may not be required in order to use the property for golfing, 
53.14 	and its green fees for golfing must be comparable to green fees typically charged by 
53.15 	municipal courses; and
53.16 	(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).
53.17 	A structure used as a clubhouse, restaurant, or place of refreshment in conjunction 
53.18 	with the golf course is classified as class 3a property;
53.19 	(3) real property up to a maximum of one acrethree acres of land owned and used 
53.20 	by a nonprofit community service oriented organization; provided thatand that is not used 
53.21 	for residential purposes on either a temporary or permanent basis, qualifies for class 4c 
53.22 	provided that it meets either of the following:
53.23 	(i) the property is not used for a revenue-producing activity for more than six days 
53.24 	in the calendar year preceding the year of assessment and the property is not used for 
53.25 	residential purposes on either a temporary or permanent basis; or
53.26 	(ii) the organization makes annual charitable contributions and donations at least 
53.27 	equal to the property's previous year's property taxes and the property is allowed to be 
53.28 	used for public and community meetings or events for no charge, as appropriate to the 
53.29 	size of the facility. 
53.30 	For purposes of this clause, 
53.31 	(A) "charitable contributions and donations" has the same meaning as lawful 
53.32 	gambling purposes under section 349.12, subdivision 25, excluding those purposes 
53.33 	relating to the payment of taxes, assessments, fees, auditing costs, and utility payments;
53.34 	(B) "property taxes" excludes the state general tax;
53.35 	(C) a "nonprofit community service oriented organization" means any corporation, 
53.36 	society, association, foundation, or institution organized and operated exclusively for 
54.1 	charitable, religious, fraternal, civic, or educational purposes, and which is exempt from 
54.2 	federal income taxation pursuant to section 501(c)(3), (10), or (19) of the Internal Revenue 
54.3 	Code of 1986, as amended through December 31, 1990. For purposes of this clause,; and
54.4 	(D) "revenue-producing activities" shall include but not be limited to property or that 
54.5 	portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt 
54.6 	liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling 
54.7 	alley, a retail store, gambling conducted by organizations licensed under chapter 349, an 
54.8 	insurance business, or office or other space leased or rented to a lessee who conducts a 
54.9 	for-profit enterprise on the premises. 
54.10 	Any portion of the property qualifying under item (i) which is used for revenue-producing 
54.11 	activities for more than six days in the calendar year preceding the year of assessment 
54.12 	shall be assessed as class 3a. The use of the property for social events open exclusively 
54.13 	to members and their guests for periods of less than 24 hours, when an admission is 
54.14 	not charged nor any revenues are received by the organization shall not be considered a 
54.15 	revenue-producing activity;.
54.16 	The organization shall maintain records of its charitable contributions and donations 
54.17 	and of public meetings and events held on the property and make them available upon 
54.18 	request any time to the assessor to ensure eligibility. An organization meeting the 
54.19 	requirement under item (ii) must file an application by May 1 with the assessor for 
54.20 	eligibility for the current year's assessment. The commissioner shall prescribe a uniform 
54.21 	application form and instructions;
54.22 	(4) postsecondary student housing of not more than one acre of land that is owned by 
54.23 	a nonprofit corporation organized under chapter 317A and is used exclusively by a student 
54.24 	cooperative, sorority, or fraternity for on-campus housing or housing located within two 
54.25 	miles of the border of a college campus;
54.26 	(5) manufactured home parks as defined in section 327.14, subdivision 3;
54.27 	(6) real property that is actively and exclusively devoted to indoor fitness, health, 
54.28 	social, recreational, and related uses, is owned and operated by a not-for-profit corporation, 
54.29 	and is located within the metropolitan area as defined in section 473.121, subdivision 2;
54.30 	(7) a leased or privately owned noncommercial aircraft storage hangar not exempt 
54.31 	under section 272.01, subdivision 2, and the land on which it is located, provided that:
54.32 	(i) the land is on an airport owned or operated by a city, town, county, Metropolitan 
54.33 	Airports Commission, or group thereof; and
54.34 	(ii) the land lease, or any ordinance or signed agreement restricting the use of the 
54.35 	leased premise, prohibits commercial activity performed at the hangar.
55.1 	If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must 
55.2 	be filed by the new owner with the assessor of the county where the property is located 
55.3 	within 60 days of the sale;
55.4 	(8) a privately owned noncommercial aircraft storage hangar not exempt under 
55.5 	section 272.01, subdivision 2, and the land on which it is located, provided that:
55.6 	(i) the land abuts a public airport; and
55.7 	(ii) the owner of the aircraft storage hangar provides the assessor with a signed 
55.8 	agreement restricting the use of the premises, prohibiting commercial use or activity 
55.9 	performed at the hangar; and
55.10 	(9) residential real estate, a portion of which is used by the owner for homestead 
55.11 	purposes, and that is also a place of lodging, if all of the following criteria are met:
55.12 	(i) rooms are provided for rent to transient guests that generally stay for periods 
55.13 	of 14 or fewer days;
55.14 	(ii) meals are provided to persons who rent rooms, the cost of which is incorporated 
55.15 	in the basic room rate;
55.16 	(iii) meals are not provided to the general public except for special events on fewer 
55.17 	than seven days in the calendar year preceding the year of the assessment; and
55.18 	(iv) the owner is the operator of the property.
55.19 	The market value subject to the 4c classification under this clause is limited to five rental 
55.20 	units. Any rental units on the property in excess of five, must be valued and assessed as 
55.21 	class 3a. The portion of the property used for purposes of a homestead by the owner must 
55.22 	be classified as class 1a property under subdivision 22.
55.23 	Class 4c property has a class rate of 1.5 percent of market value, except that (i) each 
55.24 	parcel of seasonal residential recreational property not used for commercial purposes has 
55.25 	the same class rates as class 4bb property, (ii) manufactured home parks assessed under 
55.26 	clause (5) have the same class rate as class 4b property, (iii) commercial-use seasonal 
55.27 	residential recreational property has a class rate of one percent for the first $500,000 of 
55.28 	market value, and 1.25 percent for the remaining market value, (iv) the market value of 
55.29 	property described in clause (4) has a class rate of one percent, (v) the market value of 
55.30 	property described in clauses (2) and (6) has a class rate of 1.25 percent, and (vi) that 
55.31 	portion of the market value of property in clause (9) qualifying for class 4c property 
55.32 	has a class rate of 1.25 percent.
55.33 	(e) Class 4d property is qualifying low-income rental housing certified to the assessor 
55.34 	by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion 
55.35 	of the units in the building qualify as low-income rental housing units as certified under 
55.36 	section 273.128, subdivision 3, only the proportion of qualifying units to the total number 
56.1 	of units in the building qualify for class 4d. The remaining portion of the building shall be 
56.2 	classified by the assessor based upon its use. Class 4d also includes the same proportion of 
56.3 	land as the qualifying low-income rental housing units are to the total units in the building. 
56.4 	For all properties qualifying as class 4d, the market value determined by the assessor must 
56.5 	be based on the normal approach to value using normal unrestricted rents.
56.6 	Class 4d property has a class rate of 0.75 percent.

56.7 	EFFECTIVE DATE. The portion of this section relating to class 4c resorts in 
56.8 	paragraph (d), clause (1), is effective for assessment year 2008 and thereafter, for taxes 
56.9 	payable in 2009 and thereafter. The portion of this section relating to nonprofit community 
56.10 	service oriented organizations is effective for assessment year 2007 and thereafter, for 
56.11 	taxes payable in 2008 and thereafter, except that the application date in paragraph (d), 
56.12 	clause (3), item (ii), for the 2007 assessment is extended to September 1, 2007.

56.13 	Sec. 20. Minnesota Statutes 2006, section 273.13, subdivision 33, is amended to read:
56.14 		Subd. 33.Classification of unimproved property. (a) All real property that is not 
56.15 	improved with a structure must be classified according to its current use.
56.16 	(b) Except as provided in subdivision 23, paragraph (b), clause (1), real property that 
56.17 	is not improved with a structure and for which there is no identifiable current use must be 
56.18 	classified according to its highest and best use permitted under the local zoning ordinance. 
56.19 	If the ordinance permits more than one use, the land must be classified according to the 
56.20 	highest and best use permitted under the ordinance. If no such ordinance exists, the 
56.21 	assessor shall consider the most likely potential use of the unimproved land based upon 
56.22 	the use made of surrounding land or land in proximity to the unimproved land.

56.23 	EFFECTIVE DATE. This section is effective for assessment year 2007 and 
56.24 	thereafter, for taxes payable in 2008 and thereafter.

56.25 	Sec. 21. Minnesota Statutes 2006, section 273.13, is amended by adding a subdivision 
56.26 	to read:
56.27 		Subd. 34.Homestead of disabled veteran. (a) All or a portion of the market value 
56.28 	of property qualifying for homestead classification under subdivision 22 or 23 is excluded 
56.29 	in determining the property's taxable market value if it serves as the homestead of a 
56.30 	military veteran, as defined in section 197.447, who has a service-connected disability of 
56.31 	50 percent or more. To qualify for exclusion under this subdivision, the veteran must have 
56.32 	been honorably discharged from the United States armed forces, as indicated by United 
56.33 	States Government Form DD214 or other official military discharge papers, and must be 
57.1 	certified by the United States Veterans Administration as having a service-connected 
57.2 	disability. 
57.3 	(b)(1) For a disability rating of at least 50 percent but less than 70 percent, $100,000 
57.4 	of market value is excluded;
57.5 	(2) for a disability rating of 70 percent or more, $150,000 of market value is 
57.6 	excluded, except as provided in clause (3); and
57.7 	(3) for a total (100 percent) and permanent disability, $300,000 of market value is 
57.8 	excluded.
57.9 	(c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b), 
57.10 	clause (3), predeceases the veteran's spouse, and if upon the death of the veteran the 
57.11 	spouse holds the legal or beneficial title to the homestead and permanently resides there, 
57.12 	the exclusion shall carry over to the benefit of the veteran's spouse until such time as the 
57.13 	spouse sells, transfers, or otherwise disposes of the property.
57.14 	(d) In the case of an agricultural homestead, only the portion of the property 
57.15 	consisting of the house and garage and immediately surrounding one acre of land qualifies 
57.16 	for the valuation exclusion under this subdivision.
57.17 	(e) A property qualifying for a valuation exclusion under this subdivision is not 
57.18 	eligible for the credit under section 273.1384, subdivision 1.
57.19 	(f) To qualify for a valuation exclusion under this subdivision a property owner must 
57.20 	apply to the assessor by July 1 of each assessment year, except that an annual reapplication 
57.21 	is not required once a property has been accepted for a valuation exclusion under paragraph 
57.22 	(b), clause (3), and the property continues to qualify until there is a change in ownership.

57.23 	EFFECTIVE DATE. This section is effective for assessment year 2007 and 
57.24 	thereafter, for taxes payable in 2008 and thereafter.

57.25 	Sec. 22. Minnesota Statutes 2006, section 275.065, is amended by adding a subdivision 
57.26 	to read:
57.27 		Subd. 3b.Supplemental notice of proposed levy increases. (a) If a city that has 
57.28 	a population of more than 2,500 or a county proposes a levy increase greater than the 
57.29 	threshold increase calculated under paragraph (b), it shall prepare and deliver by first class 
57.30 	mail a supplemental proposed property tax notice to each property taxpayer in the taxing 
57.31 	jurisdiction, as described in this subdivision.
57.32 	(b) The threshold increase in the proposed property tax levy is equal to the levy in 
57.33 	the previous year, multiplied by the sum of (1) one percent, (2) the percentage growth, 
57.34 	if any, in the population in the taxing jurisdiction for the most recent available year, (3) 
57.35 	the percentage increase in the total market value in the taxing jurisdiction due to new 
58.1 	construction of commercial and industrial property, and (4) the percentage increase in the 
58.2 	implicit price deflator for government consumption expenditures and gross investment for 
58.3 	state and local governments as prepared by the United States Department of Commerce 
58.4 	for the most recent 12-month period ending March of the levy year.
58.5 	(c) The supplemental proposed notice must show the taxing jurisdiction's (1) levy for 
58.6 	the previous year, (2) its threshold levy increase indicating that this increase is calculated 
58.7 	to reflect reasonable growth adjusting for population increases, increased demand from 
58.8 	new business, and inflation, (3) the proposed property tax increase, and (4) the amount the 
58.9 	proposed increase exceeds the threshold increase. The notice must contain a description of 
58.10 	why the jurisdiction needs to raise property taxes above the threshold amount and how the 
58.11 	taxing jurisdiction plans to spend the additional revenue.

58.12 	EFFECTIVE DATE. This section is effective for taxes levied in calendar year 
58.13 	2007 and thereafter.

58.14 	Sec. 23. Minnesota Statutes 2006, section 275.065, is amended by adding a subdivision 
58.15 	to read:
58.16 		Subd. 6c.Joint public hearing; nonmetropolitan county, cities, and school 
58.17 	districts. (a) Notwithstanding any other provision of law, the county board may hold a 
58.18 	joint hearing with the governing bodies of all taxing authorities located wholly or partially 
58.19 	within the county that are required to hold a public hearing under this section, excluding 
58.20 	special taxing districts. The primary purpose of the joint hearing is for taxpayer efficiency 
58.21 	by allowing taxpayers to come to a single public hearing to discuss the budgets and 
58.22 	proposed property tax levies of most taxing authorities that impact the taxes on their 
58.23 	property.
58.24 	(b) This subdivision applies only to counties located outside the metropolitan area 
58.25 	as defined under section 473.121, subdivision 2. If a city or school district is located 
58.26 	partially within the metropolitan area, that taxing jurisdiction may participate in its 
58.27 	nonmetropolitan county's joint hearing, if it so chooses.
58.28 	(c) Upon the adoption of a resolution by the county board to hold a joint public 
58.29 	hearing, the county shall notify each city with a population over 500 and each school 
58.30 	district located wholly or partially within the county of its intention to hold the joint 
58.31 	hearing and ask each of the taxing authorities if it would like to participate. Participation 
58.32 	is voluntary, and participation in the joint hearing is in lieu of the requirement for the 
58.33 	governing body to hold a separate public hearing under subdivision 6. If a participating 
58.34 	city or school district is located in more than one county, the hearing under this subdivision 
58.35 	is in lieu of the requirement to hold a separate public hearing if 75 percent or more 
59.1 	of that city or school district's previous year's net tax capacity is in the county where 
59.2 	the hearing is held.
59.3 	(d) The initial joint hearing must be held on the first Thursday in December. The 
59.4 	county may hold an additional joint hearing on another date before December 20 if the 
59.5 	majority of the participating taxing authorities want an additional hearing.
59.6 	The county board shall obtain a meeting space to hold the joint hearing, preferably 
59.7 	at a public building such as the courthouse, school, or community center. The location 
59.8 	shall be as centrally located within the county as possible. The meeting shall generally be 
59.9 	structured in the following general manner:
59.10 	(1) 30 to 60 minutes must be devoted to discussion of the county's budget and levy;
59.11 	(2) 30 to 60 minutes must be devoted to discussion of the city's budget and levy, 
59.12 	with each city's discussion held in a separate room, preferably in the same building;
59.13 	(3) 30 to 60 minutes must be devoted to discussion of the school district's levy, 
59.14 	with each school district's discussion held in a separate room, preferably in the same 
59.15 	building; and
59.16 	(4) during the last 30 minutes the governing bodies must reassemble in a joint 
59.17 	meeting to entertain any follow-up questions that have arisen from the separate discussions.
59.18 	The county shall attempt to keep the total public hearing to within three hours.
59.19 	(e) In lieu of the public advertisement requirement in subdivision 5a, the county shall 
59.20 	have a single advertisement listing the county, each city with a population of over 500, and 
59.21 	each school district participating in the joint public hearing listing. Any taxing authority 
59.22 	participating under this subdivision is exempt from the separate public advertisement 
59.23 	requirement under subdivision 5a. The cost of the joint hearing advertisement shall be 
59.24 	apportioned in the same manner provided in subdivision 4. The notice must be published 
59.25 	not less than two business days nor more than six business days before the hearing. The 
59.26 	newspaper selected must be one of general interest and readership in the county, and not 
59.27 	one of limited subject matter. The advertisement must appear in a newspaper that is 
59.28 	published at least once per week. The advertisement must be in the following form:
59.29 	"NOTICE OF JOINT PUBLIC HEARING
59.30 	PROPOSED TOTAL PROPERTY TAXES
59.31 	FOR PARTICIPATING TAXING AUTHORITIES
59.32 	The property tax amounts below compare that portion of the current budget levied in 
59.33 	property taxes in the county, cities, and school districts for (year) with the property 
59.34 	taxes the county, cities, and school districts propose to collect in (year) for those taxing 
59.35 	authorities participating in the joint public hearing.

60.1
60.2	Taxing Authority
	(Year) Property 
Taxes
	Proposed (Year) 
Property Taxes
	Change (Year) - 
(Year)
	
60.3	$.......
	$.......
	$.......
	...%
	
60.4	$.......
	$.......
	$.......
	...%
	
60.5	$.......
	$.......
	$.......
	...%
	
60.6 	ATTEND THE JOINT PUBLIC HEARING
60.7 	All residents are invited to attend the joint public hearing of the county/cities/school 
60.8 	districts to express your opinions on the proposed amount of (year) property taxes. The 
60.9 	hearing will be held on:
60.10 	(Month/Day/Year/Time)
60.11 	(Location/Address)
60.12 	If the discussion cannot be completed, and another hearing is scheduled, a time and place 
60.13 	for that hearing will be announced at this hearing. You are also invited to send your 
60.14 	written comments to the county auditor. If the comments relate to the city or school 
60.15 	district's levy, please identify that on the envelope so the county auditor can direct the 
60.16 	correspondence to the right jurisdiction."
60.17 	The formal adoption of the taxing authority's levy must not be made at the joint 
60.18 	public hearing held under this subdivision. The formal adoption must be made at one of 
60.19 	the regularly scheduled meetings of the taxing authority's governing body. However, the 
60.20 	property tax levy amount that is subsequently adopted cannot exceed the amount shown to 
60.21 	taxpayers at the joint public hearing.

60.22 	EFFECTIVE DATE. This section is effective for hearings held in 2007 and 
60.23 	thereafter.

60.24 	Sec. 24. Minnesota Statutes 2006, section 278.05, subdivision 6, is amended to read:
60.25 		Subd. 6.Dismissal of petition; exclusion of certain evidence. (a) In cases where 
60.26 	the petitioner contests the valuation of income-producing property, information, including 
60.27 	income and expense figures in the form of (1) year-end financial statements for the 
60.28 	year prior to the assessment date, (2) year-end financial statements for the year of the 
60.29 	assessment date, and (3) rent rolls on the assessment date including tenant name, lease start 
60.30 	and end dates, option terms, base rent, square footage leased and vacant space, verified net 
60.31 	rentable areas in the form of net rentable square footage of the building or buildings, and 
60.32 	anticipated income and expenses in the form of proposed budgets for the year subsequent 
60.33 	to the year of the assessment date, for income-producing property must be provided to 
60.34 	the county assessor no later than 60 days after the applicable filing deadline contained 
60.35 	in section 278.01, subdivision 1 or 4. Failure to provide the information required in this 
61.1 	paragraph shall result in the dismissal of the petition, unless (1) the failure to provide it was 
61.2 	due to the unavailability of the evidence at the time that the information was due, or (2) 
61.3 	the petitioner was not aware of or informed of the requirement to provide the information. 
61.4 	If the petitioner proves that the requirements under clause (2) are met, the petitioner has 
61.5 	an additional 30 days to provide the information from the time the petitioner became 
61.6 	aware of or was informed of the requirement to provide the information, otherwise the 
61.7 	petition shall be dismissed.
61.8 	(b) Provided that the information as contained in paragraph (a) is timely submitted to 
61.9 	the county assessor, the county assessor shall furnish the petitioner at least five days before 
61.10 	the hearing under this chapter with the property's appraisal, if any, which will be presented 
61.11 	to the court at the hearing. The petitioner shall furnish to the county assessor at least five 
61.12 	days before the hearing under this chapter with the property's appraisal, if any, which 
61.13 	will be presented to the court at the hearing. An appraisal of the petitioner's property 
61.14 	done by or for the county shall not be admissible as evidence if the county assessor does 
61.15 	not comply with the provisions in this paragraph. The petition shall be dismissed if the 
61.16 	petitioner does not comply with the provisions in this paragraph.

61.17 	EFFECTIVE DATE. This section is effective for petitions filed on or after July 
61.18 	1, 2007.

61.19 	Sec. 25. Minnesota Statutes 2006, section 279.01, is amended by adding a subdivision 
61.20 	to read:
61.21 		Subd. 5.Homestead property; monthly payment option. (a) In the case of class 
61.22 	1, 1c, or 2a homestead property as defined in section 273.13, a homeowner may apply 
61.23 	to make payments in eight equal monthly installments on the 15th day of each month 
61.24 	from May through December. A homeowner desiring to utilize this option must apply 
61.25 	to the county by April 15 of the year that the taxes are payable, following procedures 
61.26 	established by the county. 
61.27 	(b) Each county must establish procedures allowing homeowners the option of 
61.28 	paying the current year's property taxes on a monthly basis. The procedures must address 
61.29 	how homeowners apply to participate in the program, how taxpayers can make payments, 
61.30 	including the possibility of automatic bank withdrawals, how and whether the taxpayer is 
61.31 	notified of each payment due date, whether to require annual applications, how to modify 
61.32 	the property tax settlement process, and any other procedures the county board deems 
61.33 	necessary to implement this subdivision. The proposed procedures must be submitted to 
61.34 	the commissioner of revenue by November 1, 2007. The commissioner must review the 
62.1 	procedures and approve them or notify the county of changes that must be made to the 
62.2 	proposed procedures by January 1, 2008.
62.3 	(c) The application procedure must be included in the property tax statement mailing.
62.4 	(d) Penalties on unpaid taxes on property under the monthly payment program 
62.5 	must be computed by equating the number of days that any of the monthly payments are 
62.6 	overdue to the penalty for the corresponding number of days after May 15 that a payment 
62.7 	is overdue under subdivision 1.

62.8 	EFFECTIVE DATE. This section is effective for taxes payable in 2008 and 
62.9 	thereafter.

62.10 	Sec. 26. Minnesota Statutes 2006, section 279.37, subdivision 1a, is amended to read:
62.11 		Subd. 1a.Class 3a property. (a) The delinquent taxes upon a parcel of property 
62.12 	which was classified class 3a, for the previous year's assessment and had a total market 
62.13 	value of $200,000$500,000 or less for that same assessment shall be eligible to be 
62.14 	composed into a confession of judgment. Property qualifying under this subdivision 
62.15 	shall be subject to the same provisions as provided in this section except as provided 
62.16 	in paragraphs (b) to (d).
62.17 	(b) Current year taxes and penalty due at the time the confession of judgment 
62.18 	is entered must be paid.
62.19 	(c) The down payment must include all special assessments due in the current tax 
62.20 	year, all delinquent special assessments, and 20 percent of the ad valorem tax, penalties, 
62.21 	and interest accrued against the parcel. The balance remaining is payable in four equal 
62.22 	annual installments.
62.23 	(d) The amounts entered in judgment bear interest at the rate provided in section 
62.24 	279.03, subdivision 1a, commencing with the date the judgment is entered. The interest 
62.25 	rate is subject to change each year on the unpaid balance in the manner provided in section 
62.26 	279.03, subdivision 1a. 

62.27 	EFFECTIVE DATE. This section is effective for confessions of judgment entered 
62.28 	into July 1, 2007, and thereafter.

62.29 	Sec. 27. Minnesota Statutes 2006, section 280.39, is amended to read:
62.30 	280.39 DELINQUENT TAXES MAY BE PAID IN INVERSE ORDER.
62.31 	In any case where taxes for two or more years are delinquent against a parcel of land, 
62.32 	such taxes for one or more entire years, if held by the state, may be paid in the inverse 
62.33 	order to that in which the taxes were levied, with accrued penalties, interest, and costs 
63.1 	upon the taxes so paid, without payment of the taxes for the first of such years; provided, 
63.2 	that such payment shall not affect the lien of any unpaid taxes or tax judgment.

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

63.4 	Sec. 28. Minnesota Statutes 2006, section 289A.08, subdivision 13, is amended to read:
63.5 		Subd. 13.Long and short forms; local use tax instructions; property tax refund 
63.6 	information. (a) The commissioner shall provide a long form individual income tax 
63.7 	return and may provide a short form individual income tax return. The returns shall be in 
63.8 	a form that is consistent with the provisions of chapter 290, notwithstanding any other 
63.9 	law to the contrary. The nongame wildlife checkoff provided in section 290.431 and the 
63.10 	dependent care credit provided in section 290.067 must be included on the short form. 
63.11 	(b) The commissioner must provide information on local use taxes in the individual 
63.12 	income tax instruction booklet. The commissioner must provide this information in the 
63.13 	same section of the booklet that provides information on the state use tax.
63.14 	(c) The commissioner must refer to the property tax refunds allowed under chapter 
63.15 	290A on the front cover of the individual income tax instruction booklet, as well as 
63.16 	information within the booklet on income eligibility for the homestead and renter refunds, 
63.17 	and maximum refund amounts allowed in the current year.

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

63.19 	Sec. 29. Minnesota Statutes 2006, section 289A.40, subdivision 4, is amended to read:
63.20 		Subd. 4.Property tax refund claims. A property tax refund claim under chapter 
63.21 	290A is not allowed if the initial claim is filed more than (1) one year after the original 
63.22 	due date for filing the claim for refunds under section 290A.04, subdivision 2h; or (2) two 
63.23 	years after the original due date for filing the claim for refunds under section 290A.04, 
63.24 	subdivisions 2, 2a, and 2k.

63.25 	EFFECTIVE DATE. This section is effective for property taxes payable in 2006 
63.26 	and thereafter and rent paid in 2005 and thereafter.

63.27 	Sec. 30. Minnesota Statutes 2006, section 290B.03, subdivision 1, is amended to read:
63.28 		Subdivision 1.Program qualifications. The qualifications for the senior citizens' 
63.29 	property tax deferral program are as follows:
63.30 	(1) the property must be owned and occupied as a homestead by a person 65 years of 
63.31 	age or older. In the case of a married couple, bothonly one of the spouses must be at least 
63.32 	65 years old at the time the first property tax deferral is granted, regardless of whether the 
64.1 	property is titled in the name of one spouse or both spouses, or titled in another way that 
64.2 	permits the property to have homestead status;
64.3 	(2) the total household income of the qualifying homeowners homeowner, or in the 
64.4 	case of a married couple, the qualifying homeowner and spouse, as defined in section 
64.5 	290A.03, subdivision 5, for the calendar year preceding the year of the initial application 
64.6 	may not exceed $60,000 $75,000; 
64.7 	(3) the homestead must have been owned and occupied as the homestead of at 
64.8 	least one of the qualifying homeowners for at least 15 years prior to the year the initial 
64.9 	application is filed;
64.10 	(4) there are no state or federal tax liens or judgment liens on the homesteaded 
64.11 	property;
64.12 	(5) there are no mortgages or other liens on the property that secure future advances, 
64.13 	except for those subject to credit limits that result in compliance with clause (6); and
64.14 	(6) the total unpaid balances of debts secured by mortgages and other liens on the 
64.15 	property, including unpaid and delinquent special assessments and interest and any 
64.16 	delinquent property taxes, penalties, and interest, but not including property taxes payable 
64.17 	during the year, does not exceed 75 percent of the assessor's estimated market value for 
64.18 	the year.

64.19 	EFFECTIVE DATE. This section is effective for applications filed on or after 
64.20 	July 1, 2007.

64.21 	Sec. 31. Minnesota Statutes 2006, section 290B.03, subdivision 2, is amended to read:
64.22 		Subd. 2.Qualifying homestead; defined. Qualifying homestead property is defined 
64.23 	as the dwelling occupied as the homeowner's principal residence and so much of the land 
64.24 	surrounding it as is reasonably necessary for use of the dwelling as a home and any other 
64.25 	property used for purposes of a homestead as defined in section 273.13, subdivisions 
64.26 	22 and 23, but not to exceed one acre. The homestead may be part of a multidwelling 
64.27 	building and the land on which it is built. Property is not qualifying homestead property if 
64.28 	a person or entity other than the applicant or the applicant's spouse holds an interest in the 
64.29 	property as the vendor under a contract for deed or as a remainderperson.

64.30 	EFFECTIVE DATE. This section is effective for applications submitted on or 
64.31 	after January 1, 2007.

64.32 	Sec. 32. Minnesota Statutes 2006, section 290B.04, subdivision 3, is amended to read:
65.1 		Subd. 3.Excess-income certification by taxpayer. A taxpayer whose initial 
65.2 	application has been approved under subdivision 2 shall notify the commissioner of 
65.3 	revenue in writing by July 1 if the taxpayer's household income for the preceding calendar 
65.4 	year exceeded $60,000 $75,000. The certification must state the homeowner's total 
65.5 	household income for the previous calendar year. No property taxes may be deferred 
65.6 	under this chapter in any year following the year in which a program participant filed or 
65.7 	should have filed an excess-income certification under this subdivision showing income in 
65.8 	excess of the maximum allowed, unless the participant has filed a resumption of eligibility 
65.9 	certification as described in subdivision 4.

65.10 	EFFECTIVE DATE. This section is effective for applications filed on or after 
65.11 	July 1, 2007.

65.12 	Sec. 33. Minnesota Statutes 2006, section 290B.04, subdivision 4, is amended to read:
65.13 		Subd. 4.Resumption of eligibility certification by taxpayer. A taxpayer who has 
65.14 	previously filed an excess-income certification under subdivision 3 may resume program 
65.15 	participation if the taxpayer's household income for a subsequent year is $60,000 $75,000
65.16 	or less. If the taxpayer chooses to resume program participation, the taxpayer must notify 
65.17 	the commissioner of revenue in writing by July 1 of the year following a calendar year in 
65.18 	which the taxpayer's household income is $60,000 $75,000 or less. The certification must 
65.19 	state the taxpayer's total household income for the previous calendar year. Once a taxpayer 
65.20 	resumes participation in the program under this subdivision, participation will continue 
65.21 	until the taxpayer files a subsequent excess-income certification under subdivision 3 or 
65.22 	until participation is terminated under section 290B.08, subdivision 1. 

65.23 	EFFECTIVE DATE. This section is effective for applications filed on or after 
65.24 	July 1, 2007.

65.25 	Sec. 34. Minnesota Statutes 2006, section 290B.05, subdivision 1, is amended to read:
65.26 		Subdivision 1.Determination by commissioner. The commissioner shall 
65.27 	determine each qualifying homeowner's "annual maximum property tax amount" 
65.28 	following approval of the homeowner's initial application and following the receipt of a 
65.29 	resumption of eligibility certification. The "annual maximum property tax amount" equals 
65.30 	three percent of the homeowner's total household income for the year preceding either the 
65.31 	initial application or the resumption of eligibility certification, whichever is applicable. 
65.32 	Following approval of the initial application, the commissioner shall determine the 
65.33 	qualifying homeowner's "maximum allowable deferral." No tax may be deferred relative 
66.1 	to the appropriate assessment year for any homeowner whose total household income 
66.2 	for the previous year exceeds $60,000 $75,000. No tax shall be deferred in any year in 
66.3 	which the homeowner does not meet the program qualifications in section 290B.03. The 
66.4 	maximum allowable total deferral is equal to 75 percent of the assessor's estimated market 
66.5 	value for the year, less the balance of any mortgage loans and other amounts secured by 
66.6 	liens against the property at the time of application, including any unpaid and delinquent 
66.7 	special assessments and interest and any delinquent property taxes, penalties, and interest, 
66.8 	but not including property taxes payable during the year. 

66.9 	EFFECTIVE DATE. This section is effective for applications received on or after 
66.10 	July 1, 2007.

66.11 	Sec. 35. Minnesota Statutes 2006, section 290B.07, is amended to read:
66.12 	290B.07 LIEN; DEFERRED PORTION.
66.13 	(a) Payment by the state to the county treasurer of property taxes, penalties, interest, 
66.14 	or special assessments and interest deferred under this chapter is deemed a loan from the 
66.15 	state to the program participant. The commissioner must compute the interest as provided 
66.16 	in section 270C.40, subdivision 5, but not to exceed five percent, and maintain records of 
66.17 	the total deferred amount and interest for each participant. Interest shall accrue beginning 
66.18 	September 1 of the payable year for which the taxes are deferred, provided that no interest 
66.19 	shall be charged on (1) deferred property tax amounts on applications filed on or after 
66.20 	July 1, 2007, or (2) deferred property taxes beginning with taxes payable in 2008 on 
66.21 	applications filed prior to July 1, 2007. Any deferral made under this chapter shall not 
66.22 	be construed as delinquent property taxes.
66.23 	The lien created under section 272.31 continues to secure payment by the taxpayer, 
66.24 	or by the taxpayer's successors or assigns, of the amount deferred, including interest, with 
66.25 	respect to all years for which amounts are deferred. The lien for deferred taxes and interest 
66.26 	has the same priority as any other lien under section 272.31, except that liens, including 
66.27 	mortgages, recorded or filed prior to the recording or filing of the notice under section 
66.28 	290B.04, subdivision 2, have priority over the lien for deferred taxes and interest. A 
66.29 	seller's interest in a contract for deed, in which a qualifying homeowner is the purchaser 
66.30 	or an assignee of the purchaser, has priority over deferred taxes and interest on deferred 
66.31 	taxes, regardless of whether the contract for deed is recorded or filed. The lien for deferred 
66.32 	taxes and interest for future years has the same priority as the lien for deferred taxes and 
66.33 	interest for the first year, which is always higher in priority than any mortgages or other 
66.34 	liens filed, recorded, or created after the notice recorded or filed under section 290B.04, 
67.1 	subdivision 2. The county treasurer or auditor shall maintain records of the deferred 
67.2 	portion and shall list the amount of deferred taxes for the year and the cumulative deferral 
67.3 	and interest for all previous years as a lien against the property. In any certification of 
67.4 	unpaid taxes for a tax parcel, the county auditor shall clearly distinguish between taxes 
67.5 	payable in the current year, deferred taxes and interest, and delinquent taxes. Payment 
67.6 	of the deferred portion becomes due and owing at the time specified in section 290B.08. 
67.7 	Upon receipt of the payment, the commissioner shall issue a receipt for it to the person 
67.8 	making the payment upon request and shall notify the auditor of the county in which the 
67.9 	parcel is located, within ten days, identifying the parcel to which the payment applies. 
67.10 	Upon receipt by the commissioner of revenue of collected funds in the amount of the 
67.11 	deferral, the state's loan to the program participant is deemed paid in full.
67.12 	(b) If property for which taxes have been deferred under this chapter forfeits 
67.13 	under chapter 281 for nonpayment of a nondeferred property tax amount, or because 
67.14 	of nonpayment of amounts previously deferred following a termination under section 
67.15 	290B.08, the lien for the taxes deferred under this chapter, plus interest and costs, shall be 
67.16 	canceled by the county auditor as provided in section 282.07. However, notwithstanding 
67.17 	any other law to the contrary, any proceeds from a subsequent sale of the property under 
67.18 	chapter 282 or another law, must be used to first reimburse the county's forfeited tax sale 
67.19 	fund for any direct costs of selling the property or any costs directly related to preparing 
67.20 	the property for sale, and then to reimburse the state for the amount of the canceled lien. 
67.21 	Within 90 days of the receipt of any sale proceed to which the state is entitled under these 
67.22 	provisions, the county auditor must pay those funds to the commissioner of revenue by 
67.23 	warrant for deposit in the general fund. No other deposit, use, distribution, or release of 
67.24 	gross sale proceeds or receipts may be made by the county until payments sufficient 
67.25 	to fully reimburse the state for the canceled lien amount have been transmitted to the 
67.26 	commissioner.

67.27 	EFFECTIVE DATE. This section is effective July 1, 2007.

67.28 	Sec. 36. Minnesota Statutes 2006, section 290C.07, is amended to read:
67.29 	290C.07 CALCULATION OF INCENTIVE PAYMENT.
67.30 	An approved claimant under the sustainable forest incentive program is eligible to 
67.31 	receive an annual payment. The payment shall equal the greater of:
67.32 	(1) the difference between the property tax that would be paid on the land using the 
67.33 	previous year's statewide average total township tax rate and the class rate for class 2b 
67.34 	timberland under section 273.13, subdivision 23, paragraph (b), if the land were valued 
68.1 	at (i) the average statewide timberland market value per acre calculated under section 
68.2 	290C.06, and (ii) the average statewide timberland current use value per acre calculated 
68.3 	under section 290C.02, subdivision 5; 
68.4 	(2) two-thirds of the property tax amount determined by using the previous year's 
68.5 	statewide average total township tax rate, the estimated market value per acre as calculated 
68.6 	in section 290C.06, and the class rate for 2b timberland under section 273.13, subdivision 
68.7 	23, paragraph (b); or 
68.8 	(3) $1.50$5 per acre for each acre enrolled in the sustainable forest incentive 
68.9 	program.

68.10 	EFFECTIVE DATE. This section is effective for payments made in 2008 and 
68.11 	thereafter.

68.12 	Sec. 37. [290D.01] CITATION.
68.13 	This program shall be named the "seasonal recreational property tax deferral 
68.14 	program."

68.15 	EFFECTIVE DATE. This section is effective July 1, 2007.

68.16 	Sec. 38. [290D.02] TERMS.
68.17 		Subdivision 1.Terms. For purposes of sections 290D.01 to 290D.08, the terms 
68.18 	defined in this section have the meanings given them.
68.19 		Subd. 2.Primary property owner. "Primary property owner" means a person who 
68.20 	(1) has been the owner, or one of the owners, of the eligible property for at least 15 years 
68.21 	prior to the year the application is filed under section 290D.04; and (2) applies for the 
68.22 	deferral of property taxes under section 290D.04.
68.23 		Subd. 3.Secondary property owner. "Secondary property owner" means any 
68.24 	person, other than the primary property owner, who has been an owner of the eligible 
68.25 	property for at least 15 years prior to the year the initial application is filed for deferral 
68.26 	of property taxes under section 290D.04.
68.27 		Subd. 4.Eligible property. "Eligible property" means a parcel of property or 
68.28 	contiguous parcels of property under the same ownership classified as noncommercial 
68.29 	seasonal residential recreational 4c(1) property under section 273.13, subdivision 25.
68.30 		Subd. 5.Base property tax amount. "Base property tax amount" means the total 
68.31 	property taxes levied by all taxing jurisdictions, including special assessments, on the 
68.32 	eligible property in the year prior to the year that the initial application is approved under 
68.33 	section 290D.04 and payable in the year of the application.
69.1 		Subd. 6.Special assessments. "Special assessments" means any assessment, fee, or 
69.2 	other charge that may be made by law, and that appears on the property tax statement for 
69.3 	the property for collection under the laws applicable to the enforcement of real estate taxes.
69.4 		Subd. 7.Commissioner. "Commissioner" means the commissioner of revenue.

69.5 	EFFECTIVE DATE. This section is effective for applications filed July 1, 2008, 
69.6 	and thereafter.

69.7 	Sec. 39. [290D.03] QUALIFICATIONS FOR DEFERRAL.
69.8 	In order for an eligible property to qualify for treatment under this program:
69.9 	(1) the eligible property must have been owned solely by the primary property owner, 
69.10 	or jointly with others, for at least 15 years prior to the year the initial application is filed;
69.11 	(2) there must be no state or federal tax liens or judgment liens on the eligible 
69.12 	property;
69.13 	(3) there must be no mortgages or other liens on the eligible property that secure 
69.14 	future advances, except for those subject to credit limits that result in compliance with 
69.15 	clause (4); and
69.16 	(4) the total unpaid balances of debts secured by mortgages and other liens on the 
69.17 	eligible property, including unpaid and delinquent special assessments and interest and 
69.18 	any delinquent property taxes, penalties, and interest, but not including property taxes 
69.19 	payable during the year, must not exceed 60 percent of the assessor's estimated market 
69.20 	value for the current assessment year.

69.21 	EFFECTIVE DATE. This section is effective for applications filed July 1, 2008, 
69.22 	and thereafter.

69.23 	Sec. 40. [290D.04] APPLICATION FOR DEFERRAL.
69.24 		Subdivision 1.Initial application. (a) A primary owner of a property meeting 
69.25 	the qualifications under section 290D.03 may apply to the commissioner for deferral 
69.26 	of taxes on the eligible property. Applications are due on or before July 1 for deferral 
69.27 	of any taxes payable in the following year. The application, which must be prescribed 
69.28 	by the commissioner, shall include the following items and any other information the 
69.29 	commissioner deems necessary: 
69.30 	(1) the name, address, and Social Security number of the primary property owner 
69.31 	and secondary property owners, if any;
69.32 	(2) a copy of the property tax statement for the current taxes payable year for the 
69.33 	eligible property;
70.1 	(3) the initial year of ownership of the primary property owner and any second 
70.2 	property owners of the eligible property;
70.3 	(4) information on any mortgage loans or other amounts secured by mortgages or 
70.4 	other liens against the eligible property, for which purpose the commissioner may require 
70.5 	the applicant to provide a copy of the mortgage note, the mortgage, or a statement of the 
70.6 	balance owing on the mortgage loan provided by the mortgage holder. The commissioner 
70.7 	may require the appropriate documents in connection with obtaining and confirming 
70.8 	information on unpaid amounts secured by other liens; and
70.9 	(5) the signatures of the primary property owner and all other owners, if any, stating 
70.10 	that each owner agrees to enroll the eligible property in the program to defer property 
70.11 	taxes under this chapter.
70.12 	The application must state that program participation is voluntary. The application 
70.13 	must also state that program participation includes authorization for the annual deferred 
70.14 	amount. The deferred property tax calculated by the county and the cumulative deferred 
70.15 	property tax amount is public data.
70.16 	(b) As part of the initial application process, if the property is abstract property, the 
70.17 	commissioner may require the applicant to obtain at the applicant's cost a report prepared 
70.18 	by a licensed abstracter showing the last deed and any unsatisfied mortgages, liens, 
70.19 	judgments, and state and federal tax lien notices which were recorded on or after the date 
70.20 	of that last deed with respect to the eligible property or to the applicant.
70.21 	The certificate or report need not include references to any documents filed or 
70.22 	recorded more than 40 years prior to the date of the certification or report. The certification 
70.23 	or report must be as of a date not more than 30 days prior to submission of the application 
70.24 	under this section.
70.25 	The commissioner may also require the county recorder or county registrar of the 
70.26 	county where the eligible property is located to provide copies of recorded documents 
70.27 	related to the applicant of the eligible property, for which the recorder or registrar shall 
70.28 	not charge a fee. The commissioner may use any information available to determine or 
70.29 	verify eligibility under this section.
70.30 		Subd. 2.Approval; recording. The commissioner shall approve all initial 
70.31 	applications that qualify under this chapter and shall notify the primary property owner on 
70.32 	or before December 1. The commissioner may investigate the facts or require confirmation 
70.33 	in regard to an application. The commissioner shall record or file a notice of qualification 
70.34 	for deferral, including the names of the primary and any secondary property owners and a 
70.35 	legal description of the eligible property, in the office of the county recorder, or registrar of 
70.36 	titles, whichever is applicable, in the county where the eligible property is located. The 
71.1 	notice must state that it serves as a notice of lien and that it includes deferrals under this 
71.2 	section for future years. The primary property owner shall pay the recording or filing fees 
71.3 	for the notice, which, notwithstanding section 357.18, shall be paid by that owner at the 
71.4 	time of satisfaction of the lien.
71.5 		Subd. 3.Penalty for failure; investigations. (a) The commissioner shall assess 
71.6 	a penalty equal to 20 percent of the property taxes improperly deferred in the case of a 
71.7 	false application. The commissioner shall assess a penalty equal to 50 percent of the 
71.8 	property taxes improperly deferred if the taxpayer knowingly filed a false application. The 
71.9 	commissioner shall assess penalties under this section through the issuance of an order 
71.10 	under the provisions of chapter 270C. Persons affected by a commissioner's order issued 
71.11 	under this section may appeal as provided in chapter 270C.
71.12 	(b) The commissioner may conduct investigations related to initial applications 
71.13 	required under this chapter within the period ending 3-1/2 years from the due date of 
71.14 	the application.
71.15 		Subd. 4.Annual certification to commissioner. Annually on or before July 1, 
71.16 	the primary property owner must certify to the commissioner that the person continues 
71.17 	to qualify as a primary property owner. If the primary owner has died or has transferred 
71.18 	the property in the preceding year, a certification may be filed by the primary owner's 
71.19 	spouse, or by one of the secondary owners, provided that the person is currently an 
71.20 	owner of the property. In this case, the primary owner's spouse or the secondary owner 
71.21 	shall be considered the primary owner from that point forward. If neither the primary 
71.22 	owner, the primary owner's spouse, or a secondary owner is eligible to file the required 
71.23 	annual certification for the property, the property's participation in the program shall be 
71.24 	terminated, and the procedures in section 290D.07 apply.
71.25 		Subd. 5.Annual notice to primary property owner. Annually, on or before 
71.26 	September 1, the commissioner shall notify each primary property owner, in writing, of 
71.27 	the total cumulative deferred taxes and accrued interest on the qualifying property as of 
71.28 	that date.

71.29 	EFFECTIVE DATE. This section is effective for applications filed July 1, 2008, 
71.30 	and thereafter.

71.31 	Sec. 41. [290D.05] DEFERRED PROPERTY TAX AMOUNT.
71.32 		Subdivision 1.Calculation of deferred property tax amount. Each year after 
71.33 	the county auditor has determined the final property tax rates under section 275.08, the 
71.34 	"deferred property tax amount" must be calculated on each eligible property. The deferred 
71.35 	property tax amount is equal to 50 percent of the amount of the difference between (1) the 
72.1 	total amount of property taxes and special assessments levied upon the eligible property 
72.2 	for the current year by all taxing jurisdictions and (2) the eligible property's base property 
72.3 	tax amount. Any tax attributable to new improvements made to the eligible property after 
72.4 	the initial application has been approved under section 290D.04, subdivision 2, must be 
72.5 	excluded in determining the deferred property tax amount. The eligible property's total 
72.6 	current year's tax less the deferred property tax amount for the current year must be listed 
72.7 	on the property tax statement and is the amount due to the county under chapter 276. 
72.8 	Reference that the property is enrolled in the seasonal recreational property tax deferral 
72.9 	program under this chapter and a state lien has been recorded must be clearly printed on 
72.10 	the statement.
72.11 		Subd. 2.Certification to commissioner. The county auditor shall annually, on or 
72.12 	before April 15, certify to the commissioner the property tax deferral amounts determined 
72.13 	under this section for each eligible property in the county. The commissioner shall 
72.14 	prescribe the information that is necessary to identify the eligible properties.
72.15 		Subd. 3.Limitation on total amount of deferred taxes. The total amount of 
72.16 	deferred taxes and interest on a property, when added to (1) the balance owed on any 
72.17 	mortgages on the property at the time of initial application; (2) other amounts secured by 
72.18 	liens on the property at the time of the initial application; and (3) any unpaid and delinquent 
72.19 	special assessments and interest and any delinquent property taxes, penalties, and interest, 
72.20 	but not including property taxes payable during the year, must not exceed 60 percent of 
72.21 	the assessor's estimated market value of the property for the current assessment year.

72.22 	EFFECTIVE DATE. This section is effective for applications filed July 1, 2008, 
72.23 	and thereafter.

72.24 	Sec. 42. [290D.06] LIEN; DEFERRED PORTION.
72.25 	(a) Payment by the state to the county treasurer of property taxes, penalties, interest, 
72.26 	or special assessments and interest, deferred under this chapter is deemed a loan from the 
72.27 	state to the program participant. The commissioner shall compute the interest as provided 
72.28 	in section 270C.40, subdivision 5, but not to exceed two percent over the maximum 
72.29 	interest rate provided in section 290B.07, paragraph (a), and maintain records of the total 
72.30 	deferred amount and interest for each participant. Interest accrues beginning September 1 
72.31 	of the payable year for which the taxes are deferred. Any deferral made under this chapter 
72.32 	must not be construed as delinquent property taxes.
72.33 	The lien created under section 272.31 continues to secure payment by the taxpayer, 
72.34 	or by the taxpayer's successors or assigns, of the amount deferred, including interest, with 
72.35 	respect to all years for which amounts are deferred. The lien for deferred taxes and interest 
73.1 	has the same priority as any other lien under section 272.31, except that liens, including 
73.2 	mortgages, recorded or filed prior to the recording or filing of the notice under section 
73.3 	290D.04, subdivision 2, have priority over the lien for deferred taxes and interest. A 
73.4 	seller's interest in a contract for deed, in which a qualifying owner is the purchaser or an 
73.5 	assignee of the purchaser, has priority over deferred taxes and interest on deferred taxes, 
73.6 	regardless of whether the contract for deed is recorded or filed. The lien for deferred taxes 
73.7 	and interest for future years has the same priority as the lien for deferred taxes and interest 
73.8 	for the first year, which is always higher in priority than any mortgages or other liens filed, 
73.9 	recorded, or created after the notice recorded or filed under section 290D.04, subdivision 
73.10 	2. The county treasurer or auditor shall maintain records of the deferred portion and shall 
73.11 	list the amount of deferred taxes for the year and the cumulative deferral and interest for 
73.12 	all previous years as a lien against the eligible property. In any certification of unpaid 
73.13 	taxes for a tax parcel, the county auditor shall clearly distinguish between taxes payable in 
73.14 	the current year, deferred taxes and interest, and delinquent taxes. Payment of the deferred 
73.15 	portion becomes due and owing at the time specified in section 290D.07. Upon receipt of 
73.16 	the payment, the commissioner shall issue a receipt to the person making the payment 
73.17 	upon request and shall notify the auditor of the county in which the parcel is located, 
73.18 	within ten days, identifying the parcel to which the payment applies. Upon receipt by the 
73.19 	commissioner of collected funds in the amount of the deferral, the state's loan to the 
73.20 	program participant is deemed paid in full.
73.21 	(b) If eligible property for which taxes have been deferred under this chapter forfeits 
73.22 	under chapter 281 for nonpayment of a nondeferred property tax amount, or because 
73.23 	of nonpayment of amounts previously deferred following a termination under section 
73.24 	290D.07, the lien for the taxes deferred under this chapter, plus interest and costs, shall be 
73.25 	canceled by the county auditor as provided in section 282.07. However, notwithstanding 
73.26 	any other law to the contrary, any proceeds from a subsequent sale of the eligible property 
73.27 	under chapter 282 or another law, must be used to first reimburse the county's forfeited 
73.28 	tax sale fund for any direct costs of selling the eligible property or any costs directly 
73.29 	related to preparing the eligible property for sale, and then to reimburse the state for 
73.30 	the amount of the canceled lien. Within 90 days of the receipt of any sale proceeds to 
73.31 	which the state is entitled under these provisions, the county auditor must pay those funds 
73.32 	to the commissioner by warrant for deposit in the general fund. No other deposit, use, 
73.33 	distribution, or release of gross sale proceeds or receipts may be made by the county until 
73.34 	payments sufficient to fully reimburse the state for the canceled lien amount have been 
73.35 	transmitted to the commissioner.

74.1 	EFFECTIVE DATE. This section is effective for applications filed July 1, 2008, 
74.2 	and thereafter.

74.3 	Sec. 43. [290D.07] TERMINATION OF DEFERRAL; PAYMENT OF 
74.4 	DEFERRED TAXES.
74.5 		Subdivision 1.Termination. (a) The deferral of taxes granted under this chapter 
74.6 	terminates when one of the following occurs:
74.7 	(1) the eligible property is sold or transferred to someone other than the primary 
74.8 	owner's spouse or a secondary owner;
74.9 	(2) the death of the primary owner, or in the case of a married couple, after the 
74.10 	death of both spouses, provided that there is not a secondary owner eligible to become 
74.11 	the primary owner;
74.12 	(3) the primary property owner notifies the commissioner, in writing, that all owners, 
74.13 	including any secondary property owners, desire to discontinue the deferral; or
74.14 	(4) the eligible property no longer qualifies under section 290D.03.
74.15 	(b) An eligible property is not terminated from the program because no deferred 
74.16 	property tax amount is determined for any given year after the eligible property's initial 
74.17 	enrollment into the program.
74.18 	(c) An eligible property is not terminated from the program if the eligible property 
74.19 	subsequently becomes the homestead of one or more of the property owners and the 
74.20 	property and the owners qualify for, and are immediately enrolled in, the senior deferral 
74.21 	program under chapter 290B.
74.22 		Subd. 2.Payment upon termination. Upon the termination of the deferral under 
74.23 	subdivision 1, the amount of deferred taxes, penalties, interest, and special assessments 
74.24 	and interest, plus the recording or filing fees under this subdivision and section 290D.04, 
74.25 	subdivision 2, becomes due and payable to the commissioner within 90 days of termination 
74.26 	of the deferral for terminations under subdivision 1, paragraph (a), clauses (1) and (2), 
74.27 	and within one year of termination of the deferral for terminations under subdivision 1, 
74.28 	paragraph (a), clauses (3) and (4). No additional interest is due on the deferral if timely 
74.29 	paid. On receipt of payment, the commissioner shall, within ten days, notify the auditor 
74.30 	of the county in which the parcel is located, identifying the parcel to which the payment 
74.31 	applies and shall remit the recording or filing fees under this subdivision and section 
74.32 	290D.04, subdivision 2, to the auditor. A notice of termination of deferral, containing the 
74.33 	legal description and the recording or filing data for the notice of qualification for deferral 
74.34 	under section 290D.04, subdivision 2, shall be prepared and recorded or filed by the 
74.35 	county auditor in the same office in which the notice of qualification for deferral under 
75.1 	section 290D.04, subdivision 2, was recorded or filed, and the county auditor shall mail a 
75.2 	copy of the notice of termination to the property owner. The property owner shall pay the 
75.3 	recording or filing fees. Upon recording or filing of the notice of termination of deferral, 
75.4 	the notice of qualification for deferral under section 290D.04, subdivision 2, and the lien 
75.5 	created by it are discharged. If the deferral is not timely paid, the penalty, interest, lien, 
75.6 	forfeiture, and other rules for the collection of ad valorem property taxes apply. 

75.7 	EFFECTIVE DATE. This section is effective for applications filed July 1, 2008, 
75.8 	and thereafter.

75.9 	Sec. 44. [290D.08] STATE REIMBURSEMENT.
75.10 		Subdivision 1.Determination; payment. The county auditor shall determine the 
75.11 	total current year's deferred amount of property tax under this chapter in the county, and 
75.12 	submit those amounts as part of the abstracts of tax lists submitted by the county auditors 
75.13 	under section 275.29. The commissioner may make changes in the abstracts of tax lists as 
75.14 	deemed necessary. The commissioner, after such review, shall pay the deferred amount of 
75.15 	property tax to each county treasurer on or before August 31. 
75.16 	The county treasurer shall distribute as part of the October settlement the funds 
75.17 	received as if they had been collected as part of the property tax.
75.18 		Subd. 2.Appropriation. An amount sufficient to pay the total amount of property 
75.19 	tax determined under subdivision 1, plus any amounts paid under section 290D.04, 
75.20 	subdivision 4, is annually appropriated from the general fund to the commissioner.

75.21 	EFFECTIVE DATE. This section is effective for applications filed July 1, 2008, 
75.22 	and thereafter.

75.23 	Sec. 45. Minnesota Statutes 2006, section 298.75, is amended by adding a subdivision 
75.24 	to read:
75.25 		Subd. 11.Tax may be imposed; Otter Tail County. (a) If Otter Tail County 
75.26 	does not impose a tax under this section and approves imposition of the tax under this 
75.27 	subdivision, the town of Scambler in Otter Tail County may impose the aggregate 
75.28 	materials tax under this section.
75.29 	(b) For purposes of exercising the powers contained in this section, the "town" is 
75.30 	deemed to be the "county."
75.31 	(c) All provisions in this section apply to the town of Scambler, except that in lieu of 
75.32 	the tax proceeds under subdivision 7, all proceeds of the tax must be retained by the town.
76.1 	(d) If Otter Tail County imposes an aggregate materials tax under this section, the 
76.2 	tax imposed by the town of Scambler under this subdivision is repealed on the effective 
76.3 	date of the Otter Tail County tax.

76.4 	EFFECTIVE DATE. This section is effective the day after the governing body 
76.5 	of the town of Scambler and its chief clerical officer comply with section 645.021, 
76.6 	subdivisions 2 and 3.

76.7 	Sec. 46. Minnesota Statutes 2006, section 435.193, is amended to read:
76.8 	435.193 HARDSHIP ASSESSMENT DEFERRAL FOR SENIORS OR,
76.9 	DISABLED, OR MILITARY PERSONS.
76.10 	(a) Notwithstanding the provisions of any law to the contrary, any county, statutory 
76.11 	or home rule charter city, or town, making a special assessment may, at its discretion, defer 
76.12 	the payment of that assessment for any homestead property:
76.13 	(1) owned by a person 65 years of age or older or retired by virtue of a permanent 
76.14 	and total disability for whom it would be a hardship to make the payments; or
76.15 	(2) owned by a person who is a member of the Minnesota National Guard or other 
76.16 	military reserves who is ordered into active military service, as defined in section 190.05, 
76.17 	subdivision 5b or 5c, as stated in the person's military orders, for whom it would be a 
76.18 	hardship to make the payments.
76.19 	(b) Any county, statutory or home rule charter city, or town electing to defer 
76.20 	special assessments shall adopt an ordinance or resolution establishing standards and 
76.21 	guidelines for determining the existence of a hardship and for determining the existence of 
76.22 	a disability, but nothing herein shall be construed to prohibit the determination of hardship 
76.23 	on the basis of exceptional and unusual circumstances not covered by the standards and 
76.24 	guidelines where the determination is made in a nondiscriminatory manner and does not 
76.25 	give the applicant an unreasonable preference or advantage over other applicants.

76.26 	EFFECTIVE DATE. This section is effective the day following final enactment, 
76.27 	and applies to any special assessment for which payment is due on or after that date.

76.28 	Sec. 47. Minnesota Statutes 2006, section 469.1813, subdivision 1a, is amended to 
76.29 	read:
76.30 		Subd. 1a.Use of term. (a) As used in this section and sections 469.1814 and 
76.31 	469.1815, "abatement" includes a deferral of taxes with abatement of interest and penalties 
76.32 	unless the context indicates otherwise. The abatement may include delinquent taxes, 
76.33 	interest, and penalties.
77.1 	(b) Computation of duration limits under this section must include each taxes 
77.2 	payable year for which delinquent taxes are abated.

77.3 	EFFECTIVE DATE. This section is effective for abatements granted after 
77.4 	December 31, 2006.

77.5 	Sec. 48. Minnesota Statutes 2006, section 473F.01, subdivision 2, is amended to read:
77.6 		Subd. 2.Use of proceeds. Except as provided in section 473F.08, subdivision 3a,
77.7 	The proceeds from the areawide tax imposed under this chapter must be used by a local 
77.8 	governmental unit in the same manner and for the same purposes as the proceeds from 
77.9 	other ad valorem taxes levied by the local governmental unit. 

77.10 	EFFECTIVE DATE. This section is effective for taxes payable in 2008 and 
77.11 	thereafter.

77.12 	Sec. 49. Minnesota Statutes 2006, section 473F.08, subdivision 5, is amended to read:
77.13 		Subd. 5.Areawide tax rate. On or before August 25 of each year, the county auditor 
77.14 	shall certify to the administrative auditor that portion of the levy of each governmental 
77.15 	unit determined under subdivisions 3, clause (a), 3a, and 3b. The administrative auditor 
77.16 	shall then determine the areawide tax rate sufficient to yield an amount equal to the sum of 
77.17 	such levies from the areawide net tax capacity. On or before September 1 of each year, the 
77.18 	administrative auditor shall certify the areawide tax rate to each of the county auditors.

77.19 	EFFECTIVE DATE. This section is effective for taxes payable in 2008 and 
77.20 	thereafter.

77.21 	Sec. 50. Minnesota Statutes 2006, section 473F.08, subdivision 7a, is amended to read:
77.22 		Subd. 7a.Certification of values; payment. The administrative auditor shall 
77.23 	determine for each county the difference between the total levy on distribution value 
77.24 	pursuant to subdivisions 3, clause (a), 3a, and 3b, within the county and the total tax on 
77.25 	contribution value pursuant to subdivision 6, within the county. On or before May 16 of 
77.26 	each year, the administrative auditor shall certify the differences so determined to each 
77.27 	county auditor. In addition, the administrative auditor shall certify to those county auditors 
77.28 	for whose county the total tax on contribution value exceeds the total levy on distribution 
77.29 	value the settlement the county is to make to the other counties of the excess of the total tax 
77.30 	on contribution value over the total levy on distribution value in the county. On or before 
77.31 	June 15 and November 15 of each year, each county treasurer in a county having a total tax 
78.1 	on contribution value in excess of the total levy on distribution value shall pay one-half of 
78.2 	the excess to the other counties in accordance with the administrative auditors certification.

78.3 	EFFECTIVE DATE. This section is effective for taxes payable in 2008 and 
78.4 	thereafter.

78.5 	Sec. 51. Laws 1973, chapter 393, section 1, as amended by Laws 1974, chapter 153, 
78.6 	section 1, is amended to read:
78.7 	Section 1. MINNEAPOLIS, CITY OF; STREET MAINTENANCE AND 
78.8 	LIGHTING.
78.9 	Notwithstanding the provisions of any statute or the charter of the city of 
78.10 	Minneapolis to the contrary, the city council of said city may provide that all or part of the 
78.11 	costs of construction, operation, and maintenance of streets and street lighting within the 
78.12 	city may hereafter be paid from the general revenues of the city of Minneapolis; provided 
78.13 	that the portion of the costs assessable against nongovernmental real property exempt from 
78.14 	ad valorem taxation may be levied as a special assessment against the property.

78.15 	Sec. 52. Laws 2006, chapter 236, article 1, section 21, is amended to read:
78.16 	Sec. 47. EXCHANGE OF TAX-FORFEITED LAND; PRIVATE SALE; 
78.17 	ITASCA COUNTY.
 78.18 	(a) For the purpose of a land exchange for use in connection with a proposed 
78.19 	steel mill in Itasca County referenced in Laws 1999, chapter 240, article 1, section 8, 
78.20 	subdivision 3, title examination and approval of the land described in paragraph (b) 
78.21 	shall be undertaken as a condition of exchange of the land for class B land, and shall be 
78.22 	governed by Minnesota Statutes, section 94.344, subdivisions 9 and 10, and the provisions 
78.23 	of this section. Notwithstanding the evidence of title requirements in Minnesota Statutes, 
78.24 	section 94.344, subdivisions 9 and 10, the county attorney shall examine one or more title 
78.25 	reports or title insurance commitments prepared or underwritten by a title insurer licensed 
78.26 	to conduct title insurance business in this state, regardless of whether abstracts were 
78.27 	created or updated in the preparation of the title reports or commitments. The opinion of 
78.28 	the county attorney, and approval by the attorney general, shall be based on those title 
78.29 	reports or commitments.
78.30 	(b) The land subject to this section is located in Itasca County and is described as:
78.31 	(1) Sections 3, 4, 7, 10, 14, 15, 16, 17, 18, 20, 21, 22, 23, 26, 28, and 29, Township 
78.32 	56 North, Range 22 West;
78.33 	(2) Sections 3, 4, 9, 10, 13, and 14, Township 56 North, Range 23 West;
78.34 	(3) Section 30, Township 57 North, Range 22 West; and
79.1 	(4) Sections 25, 26, 34, 35, and 36, Township 57 North, Range 23 West.
79.2 	(c) Riparian land given in exchange by Itasca County for the purpose of the steel 
79.3 	mill referenced in paragraph (a), is exempt from the restrictions imposed by Minnesota 
79.4 	Statutes, section 94.342, subdivision 3.
79.5 	(d) Notwithstanding Minnesota Statutes, sections 92.45 and 282.018, subdivision 1, 
79.6 	and the public sale provisions of Minnesota Statutes, chapter 282, Itasca County may sell, 
79.7 	by private sale, any land received in exchange for the purpose of the steel mill referenced 
79.8 	in paragraph (a), under the remaining provisions of Minnesota Statutes, chapter 282. The 
79.9 	sale must be in a form approved by the attorney general.
79.10 	(e) Notwithstanding Minnesota Statutes, section 284.28, subdivision 8, or any other 
79.11 	law to the contrary, land acquired through an exchange under this section is exempt from 
79.12 	payment of three percent of the sales price required to be collected by the county auditor 
79.13 	at the time of sale for deposit in the state treasury.

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

79.15 	Sec. 53. FISCAL DISPARITIES STUDY.
 79.16 	The commissioner of revenue shall conduct a study of the metropolitan revenue 
79.17 	distribution program contained in Minnesota Statutes, chapter 473F, commonly known 
79.18 	as the fiscal disparities program. On or before February 1, 2008, the commissioner shall 
79.19 	make a report to the chairs of the house of representatives and senate tax committees 
79.20 	consisting of the findings of the study and any recommendations resulting from the study.
79.21 	The study must consider to what extent the program is meeting the following goals, 
79.22 	and what changes could be made to the program in the furtherance of meeting those goals:
79.23 	(1) reducing the extent to which the property tax encourages development patterns 
79.24 	that do not make cost-effective use of public infrastructure or impose other high public 
79.25 	costs;
79.26 	(2) ensuring that the benefits of economic growth of the region are shared throughout 
79.27 	the region, especially for growth that results from state and/or regional decisions;
79.28 	(3) improving the ability of each jurisdiction within the region to deliver services at 
79.29 	a level commensurate with its tax effort;
79.30 	(4) compensating jurisdictions containing properties that provide regional benefits 
79.31 	for the costs those properties impose on their host jurisdictions in excess of their tax 
79.32 	payments;
79.33 	(5) promoting a fair distribution of property tax burdens across jurisdictions of 
79.34 	the region; and
80.1 	(6) reducing the economic losses that result from competition among communities 
80.2 	for commercial-industrial tax base.

80.3 	EFFECTIVE DATE. This section is effective July 1, 2007.

80.4 	Sec. 54. IMPROVING PUBLIC AWARENESS AND PARTICIPATION IN 
80.5 	PROPERTY TAX RELIEF PROGRAMS.
 80.6 	The commissioner of revenue, in consultation with county officials, shall undertake 
80.7 	to improve the public's awareness of and participation in property tax refund programs, 
80.8 	including the regular program for homeowners and renters and the additional property 
80.9 	tax refund program, the senior citizen's property tax deferral program, and the seasonal 
80.10 	recreational property tax deferral program.
80.11 	The commissioner shall consider options for improving public awareness, including, 
80.12 	but not limited to:
80.13 	(i) direct mailings to homeowners;
80.14 	(ii) an insert in the property tax statement;
80.15 	(iii) more prominent and direct references to the programs on the property tax 
80.16 	statement;
80.17 	(iv) notification on the property tax statement envelopes or folders;
80.18 	(v) public service announcements, including print, broadcast, and Internet; and
80.19 	(vi) information and handouts at the truth in taxation hearings.

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

80.21 	Sec. 55. TRUTH IN TAXATION PROGRAM; COSTS AND PARTICIPATION 
80.22 	STUDY.
 80.23 	The commissioner of revenue shall prepare a study of the costs of the truth in 
80.24 	taxation program under Minnesota Statutes, section 275.065, and the level of taxpayer 
80.25 	participation in the hearings required under Minnesota Statutes, section 275.065, 
80.26 	subdivision 6. In determining the costs, the commissioner shall ascertain the costs of 
80.27 	the preparation and mailing of the notice under Minnesota Statutes, section 275.065, 
80.28 	subdivision 3, the advertisement under Minnesota Statutes, section 275.065, subdivision 
80.29 	5a, and any costs associated with the hearings required under Minnesota Statutes, section 
80.30 	275.065, subdivision 6. The report must also make recommendations for ways to increase 
80.31 	taxpayer participation in the local government budget process, including but not limited to 
80.32 	the truth-in-taxation process. The report must be delivered by January 15, 2008, to the 
80.33 	legislature as provided for in Minnesota Statutes, section 3.195. The report must also be 
81.1 	provided to the chairs of the senate and house of representatives committees and divisions 
81.2 	with jurisdiction over property taxes.

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

81.4 	Sec. 56. CLAIR A. NELSON MEMORIAL FOREST, LAKE COUNTY; 
81.5 	TEMPORARY SUSPENSION OF APPORTIONMENT OF PROCEEDS FROM 
81.6 	TAX-FORFEITED LANDS.
 81.7 	(a) Upon approval of an affected political subdivision within Lake County, the 
81.8 	Lake County Board may suspend the apportionment of the balance of net proceeds from 
81.9 	tax-forfeited lands within the affected political subdivision under Minnesota Statutes, 
81.10 	section 282.08, clause (4), item (iii), and retain the net proceeds. The authority under this 
81.11 	paragraph is available until Lake County suspends the apportionment of net proceeds 
81.12 	subject to item (iii) in the amount of $2,200,000 plus any interest costs incurred by the 
81.13 	county to purchase land described in this section. The money received by Lake County is 
81.14 	to reimburse the county for the purchase in 2006 of 6,085 acres of forest land named the 
81.15 	Clair A. Nelson Memorial Forest.
81.16 	(b) Any revenue derived from acquired land that was reimbursed under paragraph 
81.17 	(a) is subject to apportionment as provided in Minnesota Statutes, section 282.08.

81.18 	EFFECTIVE DATE. This section is effective retroactively from January 1, 2006.

81.19 	Sec. 57. LAKEVIEW CEMETERY ASSOCIATION.
 81.20 		Subdivision 1.Authorized. Any two or more of the following cities and towns in 
81.21 	Itasca County may enter into a joint powers agreement under Minnesota Statutes, section 
81.22 	471.59, to establish the Lakeview Cemetery Association with the powers and duties of a 
81.23 	cemetery association under Minnesota Statutes, chapter 306: the cities of Bovey, Calumet, 
81.24 	Coleraine, Marble, and Taconite, and the towns of Greenway, Iron Range, Lawrence, 
81.25 	and Trout Lake.
81.26 		Subd. 2.Additions; withdrawals. (a) A city or town listed in subdivision 1 that 
81.27 	does not join the association at the time of the initial agreement may join as provided in 
81.28 	the joint powers agreement, or if the joint powers agreement does not provide for later 
81.29 	additions, by providing the association a copy of the adopted resolution to join. If the 
81.30 	joint powers agreement does not provide for adding members, a city or town that joins 
81.31 	after the initial agreement is effective, may join prior to July 1 of the levy year, for taxes 
81.32 	payable in the following year.
82.1 	(b) A city or town may withdraw from the association as otherwise provided in the 
82.2 	joint powers agreement, or providing to the association a copy of the adopted resolution of 
82.3 	the city or town, prior to July 1 of the levy year for taxes payable in the following year.
82.4 		Subd. 3.Operation; tax levy. The joint powers agreement for the association may 
82.5 	provide for each participating city and town to levy a tax against all taxable properties 
82.6 	located within the city or town. The maximum amount that may be levied by all 
82.7 	participating cities and towns combined shall not exceed a total of $200,000 per year. If 
82.8 	levied, the tax is in addition to all other taxes permitted to be levied on the property, 
82.9 	including taxes permitted to be levied for cemetery purposes by a participating city or 
82.10 	town. The levy under this section must be disregarded in the calculation of all other 
82.11 	rate or per capita levy limitations imposed by law. One of the cities or towns within the 
82.12 	association, chosen by the members of the association, shall certify a tax levy to the 
82.13 	Itasca County auditor. When collected, the Itasca County auditor shall pay the Lakeview 
82.14 	Cemetery Association directly.

82.15 	EFFECTIVE DATE. This section is effective for taxes levied in 2007, payable 
82.16 	in 2008, and thereafter.

82.17 	Sec. 58. TAX-FORFEITED LANDS LEASE; ITASCA COUNTY.
 82.18 	Notwithstanding Minnesota Statutes, section 282.04, or other law to the contrary, 
82.19 	the Itasca County auditor may lease tax-forfeited land to Minnesota Steel for a period of 
82.20 	20 years, for use as a tailings basin and buffer area. A lease entered under this section 
82.21 	is renewable.

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

82.23 	Sec. 59. REPEALER.
 82.24 	(a) Minnesota Statutes 2006, section 473F.08, subdivision 3a, is repealed.
82.25 	(b) Laws 1973, chapter 393, section 2, is repealed.
82.26 	(c) Laws 1994, chapter 587, article 9, section 8, subdivision 1, as amended by Laws 
82.27 	2005, First Special Session chapter 3, article 1, section 36, is repealed, effective for the 
82.28 	same levy year in which the association initially levies under section 57.

82.29 	EFFECTIVE DATE. Paragraph (a) is effective for taxes payable in 2008 and 
82.30 	thereafter.

83.1 	ARTICLE 4
83.2 	CORPORATE FRANCHISE TAX

83.3 	Section 1. Minnesota Statutes 2006, section 289A.08, subdivision 3, is amended to 
83.4 	read:
83.5 		Subd. 3.Corporations. A corporation that is subject to the state's jurisdiction to tax 
83.6 	under section 290.014, subdivision 5, must file a return, except that a foreign operating 
83.7 	corporation as defined in section 290.01, subdivision 6b, is not required to file a return. 
83.8 	The commissioner shall adopt rules for the filing of one return on behalf of the members 
83.9 	of an affiliated group of corporations that are required to file a combined report. All 
83.10 	members of an affiliated group that are required to file a combined report must file one 
83.11 	return on behalf of the members of the group under rules adopted by the commissioner. 
83.12 	If a corporation claims on a return that it has paid tax in excess of the amount of taxes 
83.13 	lawfully due, that corporation must include on that return information necessary for 
83.14 	payment of the tax in excess of the amount lawfully due by electronic means.

83.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
83.16 	December 31, 2006.

83.17 	Sec. 2. Minnesota Statutes 2006, section 290.01, subdivision 5, is amended to read:
83.18 		Subd. 5.Domestic corporation. The term "domestic" when applied to a corporation 
83.19 	means a corporation:
83.20 	(1) created or organized in the United States, or under the laws of the United States 
83.21 	or of any state, the District of Columbia, or any political subdivision of any of the 
83.22 	foregoing but not including the Commonwealth of Puerto Rico, or any possession of 
83.23 	the United States;
83.24 	(2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue 
83.25 	Code; or
83.26 	(3) which qualifies as a FSC, as defined in section 922 of the Internal Revenue Code.;
83.27 	(4) which is treated as a domestic corporation for purposes of section 1504(d) of the 
83.28 	Internal Revenue Code; 
83.29 	(5) if the average of its property, payroll, and sales factors, as defined under section 
83.30 	290.191, within the 50 states of the United States and the District of Columbia is 20 
83.31 	percent or more; or
84.1 	(6) which is a controlled foreign corporation as defined in section 957 of the Internal 
84.2 	Revenue Code and which has subpart F income, as defined in section 952 of the Internal 
84.3 	Revenue Code, for the taxable year.

84.4 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
84.5 	December 31, 2006.

84.6 	Sec. 3. Minnesota Statutes 2006, section 290.01, subdivision 19c, is amended to read:
84.7 		Subd. 19c.Corporations; additions to federal taxable income. For corporations, 
84.8 	there shall be added to federal taxable income:
84.9 	(1) the amount of any deduction taken for federal income tax purposes for income, 
84.10 	excise, or franchise taxes based on net income or related minimum taxes, including but not 
84.11 	limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota, 
84.12 	another state, a political subdivision of another state, the District of Columbia, or any 
84.13 	foreign country or possession of the United States;
84.14 	(2) interest not subject to federal tax upon obligations of: the United States, its 
84.15 	possessions, its agencies, or its instrumentalities; the state of Minnesota or any other 
84.16 	state, any of its political or governmental subdivisions, any of its municipalities, or any 
84.17 	of its governmental agencies or instrumentalities; the District of Columbia; or Indian 
84.18 	tribal governments;
84.19 	(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal 
84.20 	Revenue Code;
84.21 	(4) the amount of any net operating loss deduction taken for federal income tax 
84.22 	purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss 
84.23 	deduction under section 810 of the Internal Revenue Code;
84.24 	(5) the amount of any special deductions taken for federal income tax purposes 
84.25 	under sections 241 to 247 and 965 of the Internal Revenue Code;
84.26 	(6) losses from the business of mining, as defined in section 290.05, subdivision 1, 
84.27 	clause (a), that are not subject to Minnesota income tax;
84.28 	(7) the amount of any capital losses deducted for federal income tax purposes under 
84.29 	sections 1211 and 1212 of the Internal Revenue Code;
84.30 	(8) the exempt foreign trade income of a foreign sales corporation under sections 
84.31 	921(a) and 291 of the Internal Revenue Code;
84.32 	(9) the amount of percentage depletion deducted under sections 611 through 614 and 
84.33 	291 of the Internal Revenue Code;
84.34 	(10) for certified pollution control facilities placed in service in a taxable year 
84.35 	beginning before December 31, 1986, and for which amortization deductions were elected 
85.1 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
85.2 	31, 1985, the amount of the amortization deduction allowed in computing federal taxable 
85.3 	income for those facilities;
85.4 	(11) the amount of any deemed dividend from a foreign operating corporation 
85.5 	determined pursuant to section 290.17, subdivision 4, paragraph (g); payments to a foreign 
85.6 	corporation that is part of the unitary business and that is not subject to an election for the 
85.7 	taxable year under section 290.17, subdivision 4a, deducted in computing federal taxable 
85.8 	income, if the payments are foreign personal holding company income as that term is 
85.9 	defined in section 954(c) of the Internal Revenue Code;
85.10 	(12) (11) the amount of a partner's pro rata share of net income which does not flow 
85.11 	through to the partner because the partnership elected to pay the tax on the income under 
85.12 	section 6242(a)(2) of the Internal Revenue Code;
85.13 	(13) (12) the amount of net income excluded under section 114 of the Internal 
85.14 	Revenue Code;
85.15 	(14) any increase in subpart F income, as defined in section 952(a) of the Internal 
85.16 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
85.17 	to the provisions of section 103 of Public Law 109-222;
85.18 	(15) (13) 80 percent of the depreciation deduction allowed under section 
85.19 	168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if 
85.20 	the taxpayer has an activity that in the taxable year generates a deduction for depreciation 
85.21 	under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable 
85.22 	year that the taxpayer is not allowed to claim for the taxable year, "the depreciation 
85.23 	allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess 
85.24 	of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) 
85.25 	over the amount of the loss from the activity that is not allowed in the taxable year. In 
85.26 	succeeding taxable years when the losses not allowed in the taxable year are allowed, the 
85.27 	depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;
85.28 	(16) (14) 80 percent of the amount by which the deduction allowed by section 179 of 
85.29 	the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal 
85.30 	Revenue Code of 1986, as amended through December 31, 2003;
85.31 	(17) (15) to the extent deducted in computing federal taxable income, the amount of 
85.32 	the deduction allowable under section 199 of the Internal Revenue Code; and
85.33 	(18) (16) the exclusion allowed under section 139A of the Internal Revenue Code 
85.34 	for federal subsidies for prescription drug plans.

85.35 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
85.36 	December 31, 2006.

86.1 	Sec. 4. Minnesota Statutes 2006, section 290.01, subdivision 19d, is amended to read:
86.2 		Subd. 19d.Corporations; modifications decreasing federal taxable income. For 
86.3 	corporations, there shall be subtracted from federal taxable income after the increases 
86.4 	provided in subdivision 19c:
86.5 	(1) the amount of foreign dividend gross-up added to gross income for federal 
86.6 	income tax purposes under section 78 of the Internal Revenue Code;
86.7 	(2) the amount of salary expense not allowed for federal income tax purposes due 
86.8 	to claiming the federal jobs work opportunity credit under section 51 of the Internal 
86.9 	Revenue Code;
86.10 	(3) any dividend (not including any distribution in liquidation) paid within the 
86.11 	taxable year by a national or state bank to the United States, or to any instrumentality of 
86.12 	the United States exempt from federal income taxes, on the preferred stock of the bank 
86.13 	owned by the United States or the instrumentality;
86.14 	(4) amounts disallowed for intangible drilling costs due to differences between 
86.15 	this chapter and the Internal Revenue Code in taxable years beginning before January 
86.16 	1, 1987, as follows:
86.17 	(i) to the extent the disallowed costs are represented by physical property, an amount 
86.18 	equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09, 
86.19 	subdivision 7, subject to the modifications contained in subdivision 19e; and
86.20 	(ii) to the extent the disallowed costs are not represented by physical property, an 
86.21 	amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section 
86.22 	290.09, subdivision 8;
86.23 	(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the 
86.24 	Internal Revenue Code, except that:
86.25 	(i) for capital losses incurred in taxable years beginning after December 31, 1986, 
86.26 	capital loss carrybacks shall not be allowed;
86.27 	(ii) for capital losses incurred in taxable years beginning after December 31, 1986, 
86.28 	a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be 
86.29 	allowed;
86.30 	(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a 
86.31 	capital loss carryback to each of the three taxable years preceding the loss year, subject to 
86.32 	the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and
86.33 	(iv) for capital losses incurred in taxable years beginning before January 1, 1987, 
86.34 	a capital loss carryover to each of the five taxable years succeeding the loss year to the 
86.35 	extent such loss was not used in a prior taxable year and subject to the provisions of 
86.36 	Minnesota Statutes 1986, section 290.16, shall be allowed;
87.1 	(6) an amount for interest and expenses relating to income not taxable for federal 
87.2 	income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and 
87.3 	expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or 
87.4 	291 of the Internal Revenue Code in computing federal taxable income;
87.5 	(7) in the case of mines, oil and gas wells, other natural deposits, and timber for 
87.6 	which percentage depletion was disallowed pursuant to subdivision 19c, clause (11) (9), a 
87.7 	reasonable allowance for depletion based on actual cost. In the case of leases the deduction 
87.8 	must be apportioned between the lessor and lessee in accordance with rules prescribed 
87.9 	by the commissioner. In the case of property held in trust, the allowable deduction must 
87.10 	be apportioned between the income beneficiaries and the trustee in accordance with the 
87.11 	pertinent provisions of the trust, or if there is no provision in the instrument, on the basis 
87.12 	of the trust's income allocable to each;
87.13 	(8) for certified pollution control facilities placed in service in a taxable year 
87.14 	beginning before December 31, 1986, and for which amortization deductions were elected 
87.15 	under section 169 of the Internal Revenue Code of 1954, as amended through December 
87.16 	31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes 
87.17 	1986, section 290.09, subdivision 7;
87.18 	(9) amounts included in federal taxable income that are due to refunds of income, 
87.19 	excise, or franchise taxes based on net income or related minimum taxes paid by the 
87.20 	corporation to Minnesota, another state, a political subdivision of another state, the 
87.21 	District of Columbia, or a foreign country or possession of the United States to the extent 
87.22 	that the taxes were added to federal taxable income under section 290.01, subdivision 19c, 
87.23 	clause (1), in a prior taxable year;
87.24 	(10) 80 percent of royalties, fees, or other like income accrued or received from a 
87.25 	foreign operating corporation or a foreign corporation which is part of the same unitary 
87.26 	business as the receiving corporation;
87.27 	(11) (9) income or gains from the business of mining as defined in section 290.05, 
87.28 	subdivision 1, clause (a), that are not subject to Minnesota franchise tax;
87.29 	(12) (10) the amount of disability access expenditures in the taxable year which are 
87.30 	not allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue 
87.31 	Code;
87.32 	(13) (11) the amount of qualified research expenses not allowed for federal income 
87.33 	tax purposes under section 280C(c) of the Internal Revenue Code, but only to the extent 
87.34 	that the amount exceeds the amount of the credit allowed under section 290.068;
88.1 	(14) (12) the amount of salary expenses not allowed for federal income tax purposes 
88.2 	due to claiming the Indian employment credit under section 45A(a) of the Internal 
88.3 	Revenue Code;
88.4 	(15) the amount of any refund of environmental taxes paid under section 59A of the 
88.5 	Internal Revenue Code;
88.6 	(16) (13) for taxable years beginning before January 1, 2008, the amount of the 
88.7 	federal small ethanol producer credit allowed under section 40(a)(3) of the Internal 
88.8 	Revenue Code which is included in gross income under section 87 of the Internal Revenue 
88.9 	Code;
88.10 	(17) (14) for a corporation whose foreign sales corporation, as defined in section 
88.11 	922 of the Internal Revenue Code, constituted a foreign operating corporation during any 
88.12 	taxable year ending before January 1, 1995, and a return was filed by August 15, 1996, 
88.13 	claiming the deduction under section 290.21, subdivision 4, for income received from 
88.14 	the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of 
88.15 	income excluded under section 114 of the Internal Revenue Code, provided the income is 
88.16 	not income of a foreign operating company;
88.17 	(18) any decrease in subpart F income, as defined in section 952(a) of the Internal 
88.18 	Revenue Code, for the taxable year when subpart F income is calculated without regard 
88.19 	to the provisions of section 614 of Public Law 107-147;
88.20 	(19) (15) in each of the five tax years immediately following the tax year in which an 
88.21 	addition is required under subdivision 19c, clause (15) (13), an amount equal to one-fifth 
88.22 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the 
88.23 	amount of the addition made by the taxpayer under subdivision 19c, clause (15) (13). The 
88.24 	resulting delayed depreciation cannot be less than zero; and
88.25 	(20) (16) in each of the five tax years immediately following the tax year in which an 
88.26 	addition is required under subdivision 19c, clause (16) (14), an amount equal to one-fifth 
88.27 	of the amount of the addition.

88.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
88.29 	December 31, 2006, except the amendment to clause (2) is effective the day following 
88.30 	final enactment.

88.31 	Sec. 5. Minnesota Statutes 2006, section 290.0921, subdivision 3, is amended to read:
88.32 		Subd. 3.Alternative minimum taxable income. "Alternative minimum taxable 
88.33 	income" is Minnesota net income as defined in section 290.01, subdivision 19, and 
88.34 	includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e), 
88.35 	(f), and (h) of the Internal Revenue Code. If a corporation files a separate company 
89.1 	Minnesota tax return, the minimum tax must be computed on a separate company basis. 
89.2 	If a corporation is part of a tax group filing a unitary return, the minimum tax must be 
89.3 	computed on a unitary basis. The following adjustments must be made.
89.4 	(1) For purposes of the depreciation adjustments under section 56(a)(1) and 
89.5 	56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in 
89.6 	service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal 
89.7 	income tax purposes, including any modification made in a taxable year under section 
89.8 	290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7, 
89.9 	paragraph (c).
89.10 	For taxable years beginning after December 31, 2000, the amount of any remaining 
89.11 	modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986, 
89.12 	section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation 
89.13 	allowance in the first taxable year after December 31, 2000.
89.14 	(2) The portion of the depreciation deduction allowed for federal income tax 
89.15 	purposes under section 168(k) of the Internal Revenue Code that is required as an addition 
89.16 	under section 290.01, subdivision 19c, clause (16) (13), is disallowed in determining 
89.17 	alternative minimum taxable income.
89.18 	(3) The subtraction for depreciation allowed under section 290.01, subdivision 
89.19 	19d, clause (19) (15), is allowed as a depreciation deduction in determining alternative 
89.20 	minimum taxable income.
89.21 	(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d) 
89.22 	of the Internal Revenue Code does not apply.
89.23 	(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal 
89.24 	Revenue Code does not apply.
89.25 	(6) The special rule for dividends from section 936 companies under section 
89.26 	56(g)(4)(C)(iii) does not apply.
89.27 	(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue 
89.28 	Code does not apply.
89.29 	(8) The tax preference for intangible drilling costs under section 57(a)(2) of the 
89.30 	Internal Revenue Code must be calculated without regard to subparagraph (E) and the 
89.31 	subtraction under section 290.01, subdivision 19d, clause (4).
89.32 	(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal 
89.33 	Revenue Code does not apply.
89.34 	(10) The tax preference for charitable contributions of appreciated property under 
89.35 	section 57(a)(6) of the Internal Revenue Code does not apply.
90.1 	(11) For purposes of calculating the tax preference for accelerated depreciation or 
90.2 	amortization on certain property placed in service before January 1, 1987, under section 
90.3 	57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the 
90.4 	deduction allowed under section 290.01, subdivision 19e.
90.5 	For taxable years beginning after December 31, 2000, the amount of any remaining 
90.6 	modification made under section 290.01, subdivision 19e, not previously deducted is a 
90.7 	depreciation or amortization allowance in the first taxable year after December 31, 2004.
90.8 	(12) For purposes of calculating the adjustment for adjusted current earnings in 
90.9 	section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable 
90.10 	income" as it is used in section 56(g) of the Internal Revenue Code, means alternative 
90.11 	minimum taxable income as defined in this subdivision, determined without regard to the 
90.12 	adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.
90.13 	(13) For purposes of determining the amount of adjusted current earnings under 
90.14 	section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section 
90.15 	56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend 
90.16 	gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), or (ii) the 
90.17 	amount of refunds of income, excise, or franchise taxes subtracted as provided in section 
90.18 	290.01, subdivision 19d, clause (10), or (iii) the amount of royalties, fees or other like 
90.19 	income subtracted as provided in section 290.01, subdivision 19d, clause (11) (8).
90.20 	(14) Alternative minimum taxable income excludes the income from operating in a 
90.21 	job opportunity building zone as provided under section 469.317.
90.22 	(15) Alternative minimum taxable income excludes the income from operating in a 
90.23 	biotechnology and health sciences industry zone as provided under section 469.337.
90.24 	(16) Alternative minimum taxable income excludes the income from operating in an 
90.25 	international economic development zone as provided under section 469.326.
90.26 	Items of tax preference must not be reduced below zero as a result of the 
90.27 	modifications in this subdivision.

90.28 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
90.29 	December 31, 2006.

90.30 	Sec. 6. Minnesota Statutes 2006, section 290.17, subdivision 4, is amended to read:
90.31 		Subd. 4.Unitary business principle. (a) If a trade or business conducted wholly 
90.32 	within this state or partly within and partly without this state is part of a unitary business, 
90.33 	the entire income of the unitary business is subject to apportionment pursuant to section 
90.34 	290.191. Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary 
90.35 	business is considered to be derived from any particular source and none may be allocated 
91.1 	to a particular place except as provided by the applicable apportionment formula. The 
91.2 	provisions of this subdivision do not apply to business income subject to subdivision 5, 
91.3 	income of an insurance company, or income of an investment company determined under 
91.4 	section 290.36. 
91.5 	(b) The term "unitary business" means business activities or operations which 
91.6 	result in a flow of value between them. The term may be applied within a single legal 
91.7 	entity or between multiple entities and without regard to whether each entity is a sole 
91.8 	proprietorship, a corporation, a partnership or a trust.
91.9 	(c) Unity is presumed whenever there is unity of ownership, operation, and use, 
91.10 	evidenced by centralized management or executive force, centralized purchasing, 
91.11 	advertising, accounting, or other controlled interaction, but the absence of these 
91.12 	centralized activities will not necessarily evidence a nonunitary business. Unity is also 
91.13 	presumed when business activities or operations are of mutual benefit, dependent upon or 
91.14 	contributory to one another, either individually or as a group.
91.15 	(d) Where a business operation conducted in Minnesota is owned by a business 
91.16 	entity that carries on business activity outside the state different in kind from that 
91.17 	conducted within this state, and the other business is conducted entirely outside the state, it 
91.18 	is presumed that the two business operations are unitary in nature, interrelated, connected, 
91.19 	and interdependent unless it can be shown to the contrary.
91.20 	(e) Unity of ownership is not deemed to exist when a corporation is involved unless 
91.21 	that corporation is a member of a group of two or more business entities and more than 50 
91.22 	percent of the voting stock of each member of the group is directly or indirectly owned 
91.23 	by a common owner or by common owners, either corporate or noncorporate, or by one 
91.24 	or more of the member corporations of the group. For this purpose, the term "voting 
91.25 	stock" shall include membership interests of mutual insurance holding companies formed 
91.26 	under section 66A.40. 
91.27 	(f) The net income and apportionment factors under section 290.191 or 290.20 of 
91.28 	foreign corporations and other foreign entities which are part of a unitary business shall 
91.29 	not be included in the net income or the apportionment factors of the unitary business. 
91.30 	A foreign corporation or other foreign entity which is required to file a return under this 
91.31 	chapter shall file on a separate return basis. The net income and apportionment factors 
91.32 	under section 290.191 or 290.20 of foreign operating corporations shall not be included in 
91.33 	the net income or the apportionment factors of the unitary business except as provided in 
91.34 	paragraph (g).
91.35 	(g) The adjusted net income of a foreign operating corporation shall be deemed to 
91.36 	be paid as a dividend on the last day of its taxable year to each shareholder thereof, in 
92.1 	proportion to each shareholder's ownership, with which such corporation is engaged in 
92.2 	a unitary business. Such deemed dividend shall be treated as a dividend under section 
92.3 	290.21, subdivision 4.
92.4 	Dividends actually paid by a foreign operating corporation to a corporate shareholder 
92.5 	which is a member of the same unitary business as the foreign operating corporation shall 
92.6 	be eliminated from the net income of the unitary business in preparing a combined report 
92.7 	for the unitary business. The adjusted net income of a foreign operating corporation 
92.8 	shall be its net income adjusted as follows:
92.9 	(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto 
92.10 	Rico, or a United States possession or political subdivision of any of the foregoing shall 
92.11 	be a deduction; and
92.12 	(2) the subtraction from federal taxable income for payments received from foreign 
92.13 	corporations or foreign operating corporations under section 290.01, subdivision 19d, 
92.14 	clause (10), shall not be allowed. 
92.15 	If a foreign operating corporation incurs a net loss, neither income nor deduction 
92.16 	from that corporation shall be included in determining the net income of the unitary 
92.17 	business.
92.18 	(h) (g) For purposes of determining the net income of a unitary business and the 
92.19 	factors to be used in the apportionment of net income pursuant to section 290.191 or 
92.20 	290.20, there must be included only the income and apportionment factors of domestic 
92.21 	corporations or other domestic entities other than foreign operating corporations that are 
92.22 	determined to be part of the unitary business pursuant to this subdivision, notwithstanding 
92.23 	that foreign corporations or other foreign entities might be included in the unitary business, 
92.24 	except as provided in subdivision 4a. For a controlled foreign corporation, as defined in 
92.25 	section 957 of the Internal Revenue Code, that is a domestic corporation for the taxable 
92.26 	year under section 290.01, subdivision 5, its income and apportionment factors for the 
92.27 	taxable year must be multiplied by a fraction not to exceed one, the numerator of which is 
92.28 	the subpart F income of the corporation, as defined in section 952 of the Internal Revenue 
92.29 	Code, for the taxable year and the denominator of which is the earnings and profits of the 
92.30 	corporation, as defined in section 964 of the Internal Revenue Code, for the taxable year.
92.31 	(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter 
92.32 	that are connected with or allocable against dividends, deemed dividends described 
92.33 	in paragraph (g), or royalties, fees, or other like income described in section 290.01, 
92.34 	subdivision 19d, clause (10), shall not be disallowed. 
92.35 	(j) (h) Each corporation or other entity, except a sole proprietorship, that is part of 
92.36 	a unitary business must file combined reports as the commissioner determines. On the 
93.1 	reports, all intercompany transactions between entities included pursuant to paragraph 
93.2 	(h) (g) must be eliminated and the entire net income of the unitary business determined in 
93.3 	accordance with this subdivision is apportioned among the entities by using each entity's 
93.4 	Minnesota factors for apportionment purposes in the numerators of the apportionment 
93.5 	formula and the total factors for apportionment purposes of all entities included pursuant 
93.6 	to paragraph (h) (g) in the denominators of the apportionment formula.
93.7 	(k) (i) If a corporation has been divested from a unitary business and is included in a 
93.8 	combined report for a fractional part of the common accounting period of the combined 
93.9 	report:
93.10 	(1) its income includable in the combined report is its income incurred for that part 
93.11 	of the year determined by proration or separate accounting; and
93.12 	(2) its sales, property, and payroll included in the apportionment formula must 
93.13 	be prorated or accounted for separately.

93.14 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
93.15 	December 31, 2006.

93.16 	Sec. 7. Minnesota Statutes 2006, section 290.17, is amended by adding a subdivision 
93.17 	to read:
93.18 		Subd. 4a.Election to include foreign corporations. (a) Notwithstanding the 
93.19 	provisions of subdivision 4, paragraph (f), a unitary business may elect to include all 
93.20 	foreign corporations and other foreign entities that are part of the unitary business in 
93.21 	the net income and the apportionment factors of the unitary business under the terms 
93.22 	provided in this subdivision. An election under this subdivision requires all of the income 
93.23 	and factors of a controlled foreign corporation, treated as a domestic corporation under 
93.24 	section 290.01, subdivision 5, clause (6), to be included in the combined report. Each 
93.25 	member of the unitary business must make the election under this subdivision for the 
93.26 	election to be effective.
93.27 	(b) An election or a revocation made under this subdivision must be made in the form 
93.28 	and manner provided by the commissioner and include any information, consents, or other 
93.29 	agreements that the commissioner prescribes. The election must be made by the due date 
93.30 	of the return for the taxable year and applies for that taxable year and the succeeding four 
93.31 	taxable years or until it is revoked as provided in this paragraph, whichever occurs later. 
93.32 	Revocation of an election under this subdivision is effective beginning with the first taxable 
93.33 	year that begins two years after the date the revocation is filed with the commissioner. If a 
93.34 	taxpayer revokes an election, a subsequent election under this subdivision may not take 
93.35 	effect until the third taxable year after the revocation became effective.
94.1 	(c) For each taxable year in which an election is effective under this subdivision, 
94.2 	the net income and apportionment factors of the unitary business must include the net 
94.3 	income and apportionment factors of all foreign corporations and other foreign entities 
94.4 	that are part of the unitary business.
94.5 	(d) The commissioner may waive any of the time requirements under paragraph (b) 
94.6 	to the extent necessary to reflect the amount of income fairly attributable to this state.
94.7 	(e) Notwithstanding the requirements of paragraph (b), an election under this 
94.8 	subdivision is revoked for the current taxable year if one of the following occurs:
94.9 	(1) 50 percent or more of the voting stock of the electing corporation is acquired by 
94.10 	a nonaffiliated corporation, which has not made an election under this subdivision; or
94.11 	(2) if the corporation is completely liquidated during the taxable year, its election 
94.12 	does not carry over to the corporation receiving its assets; or
94.13 	(3) the corporation acquires 50 percent or more of the stock of a nonaffiliated 
94.14 	corporation (or corporations), which has not made an election under this subdivision and 
94.15 	which has Minnesota taxable net income for the previous taxable year that equals or 
94.16 	exceeds 20 percent of the Minnesota taxable net income of the unitary business, and each 
94.17 	member of the unitary business elects, in a form prescribed by the commissioner, to 
94.18 	revoke its election under this subdivision.
94.19 	(f) If a corporation with an election in effect for the taxable year acquires 50 percent 
94.20 	or more of the stock of a nonaffiliated corporation, which has not made an election under 
94.21 	this subdivision, and the unitary business does not revoke the election under paragraph (e), 
94.22 	clause (3), or does not qualify to revoke the election under paragraph (e), clause (3), the 
94.23 	acquired corporation is deemed to have made an election under this subdivision for the 
94.24 	term of the election of the unitary business.

94.25 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
94.26 	December 31, 2006.

94.27 	Sec. 8. Minnesota Statutes 2006, section 290.191, subdivision 2, is amended to read:
94.28 		Subd. 2.Apportionment formula of general application. (a) Except for those 
94.29 	trades or businesses required to use a different formula under subdivision 3 or section 
94.30 	290.36, and for those trades or businesses that receive permission to use some other 
94.31 	method under section 290.20or under subdivision 4, a trade or business required to 
94.32 	apportion its net income must apportion its income to this state on the basis of the 
94.33 	percentage obtained by taking the sum of:
94.34 	(1) the percent for the sales factor under paragraph (b) of the percentage which 
94.35 	the sales made within this state in connection with the trade or business during the tax 
95.1 	period are of the total sales wherever made in connection with the trade or business during 
95.2 	the tax period;.
95.3 	(2) the percent for the property factor under paragraph (b) of the percentage which 
95.4 	the total tangible property used by the taxpayer in this state in connection with the trade or 
95.5 	business during the tax period is of the total tangible property, wherever located, used by 
95.6 	the taxpayer in connection with the trade or business during the tax period; and
95.7 	(3) the percent for the payroll factor under paragraph (b) of the percentage which 
95.8 	the taxpayer's total payrolls paid or incurred in this state or paid in respect to labor 
95.9 	performed in this state in connection with the trade or business during the tax period are 
95.10 	of the taxpayer's total payrolls paid or incurred in connection with the trade or business 
95.11 	during the tax period.
95.12 	(b) For purposes of paragraph (a) and subdivision 3, the following percentages apply 
95.13 	for the taxable years specified:

95.14
95.15
95.16
95.17	Taxable years 
beginning 
during 
calendar year
		Sales 
factor 
percent
		Property 
factor 
percent
		Payroll 
factor 
percent
	
95.18	2007
		78
		11
		11
	
95.19	2008
		81
		9.5
		9.5
	
95.20	2009
		84
		8
		8
	
95.21	2010
		87
		6.5
		6.5
	
95.22	2011
		90
		5
		5
	
95.23	2012
		93
		3.5
		3.5
	
95.24	2013
		96
		2
		2
	
95.25
95.26	2014 and later 
calendar years
		100
		0
		0

95.27 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
95.28 	December 31, 2007, provided that for purposes of taxable years beginning during calendar 
95.29 	year 2007 for Minnesota Statutes, section 290.191, subdivisions 2 and 3, the sales factor 
95.30 	percent is 82 and property and payroll factor percents are each nine.

95.31 	Sec. 9. Minnesota Statutes 2006, section 290.191, subdivision 3, is amended to read:
95.32 		Subd. 3.Apportionment formula for financial institutions. Except for an 
95.33 	investment company required to apportion its income under section 290.36, a financial 
95.34 	institution that is required to apportion its net income must apportion its net income to this 
95.35 	state on the basis of the percentage obtained by taking the sum of:
95.36 	(1) the percent for the sales factor under subdivision 2, paragraph (b), of the 
95.37 	percentage which the receipts from within this state in connection with the trade or 
96.1 	business during the tax period are of the total receipts in connection with the trade or 
96.2 	business during the tax period, from wherever derived;.
96.3 	(2) the percent for the property factor under subdivision 2, paragraph (b), of the 
96.4 	percentage which the sum of the total tangible property used by the taxpayer in this 
96.5 	state and the intangible property owned by the taxpayer and attributed to this state in 
96.6 	connection with the trade or business during the tax period is of the sum of the total 
96.7 	tangible property, wherever located, used by the taxpayer and the intangible property 
96.8 	owned by the taxpayer and attributed to all states in connection with the trade or business 
96.9 	during the tax period; and
96.10 	(3) the percent for the payroll factor under subdivision 2, paragraph (b), of the 
96.11 	percentage which the taxpayer's total payrolls paid or incurred in this state or paid in 
96.12 	respect to labor performed in this state in connection with the trade or business during 
96.13 	the tax period are of the taxpayer's total payrolls paid or incurred in connection with 
96.14 	the trade or business during the tax period.

96.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
96.16 	December 31, 2007, provided that for purposes of taxable years beginning during calendar 
96.17 	year 2007 for Minnesota Statutes, section 290.191, subdivisions 2 and 3, the sales factor 
96.18 	percent is 82 and property and payroll factor percents are each nine.

96.19 	Sec. 10. Minnesota Statutes 2006, section 290.191, subdivision 5, is amended to read:
96.20 		Subd. 5.Determination of sales factor. For purposes of this section, the following 
96.21 	rules apply in determining the sales factor.
96.22 	(a) The sales factor includes all sales, gross earnings, or receipts received in the 
96.23 	ordinary course of the business, except that the following types of income are not included 
96.24 	in the sales factor:
96.25 	(1) interest;
96.26 	(2) dividends;
96.27 	(3) sales of capital assets as defined in section 1221 of the Internal Revenue Code;
96.28 	(4) sales of property used in the trade or business, except sales of leased property of 
96.29 	a type which is regularly sold as well as leased; or
96.30 	(5) sales of debt instruments as defined in section 1275(a)(1) of the Internal Revenue 
96.31 	Code or sales of stock; and
96.32 	(6) royalties, fees, or other like income of a type which qualify for a subtraction from 
96.33 	federal taxable income under section 290.01, subdivision 19d(10). 
96.34 	(b) Sales of tangible personal property are made within this state if the property is 
96.35 	received by a purchaser at a point within this state, and the taxpayer is taxable in this state, 
97.1 	regardless of the f.o.b. point, other conditions of the sale, or the ultimate destination 
97.2 	of the property.
97.3 	(c) Tangible personal property delivered to a common or contract carrier or foreign 
97.4 	vessel for delivery to a purchaser in another state or nation is a sale in that state or nation, 
97.5 	regardless of f.o.b. point or other conditions of the sale.
97.6 	(d) Notwithstanding paragraphs (b) and (c), when intoxicating liquor, wine, 
97.7 	fermented malt beverages, cigarettes, or tobacco products are sold to a purchaser who is 
97.8 	licensed by a state or political subdivision to resell this property only within the state of 
97.9 	ultimate destination, the sale is made in that state.
97.10 	(e) Sales made by or through a corporation that is qualified as a domestic 
97.11 	international sales corporation under section 992 of the Internal Revenue Code are not 
97.12 	considered to have been made within this state.
97.13 	(f) Sales, rents, royalties, and other income in connection with real property is 
97.14 	attributed to the state in which the property is located.
97.15 	(g) Receipts from the lease or rental of tangible personal property, including finance 
97.16 	leases and true leases, must be attributed to this state if the property is located in this 
97.17 	state and to other states if the property is not located in this state. Receipts from the 
97.18 	lease or rental of moving property including, but not limited to, motor vehicles, rolling 
97.19 	stock, aircraft, vessels, or mobile equipment are included in the numerator of the receipts 
97.20 	factor to the extent that the property is used in this state. The extent of the use of moving 
97.21 	property is determined as follows:
97.22 	(1) A motor vehicle is used wholly in the state in which it is registered.
97.23 	(2) The extent that rolling stock is used in this state is determined by multiplying 
97.24 	the receipts from the lease or rental of the rolling stock by a fraction, the numerator of 
97.25 	which is the miles traveled within this state by the leased or rented rolling stock and the 
97.26 	denominator of which is the total miles traveled by the leased or rented rolling stock.
97.27 	(3) The extent that an aircraft is used in this state is determined by multiplying the 
97.28 	receipts from the lease or rental of the aircraft by a fraction, the numerator of which is 
97.29 	the number of landings of the aircraft in this state and the denominator of which is the 
97.30 	total number of landings of the aircraft.
97.31 	(4) The extent that a vessel, mobile equipment, or other mobile property is used in 
97.32 	the state is determined by multiplying the receipts from the lease or rental of the property 
97.33 	by a fraction, the numerator of which is the number of days during the taxable year the 
97.34 	property was in this state and the denominator of which is the total days in the taxable year.
97.35 	(h) Royalties and other income not described in paragraph (a), clause (6), received 
97.36 	for the use of or for the privilege of using intangible property, including patents, 
98.1 	know-how, formulas, designs, processes, patterns, copyrights, trade names, service names, 
98.2 	franchises, licenses, contracts, customer lists, or similar items, must be attributed to the 
98.3 	state in which the property is used by the purchaser. If the property is used in more 
98.4 	than one state, the royalties or other income must be apportioned to this state pro rata 
98.5 	according to the portion of use in this state. If the portion of use in this state cannot be 
98.6 	determined, the royalties or other income must be excluded from both the numerator 
98.7 	and the denominator. Intangible property is used in this state if the purchaser uses the 
98.8 	intangible property or the rights therein in the regular course of its business operations in 
98.9 	this state, regardless of the location of the purchaser's customers.
98.10 	(i) Sales of intangible property are made within the state in which the property is 
98.11 	used by the purchaser. If the property is used in more than one state, the sales must be 
98.12 	apportioned to this state pro rata according to the portion of use in this state. If the 
98.13 	portion of use in this state cannot be determined, the sale must be excluded from both the 
98.14 	numerator and the denominator of the sales factor. Intangible property is used in this 
98.15 	state if the purchaser used the intangible property in the regular course of its business 
98.16 	operations in this state.
98.17 	(j) Receipts from the performance of services must be attributed to the state where 
98.18 	the services are received. For the purposes of this section, receipts from the performance 
98.19 	of services provided to a corporation, partnership, or trust may only be attributed to a state 
98.20 	where it has a fixed place of doing business. If the state where the services are received is 
98.21 	not readily determinable or is a state where the corporation, partnership, or trust receiving 
98.22 	the service does not have a fixed place of doing business, the services shall be deemed 
98.23 	to be received at the location of the office of the customer from which the services were 
98.24 	ordered in the regular course of the customer's trade or business. If the ordering office 
98.25 	cannot be determined, the services shall be deemed to be received at the office of the 
98.26 	customer to which the services are billed. For purposes of this subdivision and subdivision 
98.27 	6, paragraph (l), receipts from the performance of services provided by corporations 
98.28 	or trusts, providing management, distribution, or administrative services to any fund 
98.29 	regulated under the Investment Company Act of 1940, are attributed to the states where 
98.30 	each fund's shareholders reside as determined by the mailing address furnished by the 
98.31 	client, based on the average number of outstanding shares owned by the shareholders at 
98.32 	the end of each month compared to the total number of outstanding shares. For purposes 
98.33 	of this section, when a fund shareholder of record is an insurance company holding the 
98.34 	shares as depositor for policyholders, the corporation can elect to treat the policyholders 
98.35 	of the insurance company as the fund shareholders. This election applies to all fund 
99.1 	shareholders that are insurance companies and is irrevocable for, and applicable for, five 
99.2 	successive income years.

99.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
99.4 	December 31, 2006, except the amendments to paragraph (j) are effective for taxable 
99.5 	years beginning after December 31, 2007.

99.6 	Sec. 11. Minnesota Statutes 2006, section 290.21, subdivision 4, is amended to read:
99.7 		Subd. 4.Dividends received from another corporation. (a)(1) Eighty percent 
99.8 	of dividends received by a corporation during the taxable year from another corporation, 
99.9 	in which the recipient owns 20 percent or more of the stock, by vote and value, not 
99.10 	including stock described in section 1504(a)(4) of the Internal Revenue Code when the 
99.11 	corporate stock with respect to which dividends are paid does not constitute the stock in 
99.12 	trade of the taxpayer or would not be included in the inventory of the taxpayer, or does not 
99.13 	constitute property held by the taxpayer primarily for sale to customers in the ordinary 
99.14 	course of the taxpayer's trade or business, or when the trade or business of the taxpayer 
99.15 	does not consist principally of the holding of the stocks and the collection of the income 
99.16 	and gains therefrom; and
99.17 	(2)(i) the remaining 20 percent of dividends if the dividends received are the stock in 
99.18 	an affiliated company transferred in an overall plan of reorganization and the dividend 
99.19 	is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as 
99.20 	amended through December 31, 1989;
99.21 	(ii) the remaining 20 percent of dividends if the dividends are received from a 
99.22 	corporation which is subject to tax under section 290.36 and which is a member of an 
99.23 	affiliated group of corporations as defined by the Internal Revenue Code and the dividend 
99.24 	is eliminated in consolidation under Treasury Department Regulation 1.1502-14(a), as 
99.25 	amended through December 31, 1989, or is deducted under an election under section 
99.26 	243(b) of the Internal Revenue Code; or 
99.27 	(iii) the remaining 20 percent of the dividends if the dividends are received from a 
99.28 	property and casualty insurer as defined under section 60A.60, subdivision 8, which is a 
99.29 	member of an affiliated group of corporations as defined by the Internal Revenue Code 
99.30 	and either: (A) the dividend is eliminated in consolidation under Treasury Regulation 
99.31 	1.1502-14(a), as amended through December 31, 1989; or (B) the dividend is deducted 
99.32 	under an election under section 243(b) of the Internal Revenue Code. 
99.33 	(b) Seventy percent of dividends received by a corporation during the taxable year 
99.34 	from another corporation in which the recipient owns less than 20 percent of the stock, 
99.35 	by vote or value, not including stock described in section 1504(a)(4) of the Internal 
100.1 	Revenue Code when the corporate stock with respect to which dividends are paid does not 
100.2 	constitute the stock in trade of the taxpayer, or does not constitute property held by the 
100.3 	taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or 
100.4 	business, or when the trade or business of the taxpayer does not consist principally of the 
100.5 	holding of the stocks and the collection of income and gain therefrom.
100.6 	(c) The dividend deduction provided in this subdivision shall be allowed only with 
100.7 	respect to dividends that are included in a corporation's Minnesota taxable net income 
100.8 	for the taxable year.
100.9 	The dividend deduction provided in this subdivision does not apply to a dividend 
100.10 	from a corporation which, for the taxable year of the corporation in which the distribution 
100.11 	is made or for the next preceding taxable year of the corporation, is a corporation exempt 
100.12 	from tax under section 501 of the Internal Revenue Code.
100.13 	The dividend deduction provided in this subdivision applies to the amount of 
100.14 	regulated investment company dividends only to the extent determined under section 
100.15 	854(b) of the Internal Revenue Code.
100.16 	The dividend deduction provided in this subdivision shall not be allowed with 
100.17 	respect to any dividend for which a deduction is not allowed under the provisions of 
100.18 	section 246(c) of the Internal Revenue Code.
100.19 	(d) If dividends received by a corporation that does not have nexus with Minnesota 
100.20 	under the provisions of Public Law 86-272 are included as income on the return of an 
100.21 	affiliated corporation permitted or required to file a combined report under section 290.34, 
100.22 	subdivision 2, then for purposes of this subdivision the determination as to whether the 
100.23 	trade or business of the corporation consists principally of the holding of stocks and the 
100.24 	collection of income and gains therefrom shall be made with reference to the trade or 
100.25 	business of the affiliated corporation having a nexus with Minnesota. 
100.26 	(e) The deduction provided by this subdivision does not apply if the dividends are 
100.27 	paid by a FSC as defined in section 922 of the Internal Revenue Code.
100.28 	(f) If one or more of the members of the unitary group whose income is included on 
100.29 	the combined report received a dividend, the deduction under this subdivision for each 
100.30 	member of the unitary business required to file a return under this chapter is the product 
100.31 	of: (1) 100 percent of the dividends received by members of the group; (2) the percentage 
100.32 	allowed pursuant to paragraph (a) or (b); and (3) the percentage of the taxpayer's business 
100.33 	income apportionable to this state for the taxable year under section 290.191 or 290.20. 
100.34 	(g) The deduction provided by paragraph (a) does not apply to dividends paid by a 
100.35 	corporation that is part of the unitary business for the taxable year for which an election 
100.36 	was not made under section 290.17, subdivision 4a.

101.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
101.2 	December 31, 2006.

101.3 	Sec. 12. TRANSITION; POLLUTION CONTROL FACILITIES 
101.4 	AMORTIZATION.
 101.5 	The amount of additions to federal taxable income pursuant to Minnesota Statutes, 
101.6 	section 290.01, subdivision 19c(10), that are properly subtractable pursuant to Minnesota 
101.7 	Statutes, section 290.01, subdivision 19d(8), for taxable years beginning after December 
101.8 	31, 2006, and have not been subtracted pursuant to subdivision 19d(8), are subtractable in 
101.9 	the taxpayer's first taxable year beginning after December 31, 2006.

101.10 	Sec. 13. REPEALER.
 101.11 	(a) Minnesota Statutes 2006, sections 290.01, subdivision 6b; and 290.0921, 
101.12 	subdivision 7, are repealed.
101.13 	(b) Minnesota Statutes 2006, section 290.191, subdivision 4, is repealed.

101.14 	EFFECTIVE DATE. Paragraph (a) of this section is effective for taxable years 
101.15 	beginning after December 31, 2006. Paragraph (b) of this section is effective for taxable 
101.16 	years beginning after December 31, 2007.

101.17 	ARTICLE 5
101.18 	INDIVIDUAL INCOME TAX

101.19 	Section 1. Minnesota Statutes 2006, section 289A.02, subdivision 7, is amended to 
101.20 	read:
101.21 		Subd. 7.Internal Revenue Code. Unless specifically defined otherwise, "Internal 
101.22 	Revenue Code" means the Internal Revenue Code of 1986, as amended through May 18, 
101.23 	2006 December 31, 2006.

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

101.25 	Sec. 2. Minnesota Statutes 2006, section 289A.12, subdivision 4, is amended to read:
101.26 		Subd. 4.Returns by persons, corporations, cooperatives, governmental entities, 
101.27 	or school districts. (a) The commissioner may by notice and demand require to the 
101.28 	extent required by section 6041 of the Internal Revenue Code, a person, corporation, 
101.29 	or cooperative, the state of Minnesota and its political subdivisions, and a city, county, 
101.30 	and school district in Minnesota, making payments in the regular course of a trade or 
101.31 	business during the taxable year to any person or corporation of $600 or more on account 
102.1 	of rents or royalties, or of $10 or more on account of interest, or $10 or more on account 
102.2 	of dividends or patronage dividends, or $600 or more on account of either wages, salaries, 
102.3 	commissions, fees, prizes, awards, pensions, annuities, or any other fixed or determinable 
102.4 	gains, profits or income, not otherwise reportable under section 289A.09, subdivision 2, or 
102.5 	on account of earnings of $10 or more distributed to its members by savings associations 
102.6 	or credit unions chartered under the laws of this state or the United States, (1) to file with 
102.7 	the commissioner a return (except in cases where a valid agreement to participate in the 
102.8 	combined federal and state information reporting system has been entered into, and the 
102.9 	return is filed only with the commissioner of internal revenue under the applicable filing 
102.10 	and informational reporting requirements of the Internal Revenue Code) with respect to 
102.11 	the payments in excess of the amounts named, giving the names and addresses of the 
102.12 	persons to whom the payments were made, the amounts paid to each, and (2) to make 
102.13 	a return with respect to the total number of payments and total amount of payments, 
102.14 	for each category of income named, which were in excess of the amounts named. This 
102.15 	subdivision does not apply to the payment of interest or dividends to a person who was a 
102.16 	nonresident of Minnesota for the entire year. 
102.17 	(b) For payments for which a return is covered by paragraph (a), regardless of 
102.18 	whether the commissioner has required filing under paragraph (a), the payor must file a 
102.19 	copy of the return with the commissioner if: 
102.20 	(i) the return is for a payment made to a Minnesota resident, to a recipient with a 
102.21 	Minnesota address, or for activity occurring in the state of Minnesota; and 
102.22 	(ii) the payment is for wages, salaries, or other compensation for services provided. 
102.23 	The commissioner may require this information to be filed in electronic or another form 
102.24 	that the commissioner determines is appropriate, notwithstanding the provisions of 
102.25 	paragraph (c).
102.26 	(c) A person, corporation, or cooperative required to file returns under this 
102.27 	subdivision must file the returns on magnetic media if magnetic media was used to satisfy 
102.28 	the federal reporting requirement under section 6011(e) of the Internal Revenue Code, 
102.29 	unless the person establishes to the satisfaction of the commissioner that compliance with 
102.30 	this requirement would be an undue hardship.

102.31 	EFFECTIVE DATE. This section is effective for forms required to be filed by 
102.32 	federal law after December 31, 2007.

102.33 	Sec. 3. Minnesota Statutes 2006, section 290.01, subdivision 19, as amended by Laws 
102.34 	2007, chapter 1, section 1, is amended to read:
103.1 		Subd. 19.Net income. The term "net income" means the federal taxable income, 
103.2 	as defined in section 63 of the Internal Revenue Code of 1986, as amended through the 
103.3 	date named in this subdivision, incorporating the federal effective dates of changes to the 
103.4 	Internal Revenue Code and any elections made by the taxpayer in accordance with the 
103.5 	Internal Revenue Code in determining federal taxable income for federal income tax 
103.6 	purposes, and with the modifications provided in subdivisions 19a to 19f.
103.7 	In the case of a regulated investment company or a fund thereof, as defined in section 
103.8 	851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment 
103.9 	company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, 
103.10 	except that:
103.11 	(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal 
103.12 	Revenue Code does not apply;
103.13 	(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal 
103.14 	Revenue Code must be applied by allowing a deduction for capital gain dividends and 
103.15 	exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal 
103.16 	Revenue Code; and
103.17 	(3) the deduction for dividends paid must also be applied in the amount of any 
103.18 	undistributed capital gains which the regulated investment company elects to have treated 
103.19 	as provided in section 852(b)(3)(D) of the Internal Revenue Code.
103.20 	The net income of a real estate investment trust as defined and limited by section 
103.21 	856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust 
103.22 	taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
103.23 	The net income of a designated settlement fund as defined in section 468B(d) of 
103.24 	the Internal Revenue Code means the gross income as defined in section 468B(b) of the 
103.25 	Internal Revenue Code.
103.26 	The Internal Revenue Code of 1986, as amended through May 18 December 31, 
103.27 	2006, shall be in effect for taxable years beginning after December 31, 1996, and before 
103.28 	January 1, 2006, and for taxable years beginning after December 31, 2006. The Internal 
103.29 	Revenue Code of 1986, as amended through December 31, 2006, is in effect for taxable 
103.30 	years beginning after December 31, 2005, and before January 1, 2007.
103.31 	Except as otherwise provided, references to the Internal Revenue Code in 
103.32 	subdivisions 19 to 19f mean the code in effect for purposes of determining net income for 
103.33 	the applicable year.

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

103.35 	Sec. 4. Minnesota Statutes 2006, section 290.01, subdivision 19b, is amended to read:
104.1 		Subd. 19b.Subtractions from federal taxable income. For individuals, estates, 
104.2 	and trusts, there shall be subtracted from federal taxable income:
104.3 	(1) net interest income on obligations of any authority, commission, or 
104.4 	instrumentality of the United States to the extent includable in taxable income for federal 
104.5 	income tax purposes but exempt from state income tax under the laws of the United States;
104.6 	(2) if included in federal taxable income, the amount of any overpayment of income 
104.7 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
104.8 	is received as a refund or as a credit to another taxable year's income tax liability;
104.9 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
104.10 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
104.11 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
104.12 	transportation of each qualifying child in attending an elementary or secondary school 
104.13 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
104.14 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
104.15 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
104.16 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
104.17 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
104.18 	"textbooks" includes books and other instructional materials and equipment purchased 
104.19 	or leased for use in elementary and secondary schools in teaching only those subjects 
104.20 	legally and commonly taught in public elementary and secondary schools in this state. 
104.21 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
104.22 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
104.23 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
104.24 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
104.25 	or materials for, or transportation to, extracurricular activities including sporting events, 
104.26 	musical or dramatic events, speech activities, driver's education, or similar programs. For 
104.27 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
104.28 	given in section 32(c)(3) of the Internal Revenue Code;
104.29 	(4) income as provided under section 290.0802;
104.30 	(5) to the extent included in federal adjusted gross income, income realized on 
104.31 	disposition of property exempt from tax under section 290.491;
104.32 	(6) to the extent not deducted in determining federal taxable income by an individual 
104.33 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
104.34 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
104.35 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 
104.36 	under the provisions of Public Law 109-1;
105.1 	(7) for taxable years beginning before January 1, 2008, the amount of the federal 
105.2 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
105.3 	which is included in gross income under section 87 of the Internal Revenue Code;
105.4 	(8) for individuals who are allowed a federal foreign tax credit for taxes that do not 
105.5 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
105.6 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
105.7 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
105.8 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
105.9 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
105.10 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
105.11 	the extent they exceed the federal foreign tax credit;
105.12 	(9) in each of the five tax years immediately following the tax year in which an 
105.13 	addition is required under subdivision 19a, clause (7), or 19c, clause (15) (13), in the case 
105.14 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
105.15 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
105.16 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
105.17 	subdivision 19c, clause (15) (13), in the case of a shareholder of an S corporation, minus 
105.18 	the positive value of any net operating loss under section 172 of the Internal Revenue 
105.19 	Code generated for the tax year of the addition. The resulting delayed depreciation 
105.20 	cannot be less than zero;
105.21 	(10) job opportunity building zone income as provided under section 469.316;
105.22 	(11) to the extent included in federal taxable income, the amount of compensation 
105.23 	paid to members of the Minnesota National Guard or other reserve components of the 
105.24 	United States military for active service performed in Minnesota, excluding compensation 
105.25 	for services performed under the Active Guard Reserve (AGR) program. For purposes of 
105.26 	this clause, "active service" means (i) state active service as defined in section 190.05, 
105.27 	subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 
105.28 	190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, 
105.29 	subdivision 5c, but "active service" excludes services performed exclusively for purposes 
105.30 	of basic combat training, advanced individual training, annual training, and periodic 
105.31 	inactive duty training; special training periodically made available to reserve members; 
105.32 	and service performed in accordance with section 190.08, subdivision 3;
105.33 	(12) to the extent included in federal taxable income, the amount of compensation 
105.34 	paid to Minnesota residents who are members of the armed forces of the United States or 
105.35 	United Nations for active duty performed outside Minnesota under United States Code, 
106.1 	title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 
106.2 	the United Nations;
106.3 	(13) an amount, not to exceed $10,000, equal to qualified expenses related to a 
106.4 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
106.5 	to another person for human organ transplantation. For purposes of this clause, "organ" 
106.6 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
106.7 	"human organ transplantation" means the medical procedure by which transfer of a human 
106.8 	organ is made from the body of one person to the body of another person; "qualified 
106.9 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
106.10 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
106.11 	may be subtracted under this clause only once; and "qualified donor" means the individual 
106.12 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
106.13 	individual may claim the subtraction in this clause for each instance of organ donation for 
106.14 	transplantation during the taxable year in which the qualified expenses occur;
106.15 	(14) in each of the five tax years immediately following the tax year in which an 
106.16 	addition is required under subdivision 19a, clause (8), or 19c, clause (16) (14), in the case 
106.17 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
106.18 	of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause 
106.19 	(16) (14), in the case of a shareholder of a corporation that is an S corporation, minus the 
106.20 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
106.21 	generated for the tax year of the addition. If the net operating loss exceeds the addition for 
106.22 	the tax year, a subtraction is not allowed under this clause;
106.23 	(15) to the extent included in federal taxable income, compensation paid to a 
106.24 	nonresident who is a service member as defined in United States Code, title 10, section 
106.25 	101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public 
106.26 	Law 108-189, section 101(2); and
106.27 	(16) international economic development zone income as provided under section 
106.28 	469.325.; and
106.29 	(17) to the extent included in federal taxable income, the amount of national service 
106.30 	educational awards received from the National Service Trust under United States Code, 
106.31 	title 42, sections 12601 to 12604, for service in an approved AmeriCorps national service 
106.32 	program.

106.33 	EFFECTIVE DATE. This section is effective retroactively for tax years beginning 
106.34 	after December 31, 2004, except that clause (17) is effective for tax years beginning 
106.35 	after December 31, 2006.

107.1 	Sec. 5. Minnesota Statutes 2006, section 290.01, subdivision 31, as amended by Laws 
107.2 	2007, chapter 1, section 3, is amended to read:
107.3 		Subd. 31.Internal Revenue Code. Unless specifically defined otherwise, for 
107.4 	taxable years beginning before January 1, 2006, and after December 31, 2006, "Internal 
107.5 	Revenue Code" means the Internal Revenue Code of 1986, as amended through May 18, 
107.6 	2006; and for taxable years beginning after December 31, 2005, and before January 1, 
107.7 	2007, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended 
107.8 	through December 31, 2006.

107.9 	EFFECTIVE DATE. This section is effective the day following final enactment 
107.10 	except the changes incorporated by federal changes are effective at the same time as the 
107.11 	changes were effective for federal purposes.

107.12 	Sec. 6. Minnesota Statutes 2006, section 290.06, subdivision 2c, is amended to read:
107.13 		Subd. 2c.Schedules of rates for individuals, estates, and trusts. (a) The income 
107.14 	taxes imposed by this chapter upon married individuals filing joint returns and surviving 
107.15 	spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
107.16 	applying to their taxable net income the following schedule of rates:
107.17 	(1) On the first $25,680 $31,150, 5.35 percent;
107.18 	(2) On all over $25,680 $31,150, but not over $102,030 $123,750, 7.05 percent;
107.19 	(3) On all over $102,030 $123,750, but not over $400,000, 7.85 percent;
107.20 	(4) On all over $400,000, 9 percent.
107.21 	Married individuals filing separate returns, estates, and trusts must compute their 
107.22 	income tax by applying the above rates to their taxable income, except that the income 
107.23 	brackets will be one-half of the above amounts.
107.24 	(b) The income taxes imposed by this chapter upon unmarried individuals must be 
107.25 	computed by applying to taxable net income the following schedule of rates:
107.26 	(1) On the first $17,570 $21,310, 5.35 percent;
107.27 	(2) On all over $17,570 $21,310, but not over $57,710 $69,990, 7.05 percent;
107.28 	(3) On all over $57,710 $69,990, but not over $226,230, 7.85 percent;
107.29 	(4) On all over $226,230, 9 percent.
107.30 	(c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
107.31 	as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
107.32 	computed by applying to taxable net income the following schedule of rates:
107.33 	(1) On the first $21,630 $26,230, 5.35 percent;
107.34 	(2) On all over $21,630 $26,230, but not over $86,910 $105,410, 7.05 percent;
107.35 	(3) On all over $86,910 $105,410, but not over $340,720, 7.85 percent;
108.1 	(4) On all over $340,720, 9 percent.
108.2 	(d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
108.3 	tax of any individual taxpayer whose taxable net income for the taxable year is less than 
108.4 	an amount determined by the commissioner must be computed in accordance with tables 
108.5 	prepared and issued by the commissioner of revenue based on income brackets of not 
108.6 	more than $100. The amount of tax for each bracket shall be computed at the rates set 
108.7 	forth in this subdivision, provided that the commissioner may disregard a fractional part of 
108.8 	a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
108.9 	(e) An individual who is not a Minnesota resident for the entire year must compute 
108.10 	the individual's Minnesota income tax as provided in this subdivision. After the 
108.11 	application of the nonrefundable credits provided in this chapter, the tax liability must 
108.12 	then be multiplied by a fraction in which:
108.13 	(1) the numerator is the individual's Minnesota source federal adjusted gross income 
108.14 	as defined in section 62 of the Internal Revenue Code and increased by the additions 
108.15 	required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), 
108.16 	and reduced by the Minnesota assignable portion of the subtraction for United States 
108.17 	government interest under section 290.01, subdivision 19b, clause (1), and the subtractions 
108.18 	under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), and (16), after applying 
108.19 	the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and
108.20 	(2) the denominator is the individual's federal adjusted gross income as defined in 
108.21 	section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
108.22 	section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), and (9), and reduced by the 
108.23 	amounts specified in section 290.01, subdivision 19b, clauses (1), (9), (10), (14), (15), 
108.24 	and (16).

108.25 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
108.26 	December 31, 2006.

108.27 	Sec. 7. Minnesota Statutes 2006, section 290.06, subdivision 2d, is amended to read:
108.28 		Subd. 2d.Inflation adjustment of brackets. (a) For taxable years beginning after 
108.29 	December 31, 2000 2007, the minimum and maximum dollar amounts for each rate 
108.30 	bracket for which a tax is imposed in subdivision 2c shall be adjusted for inflation by the 
108.31 	percentage determined under paragraph (b). For the purpose of making the adjustment as 
108.32 	provided in this subdivision all of the rate brackets provided in subdivision 2c shall be the 
108.33 	rate brackets as they existed for taxable years beginning after December 31, 1999 2006, 
108.34 	and before January 1, 2001 2008. The rate applicable to any rate bracket must not be 
108.35 	changed. The dollar amounts setting forth the tax shall be adjusted to reflect the changes 
109.1 	in the rate brackets. The rate brackets as adjusted must be rounded to the nearest $10 
109.2 	amount. If the rate bracket ends in $5, it must be rounded up to the nearest $10 amount.
109.3 	(b) The commissioner shall adjust the rate brackets and by the percentage determined 
109.4 	pursuant to the provisions of section 1(f) of the Internal Revenue Code, except that in 
109.5 	section 1(f)(3)(B) the word "1999""2006" shall be substituted for the word "1992." For 
109.6 	2001 2008, the commissioner shall then determine the percent change from the 12 months 
109.7 	ending on August 31, 1999 2006, to the 12 months ending on August 31, 2000 2007, and 
109.8 	in each subsequent year, from the 12 months ending on August 31, 1999 2006, to the 12 
109.9 	months ending on August 31 of the year preceding the taxable year. The determination of 
109.10 	the commissioner pursuant to this subdivision shall not be considered a "rule" and shall 
109.11 	not be subject to the Administrative Procedure Act contained in chapter 14.
109.12 	No later than December 15 of each year, the commissioner shall announce the 
109.13 	specific percentage that will be used to adjust the tax rate brackets.

109.14 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
109.15 	December 31, 2006.

109.16 	Sec. 8. Minnesota Statutes 2006, section 290.06, is amended by adding a subdivision 
109.17 	to read:
109.18 		Subd. 34.Dairy investment credit. (a) A dairy investment credit is allowed against 
109.19 	the tax due under this chapter equal to ten percent of the amount paid or incurred by the 
109.20 	taxpayer, on the first $500,000 of qualifying expenditures made in the qualifying period by 
109.21 	a person who raises dairy animals in this state.
109.22 	(b) For purposes of this subdivision, "qualifying expenditures" means the amount 
109.23 	spent for: 
109.24 	(1) the acquisition, construction, or improvement of buildings or facilities, if related 
109.25 	to dairy animals;
109.26 	(2) the development of pasture owned or rented by the taxpayer for the use of dairy 
109.27 	animals; or
109.28 	(3) the acquisition of equipment for dairy animal housing, for confinement, for 
109.29 	animal feeding, for production and delivery of milk and other dairy products, and for 
109.30 	waste management, including the following, if related to dairy animals in this state:
109.31 	(i) freestall barns;
109.32 	(ii) fences;
109.33 	(iii) watering facilities;
109.34 	(iv) feed storage and handling equipment;
109.35 	(v) milking parlors;
110.1 	(vi) robotic equipment;
110.2 	(vii) scales;
110.3 	(viii) milk storage and cooling facilities;
110.4 	(ix) bulk tanks;
110.5 	(x) manure pumping and storage facilities;
110.6 	(xi) digesters;
110.7 	(xii) equipment used to produce energy; and
110.8 	(xiii) on-farm processing and refrigerated trucks for delivery of milk and other 
110.9 	dairy products.
110.10 	Qualifying expenditures, other than expenditures for development of pasture, only 
110.11 	include amounts that are capitalized and deducted under either section 167 or 179 of the 
110.12 	Internal Revenue Code in computing federal taxable income. Qualifying expenditures 
110.13 	for development of pasture must not include land acquisition and are limited to soil 
110.14 	preparation expenses, seed costs, planting costs, and weed control, which are allowed once 
110.15 	for each acre owned or rented by the taxpayer for the use of dairy animals and developed 
110.16 	into pasture during the qualifying period.
110.17 	(c) The credit is limited to the liability for tax, as computed under this chapter for the 
110.18 	taxable year. If the amount of the credit determined under this section for any taxable year 
110.19 	exceeds this limitation, the excess is a dairy investment credit carryover to each of the 15 
110.20 	succeeding taxable years. The entire amount of the excess unused credit for the taxable 
110.21 	year is carried first to the earliest of the taxable years to which the credit may be carried 
110.22 	and then to each successive year to which the credit may be carried. The amount of the 
110.23 	unused credit which may be added under this paragraph shall not exceed the taxpayer's 
110.24 	liability for tax less the dairy investment credit for the taxable year.
110.25 	(d) The qualifying period is that time after December 31, 2006, and before January 
110.26 	1, 2013.
110.27 	(e) The $50,000 maximum credit applies at the entity level for partnerships, S 
110.28 	corporations, trusts, and estates as well as at the individual level. In the case of married 
110.29 	individuals, the credit is limited to $50,000 for a married couple.

110.30 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
110.31 	December 31, 2006.

110.32 	Sec. 9. Minnesota Statutes 2006, section 290.067, subdivision 1, is amended to read:
110.33 		Subdivision 1.Amount of credit. (a) A taxpayer may take as a credit against the 
110.34 	tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the 
111.1 	dependent care credit for which the taxpayer is eligible pursuant to the provisions of 
111.2 	section 21 of the Internal Revenue Code subject to the limitations provided in subdivision 
111.3 	2 except that in determining whether the child qualified as a dependent, income received 
111.4 	as a Minnesota family investment program grant or allowance to or on behalf of the child 
111.5 	must not be taken into account in determining whether the child received more than half 
111.6 	of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of 
111.7 	the Internal Revenue Code do not apply.
111.8 	(b) If a child who has not attained the age of six 13 years at the close of the taxable 
111.9 	year is cared for at a licensed family day care home operated by the child's parent, the 
111.10 	taxpayer is deemed to have paid employment-related expenses. If the child is 16 months 
111.11 	old or younger at the close of the taxable year, the amount of expenses deemed to have 
111.12 	been paid equals the maximum limit for one qualified individual under section 21(c) and 
111.13 	(d) of the Internal Revenue Code. If the child is older than 16 months of age but has not 
111.14 	attained the age of six 13 years at the close of the taxable year, the amount of expenses 
111.15 	deemed to have been paid equals the amount the licensee would charge for the care of a 
111.16 	child of the same age for the same number of hours of care.
111.17 	(c) If a married couple:
111.18 	(1) has a child who has not attained the age of one year at the close of the taxable 
111.19 	year;
111.20 	(2) files a joint tax return for the taxable year; and
111.21 	(3) does not participate in a dependent care assistance program as defined in section 
111.22 	129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid 
111.23 	for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of 
111.24 	(i) the combined earned income of the couple or (ii) the amount of the maximum limit for 
111.25 	one qualified individual under section 21(c) and (d) of the Internal Revenue Code will 
111.26 	be deemed to be the employment related expense paid for that child. The earned income 
111.27 	limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed 
111.28 	amount. These deemed amounts apply regardless of whether any employment-related 
111.29 	expenses have been paid.
111.30 	(d) If the taxpayer is not required and does not file a federal individual income tax 
111.31 	return for the tax year, no credit is allowed for any amount paid to any person unless:
111.32 	(1) the name, address, and taxpayer identification number of the person are included 
111.33 	on the return claiming the credit; or
111.34 	(2) if the person is an organization described in section 501(c)(3) of the Internal 
111.35 	Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, 
111.36 	the name and address of the person are included on the return claiming the credit.
112.1 	In the case of a failure to provide the information required under the preceding sentence, 
112.2 	the preceding sentence does not apply if it is shown that the taxpayer exercised due 
112.3 	diligence in attempting to provide the information required.
112.4 	In the case of a nonresident, part-year resident, or a person who has earned income 
112.5 	not subject to tax under this chapter including earned income excluded pursuant to section 
112.6 	290.01, subdivision 19b, clause (10) or (16), the credit determined under section 21 of the 
112.7 	Internal Revenue Code must be allocated based on the ratio by which the earned income 
112.8 	of the claimant and the claimant's spouse from Minnesota sources bears to the total earned 
112.9 	income of the claimant and the claimant's spouse.
112.10 	For residents of Minnesota, the subtractions for military pay under section 290.01, 
112.11 	subdivision 19b, clauses (11) and (12), are not considered "earned income not subject to 
112.12 	tax under this chapter."
112.13 	For residents of Minnesota, the exclusion of combat pay under section 112 of the 
112.14 	Internal Revenue Code is not considered "earned income not subject to tax under this 
112.15 	chapter."

112.16 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
112.17 	December 31, 2006.

112.18 	Sec. 10. Minnesota Statutes 2006, section 290.0677, subdivision 1, is amended to read:
112.19 		Subdivision 1.Credit allowed.  (a) An individual is allowed a credit against the tax 
112.20 	due under this chapter equal to $59 for each month or portion thereof that the individual 
112.21 	was in active military service in a designated area after September 11, 2001, and before 
112.22 	January 1, 2007, while a Minnesota domiciliary. 
112.23 	(b) An individual is allowed a credit against the tax due under this chapter equal to 
112.24 	$120 for each month or portion thereof that the individual was in active military service in 
112.25 	a designated area after December 31, 2006, while a Minnesota domiciliary.
112.26 	(c) For active service performed after September 11, 2001, and before December 31, 
112.27 	2006, the individual may claim the credit in the taxable year beginning after December 31, 
112.28 	2005, and before January 1, 2007. 
112.29 	(c)(d) For active service performed after December 31, 2006, the individual may 
112.30 	claim the credit for the taxable year in which the active service was performed. 
112.31 	(d)(e) If a Minnesota domiciliary is killed while performing active military service 
112.32 	in a designated area, the individual's surviving spouse or dependent child may take the 
112.33 	credit in the taxable year of the death. If a Minnesota domiciliary was killed while 
112.34 	performing active military service in a designated area between September 11, 2001, and 
112.35 	December 31, 2006, the individual's surviving spouse or dependent child may claim this 
113.1 	credit in the taxable year beginning after December 31, 2005, and before January 1, 2007
113.2 	an individual entitled to the credit died prior to January 1, 2006, the individual's estate or 
113.3 	heirs at law, if the individual's probate estate has closed or the estate was not probated, 
113.4 	may claim the credit. 

113.5 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
113.6 	December 31, 2006, except that paragraph (e) is effective retroactively for tax years 
113.7 	beginning after December 31, 2005.

113.8 	Sec. 11. [290.0678] CREDIT FOR HISTORIC STRUCTURE 
113.9 	REHABILITATION.
113.10 		Subdivision 1.Definitions. (a) For purposes of this section the following terms 
113.11 	have the meanings given.
113.12 	(b) "Certified historic structure" has the meaning given in section 47(c)(3)(A) of the 
113.13 	Internal Revenue Code.
113.14 		Subd. 2.Credit allowed; certified historic structure. A taxpayer who claims a 
113.15 	credit under section 47(a)(2) of the Internal Revenue Code for the taxable year is allowed 
113.16 	a credit against the tax due under this chapter for rehabilitation of a certified historic 
113.17 	structure that is located in Minnesota. The credit is equal to 100 percent of the credit 
113.18 	allowed for rehabilitation of a certified historic structure under section 47(a)(2) of the 
113.19 	Internal Revenue Code, but is limited to credits generated by rehabilitation of certified 
113.20 	historic structures that are placed in service during the taxable year.
113.21 		Subd. 3.Partnerships; multiple owners. Credits granted to a partnership, a 
113.22 	limited liability company taxed as a partnership, or multiple owners of property shall be 
113.23 	passed through to the partners, members, or owners, respectively, pro rata to each partner, 
113.24 	member, or owner based on their share of the entity's assets.
113.25 		Subd. 4.Credit refundable. If the amount of credit that the taxpayer is eligible to 
113.26 	receive under this section exceeds the liability for tax under this chapter, the commissioner 
113.27 	shall refund the excess to the claimant.
113.28 		Subd. 5.Appropriation. An amount sufficient to pay the refunds authorized under 
113.29 	this section is appropriated to the commissioner of revenue from the general fund.
113.30 		Subd. 6.Manner of claiming. The commissioner shall prescribe the manner in 
113.31 	which the credit may be issued or claimed. This may include allowing the credit only as 
113.32 	a separately processed claim for refund.
113.33 		Subd. 7.Report; determination of economic impact. The Minnesota Historical 
113.34 	Society shall annually determine the economic impact to the state from the rehabilitation 
113.35 	of property for which credits are provided under this section and provide a written report 
114.1 	on the impact to the committees on taxes of the senate and house of representatives, in 
114.2 	compliance with sections 3.195 and 3.197.

114.3 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
114.4 	December 31, 2006.

114.5 	Sec. 12. Minnesota Statutes 2006, section 290.091, subdivision 3, is amended to read:
114.6 		Subd. 3.Exemption amount. (a) For purposes of computing the alternative 
114.7 	minimum tax, the exemption amount is:
114.8 	(1) for taxable years beginning before January 1, 2006, the exemption determined 
114.9 	under section 55(d) of the Internal Revenue Code, as amended through December 31, 
114.10 	1992; and
114.11 	(2), for taxable years beginning after December 31, 2005, $60,000 for married 
114.12 	couples filing joint returns, $30,000 for married individuals filing separate returns, estates, 
114.13 	and trusts, and $45,000 for unmarried individuals.
114.14 	(b) The exemption amount determined under this subdivision is subject to the phase 
114.15 	out under section 55(d)(3) of the Internal Revenue Code, except that alternative minimum 
114.16 	taxable income as determined under this section must be substituted in the computation 
114.17 	of the phase out, and the income threshold used in the phaseout must be adjusted for 
114.18 	inflation as provided in paragraph (c).
114.19 	(c) For taxable years beginning after December 31, 2006, the exemption amount 
114.20 	under paragraph (a), clause (2), and the income threshold for the phaseout under paragraph 
114.21 	(b) must be adjusted for inflation. The commissioner shall make the inflation adjustments 
114.22 	in accordance with section 1(f) of the Internal Revenue Code except that for the purposes 
114.23 	of this subdivision the percentage increase must be determined from the year starting 
114.24 	September 1, 2005, and ending August 31, 2006, as the base year for adjusting for inflation 
114.25 	for the tax year beginning after December 31, 2006. The commissioner shall adjust the 
114.26 	exemption amount and phaseout threshold by the percentage determined pursuant to the 
114.27 	provisions of section 1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) 
114.28 	the word "2005" shall be substituted for the word "1992." For 2007, the commissioner 
114.29 	shall then determine the percentage change from the 12 months ending on August 31, 
114.30 	2005, to the 12 months ending on August 31, 2006, and in each subsequent year, from the 
114.31 	12 months ending on August 31, 2005, to the 12 months ending on August 31 of the year 
114.32 	preceding the taxable year. The exemption amount and phaseout threshold as adjusted 
114.33 	must be rounded to the nearest $10. If the amount ends in $5, it must be rounded up to the 
114.34 	nearest $10 amount. The determination of the commissioner under this subdivision is not 
114.35 	a rule under the Administrative Procedure Act.

115.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
115.2 	December 31, 2006.

115.3 	Sec. 13. Minnesota Statutes 2006, section 290.17, subdivision 2, is amended to read:
115.4 		Subd. 2.Income not derived from conduct of a trade or business. The income of 
115.5 	a taxpayer subject to the allocation rules that is not derived from the conduct of a trade or 
115.6 	business must be assigned in accordance with paragraphs (a) to (f):
115.7 	(a)(1) Subject to paragraphs (a)(2),and (a)(3), and (a)(4), income from wages as 
115.8 	defined in section 3401(a) and (f) of the Internal Revenue Code is assigned to this state if, 
115.9 	and to the extent that, the work of the employee is performed within it; all other income 
115.10 	from such sources is treated as income from sources without this state.
115.11 	Severance pay shall be considered income from labor or personal or professional 
115.12 	services.
115.13 	(2) In the case of an individual who is a nonresident of Minnesota and who is an 
115.14 	athlete or entertainer, income from compensation for labor or personal services performed 
115.15 	within this state shall be determined in the following manner:
115.16 	(i) The amount of income to be assigned to Minnesota for an individual who is a 
115.17 	nonresident salaried athletic team employee shall be determined by using a fraction in 
115.18 	which the denominator contains the total number of days in which the individual is under 
115.19 	a duty to perform for the employer, and the numerator is the total number of those days 
115.20 	spent in Minnesota. For purposes of this paragraph, off-season training activities, unless 
115.21 	conducted at the team's facilities as part of a team imposed program, are not included in 
115.22 	the total number of duty days. Bonuses earned as a result of play during the regular season 
115.23 	or for participation in championship, play-off, or all-star games must be allocated under 
115.24 	the formula. Signing bonuses are not subject to allocation under the formula if they are 
115.25 	not conditional on playing any games for the team, are payable separately from any other 
115.26 	compensation, and are nonrefundable; and
115.27 	(ii) The amount of income to be assigned to Minnesota for an individual who is a 
115.28 	nonresident, and who is an athlete or entertainer not listed in clause (i), for that person's 
115.29 	athletic or entertainment performance in Minnesota shall be determined by assigning to 
115.30 	this state all income from performances or athletic contests in this state.
115.31 	(3) For purposes of this section, amounts received by a nonresident as "retirement 
115.32 	income" as defined in section (b)(1) of the State Income Taxation of Pension Income 
115.33 	Act, Public Law 104-95, are not considered income derived from carrying on a trade 
115.34 	or business or from wages or other compensation for work an employee performed in 
115.35 	Minnesota, and are not taxable under this chapter.
116.1 	(4) Wages, otherwise assigned to this state under clause (1) and not qualifying under 
116.2 	clause (3), are not taxable under this chapter if the following conditions are met:
116.3 	(i) the recipient was not a resident of this state for any part of the taxable year in 
116.4 	which the wages were received; and
116.5 	(ii) the wages are for work performed while the recipient was a resident of this state.
116.6 	(b) Income or gains from tangible property located in this state that is not employed 
116.7 	in the business of the recipient of the income or gains must be assigned to this state.
116.8 	(c) Income or gains from intangible personal property not employed in the business 
116.9 	of the recipient of the income or gains must be assigned to this state if the recipient of the 
116.10 	income or gains is a resident of this state or is a resident trust or estate.
116.11 	Gain on the sale of a partnership interest is allocable to this state in the ratio of the 
116.12 	original cost of partnership tangible property in this state to the original cost of partnership 
116.13 	tangible property everywhere, determined at the time of the sale. If more than 50 percent 
116.14 	of the value of the partnership's assets consists of intangibles, gain or loss from the sale 
116.15 	of the partnership interest is allocated to this state in accordance with the sales factor of 
116.16 	the partnership for its first full tax period immediately preceding the tax period of the 
116.17 	partnership during which the partnership interest was sold.
116.18 	Gain on the sale of goodwill or income from a covenant not to compete that is 
116.19 	connected with a business operating all or partially in Minnesota is allocated to this state 
116.20 	to the extent that the income from the business in the year preceding the year of sale was 
116.21 	assignable to Minnesota under subdivision 3.
116.22 	When an employer pays an employee for a covenant not to compete, the income 
116.23 	allocated to this state is in the ratio of the employee's service in Minnesota in the calendar 
116.24 	year preceding leaving the employment of the employer over the total services performed 
116.25 	by the employee for the employer in that year.
116.26 	(d) Income from winnings on a bet made by an individual while in Minnesota is 
116.27 	assigned to this state. In this paragraph, "bet" has the meaning given in section 609.75, 
116.28 	subdivision 2, as limited by section 609.75, subdivision 3, clauses (1), (2), and (3). 
116.29 	(e) All items of gross income not covered in paragraphs (a) to (d) and not part of the 
116.30 	taxpayer's income from a trade or business shall be assigned to the taxpayer's domicile.
116.31 	(f) For the purposes of this section, working as an employee shall not be considered 
116.32 	to be conducting a trade or business.

116.33 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
116.34 	December 31, 2006.

117.1 	Sec. 14. Minnesota Statutes 2006, section 290.92, is amended by adding a subdivision 
117.2 	to read:
117.3 		Subd. 31.Payments to persons who are not employees. (a) For purposes of this 
117.4 	subdivision, "contractor" means a person carrying on a trade or business described in 
117.5 	industry code numbers 23 through 238990 of the North American Industry Classification 
117.6 	System. 
117.7 	(b) A contractor who makes payments to an individual, other than an employee, for 
117.8 	work must deduct and withhold two percent of the payment as Minnesota withholding 
117.9 	tax when the amount the contractor paid to that individual during the calendar year 
117.10 	exceeds $600.
117.11 	(c) A payment subject to withholding under this subdivision must be treated as if 
117.12 	the payment were a wage paid by an employer to an employee. The requirements in the 
117.13 	definitions of "employee" and "employer" in subdivision 1 relating to geographic location 
117.14 	apply in determining whether withholding tax applies under this subdivision, but without 
117.15 	regard to whether the contractor or the individual otherwise satisfy the definition of an 
117.16 	employer or an employee. Each recipient of a payment subject to withholding under this 
117.17 	subdivision must furnish the contractor with a statement of the recipient's name, address, 
117.18 	and Social Security account number.
117.19 	(d) By February 1 of each year the commissioner must report to the committees of 
117.20 	the house and senate with jurisdiction over taxes, in compliance with Minnesota Statutes, 
117.21 	sections 3.195 and 3.197, on withholding payments received under this section. The report 
117.22 	must include information on the number and amount of payments received, and on the 
117.23 	types of contractors making payments, grouped by specialty skills definitions provided in 
117.24 	the North American Industry Classification System.

117.25 	EFFECTIVE DATE. This section is effective for payments made after July 31, 
117.26 	2007.

117.27 	Sec. 15. Minnesota Statutes 2006, section 290A.03, subdivision 15, as amended by 
117.28 	Laws 2007, chapter 1, section 4, is amended to read:
117.29 		Subd. 15.Internal Revenue Code. For taxable years beginning before January 1, 
117.30 	2006, and after December 31, 2006, "Internal Revenue Code" means the Internal Revenue 
117.31 	Code of 1986, as amended through May 18, 2006; and for taxable years beginning after 
117.32 	December 31, 2005, and before January 1, 2007, "Internal Revenue Code" means the 
117.33 	Internal Revenue Code of 1986, as amended through December 31, 2006.

118.1 	EFFECTIVE DATE. This section is effective for property tax refunds based on 
118.2 	property taxes payable on or after December 31, 2006, and rent paid on or after December 
118.3 	31, 2005.

118.4 	ARTICLE 6
118.5 	SALES AND USE TAXES

118.6 	Section 1. Minnesota Statutes 2006, section 37.13, is amended by adding a subdivision 
118.7 	to read:
118.8 		Subd. 3.Capital improvements. The society shall spend the amount of sales 
118.9 	tax retained under section 289A.31, subdivision 7, paragraph (f), exclusively to make 
118.10 	capital improvements to state-owned buildings and facilities on the State Fairgrounds. 
118.11 	The society shall match the amount retained with an equal amount from proceeds from 
118.12 	special assessments levied against commercial exhibits, concessions, and rentals, and 
118.13 	other special user fees specifically designated for capital improvements.

118.14 	Sec. 2. Minnesota Statutes 2006, section 289A.31, subdivision 7, is amended to read:
118.15 		Subd. 7.Sales and use tax. (a) The sales and use tax required to be collected by the 
118.16 	retailer under chapter 297A constitutes a debt owed by the retailer to Minnesota, and the 
118.17 	sums collected must be held as a special fund in trust for the state of Minnesota.
118.18 	A retailer who does not maintain a place of business within this state as defined by 
118.19 	section 297A.66, subdivision 1, shall not be indebted to Minnesota for amounts of tax that 
118.20 	it was required to collect but did not collect unless the retailer knew or had been advised 
118.21 	by the commissioner of its obligation to collect the tax.
118.22 	(b) The use tax required to be paid by a purchaser is a debt owed by the purchaser 
118.23 	to Minnesota.
118.24 	(c) The tax imposed by chapter 297A, and interest and penalties, is a personal debt 
118.25 	of the individual required to file a return from the time the liability arises, irrespective 
118.26 	of when the time for payment of that liability occurs. The debt is, in the case of the 
118.27 	executor or administrator of the estate of a decedent and in the case of a fiduciary, that 
118.28 	of the individual in an official or fiduciary capacity unless the individual has voluntarily 
118.29 	distributed the assets held in that capacity without reserving sufficient assets to pay the tax, 
118.30 	interest, and penalties, in which case the individual is personally liable for the deficiency.
118.31 	(d) Liability for payment of sales and use taxes includes any responsible person or 
118.32 	entity described in the personal liability provisions of section 270C.56.
118.33 	(e) Any amounts collected, even if erroneously or illegally collected, from a 
118.34 	purchaser under a representation that they are taxes imposed under chapter 297A are 
119.1 	state funds from the time of collection and must be reported on a return filed with the 
119.2 	commissioner.
119.3 	(f) The tax imposed under chapter 297A on sales of tickets to the premises of or 
119.4 	events sponsored by the Minnesota State Agricultural Society and conducted on the State 
119.5 	Fairgrounds during the period of annual State Fair may be retained by the Minnesota 
119.6 	State Agricultural Society if the funds are used and matched as required under section 
119.7 	37.13, subdivision 3.

119.8 	EFFECTIVE DATE. This section is effective for sales and purchases after June 
119.9 	30, 2007.

119.10 	Sec. 3. Minnesota Statutes 2006, section 297A.61, subdivision 12, is amended to read:
119.11 		Subd. 12.Farm machinery. (a) "Farm machinery" means new or used machinery, 
119.12 	equipment, implements, accessories, and contrivances used directly and principally in 
119.13 	agricultural production of tangible personal property intended to be sold ultimately at 
119.14 	retail including, but not limited to:
119.15 	(1) machinery for the preparation, seeding, or cultivation of soil for growing 
119.16 	agricultural crops;
119.17 	(2) barn cleaners, milking systems, grain dryers, drying systems, grain bins, feeding 
119.18 	systems including stationary feed bunks, and similar installations, whether or not the 
119.19 	equipment is installed by the seller and becomes part of the real property; and
119.20 	(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe 
119.21 	fittings, valves, sprinklers, and other equipment necessary to the operation of an irrigation 
119.22 	system when sold as part of an irrigation system, whether or not the equipment is installed 
119.23 	by the seller and becomes part of the real property.
119.24 	(b) Farm machinery does not include:
119.25 	(1) repair or replacement parts;
119.26 	(2) tools, shop equipment, grain bins, fencing material, communication equipment, 
119.27 	and other farm supplies;
119.28 	(3) motor vehicles taxed under chapter 297B;
119.29 	(4) snowmobiles or snow blowers;
119.30 	(5) lawn mowers except those used in the production of sod for sale, or garden-type 
119.31 	tractors or garden tillers; or
119.32 	(6) machinery, equipment, implements, accessories, and contrivances used directly in 
119.33 	the production of horses not raised for slaughter, fur-bearing animals, or research animals.

120.1 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
120.2 	June 30, 2007.

120.3 	Sec. 4. Minnesota Statutes 2006, section 297A.668, is amended by adding a 
120.4 	subdivision to read:
120.5 		Subd. 8.Manufactured and modular housing. (a) Notwithstanding other 
120.6 	subdivisions of this section, a sale of a manufactured or modular home shall be sourced to 
120.7 	the site where the housing is first set up or installed. 
120.8 	(b) For purposes of this section, "manufactured home" has the meaning given 
120.9 	in section 327.31, subdivision 6. For purposes of this section, "modular home" means 
120.10 	a building or structural unit that has been substantially manufactured or constructed, 
120.11 	in whole or in part, at an off-site location, with the final assembly occurring on-site 
120.12 	alone or with other units and attached to a permanent foundation site and occupied 
120.13 	as a single-family dwelling. Modular home construction must comply with applicable 
120.14 	standards adopted in Minnesota Rules authorized under chapter 16B. A modular home 
120.15 	does not include a structure subject to the requirements of the National Manufactured 
120.16 	Home Construction and Safety Standards Act of 1974 or a manufactured home.

120.17 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
120.18 	June 30, 2007.

120.19 	Sec. 5. Minnesota Statutes 2006, section 297A.67, subdivision 7, is amended to read:
120.20 		Subd. 7.Drugs; medical devices. (a) Sales of the following drugs and medical 
120.21 	devices are exempt:
120.22 	(1) drugs for human use, including over-the-counter drugs;
120.23 	(2) single-use finger-pricking devices for the extraction of blood and other single-use 
120.24 	devices and single-use diagnostic agents used in diagnosing, monitoring, or treating 
120.25 	diabetes;
120.26 	(3) insulin and medical oxygen for human use, regardless of whether prescribed 
120.27 	or sold over the counter;
120.28 	(4) prosthetic devices;
120.29 	(5) durable medical equipment for home use only;
120.30 	(6) mobility enhancing equipment; and
120.31 	(7) prescription corrective eyeglasses.; and
120.32 	(8) kidney dialysis equipment, including repair and replacement parts.
120.33 	(b) For purposes of this subdivision:
121.1 	(1) "Drug" means a compound, substance, or preparation, and any component of 
121.2 	a compound, substance, or preparation, other than food and food ingredients, dietary 
121.3 	supplements, or alcoholic beverages that is:
121.4 	(i) recognized in the official United States Pharmacopoeia, official Homeopathic 
121.5 	Pharmacopoeia of the United States, or official National Formulary, and supplement 
121.6 	to any of them;
121.7 	(ii) intended for use in the diagnosis, cure, mitigation, treatment, or prevention 
121.8 	of disease; or
121.9 	(iii) intended to affect the structure or any function of the body.
121.10 	(2) "Durable medical equipment" means equipment, including repair and 
121.11 	replacement parts, but not including mobility enhancing equipment, that:
121.12 	(i) can withstand repeated use;
121.13 	(ii) is primarily and customarily used to serve a medical purpose;
121.14 	(iii) generally is not useful to a person in the absence of illness or injury; and
121.15 	(iv) is not worn in or on the body.
121.16 	(3) "Mobility enhancing equipment" means equipment, including repair and 
121.17 	replacement parts, but not including durable medical equipment, that:
121.18 	(i) is primarily and customarily used to provide or increase the ability to move from 
121.19 	one place to another and that is appropriate for use either in a home or a motor vehicle;
121.20 	(ii) is not generally used by persons with normal mobility; and
121.21 	(iii) does not include any motor vehicle or equipment on a motor vehicle normally 
121.22 	provided by a motor vehicle manufacturer.
121.23 	(4) "Over-the-counter drug" means a drug that contains a label that identifies the 
121.24 	product as a drug as required by Code of Federal Regulations, title 21, section 201.66. The 
121.25 	label must include a "drug facts" panel or a statement of the active ingredients with a list of 
121.26 	those ingredients contained in the compound, substance, or preparation. Over-the-counter 
121.27 	drugs do not include grooming and hygiene products, regardless of whether they otherwise 
121.28 	meet the definition. "Grooming and hygiene products" are soaps, cleaning solutions, 
121.29 	shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotions and sunscreens.
121.30 	(5) "Prescribed" and "prescription" means a direction in the form of an order, 
121.31 	formula, or recipe issued in any form of oral, written, electronic, or other means of 
121.32 	transmission by a duly licensed health care professional.
121.33 	(6) "Prosthetic device" means a replacement, corrective, or supportive device, 
121.34 	including repair and replacement parts, worn on or in the body to:
121.35 	(i) artificially replace a missing portion of the body;
121.36 	(ii) prevent or correct physical deformity or malfunction; or
122.1 	(iii) support a weak or deformed portion of the body.
122.2 	Prosthetic device does not include corrective eyeglasses.
122.3 	(7) "Kidney dialysis equipment" means equipment that:
122.4 	(i) is used to remove waste products that build up in the blood when the kidneys are 
122.5 	not able to do so on their own; and
122.6 	(ii) can withstand repeated use, including multiple use by a single patient. 

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

122.8 	Sec. 6. Minnesota Statutes 2006, section 297A.68, is amended by adding a subdivision 
122.9 	to read:
122.10 		Subd. 42.Agricultural feed processing facility; capital equipment. Capital 
122.11 	equipment purchased by a contractor for incorporation into an agricultural feed processing 
122.12 	facility is exempt from sales tax when purchased by the contractor if the following 
122.13 	conditions are met:
122.14 	(1) the equipment would meet the definition of capital equipment under subdivision 
122.15 	5 if purchased by the user instead of the contractor;
122.16 	(2) the equipment was incorporated into a facility that was constructed in part to 
122.17 	replace manufacturing capability destroyed in a fire; and
122.18 	(3) the processing facility is located in the city of Freeport.
122.19 	The user of the equipment must apply for the refund and the maximum amount of the 
122.20 	refund is limited to $70,000. Refund provisions for taxes paid under subdivision 5 apply.

122.21 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
122.22 	June 30, 2002, and before December 31, 2003.

122.23 	Sec. 7. Minnesota Statutes 2006, section 297A.69, subdivision 2, is amended to read:
122.24 		Subd. 2.Materials consumed in agricultural production. Materials stored, used, 
122.25 	or consumed in agricultural production of personal property intended to be sold ultimately 
122.26 	at retail are exempt, whether or not the item becomes an ingredient or constituent part 
122.27 	of the property produced. Materials that qualify for this exemption include, but are not 
122.28 	limited to, the following:
122.29 	(1) feeds, seeds, trees, fertilizers, and herbicides, including when purchased for use 
122.30 	by farmers in a federal or state farm or conservation program;
122.31 	(2) materials sold to a veterinarian to be used or consumed in the care, medication, 
122.32 	and treatment of agricultural production animals and horses;
123.1 	(3) chemicals, including chemicals used for cleaning food processing machinery 
123.2 	and equipment;
123.3 	(4) materials, including chemicals, fuels, and electricity purchased by persons 
123.4 	engaged in agricultural production to treat waste generated as a result of the production 
123.5 	process;
123.6 	(5) fuels, electricity, gas, and steam used or consumed in the production process, 
123.7 	except that including electricity, gas, or steam used for space heating, cooling, or lighting 
123.8 	is exempt if (i) it is in excess of the average climate control or lighting for the production 
123.9 	area, and (ii) it is necessary to produce that particular product of facilities housing 
123.10 	agricultural animals;
123.11 	(6) petroleum products and lubricants;
123.12 	(7) packaging materials, including returnable containers used in packaging food and 
123.13 	beverage products; and
123.14 	(8) accessory tools and equipment that are separate detachable units with an ordinary 
123.15 	useful life of less than 12 months used in producing a direct effect upon the product.
123.16 	Machinery, equipment, implements, tools, accessories, appliances, contrivances, and 
123.17 	furniture and fixtures, except those listed in this clause are not included within this 
123.18 	exemption.

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

123.20 	Sec. 8. Minnesota Statutes 2006, section 297A.69, subdivision 3, is amended to read:
123.21 		Subd. 3.Repair and replacement parts. Repair and replacement parts, except tires,
123.22 	used for maintenance or repair of farm machinery, logging equipment, and aquaculture 
123.23 	production equipment are exempt, if the part replaces a machinery part assigned a specific 
123.24 	or generic part number by the manufacturer of the machinery.

123.25 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
123.26 	June 30, 2007.

123.27 	Sec. 9. Minnesota Statutes 2006, section 297A.70, subdivision 3, is amended to read:
123.28 		Subd. 3.Sales of certain goods and services to government. (a) The following 
123.29 	sales to or use by the specified governments and political subdivisions of the state are 
123.30 	exempt:
123.31 	(1) repair and replacement parts for emergency rescue vehicles, fire trucks, and 
123.32 	fire apparatus to a political subdivision;
124.1 	(2) machinery and equipment, except for motor vehicles, used directly for mixed 
124.2 	municipal solid waste management services at a solid waste disposal facility as defined in 
124.3 	section 115A.03, subdivision 10; 
124.4 	(3) chore and homemaking services to a political subdivision of the state to be 
124.5 	provided to elderly or disabled individuals;
124.6 	(4) telephone services to the Department of Administration that are used to provide 
124.7 	telecommunications services through the intertechnologies revolving fund;
124.8 	(5) firefighter personal protective equipment as defined in paragraph (b), if purchased 
124.9 	or authorized by and for the use of an organized fire department, fire protection district, or 
124.10 	fire company regularly charged with the responsibility of providing fire protection to the 
124.11 	state or a political subdivision;
124.12 	(6) bullet-resistant body armor that provides the wearer with ballistic and trauma 
124.13 	protection, if purchased by a law enforcement agency of the state or a political subdivision 
124.14 	of the state, or a licensed peace officer, as defined in section 626.84, subdivision 1; 
124.15 	(7) motor vehicles purchased or leased by political subdivisions of the state if the 
124.16 	vehicles are exempt from registration under section 168.012, subdivision 1, paragraph (b), 
124.17 	exempt from taxation under section 473.448, or exempt from the motor vehicle sales tax 
124.18 	under section 297B.03, clause (12); 
124.19 	(8) equipment designed to process, dewater, and recycle biosolids for wastewater 
124.20 	treatment facilities of political subdivisions, and materials incidental to installation of 
124.21 	that equipment; 
124.22 	(9) sales to a town of gravel and of machinery, equipment, and accessories, except 
124.23 	motor vehicles, used exclusively for road and bridge maintenance, and leases by a town of 
124.24 	motor vehicles exempt from tax under section 297B.03, clause (10); and
124.25 	(10) the removal of trees, bushes, or shrubs for the construction and maintenance 
124.26 	of roads, trails, or firebreaks when purchased by an agency of the state or a political 
124.27 	subdivision of the state.; and
124.28 	(11) the sale of railroad cars and engines and related equipment, including repair 
124.29 	parts, used in a commuter rail transportation system operated under sections 174.80 to 
124.30 	174.90.
124.31 	(b) For purposes of this subdivision, "firefighters personal protective equipment" 
124.32 	means helmets, including face shields, chin straps, and neck liners; bunker coats and 
124.33 	pants, including pant suspenders; boots; gloves; head covers or hoods; wildfire jackets; 
124.34 	protective coveralls; goggles; self-contained breathing apparatus; canister filter masks; 
124.35 	personal alert safety systems; spanner belts; optical or thermal imaging search devices; 
124.36 	and all safety equipment required by the Occupational Safety and Health Administration.

125.1 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
125.2 	December 31, 2006.

125.3 	Sec. 10. Minnesota Statutes 2006, section 297A.70, subdivision 8, is amended to read:
125.4 		Subd. 8.Regionwide public safety radio communication system; products and 
125.5 	services. Products and services including, but not limited to, end user equipment used 
125.6 	for construction, ownership, operation, maintenance, and enhancement of the backbone 
125.7 	system of the regionwide public safety radio communication system established under 
125.8 	sections 403.21 to 403.34 403.40, are exempt. For purposes of this subdivision, backbone 
125.9 	system is defined in section 403.21, subdivision 9. This subdivision is effective for 
125.10 	purchases, sales, storage, use, or consumption for use in the first and second phases of the 
125.11 	system, as defined in section 403.21, subdivisions 3, 10, and 11, and that portion of the 
125.12 	third phase of the system that is located in the southeast district of the State Patrol and 
125.13 	the counties of Benton, Sherburne, Stearns, and Wright, and that portion of the system 
125.14 	that is located in Itasca County.

125.15 	Sec. 11. Minnesota Statutes 2006, section 297A.70, is amended by adding a 
125.16 	subdivision to read:
125.17 		Subd. 17.Sales to fire departments. All sales of tangible personal property to, 
125.18 	or authorized by and for the use of, an independent, nonprofit firefighting corporation 
125.19 	or a statutorily created or municipal fire department that are used directly in providing 
125.20 	emergency response services and emergency response training are exempt.

125.21 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
125.22 	June 30, 2007.

125.23 	Sec. 12. Minnesota Statutes 2006, section 297A.71, subdivision 23, is amended to read:
125.24 		Subd. 23.Construction materials for qualified low-income housing projects. (a) 
125.25 	Purchases of materials and supplies used or consumed in and equipment incorporated into 
125.26 	the construction, improvement, or expansion of qualified low-income housing projects are 
125.27 	exempt from the tax imposed under this chapter if the owner of the qualified low-income 
125.28 	housing project is:
125.29 	(1) the public housing agency or housing and redevelopment authority of a political 
125.30 	subdivision;
125.31 	(2) an entity exercising the powers of a housing and redevelopment authority within 
125.32 	a political subdivision;
126.1 	(3) a limited partnership in which the sole or managing general partner is an 
126.2 	authority under clause (1) or an entity under clause (2) or (4);
126.3 	(4) a nonprofit corporation subject to the provisions of chapter 317A, and qualifying 
126.4 	under section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986, as amended; or
126.5 	(5) an owner entity, as defined in Code of Federal Regulations, title 24, part 941.604, 
126.6 	for a qualified low-income housing project described in paragraph (b), clause (5).
126.7 	This exemption applies regardless of whether the purchases are made by the owner 
126.8 	of the facility or a contractor.
126.9 	(b) For purposes of this exemption, "qualified low-income housing project" means:
126.10 	(1) a housing or mixed use project in which at least 20 percent of the residential units 
126.11 	are qualifying low-income rental housing units as defined in section 273.126; 
126.12 	(2) a federally assisted low-income housing project financed by a mortgage insured 
126.13 	or held by the United States Department of Housing and Urban Development under 
126.14 	United States Code, title 12, section 1701s, 1715l(d)(3), 1715l(d)(4), or 1715z-1; United 
126.15 	States Code, title 42, section 1437f; the Native American Housing Assistance and 
126.16 	Self-Determination Act, United States Code, title 25, section 4101 et seq.; or any similar 
126.17 	successor federal low-income housing program;
126.18 	(3) a qualified low-income housing project as defined in United States Code, title 
126.19 	26, section 42(g), meeting all of the requirements for a low-income housing credit under 
126.20 	section 42 of the Internal Revenue Code regardless of whether the project actually applies 
126.21 	for or receives a low-income housing credit;
126.22 	(4) a project that will be operated in compliance with Internal Revenue Service 
126.23 	revenue procedure 96-32; or
126.24 	(5) a housing or mixed use project in which all or a portion of the residential units 
126.25 	are subject to the requirements of section 5 of the United States Housing Act of 1937.
126.26 	(c) For a project, a portion of which is not used for low-income housing units, 
126.27 	the amount of purchases that are exempt under this subdivision must be determined by 
126.28 	multiplying the total purchases, as specified in paragraph (a), by the ratio of:
126.29 	(1) the total gross square footage of units subject to the income limits under section 
126.30 	273.126, the financing for the project, the federal low-income housing tax credit, revenue 
126.31 	procedure 96-32, or section 5 of the United States Housing Act of 1937, as applicable 
126.32 	to the project; and 
126.33 	(2) the total gross square footage of all units in the project.
126.34 	(d) The tax must be imposed and collected as if the rate under section 297A.62, 
126.35 	subdivision 1, applied, and then refunded in the manner provided in section 297A.75. 

127.1 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
127.2 	June 30, 2007.

127.3 	Sec. 13. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
127.4 	subdivision to read:
127.5 		Subd. 40.Brainerd and Baxter wastewater treatment facility. Materials and 
127.6 	supplies used in, and equipment incorporated into, the construction of a joint wastewater 
127.7 	treatment facility servicing the cities of Brainerd and Baxter are partially exempt. This 
127.8 	exemption is for purchases made before July 1, 2010. The tax must be imposed and 
127.9 	collected as if the rate under section 297A.62, subdivision 1, applied. The cities must 
127.10 	apply for a refund of 50 percent of taxes paid on purchases partially exempt under this 
127.11 	subdivision as provided under section 297A.75.

127.12 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
127.13 	June 1, 2007.

127.14 	Sec. 14. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
127.15 	subdivision to read:
127.16 		Subd. 41.Baxter water treatment facility. Materials and supplies used in, and 
127.17 	equipment incorporated into, the construction of a water treatment facility owned by the 
127.18 	city of Baxter are partially exempt. This exemption is for purchases made before July 
127.19 	1, 2009. The tax must be imposed and collected as if the rate under section 297A.62, 
127.20 	subdivision 1, applied. The city must apply for a refund of 50 percent of the taxes paid on 
127.21 	purchases partially exempt under this subdivision as provided under section 297A.75.

127.22 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
127.23 	May 1, 2007.

127.24 	Sec. 15. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
127.25 	subdivision to read:
127.26 		Subd. 42.Buffalo wastewater treatment facility. Materials and supplies used 
127.27 	in, and equipment incorporated into, the construction, improvement, or expansion of a 
127.28 	wastewater treatment facility owned by the city of Buffalo are partially exempt. This 
127.29 	section is effective for purchases made before December 31, 2008. The tax must be 
127.30 	imposed and collected as if the rate under section 297A.62, subdivision 1, applied. The 
127.31 	city must apply for a refund of 50 percent of the taxes paid on purchases partially exempt 
127.32 	under this subdivision as provided under section 297A.75.

128.1 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
128.2 	or after March 1, 2007.

128.3 	Sec. 16. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
128.4 	subdivision to read:
128.5 		Subd. 43.Burnsville surface water treatment plant. Materials and supplies 
128.6 	used or consumed in, and equipment incorporated into, the construction, improvement, 
128.7 	installation, or repair of facilities and improvements associated with a surface water 
128.8 	treatment plant project located within and owned by the city of Burnsville are partially 
128.9 	exempt. This exemption is for purchases made before January 1, 2010. The tax must be 
128.10 	imposed and collected as if the rate under section 297A.62, subdivision 1, applied. The 
128.11 	city must apply for a refund of 50 percent of the taxes paid on purchases partially exempt 
128.12 	under this subdivision as provided in section 297A.75.

128.13 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
128.14 	March 15, 2007.

128.15 	Sec. 17. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
128.16 	subdivision to read:
128.17 		Subd. 44.Emily; wastewater treatment facility. Materials and supplies used in 
128.18 	and equipment incorporated into the construction of a wastewater treatment facility in the 
128.19 	city of Emily are partially exempt. This exemption is for purchases made before January 
128.20 	1, 2007. The tax must be imposed and collected as if the rate under section 297A.62, 
128.21 	subdivision 1, applied. The city must apply for a refund of 50 percent of any tax paid on 
128.22 	purchases partially exempt under this subdivision as provided in section 297A.75.

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

128.25 	Sec. 18. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
128.26 	subdivision to read:
128.27 		Subd. 45.Goodview; water treatment facilities.  Materials and supplies used in, 
128.28 	and equipment incorporated into, the construction and expansion of up to two water 
128.29 	treatment facilities in the city of Goodview are partially exempt. This exemption is for 
128.30 	purchases made before January 1, 2009. The tax must be imposed and collected as if the 
128.31 	rate under section 297A.62, subdivision 1, applied. The city must apply for a refund 
129.1 	of 50 percent of the taxes paid on purchases partially exempt under this subdivision as 
129.2 	provided in section 297A.75.

129.3 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
129.4 	June 30, 2007.

129.5 	Sec. 19. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
129.6 	subdivision to read:
129.7 		Subd. 46.Harris wastewater treatment facility. Materials and supplies used in, 
129.8 	and equipment incorporated into, the construction of a wastewater treatment facility and a 
129.9 	water treatment plant owned by the city of Harris are exempt. This exemption is effective 
129.10 	for purchases made after May 31, 2006, and on or before June 30, 2008. The tax must be 
129.11 	imposed and collected as if the rate under section 297A.62, subdivision 1, applied. The 
129.12 	city must apply for a refund of 100 percent of the taxes paid on purchases exempt under 
129.13 	this subdivision as provided in section 297A.75.

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

129.15 	Sec. 20. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
129.16 	subdivision to read:
129.17 		Subd. 47.Milaca water treatment facility. Materials and supplies used in, and 
129.18 	equipment incorporated into, the construction of a water treatment facility owned by the 
129.19 	city of Milaca are partially exempt. This exemption is for purchases made before February 
129.20 	15, 2007. The tax must be imposed and collected as if the rate under section 297A.62, 
129.21 	subdivision 1, applied. The city must apply for a refund of 50 percent of the taxes paid on 
129.22 	purchases partially exempt under this subdivision as provided in section 297A.75.

129.23 	EFFECTIVE DATE. This section is effective for sales and purchases made before 
129.24 	February 15, 2007.

129.25 	Sec. 21. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
129.26 	subdivision to read:
129.27 		Subd. 48.Minnetonka water treatment facility; sales tax exemption. Materials 
129.28 	and supplies used in, and equipment incorporated into, the construction of a water 
129.29 	treatment facility owned by the city of Minnetonka are partially exempt from the sales 
129.30 	and use tax under this chapter. This exemption is for purchases made before December 
129.31 	31, 2006. The tax must be imposed and collected as if the rate under section 297A.62, 
130.1 	subdivision 1, applied. The city must apply for a refund of 50 percent of the taxes paid on 
130.2 	purchases partially exempt under this subdivision as provided in section 297A.75.

130.3 	EFFECTIVE DATE. This section is effective for sales and purchases made before 
130.4 	December 31, 2006.

130.5 	Sec. 22. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
130.6 	subdivision to read:
130.7 		Subd. 49.New Prague wastewater treatment facility. Materials and supplies used 
130.8 	in, and equipment incorporated into, the construction, improvement, and expansion of a 
130.9 	wastewater treatment facility owned by the city of New Prague is partially exempt. This 
130.10 	exemption is effective for purchases made on or before December 31, 2008. The tax must 
130.11 	be imposed and collected as if the rate under section 297A.62, subdivision 1, applied. The 
130.12 	city must apply for a refund of 50 percent of the taxes paid on purchases partially exempt 
130.13 	under this subdivision as provided in section 297A.75.

130.14 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
130.15 	June 30, 2007.

130.16 	Sec. 23. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
130.17 	subdivision to read:
130.18 		Subd. 50.New York Mills wastewater treatment facility. Materials and supplies 
130.19 	used in, and equipment incorporated into, the construction of a wastewater treatment 
130.20 	facility owned by the city of New York Mills are partially exempt. This exemption is for 
130.21 	purchases made before January 1, 2008. The tax must be imposed and collected as if the 
130.22 	rate under section 297A.62, subdivision 1, applied. The city must apply for a refund of 
130.23 	50 percent of the taxes paid on purchases exempt under this subdivision as provided 
130.24 	in section 297A.75.

130.25 	EFFECTIVE DATE. This section is effective for sales and purchases made before 
130.26 	January 1, 2008.

130.27 	Sec. 24. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
130.28 	subdivision to read:
130.29 		Subd. 51.Pelican Rapids wastewater treatment facility. Materials and supplies 
130.30 	used in, and equipment incorporated into, the improvement and expansion of a wastewater 
130.31 	treatment facility owned by the city of Pelican Rapids are partially exempt. This 
130.32 	exemption is effective for purchases made on or before December 31, 2008. The tax must 
131.1 	be imposed and collected as if the rate under section 297A.62, subdivision 1, applied. The 
131.2 	city must apply for a refund of 50 percent of the taxes paid on purchases partially exempt 
131.3 	under this subdivision as provided in section 297A.75.

131.4 	EFFECTIVE DATE. This section is effective for sales and purchases made 
131.5 	beginning on the day following final enactment.

131.6 	Sec. 25. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
131.7 	subdivision to read:
131.8 		Subd. 52.Princeton; wastewater treatment facility. Materials and supplies used 
131.9 	in, and equipment incorporated into, the construction and expansion of a wastewater 
131.10 	treatment facility, including construction of a phosphorous reduction facility, in the city 
131.11 	of Princeton are partially exempt. This exemption is for purchases made before January 
131.12 	1, 2012. The tax must be imposed and collected as if the rate under section 297A.62, 
131.13 	subdivision 1, applied. The city must apply for a refund of 50 percent of the taxes paid on 
131.14 	purchases partially exempt under this subdivision as provided in section 297A.75.

131.15 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
131.16 	the day following final enactment.

131.17 	Sec. 26. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
131.18 	subdivision to read:
131.19 		Subd. 53.Willmar wastewater treatment facility. Materials and supplies used 
131.20 	in, and equipment incorporated into, the construction, improvement, or expansion of a 
131.21 	wastewater treatment facility owned by the city of Willmar are partially exempt. This 
131.22 	exemption is effective for purchases made before July 1, 2012. The tax must be imposed 
131.23 	and collected as if the rate under section 297A.62, subdivision 1, applied. The city 
131.24 	must apply for a refund of 50 percent of the taxes paid on purchases exempt under this 
131.25 	subdivision as provided in section 297A.75.

131.26 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
131.27 	June 30, 2007.

131.28 	Sec. 27. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
131.29 	subdivision to read:
131.30 		Subd. 54.Bioscience research facilities. (a) Building materials and supplies used 
131.31 	or consumed in, and equipment incorporated into, the construction, improvement, or 
131.32 	expansion of bioscience research facilities are exempt, if:
132.1 	(1) the facilities are utilized by a research institute to conduct cancer research under 
132.2 	a collaboration agreement with the Mayo Clinic;
132.3 	(2) the institute is an independent research unit of the University of Minnesota; and
132.4 	(3) the facilities are owned by a public foundation.
132.5 	(b) The tax must be imposed and collected as if the rate under section 297A.62, 
132.6 	subdivision 1, applied and then refunded in the manner provided in section 297A.75.
132.7 	(c) This subdivision is effective for sales and purchases occurring after June 30, 
132.8 	2006, and before January 1, 2009.

132.9 	EFFECTIVE DATE. This section is effective the day following final enactment 
132.10 	and applies to sales and purchases made after June 30, 2006, and before January 1, 2009.

132.11 	Sec. 28. Minnesota Statutes 2006, section 297A.71, is amended by adding a 
132.12 	subdivision to read:
132.13 		Subd. 55.Biobusiness center. Materials, supplies, used or consumed in, and 
132.14 	equipment incorporated into, the initial construction of a biobusiness center and related 
132.15 	infrastructure in the city of Rochester for which the city received funding for the related 
132.16 	infrastructure under Laws 2006, chapter 258, section 21, subdivision 7, are exempt.

132.17 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
132.18 	June 30, 2007.

132.19 	Sec. 29. Minnesota Statutes 2006, section 297A.75, subdivision 1, is amended to read:
132.20 		Subdivision 1.Tax imposed and collected. The tax on the gross receipts from 
132.21 	the sale of the following exempt items must be imposed and collected as if the sale 
132.22 	were taxable and the rate under section 297A.62, subdivision 1, applied. The exempt 
132.23 	items include:
132.24 	(1) capital equipment exempt under section 297A.68, subdivision 5;
132.25 	(2) building materials for an agricultural processing facility exempt under section 
132.26 	297A.71, subdivision 13;
132.27 	(3) building materials for mineral production facilities exempt under section 
132.28 	297A.71, subdivision 14;
132.29 	(4) building materials for correctional facilities under section 297A.71, subdivision 
132.30 	3;
132.31 	(5) building materials used in a residence for disabled veterans exempt under section 
132.32 	297A.71, subdivision 11;
132.33 	(6) elevators and building materials exempt under section 297A.71, subdivision 12;
133.1 	(7) building materials for the Long Lake Conservation Center exempt under section 
133.2 	297A.71, subdivision 17;
133.3 	(8) materials, supplies, fixtures, furnishings, and equipment for a county law 
133.4 	enforcement and family service center under section 297A.71, subdivision 26;
133.5 	(9) (8) materials and supplies for qualified low-income housing under section 
133.6 	297A.71, subdivision 23; 
133.7 	(10) (9) materials, supplies, and equipment for municipal electric utility facilities 
133.8 	under section 297A.71, subdivision 35;
133.9 	(11) (10) equipment and materials used for the generation, transmission, and 
133.10 	distribution of electrical energy and an aerial camera package exempt under section 
133.11 	297A.68, subdivision 37; and
133.12 	(12) (11) tangible personal property and taxable services and construction materials, 
133.13 	supplies, and equipment exempt under section 297A.68, subdivision 41.; and
133.14 	(12) building materials, supplies, and equipment of bioscience research facilities 
133.15 	exempt under section 297A.71, subdivision 54.

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

133.17 	Sec. 30. Minnesota Statutes 2006, section 297A.75, is amended by adding a 
133.18 	subdivision to read:
133.19 		Subd. 1a.Tax collected; other. For taxes collected on purchases exempted under 
133.20 	sections 13 to 26, the percentage of the tax listed in each section must be refunded as 
133.21 	provided in this section.

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

133.23 	Sec. 31. Minnesota Statutes 2006, section 297A.75, subdivision 2, is amended to read:
133.24 		Subd. 2.Refund; eligible persons. Upon application on forms prescribed by the 
133.25 	commissioner, a refund equal to the tax paid on the gross receipts of the exempt items 
133.26 	must be paid to the applicant. Only the following persons may apply for the refund:
133.27 	(1) for subdivision 1, clauses (1) to (3), the applicant must be the purchaser;
133.28 	(2) for subdivision subdivisions 1, clauses (4), and (7), and (8),; and 1a, the applicant 
133.29 	must be the governmental subdivision;
133.30 	(3) for subdivision 1, clause (5), the applicant must be the recipient of the benefits 
133.31 	provided in United States Code, title 38, chapter 21;
133.32 	(4) for subdivision 1, clause (6), the applicant must be the owner of the homestead 
133.33 	property;
134.1 	(5) for subdivision 1, clause (9) (8), the owner of the qualified low-income housing 
134.2 	project; 
134.3 	(6) for subdivision 1, clause (10) (9), the applicant must be a municipal electric 
134.4 	utility or a joint venture of municipal electric utilities; and
134.5 	(7) for subdivision 1, clauses (11) and (12) (10) and (11), the owner of the qualifying 
134.6 	business.; and
134.7 	(8) for subdivision 1, clause (12), the public foundation.

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

134.9 	Sec. 32. Minnesota Statutes 2006, section 297A.75, subdivision 3, is amended to read:
134.10 		Subd. 3.Application. (a) The application must include sufficient information 
134.11 	to permit the commissioner to verify the tax paid. If the tax was paid by a contractor, 
134.12 	subcontractor, or builder, under subdivision 1, clause (4), (5), (6), (7), (8), (9), (10), (11), 
134.13 	or (12); or 1a, the contractor, subcontractor, or builder must furnish to the refund applicant 
134.14 	a statement including the cost of the exempt items and the taxes paid on the items unless 
134.15 	otherwise specifically provided by this subdivision. The provisions of sections 289A.40
134.16 	and 289A.50 apply to refunds under this section.
134.17 	(b) An applicant may not file more than two applications per calendar year for 
134.18 	refunds for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

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

134.20 	Sec. 33. Minnesota Statutes 2006, section 297A.99, subdivision 1, is amended to read:
134.21 		Subdivision 1.Authorization; scope. (a) A political subdivision of this state may 
134.22 	impose a general sales tax if permitted by special law enacted prior to January 1, 2008, or 
134.23 	if the political subdivision enacted and imposed the tax before the effective date of section 
134.24 	477A.016 and its predecessor provision. 
134.25 	(b) This section governs the imposition of a general sales tax by the political 
134.26 	subdivision. The provisions of this section preempt the provisions of any special law:
134.27 	(1) enacted before June 2, 1997, or
134.28 	(2) enacted on or after June 2, 1997, that does not explicitly exempt the special law 
134.29 	provision from this section's rules by reference.
134.30 	(c) This section does not apply to or preempt a sales tax on motor vehicles or a 
134.31 	special excise tax on motor vehicles.
135.1 	(d) No political subdivision may use its funds to advertise, promote, or hold a 
135.2 	referendum to support imposing a general sales tax unless authorized by a special law 
135.3 	enacted prior to January 1, 2008.
135.4 	(e) No political subdivision may seek the authority to impose a general sales tax 
135.5 	after January 1, 2008.

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

135.7 	Sec. 34. Minnesota Statutes 2006, section 297B.03, is amended to read:
135.8 	297B.03 EXEMPTIONS.
135.9 	There is specifically exempted from the provisions of this chapter and from 
135.10 	computation of the amount of tax imposed by it the following:
135.11 	(1) purchase or use, including use under a lease purchase agreement or installment 
135.12 	sales contract made pursuant to section 465.71, of any motor vehicle by the United States 
135.13 	and its agencies and instrumentalities and by any person described in and subject to the 
135.14 	conditions provided in section 297A.67, subdivision 11; 
135.15 	(2) purchase or use of any motor vehicle by any person who was a resident of 
135.16 	another state or country at the time of the purchase and who subsequently becomes a 
135.17 	resident of Minnesota, provided the purchase occurred more than 60 days prior to the date 
135.18 	such person began residing in the state of Minnesota and the motor vehicle was registered 
135.19 	in the person's name in the other state or country;
135.20 	(3) purchase or use of any motor vehicle by any person making a valid election to be 
135.21 	taxed under the provisions of section 297A.90; 
135.22 	(4) purchase or use of any motor vehicle previously registered in the state of 
135.23 	Minnesota when such transfer constitutes a transfer within the meaning of section 118, 
135.24 	331, 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal 
135.25 	Revenue Code of 1986, as amended through December 31, 1999;
135.26 	(5) purchase or use of any vehicle owned by a resident of another state and leased 
135.27 	to a Minnesota-based private or for-hire carrier for regular use in the transportation of 
135.28 	persons or property in interstate commerce provided the vehicle is titled in the state of 
135.29 	the owner or secured party, and that state does not impose a sales tax or sales tax on 
135.30 	motor vehicles used in interstate commerce;
135.31 	(6) purchase or use of a motor vehicle by a private nonprofit or public educational 
135.32 	institution for use as an instructional aid in automotive training programs operated by the 
135.33 	institution. "Automotive training programs" includes motor vehicle body and mechanical 
135.34 	repair courses but does not include driver education programs;
136.1 	(7) purchase of a motor vehicle for use as an ambulance by an ambulance service 
136.2 	licensed under section 144E.10; 
136.3 	(8) purchase of a motor vehicle by or for a public library, as defined in section 
136.4 	134.001, subdivision 2, as a bookmobile or library delivery vehicle; 
136.5 	(9) purchase of a ready-mixed concrete truck;
136.6 	(10) purchase or use of a motor vehicle by a town for use exclusively for road 
136.7 	maintenance, including snowplows and dump trucks, but not including automobiles, 
136.8 	vans, or pickup trucks;
136.9 	(11) purchase or use of a motor vehicle by a corporation, society, association, 
136.10 	foundation, or institution organized and operated exclusively for charitable, religious, 
136.11 	or educational purposes, except a public school, university, or library, but only if the 
136.12 	vehicle is:
136.13 	(i) a truck, as defined in section 168.011, a bus, as defined in section 168.011, or a 
136.14 	passenger automobile, as defined in section 168.011, if the automobile is designed and 
136.15 	used for carrying more than nine persons including the driver; and 
136.16 	(ii) intended to be used primarily to transport tangible personal property or 
136.17 	individuals, other than employees, to whom the organization provides service in 
136.18 	performing its charitable, religious, or educational purpose;
136.19 	(12) purchase of a motor vehicle for use by a transit provider exclusively to provide 
136.20 	transit service is exempt if the transit provider is either (i) receiving financial assistance or 
136.21 	reimbursement under section 174.24 or 473.384, or (ii) operating under section 174.29, 
136.22 	473.388, or 473.405; 
136.23 	(13) purchase or use of a motor vehicle by a qualified business, as defined in section 
136.24 	469.310, located in a job opportunity building zone, if the motor vehicle is principally 
136.25 	garaged in the job opportunity building zone and is primarily used as part of or in direct 
136.26 	support of the person's operations carried on in the job opportunity building zone. The 
136.27 	exemption under this clause applies to sales, if the purchase was made and delivery 
136.28 	received during the duration of the job opportunity building zone. The exemption under 
136.29 	this clause also applies to any local sales and use tax;
136.30 	(14) purchase of a leased vehicle by the lessee who was a participant in a 
136.31 	lease-to-own program from a charitable organization that is:
136.32 	(i) described in section 501(c)(3) of the Internal Revenue Code; and
136.33 	(ii) licensed as a motor vehicle lessor under section 168.27, subdivision 4. 

136.34 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
136.35 	June 30, 2007.

137.1 	Sec. 35. Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991, 
137.2 	chapter 291, article 8, section 22, and Laws 1998, chapter 389, article 8, section 25, and 
137.3 	Laws 2003, First Special Session chapter 21, article 8, section 11, is amended to read:
137.4 		Subd. 2. Notwithstanding Minnesota Statutes, Section 477A.016, or any other law, 
137.5 	ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance, 
137.6 	impose an additional sales tax of up to one and one-half two and one-quarter percent on 
137.7 	sales transactions which are described in Minnesota Statutes 2000, Section 297A.01, 
137.8 	Subdivision 3, Clause (c). When the city council determines that the taxes imposed 
137.9 	under this subdivision and under Laws 1998, chapter 389, article 8, section 26 at a rate 
137.10 	of one-half of one percent have produced revenue sufficient to pay (1) the debt service 
137.11 	on bonds in a principal amount of $8,000,000 issued for capital improvements to the 
137.12 	Duluth Entertainment and Convention Center, and (2) debt service on outstanding bonds 
137.13 	originally issued in the principal amount of $4,970,000 to finance capital improvements 
137.14 	to the Great Lakes Aquarium since the imposition of the taxes at the rate of one and 
137.15 	one-half percent, the rate of the tax under this subdivision is reduced to by one-half of
137.16 	one percent. The imposition of this tax shall not be subject to voter referendum under 
137.17 	either state law or city charter provisions. When the city council determines that the taxes 
137.18 	imposed under this subdivision at a rate of three-quarters of one percent and other sources 
137.19 	of revenue produce revenue sufficient to pay debt service on bonds in the principal amount 
137.20 	of $37,931,000 plus issuance and discount costs, issued for capital improvements at the 
137.21 	Duluth Entertainment and Convention Center, which include a new arena, the rate of tax 
137.22 	under this subdivision must be reduced by three-quarters of one percent.

137.23 	EFFECTIVE DATE. This section is effective the day after the governing body of 
137.24 	the city of Duluth and its chief clerical officer comply with Minnesota Statutes, section 
137.25 	645.021, subdivisions 2 and 3.

137.26 	Sec. 36. Laws 2005, First Special Session chapter 3, article 5, section 39, is amended 
137.27 	to read:
137.28 	Sec. 39. CITY OF BEMIDJI.
 137.29 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
137.30 	section 477A.016, or any other provision of law, ordinance, or city charter, pursuant to the 
137.31 	approval of the city voters at the general election held on November 5, 2002, and at the 
137.32 	general election held November 7, 2006, the city of Bemidji may impose by ordinance 
137.33 	a sales and use tax of one-half of one percent for the purposes specified in subdivision 
137.34 	2. The provisions of Minnesota Statutes, section 297A.99, govern the imposition, 
137.35 	administration, collection, and enforcement of the tax authorized under this subdivision.
138.1 		Subd. 2.Use of revenues. Revenues received from the tax authorized by 
138.2 	subdivision 1 must be used for the cost of collecting and administering the tax and to pay 
138.3 	for the projects listed in this subdivision:
138.4 	(1) To pay all or part of the capital or administrative costs of the acquisition, 
138.5 	construction, and improvement of parks and trails within the city, as provided for in the 
138.6 	city of Bemidji's parks, open space, and trail system plan, adopted by the Bemidji City 
138.7 	Council on November 21, 2001. Authorized expenses include, but are not limited to, 
138.8 	acquiring property, paying construction expenses related to the development of these 
138.9 	facilities and improvements, and securing and paying debt service on bonds or other 
138.10 	obligations issued to finance acquisition, construction, improvement, or development of 
138.11 	parks and trails within the city of Bemidji.
138.12 	(2) To pay all or part of the city's share of costs of up to $50,000,000 plus any 
138.13 	associated bond costs, for acquisition, design, and construction of a regional event center. 
138.14 	Authorized expenses include, but are not limited to, acquiring property, paying demolition 
138.15 	and construction expenses, improving associated infrastructure, and purchasing furniture, 
138.16 	fixtures, and equipment for the regional event center, and securing and paying debt service 
138.17 	on bonds or other obligations issued to finance the regional event center project.
138.18 		Subd. 3.Bonds. (a) Pursuant to the approval of the city voters at the general 
138.19 	election held on November 5, 2002, the city of Bemidji may issue, without an additional 
138.20 	election, general obligation bonds of the city in an amount not to exceed $9,826,000 to 
138.21 	pay capital and administrative expenses for the acquisition, construction, improvement, 
138.22 	and development of parks and trails as specified in subdivision 2. The debt represented by 
138.23 	the bonds must not be included in computing any debt limitations applicable to the city, 
138.24 	and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the principal 
138.25 	of any interest on the bonds must not be subject to any levy limitations or be included in 
138.26 	computing or applying any levy limitation applicable to the city.
138.27 	(b) Pursuant to the approval of the city voters at the general election held on 
138.28 	November 7, 2006, the city of Bemidji may issue, without an additional election, general 
138.29 	obligation bonds of the city in an amount not to exceed $50,000,000 to pay capital and 
138.30 	administrative expenses for the acquisition, construction, improvement, and development 
138.31 	of the regional event center specified in subdivision 2. The debt represented by the bonds 
138.32 	must not be included in computing any debt limitations applicable to the city, and the levy 
138.33 	of taxes required by Minnesota Statutes, section 475.61, to pay the principal of any interest 
138.34 	on the bonds must not be subject to any levy limitations or be included in computing or 
138.35 	applying any levy limitation applicable to the city.
139.1 		Subd. 4.Termination of tax. The tax imposed under subdivision 1 expires 
139.2 	when the Bemidji City Council determines that the amount described in subdivision 3, 
139.3 	paragraph (a), has been received from the tax to finance the capital and administrative 
139.4 	costs for acquisition, construction, improvement, and development of parks and trails and 
139.5 	to repay or retire at maturity the principal, interest, and premium due on any bonds issued 
139.6 	for the park and trail improvements under subdivision 3, paragraph (a), plus the earlier 
139.7 	of (1) 30 years, or (2) when the city council first determines that the additional revenues 
139.8 	received from the extension of the tax equals or exceeds the amount authorized to be spent 
139.9 	for the regional event center under subdivision 2, clause (2). Any funds remaining after 
139.10 	completion of the park and trail improvements authorized projects and retirement or 
139.11 	redemption of the bonds may be placed in the general fund of the city. The tax imposed 
139.12 	under subdivision 1 may expire at an earlier time if the city so determines by ordinance.

139.13 	EFFECTIVE DATE. This section is effective the day after compliance by the 
139.14 	governing body of the city of Bemidji and its chief clerical officer with Minnesota 
139.15 	Statutes, section 645.021, subdivisions 2 and 3.

139.16 	Sec. 37. CITY OF CROOKSTON; TAXES AUTHORIZED.
 139.17 		Subdivision 1.Sales and use tax. Notwithstanding Minnesota Statutes, section 
139.18 	477A.016, or any other provision of law, ordinance, or city charter, if approved by the 
139.19 	voters at the next general election or a special election prior to December 31, 2008, the 
139.20 	city of Crookston may impose by ordinance a sales and use tax of up to one-half of one 
139.21 	percent for the purpose specified in subdivision 2. Except as provided in this section, the 
139.22 	provisions of Minnesota Statutes, section 297A.99, govern the imposition, administration, 
139.23 	collection, and enforcement of the tax authorized under this subdivision.
139.24 		Subd. 2.Use of revenues. Revenues received from taxes authorized by subdivision 
139.25 	1 must be used by the city to pay the cost of collecting the taxes and to pay all or part of the 
139.26 	capital and administrative costs for the reconstruction of public facilities that need to be 
139.27 	relocated in conjunction with the city's flood control project. Authorized expenses include, 
139.28 	but are not limited to, acquiring property and paying construction expenses related to these 
139.29 	facilities and improvements, and paying debt service on bonds or other obligations issued 
139.30 	to finance acquisition, development, and construction of these facilities and improvements. 
139.31 	The total amount of revenues that the city may raise under subdivision 1 to finance these 
139.32 	projects is limited to no more than $10,000,000 plus any associated bond costs.
139.33 		Subd. 3.Bonding authority. Pursuant to the approval of the city voters to impose 
139.34 	the tax authorized under subdivision 1, the city may issue, without an additional election, 
139.35 	general obligation bonds of the city in an amount not to exceed $10,000,000 to pay 
140.1 	capital and administrative expenses for the projects described in subdivision 2. The debt 
140.2 	represented by the bonds is not included in computing any debt limitation applicable to the 
140.3 	city, and any levy of taxes under Minnesota Statutes, section 475.61, to pay principal of 
140.4 	and interest on the bonds is not subject to any levy limitation or be included in computing 
140.5 	or applying any levy limitation applicable to the city.
140.6 		Subd. 4.Termination of taxes. The taxes imposed under subdivision 1 expire when 
140.7 	the Crookston city council determines that the amount of revenues received from the taxes 
140.8 	to finance the project described in subdivision 2 first equals or exceeds the amount spent 
140.9 	directly on the projects in subdivision 2, plus the additional amount needed to pay the 
140.10 	costs related to issuance of bonds under subdivision 3, including interest on the bonds. 
140.11 	Any funds remaining after completion of the project and retirement or redemption of the 
140.12 	bonds may be placed in the general fund of the city. The taxes imposed under subdivision 
140.13 	1 may expire at an earlier time if the city so determines by ordinance.

140.14 	EFFECTIVE DATE. This section is effective the day after the governing body of 
140.15 	the city of Crookston and its chief clerical officer comply with Minnesota Statutes, section 
140.16 	645.021, subdivisions 2 and 3.

140.17 	Sec. 38. CITY OF NORTH MANKATO; TAXES AUTHORIZED.
 140.18 		Subdivision 1.Sales and use tax authorized. Notwithstanding Minnesota Statutes, 
140.19 	section 477A.016, or any other provision of law, ordinance, or city charter pursuant to 
140.20 	the approval of the voters on November 7, 2006, and pursuant to Minnesota Statutes, 
140.21 	section 297A.99, the city of North Mankato may impose by ordinance a sales and use tax 
140.22 	of one-half of one percent for the purposes specified in subdivision 2. The provisions of 
140.23 	Minnesota Statutes, section 297A.99, govern the imposition, administration, collection, 
140.24 	and enforcement of the taxes authorized under this subdivision. 
140.25 		Subd. 2.Use of revenues. Revenues received from the tax authorized by 
140.26 	subdivision 1 must be used to pay all or part of the capital costs of the following projects: 
140.27 	(1) the local share of the Trunk Highway 14/County State Aid Highway 41 
140.28 	interchange project;
140.29 	(2) development of regional parks and hiking and biking trails;
140.30 	(3) expansion of the North Mankato Taylor Library;
140.31 	(4) riverfront redevelopment; and
140.32 	(5) lake improvement projects.
140.33 	The total amount of revenues from the tax in subdivision 1 that may be used to fund 
140.34 	these projects is $6,000,000 plus any associated bond costs.
141.1 		Subd. 3.Bonds. (a) The city of North Mankato, pursuant to the approval of the 
141.2 	voters at the November 7, 2006, referendum authorizing the imposition of the taxes in 
141.3 	this section, may issue bonds under Minnesota Statutes, chapter 475, to pay capital and 
141.4 	administrative expenses for the projects described in subdivision 2, in an amount that 
141.5 	does not exceed $6,000,000. A separate election to approve the bonds under Minnesota 
141.6 	Statutes, section 475.58, is not required.
141.7 	(b) The debt represented by the bonds is not included in computing any debt 
141.8 	limitation applicable to the city, and any levy of taxes under Minnesota Statutes, section 
141.9 	475.61, to pay principal and interest on the bonds is not subject to any levy limitation.
141.10 		Subd. 4.Termination of taxes. The tax imposed under subdivision 1 expires 
141.11 	when the city council determines that the amount of revenues received from the taxes 
141.12 	to pay for the projects under subdivision 2 first equals or exceeds $6,000,000 plus the 
141.13 	additional amount needed to pay the costs related to issuance of bonds under subdivision 
141.14 	3, including interest on the bonds. Any funds remaining after completion of the projects 
141.15 	and retirement or redemption of the bonds must be placed in a capital facilities and 
141.16 	equipment replacement fund of the city. The tax imposed under subdivision 1 may expire 
141.17 	at an earlier time if the city so determines by ordinance. 

141.18 	EFFECTIVE DATE. This section is effective the day after compliance by the 
141.19 	governing body of the city of North Mankato with Minnesota Statutes, section 645.021, 
141.20 	subdivision 3.

141.21 	Sec. 39. STUDY OF SALES AND USE TAX.
 141.22 	(a) The commissioner of revenue shall study the current sales and use tax base 
141.23 	in Minnesota and provide a written report and recommendations to the legislature, in 
141.24 	compliance with Minnesota Statutes, sections 3.195 and 3.197, by February 1, 2008. 
141.25 	The study must report on:
141.26 	(1) the changes needed in the current sales tax base to move to a tax based solely on 
141.27 	final consumption of all consumer goods and services, with no taxation of intermediate 
141.28 	inputs to businesses;
141.29 	(2) the estimated change in state revenues for each of the changes identified in 
141.30 	clause (1), along with the sales tax rate change that would be needed to make the changes 
141.31 	revenue-neutral;
141.32 	(3) legal, administrative, and collection issues that would be associated with the 
141.33 	changes identified in clause (1), including interaction with other existing state taxes; 
141.34 	(4) the effect of the changes identified in clause (1) on the incidence of the sales tax 
141.35 	system and the overall state and local tax system;
142.1 	(5) the effect of changes on efficiency and the competitiveness of Minnesota as a 
142.2 	location for business and investment; and
142.3 	(6) alternatives for rebating or refunding a portion of the tax to offset any increase 
142.4 	in regressivity identified under clause (4).
142.5 	(b) The study must make recommendations on:
142.6 	(1) sales tax base expansions to move the state toward a system where the tax applies 
142.7 	to the majority of final purchases of goods and services by consumers while minimizing 
142.8 	administrative and collection issues;
142.9 	(2) the sales tax rate change that would be needed to keep the sales tax system 
142.10 	revenue neutral under clause (1); and
142.11 	(3) sales tax base exemptions to minimize the state taxation of intermediate business 
142.12 	inputs while minimizing administrative and collection issues.

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

142.14 	ARTICLE 7
142.15 	ECONOMIC DEVELOPMENT

142.16 	Section 1. Minnesota Statutes 2006, section 268.19, subdivision 1, is amended to read:
142.17 		Subdivision 1.Use of data. (a) Except as otherwise provided by this section, data 
142.18 	gathered from any person pursuant to the administration of the Minnesota Unemployment 
142.19 	Insurance Law are private data on individuals or nonpublic data not on individuals as 
142.20 	defined in section 13.02, subdivisions 9 and 12, and may not be disclosed except pursuant 
142.21 	to a district court order or section 13.05. A subpoena shall not be considered a district 
142.22 	court order. These data may be disseminated to and used by the following agencies 
142.23 	without the consent of the subject of the data:
142.24 	(1) state and federal agencies specifically authorized access to the data by state 
142.25 	or federal law;
142.26 	(2) any agency of any other state or any federal agency charged with the 
142.27 	administration of an unemployment insurance program;
142.28 	(3) any agency responsible for the maintenance of a system of public employment 
142.29 	offices for the purpose of assisting individuals in obtaining employment;
142.30 	(4) human rights agencies within Minnesota that have enforcement powers;
142.31 	(5) the Department of Revenue only to the extent necessary for its duties under 
142.32 	Minnesota laws;
143.1 	(6) public and private agencies responsible for administering publicly financed 
143.2 	assistance programs for the purpose of monitoring the eligibility of the program's 
143.3 	recipients;
143.4 	(7) the Department of Labor and Industry and the Division of Insurance Fraud 
143.5 	Prevention in the Department of Commerce on an interchangeable basis with the 
143.6 	department for uses consistent with the administration of their duties under Minnesota law;
143.7 	(8) local and state welfare agencies for monitoring the eligibility of the data subject 
143.8 	for assistance programs, or for any employment or training program administered by those 
143.9 	agencies, whether alone, in combination with another welfare agency, or in conjunction 
143.10 	with the department or to monitor and evaluate the statewide Minnesota family investment 
143.11 	program by providing data on recipients and former recipients of food stamps or food 
143.12 	support, cash assistance under chapter 256, 256D, 256J, or 256K, child care assistance 
143.13 	under chapter 119B, or medical programs under chapter 256B, 256D, or 256L;
143.14 	(9) local and state welfare agencies for the purpose of identifying employment, 
143.15 	wages, and other information to assist in the collection of an overpayment debt in an 
143.16 	assistance program;
143.17 	(10) local, state, and federal law enforcement agencies for the sole purpose of 
143.18 	ascertaining the last known address and employment location of a person who is the 
143.19 	subject of a criminal investigation;
143.20 	(11) the federal Immigration and Naturalization Service shall have access to data on 
143.21 	specific individuals and specific employers provided the specific individual or specific 
143.22 	employer is the subject of an investigation by that agency; and
143.23 	(12) the Department of Health solely for the purposes of epidemiologic 
143.24 	investigations.; and
143.25 	(13) the state auditor to the extent necessary to conduct audits of job opportunity 
143.26 	building zones as required under section 469.3201.
143.27 	(b) Data on individuals and employers that are collected, maintained, or used by the 
143.28 	department in an investigation pursuant to section 268.182 are confidential as to data on 
143.29 	individuals and protected nonpublic data not on individuals as defined in section 13.02, 
143.30 	subdivisions 3 and 13, and must not be disclosed except pursuant to statute or district 
143.31 	court order or to a party named in a criminal proceeding, administrative or judicial, for 
143.32 	preparation of a defense.
143.33 	(c) Data gathered by the department pursuant to the administration of the Minnesota 
143.34 	unemployment insurance program must not be made the subject or the basis for any 
143.35 	suit in any civil proceedings, administrative or judicial, unless the action is initiated by 
143.36 	the department.

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

144.2 	Sec. 2. Minnesota Statutes 2006, section 270B.15, is amended to read:
144.3 	270B.15 DISCLOSURE TO LEGISLATIVE AUDITOR AND STATE 
144.4 	AUDITOR.
144.5 	(a) Returns and return information must be disclosed to the legislative auditor to the 
144.6 	extent necessary for the legislative auditor to carry out sections 3.97 to 3.979. 
144.7 	(b) The commissioner must disclose return information, including the report 
144.8 	required under section 289A.12, subdivision 15, to the state auditor to the extent necessary 
144.9 	to conduct audits of job opportunity building zones as required under section 469.3201.

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

144.11 	Sec. 3. Minnesota Statutes 2006, section 272.02, subdivision 64, is amended to read:
144.12 		Subd. 64.Job opportunity building zone property. (a) Improvements to real 
144.13 	property, and personal property, classified under section 273.13, subdivision 24, and 
144.14 	located within a job opportunity building zone, designated under section 469.314, are 
144.15 	exempt from ad valorem taxes levied under chapter 275.
144.16 	(b) Improvements to real property, and tangible personal property, of an agricultural 
144.17 	production facility located within an agricultural processing facility zone, designated 
144.18 	under section 469.314, is exempt from ad valorem taxes levied under chapter 275.
144.19 	(c) For property to qualify for exemption under paragraph (a), the occupant must be 
144.20 	a qualified business, as defined in section 469.310.
144.21 	(d) The exemption applies beginning for the first assessment year after designation 
144.22 	of the job opportunity building zone by the commissioner of employment and economic 
144.23 	development. The exemption applies to each assessment year that begins during the 
144.24 	duration of the job opportunity building zone. To be exempt, the property must be 
144.25 	occupied by July 1 of the assessment year by a qualified business that has signed the 
144.26 	business subsidy agreement and relocation agreement, if required, by July 1 of the 
144.27 	assessment year. This exemption does not apply to:
144.28 	(1) the levy under section 475.61 or similar levy provisions under any other law to 
144.29 	pay general obligation bonds; or
144.30 	(2) a levy under section 126C.17, if the levy was approved by the voters before the 
144.31 	designation of the job opportunity building zone.

144.32 	EFFECTIVE DATE. This section is effective beginning for taxes payable in 2008.

145.1 	Sec. 4. Minnesota Statutes 2006, section 289A.12, is amended by adding a subdivision 
145.2 	to read:
145.3 		Subd. 15.Report of job opportunity zone benefits; penalty for failure to file 
145.4 	report. (a) By October 15 of each year, every qualified business, as defined under section 
145.5 	469.310, subdivision 11, must file with the commissioner, on a form prescribed by the 
145.6 	commissioner, a report listing the tax benefits under section 469.315 received by the 
145.7 	business for the previous year.
145.8 	(b) The commissioner shall send notice to each business that fails to timely submit 
145.9 	the report required under paragraph (a). The notice shall demand that the business submit 
145.10 	the report within 60 days. Where good cause exists, the commissioner may extend 
145.11 	the period for submitting the report as long as a request for extension is filed by the 
145.12 	business before the expiration of the 60-day period. The commissioner shall notify the 
145.13 	commissioner of the Department of Employment and Economic Development and the 
145.14 	appropriate job opportunity subzone administrator whenever notice is sent to a business 
145.15 	under this paragraph.
145.16 	(c) A business that fails to submit the report as required under paragraph (b) is no 
145.17 	longer a qualified business under section 469.310, subdivision 11, and is subject to the 
145.18 	repayment provisions of section 469.319.

145.19 	EFFECTIVE DATE. This section is effective beginning with reports required to be 
145.20 	filed October 15, 2008.

145.21 	Sec. 5. Minnesota Statutes 2006, section 469.169, is amended by adding a subdivision 
145.22 	to read:
145.23 		Subd. 18.Additional border city allocations; 2007. (a) In addition to tax 
145.24 	reductions authorized in subdivisions 7 to 17, the commissioner shall allocate $750,000 
145.25 	for tax reductions to border city enterprise zones in cities located on the western border 
145.26 	of the state. The commissioner shall make allocations to zones in cities on the western 
145.27 	border on a per capita basis. Allocations made under this subdivision may be used for 
145.28 	tax reductions as provided in section 469.171, or for other offsets of taxes imposed on 
145.29 	or remitted by businesses located in the enterprise zone, but only if the municipality 
145.30 	determines that the granting of the tax reduction or offset is necessary in order to retain a 
145.31 	business within or attract a business to the zone. The city alternatively may elect to use 
145.32 	any portion of the allocation provided in this paragraph for tax reductions under section 
145.33 	469.1732 or 469.1734.
145.34 	(b) The commissioner shall allocate $750,000 for tax reductions under section 
145.35 	469.1732 or 469.1734 to cities with border city enterprise zones located on the western 
146.1 	border of the state. The commissioner shall allocate this amount among the cities on a per 
146.2 	capita basis. The city alternatively may elect to use any portion of the allocation provided 
146.3 	in this paragraph for tax reductions as provided in section 469.171.

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

146.5 	Sec. 6. Minnesota Statutes 2006, section 469.174, subdivision 10, is amended to read:
146.6 		Subd. 10.Redevelopment district. (a) "Redevelopment district" means a type of 
146.7 	tax increment financing district consisting of a project, or portions of a project, within 
146.8 	which the authority finds by resolution that one or more of the following conditions, 
146.9 	reasonably distributed throughout the district, exists:
146.10 	(1) parcels consisting of 70 percent of the area of the district are occupied by 
146.11 	buildings, streets, utilities, paved or gravel parking lots, or other similar structures 
146.12 	and more than 50 percent of the buildings, not including outbuildings, are structurally 
146.13 	substandard to a degree requiring substantial renovation or clearance;
146.14 	(2) the property consists of vacant, unused, underused, inappropriately used, 
146.15 	or infrequently used railyards, rail storage facilities, or excessive or vacated railroad 
146.16 	rights-of-way;
146.17 	(3) tank facilities, or property whose immediately previous use was for tank 
146.18 	facilities, as defined in section 115C.02, subdivision 15, if the tank facilities: 
146.19 	(i) have or had a capacity of more than 1,000,000 gallons;
146.20 	(ii) are located adjacent to rail facilities; and
146.21 	(iii) have been removed or are unused, underused, inappropriately used, or 
146.22 	infrequently used; or
146.23 	(4) a qualifying disaster area, as defined in subdivision 10b.
146.24 	(b) For purposes of this subdivision, "structurally substandard" shall mean 
146.25 	containing defects in structural elements or a combination of deficiencies in essential 
146.26 	utilities and facilities, light and ventilation, fire protection including adequate egress, 
146.27 	layout and condition of interior partitions, or similar factors, which defects or deficiencies 
146.28 	are of sufficient total significance to justify substantial renovation or clearance.
146.29 	(c) A building is not structurally substandard if it is in compliance with the building 
146.30 	code applicable to new buildings or could be modified to satisfy the building code at 
146.31 	a cost of less than 15 percent of the cost of constructing a new structure of the same 
146.32 	square footage and type on the site. The municipality may find that a building is not 
146.33 	disqualified as structurally substandard under the preceding sentence on the basis of 
146.34 	reasonably available evidence, such as the size, type, and age of the building, the average 
146.35 	cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The 
147.1 	municipality may not make such a determination without an interior inspection of the 
147.2 	property, but need not have an independent, expert appraisal prepared of the cost of repair 
147.3 	and rehabilitation of the building. An interior inspection of the property is not required, 
147.4 	if the municipality finds that (1) the municipality or authority is unable to gain access to 
147.5 	the property after using its best efforts to obtain permission from the party that owns or 
147.6 	controls the property; and (2) the evidence otherwise supports a reasonable conclusion that 
147.7 	the building is structurally substandard. Items of evidence that support such a conclusion 
147.8 	include recent fire or police inspections, on-site property tax appraisals or housing 
147.9 	inspections, exterior evidence of deterioration, or other similar reliable evidence. Written 
147.10 	documentation of the findings and reasons why an interior inspection was not conducted 
147.11 	must be made and retained under section 469.175, subdivision 3, clause (1). Failure of a 
147.12 	building to be disqualified under the provisions of this paragraph is a necessary, but not a 
147.13 	sufficient, condition to determining that the building is substandard. 
147.14 	(d) A parcel is deemed to be occupied by a structurally substandard building 
147.15 	for purposes of the finding under paragraph (a) or by the improvements described in 
147.16 	paragraph (e) if all of the following conditions are met:
147.17 	(1) the parcel was occupied by a substandard building or met the requirements 
147.18 	of paragraph (e), as the case may be, within three years of the filing of the request for 
147.19 	certification of the parcel as part of the district with the county auditor;
147.20 	(2) the substandard building was or the improvements described in paragraph (e) 
147.21 	were demolished or removed by the authority or the demolition or removal was financed 
147.22 	by the authority or was done by a developer under a development agreement with the 
147.23 	authority;
147.24 	(3) the authority found by resolution before the demolition or removal that the 
147.25 	parcel was occupied by a structurally substandard building or met the requirements of 
147.26 	paragraph (e) and that after demolition and clearance the authority intended to include 
147.27 	the parcel within a district; and
147.28 	(4) upon filing the request for certification of the tax capacity of the parcel as part 
147.29 	of a district, the authority notifies the county auditor that the original tax capacity of the 
147.30 	parcel must be adjusted as provided by section 469.177, subdivision 1, paragraph (f). 
147.31 	(e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, 
147.32 	utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the 
147.33 	area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or 
147.34 	other similar structures.
148.1 	(f) For districts consisting of two or more noncontiguous areas, each area must 
148.2 	qualify as a redevelopment district under paragraph (a) to be included in the district, and 
148.3 	the entire area of the district must satisfy paragraph (a).

148.4 	EFFECTIVE DATE. This section is effective for requests for certification made 
148.5 	after June 30, 2007.

148.6 	Sec. 7. Minnesota Statutes 2006, section 469.174, subdivision 10a, is amended to read:
148.7 		Subd. 10a.Renewal and renovation district. (a) "Renewal and renovation district" 
148.8 	means a type of tax increment financing district consisting of a project, or portions of a 
148.9 	project, within which the authority finds by resolution that:
148.10 	(1)(i) parcels consisting of 70 percent of the area of the district are occupied by 
148.11 	buildings, streets, utilities, paved or gravel parking lots, or other similar structures; (ii) 
148.12 	20 percent of the buildings are structurally substandard; and (iii) 30 percent of the other 
148.13 	buildings require substantial renovation or clearance to remove existing conditions such 
148.14 	as: inadequate street layout, incompatible uses or land use relationships, overcrowding of 
148.15 	buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for 
148.16 	improvement or conversion, or other identified hazards to the health, safety, and general 
148.17 	well-being of the community; and
148.18 	(2) the conditions described in clause (1) are reasonably distributed throughout the 
148.19 	geographic area of the district.
148.20 	(b) For purposes of determining whether a building is structurally substandard, 
148.21 	whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, 
148.22 	or other similar structures, or whether noncontiguous areas qualify, the provisions of 
148.23 	subdivision 10, paragraphs (c), (e), and (b) through (f) apply.

148.24 	EFFECTIVE DATE. This section is effective for requests for certification made 
148.25 	after June 30, 2007.

148.26 	Sec. 8. Minnesota Statutes 2006, section 469.174, subdivision 27, is amended to read:
148.27 		Subd. 27.Small city. "Small city" means any home rule charter or statutory city 
148.28 	that has a population of 5,000 or less and that is located ten miles or more from a home 
148.29 	rule charter or statutory city, located in this state, with a population of 10,000 or more. For 
148.30 	purposes of this definition, the distance between cities is measured by drawing a straight 
148.31 	line from the nearest boundaries of the two cities. In calculating the distance between 
148.32 	cities, the city may use any boundaries of the city with a population of 10,000 or more 
149.1 	that were in effect during the ten-year period ending on the last day of the calendar year 
149.2 	previous to the year in which the request for certification is made.

149.3 	EFFECTIVE DATE. This section is effective for requests for certification made 
149.4 	after the day following final enactment.

149.5 	Sec. 9. Minnesota Statutes 2006, section 469.175, subdivision 1, is amended to read:
149.6 		Subdivision 1.Tax increment financing plan. (a) A tax increment financing plan 
149.7 	shall contain:
149.8 	(1) a statement of objectives of an authority for the improvement of a project;
149.9 	(2) a statement as to the development program for the project, including the property 
149.10 	within the project, if any, that the authority intends to acquire, identified by parcel number, 
149.11 	identifiable property name, block, or other appropriate means indicating the area in which 
149.12 	the authority intends to acquire properties;
149.13 	(3) a list of any development activities that the plan proposes to take place within 
149.14 	the project, for which contracts have been entered into at the time of the preparation of 
149.15 	the plan, including the names of the parties to the contract, the activity governed by the 
149.16 	contract, the cost stated in the contract, and the expected date of completion of that activity;
149.17 	(4) identification or description of the type of any other specific development 
149.18 	reasonably expected to take place within the project, and the date when the development is 
149.19 	likely to occur;
149.20 	(5) estimates of the following:
149.21 	(i) cost of the project, including administrative expenses, except that if part of the 
149.22 	cost of the project is paid or financed with increment from the tax increment financing 
149.23 	district, the tax increment financing plan for the district must contain an estimate of the 
149.24 	amount of the cost of the project, including administrative expenses, that will be paid or 
149.25 	financed with tax increments from the district;
149.26 	(ii) amount of bonded indebtedness to be incurred;
149.27 	(iii) sources of revenue to finance or otherwise pay public costs;
149.28 	(iv) the most recent net tax capacity of taxable real property within the tax increment 
149.29 	financing district and within any subdistrict;
149.30 	(v) the estimated captured net tax capacity of the tax increment financing district 
149.31 	at completion; and
149.32 	(vi) the duration of the tax increment financing district's and any subdistrict's 
149.33 	existence;
149.34 	(6) statements of the authority's alternate estimates of the impact of tax increment 
149.35 	financing on the net tax capacities of all taxing jurisdictions in which the tax increment 
150.1 	financing district is located in whole or in part. For purposes of one statement, the 
150.2 	authority shall assume that the estimated captured net tax capacity would be available to 
150.3 	the taxing jurisdictions without creation of the district, and for purposes of the second 
150.4 	statement, the authority shall assume that none of the estimated captured net tax capacity 
150.5 	would be available to the taxing jurisdictions without creation of the district or subdistrict;
150.6 	(7) identification and description of studies and analyses used to make the 
150.7 	determination set forth in subdivision 3, clause (2); and
150.8 	(8) identification of all parcels to be included in the district or any subdistrict.
150.9 	(b) The authority may specify in the tax increment financing plan the first year in 
150.10 	which it elects to receive increment, up to four years following the year of approval of the 
150.11 	district. This paragraph does not apply to an economic development district.

150.12 	EFFECTIVE DATE. This section is effective for districts for which the request for 
150.13 	certification is made after June 30, 2007.

150.14 	Sec. 10. Minnesota Statutes 2006, section 469.175, subdivision 3, is amended to read:
150.15 		Subd. 3.Municipality approval. (a) A county auditor shall not certify the original 
150.16 	net tax capacity of a tax increment financing district until the tax increment financing plan 
150.17 	proposed for that district has been approved by the municipality in which the district 
150.18 	is located. If an authority that proposes to establish a tax increment financing district 
150.19 	and the municipality are not the same, the authority shall apply to the municipality in 
150.20 	which the district is proposed to be located and shall obtain the approval of its tax 
150.21 	increment financing plan by the municipality before the authority may use tax increment 
150.22 	financing. The municipality shall approve the tax increment financing plan only after a 
150.23 	public hearing thereon after published notice in a newspaper of general circulation in the 
150.24 	municipality at least once not less than ten days nor more than 30 days prior to the date 
150.25 	of the hearing. The published notice must include a map of the area of the district from 
150.26 	which increments may be collected and, if the project area includes additional area, a map 
150.27 	of the project area in which the increments may be expended. The hearing may be held 
150.28 	before or after the approval or creation of the project or it may be held in conjunction with 
150.29 	a hearing to approve the project.
150.30 	(b) Before or at the time of approval of the tax increment financing plan, the 
150.31 	municipality shall make the following findings, and shall set forth in writing the reasons 
150.32 	and supporting facts for each determination:
150.33 	(1) that the proposed tax increment financing district is a redevelopment district, a 
150.34 	renewal or renovation district, a housing district, a soils condition district, or an economic 
150.35 	development district; if the proposed district is a redevelopment district or a renewal or 
151.1 	renovation district, the reasons and supporting facts for the determination that the district 
151.2 	meets the criteria of section 469.174, subdivision 10, paragraph (a), clauses (1) and (2), or 
151.3 	subdivision 10a, must be documented in writing and retained and made available to the 
151.4 	public by the authority until the district has been terminated; 
151.5 	(2) that, in the opinion of the municipality:
151.6 	(i) the proposed development or redevelopment would not reasonably be expected to 
151.7 	occur solely through private investment within the reasonably foreseeable future; and
151.8 	(ii) the increased market value of the site that could reasonably be expected to 
151.9 	occur without the use of tax increment financing would be less than the increase in the 
151.10 	market value estimated to result from the proposed development after subtracting the 
151.11 	present value of the projected tax increments for the maximum duration of the district 
151.12 	permitted by the plan. The requirements of this item do not apply if the district is a 
151.13 	qualified housing district;
151.14 	(3) that the tax increment financing plan conforms to the general plan for the 
151.15 	development or redevelopment of the municipality as a whole;
151.16 	(4) that the tax increment financing plan will afford maximum opportunity, 
151.17 	consistent with the sound needs of the municipality as a whole, for the development or 
151.18 	redevelopment of the project by private enterprise;
151.19 	(5) that the municipality elects the method of tax increment computation set forth in 
151.20 	section 469.177, subdivision 3, paragraph (b), if applicable. 
151.21 	(c) When the municipality and the authority are not the same, the municipality shall 
151.22 	approve or disapprove the tax increment financing plan within 60 days of submission by 
151.23 	the authority. When the municipality and the authority are not the same, the municipality 
151.24 	may not amend or modify a tax increment financing plan except as proposed by the 
151.25 	authority pursuant to subdivision 4. Once approved, the determination of the authority 
151.26 	to undertake the project through the use of tax increment financing and the resolution of 
151.27 	the governing body shall be conclusive of the findings therein and of the public need for 
151.28 	the financing.
151.29 	(d) For a district that is subject to the requirements of paragraph (b), clause (2), 
151.30 	item (ii), the municipality's statement of reasons and supporting facts must include all of 
151.31 	the following:
151.32 	(1) an estimate of the amount by which the market value of the site will increase 
151.33 	without the use of tax increment financing;
151.34 	(2) an estimate of the increase in the market value that will result from the 
151.35 	development or redevelopment to be assisted with tax increment financing; and
152.1 	(3) the present value of the projected tax increments for the maximum duration of 
152.2 	the district permitted by the tax increment financing plan.
152.3 	(e) For purposes of this subdivision, "site" means the parcels on which the 
152.4 	development or redevelopment to be assisted with tax increment financing will be located.

152.5 	EFFECTIVE DATE. This section is effective the day following final enactment 
152.6 	and applies to all districts, regardless of when the request for certification was made.

152.7 	Sec. 11. Minnesota Statutes 2006, section 469.176, subdivision 1, is amended to read:
152.8 		Subdivision 1.Duration of tax increment financing districts. (a) Subject to the 
152.9 	limitations contained in subdivisions 1a to 1f, any tax increment financing district as to 
152.10 	which bonds are outstanding, payment for which the tax increment and other revenues 
152.11 	have been pledged, shall remain in existence at least as long as the bonds continue to be 
152.12 	outstanding. The municipality may, at the time of approval of the initial tax increment 
152.13 	financing plan, provide for one or both of the following:
152.14 	(1) a shorter maximum duration limit than specified in subdivisions 1a to 1f.;
152.15 	(2) an election as provided under section 469.175, subdivision 1, paragraph (b).
152.16 	The specified limit applies in place of the otherwise applicable limit, unless the authority 
152.17 	modifies the plan following the procedures under section 469.175, subdivision 4, 
152.18 	paragraph (b).
152.19 	(b) The tax increment pledged to the payment of the bonds and interest thereon may 
152.20 	be discharged and the tax increment financing district may be terminated if sufficient funds 
152.21 	have been irrevocably deposited in the debt service fund or other escrow account held in 
152.22 	trust for all outstanding bonds to provide for the payment of the bonds at maturity or date 
152.23 	of redemption and interest thereon to the maturity or redemption date.
152.24 	(c) For bonds issued pursuant to section 469.178, subdivisions 2 and 3, the full 
152.25 	faith and credit and any taxing powers of the municipality or authority are pledged to the 
152.26 	payment of the bonds until the principal of and interest on the bonds has been paid in full. 

152.27 	EFFECTIVE DATE. This section is effective for districts for which the request for 
152.28 	certification is made after June 30, 2007.

152.29 	Sec. 12. Minnesota Statutes 2006, section 469.176, subdivision 2, is amended to read:
152.30 		Subd. 2.Excess increments. (a) The authority shall annually determine the amount 
152.31 	of excess increments for a district, if any. This determination must be based on the tax 
152.32 	increment financing plan in effect on December 31 of the year and the increments and 
153.1 	other revenues received as of December 31 of the year. The authority must spend or return 
153.2 	the excess increments under paragraph (c) within nine months after the end of the year.
153.3 	(b) For purposes of this subdivision, "excess increments" equals the excess of:
153.4 	(1) total increments collected from the district since its certification, reduced by any 
153.5 	excess increments paid under paragraph (c), clause (4), for a prior year, over
153.6 	(2) the total costs authorized by the tax increment financing plan to be paid with 
153.7 	increments from the district, reduced, but not below zero, by the sum of:
153.8 	(i) the amounts of those authorized costs that have been paid from sources other than 
153.9 	tax increments from the district;
153.10 	(ii) revenues, other than tax increments from the district, that are dedicated for or 
153.11 	otherwise required to be used to pay those authorized costs and that the authority has 
153.12 	received and that are not included in item (i);
153.13 	(iii) the amount of principal and interest obligations due on outstanding bonds after 
153.14 	December 31 of the year and not prepaid under paragraph (c) in a prior year; and
153.15 	(iv) increased by the sum of the transfers of increments made under section 469.1763, 
153.16 	subdivision 6, to reduce deficits in other districts made by December 31 of the year.
153.17 	(c) The authority shall use excess increment only to do one or more of the following:
153.18 	(1) prepay any outstanding bonds;
153.19 	(2) discharge the pledge of tax increment for any outstanding bonds;
153.20 	(3) pay into an escrow account dedicated to the payment of any outstanding bonds; or
153.21 	(4) return the excess amount to the county auditor who shall distribute the excess 
153.22 	amount to the city or town, county, and school district in which the tax increment financing 
153.23 	district is located in direct proportion to their respective local tax rates.
153.24 	(d) For purposes of a district for which the request for certification was made prior to 
153.25 	August 1, 1979, excess increments equal the amount of increments on hand on December 
153.26 	31, less the principal and interest obligations due on outstanding bonds or advances, 
153.27 	qualifying under subdivision 1c, clauses (1), (2), (4), and (5), after December 31 of the 
153.28 	year and not prepaid under paragraph (c).
153.29 	(e) The county auditor must report to the commissioner of education the amount of 
153.30 	any excess tax increment distributed to a school district within 30 days of the distribution.
153.31 	(f) For purposes of this subdivision, "outstanding bonds" means bonds which are 
153.32 	secured by increments from the district.
153.33 	(g) The state auditor may exempt an authority from reporting the amounts calculated 
153.34 	under this subdivision for a calendar year, if the authority certifies to the auditor in 
153.35 	its report that the total amount authorized by the tax increment plan to be paid with 
154.1 	increments from the district exceeds the sum of the total increments collected for the 
154.2 	district for all years by 20 percent.

154.3 	EFFECTIVE DATE. This section is effective the day following final enactment and 
154.4 	applies to all districts regardless of when the request for certification was made, including 
154.5 	districts for which the request for certification was made on or before August 1, 1979.

154.6 	Sec. 13. Minnesota Statutes 2006, section 469.176, subdivision 4l, is amended to read:
154.7 		Subd. 4l.Prohibited facilities. (a) No tax increment from any district may be 
154.8 	used for:
154.9 	(1) a commons area used as a public park; or
154.10 	(2) a facility used for social, recreational, or conference purposes.
154.11 	(b) This subdivision does not apply to a privately owned facility for conference 
154.12 	purposes or a parking structure, whether it is public or privately owned or whether it is 
154.13 	ancillary to a use listed in paragraph (a).

154.14 	EFFECTIVE DATE. This section confirms the original intent of the legislature 
154.15 	in enacting Minnesota Statutes, section 469.176, subdivision 4l, and is effective the day 
154.16 	following final enactment and applies to any expenditure subject to Minnesota Statutes, 
154.17 	section 469.176, subdivision 4l.

154.18 	Sec. 14. Minnesota Statutes 2006, section 469.176, subdivision 7, is amended to read:
154.19 		Subd. 7.Parcels not includable in districts. (a) The authority may request 
154.20 	inclusion in a tax increment financing district and the county auditor may certify the 
154.21 	original tax capacity of a parcel or a part of a parcel that qualified under the provisions of 
154.22 	section 273.111 or 273.112 or chapter 473H for taxes payable in any of the five calendar 
154.23 	years before the filing of the request for certification only for: 
154.24 	(1) a district in which 85 percent or more of the planned buildings and facilities 
154.25 	(determined on the basis of square footage) are a qualified manufacturing facility or a 
154.26 	qualified distribution facility or a combination of both; or
154.27 	(2) a qualified housing district.
154.28 	(b)(1) A distribution facility means buildings and other improvements to real 
154.29 	property that are used to conduct activities in at least each of the following categories:
154.30 	(i) to store or warehouse tangible personal property;
154.31 	(ii) to take orders for shipment, mailing, or delivery;
154.32 	(iii) to prepare personal property for shipment, mailing, or delivery; and
154.33 	(iv) to ship, mail, or deliver property.
155.1 	(2) A manufacturing facility includes space used for manufacturing or producing 
155.2 	tangible personal property, including processing resulting in the change in condition of the 
155.3 	property, and space necessary for and related to the manufacturing activities.
155.4 	(3) To be a qualified facility, the owner or operator of a manufacturing or distribution 
155.5 	facility must agree to pay and pay 90 percent or more of the employees of the facility at 
155.6 	a rate equal to or greater than 160 percent of the federal minimum wage for individuals 
155.7 	over the age of 20.

155.8 	EFFECTIVE DATE. This section is effective the day following final enactment 
155.9 	and applies to all districts regardless of when the request for certification was made.

155.10 	Sec. 15. Minnesota Statutes 2006, section 469.1761, subdivision 1, is amended to read:
155.11 		Subdivision 1.Requirement imposed. (a) In order for a tax increment financing 
155.12 	district to qualify as a housing district:
155.13 	(1) the income limitations provided in this section must be satisfied; and
155.14 	(2) no more than 20 percent of the square footage of buildings that receive assistance 
155.15 	from tax increments may consist of commercial, retail, or other nonresidential uses.
155.16 	(b) The requirements imposed by this section apply to property receiving assistance 
155.17 	financed with tax increments, including interest reduction, land transfers at less than the 
155.18 	authority's cost of acquisition, utility service or connections, roads, parking facilities, or 
155.19 	other subsidies. The provisions of this section do not apply to districts located in a targeted 
155.20 	area as defined in section 462C.02, subdivision 9, clause (e).
155.21 	(c) For purposes of the requirements of paragraph (a), the authority may elect to treat 
155.22 	an addition to an existing structure as a separate building if:
155.23 	(1) construction of the addition begins more than three years after construction of 
155.24 	the existing structure was completed; and 
155.25 	(2) for an addition that does not meet the requirements of paragraph (a), clause (2), if 
155.26 	it is treated as a separate building, the addition was not contemplated by the tax increment 
155.27 	financing plan which includes the existing structure.

155.28 	EFFECTIVE DATE. This section is effective for expenditures of tax increment 
155.29 	authorized and made after the day following final enactment, regardless of when the 
155.30 	request for certification of the district was made.

155.31 	Sec. 16. Minnesota Statutes 2006, section 469.1763, subdivision 2, is amended to read:
155.32 		Subd. 2.Expenditures outside district. (a) For each tax increment financing 
155.33 	district, an amount equal to at least 75 percent of the total revenue derived from tax 
156.1 	increments paid by properties in the district must be expended on activities in the district 
156.2 	or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities 
156.3 	in the district or to pay, or secure payment of, debt service on credit enhanced bonds. 
156.4 	For districts, other than redevelopment districts for which the request for certification 
156.5 	was made after June 30, 1995, the in-district percentage for purposes of the preceding 
156.6 	sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax 
156.7 	increments paid by properties in the district may be expended, through a development fund 
156.8 	or otherwise, on activities outside of the district but within the defined geographic area of 
156.9 	the project except to pay, or secure payment of, debt service on credit enhanced bonds. 
156.10 	For districts, other than redevelopment districts for which the request for certification was 
156.11 	made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is 
156.12 	20 percent. The revenue derived from tax increments for the district that are expended on 
156.13 	costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before 
156.14 	calculating the percentages that must be expended within and without the district.
156.15 	(b) In the case of a housing district, a housing project, as defined in section 469.174, 
156.16 	subdivision 11, is an activity in the district.
156.17 	(c) All administrative expenses are for activities outside of the district, except that 
156.18 	if the only expenses for activities outside of the district under this subdivision are for 
156.19 	the purposes described in paragraph (d), administrative expenses will be considered as 
156.20 	expenditures for activities in the district.
156.21 	(d) The authority may elect, in the tax increment financing plan for the district, 
156.22 	to increase by up to ten percentage points the permitted amount of expenditures for 
156.23 	activities located outside the geographic area of the district under paragraph (a). As 
156.24 	permitted by section 469.176, subdivision 4k, the expenditures, including the permitted 
156.25 	expenditures under paragraph (a), need not be made within the geographic area of the 
156.26 	project. Expenditures that meet the requirements of this paragraph are legally permitted 
156.27 	expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, and 4j. 
156.28 	To qualify for the increase under this paragraph, the expenditures must:
156.29 	(1) be used exclusively to assist housing that meets the requirement for a qualified 
156.30 	low-income building, as that term is used in section 42 of the Internal Revenue Code;
156.31 	(2) not exceed the qualified basis of the housing, as defined under section 42(c) of 
156.32 	the Internal Revenue Code, less the amount of any credit allowed under section 42 of 
156.33 	the Internal Revenue Code; and
156.34 	(3) be used to:
156.35 	(i) acquire and prepare the site of the housing;
156.36 	(ii) acquire, construct, or rehabilitate the housing; or
157.1 	(iii) make public improvements directly related to the housing.
157.2 	(e) For a district created within a biotechnology and health sciences industry zone 
157.3 	as defined in section 469.330, subdivision 6, or for an existing district located within 
157.4 	such a zone, tax increment derived from such a district may be expended outside of the 
157.5 	district but within the zone only for expenditures required for the construction of public 
157.6 	infrastructure necessary to support the activities of the zone, land acquisition, and other 
157.7 	redevelopment costs as defined in section 469.176, subdivision 4j. Public infrastructure
157.8 	These expenditures are considered as expenditures for activities within the district.

157.9 	EFFECTIVE DATE. This section is effective for all districts located in bioscience 
157.10 	zones, regardless of when the request for certification was made.

157.11 	Sec. 17. Minnesota Statutes 2006, section 469.177, subdivision 1, is amended to read:
157.12 		Subdivision 1.Original net tax capacity. (a) Upon or after adoption of a tax 
157.13 	increment financing plan, the auditor of any county in which the district is situated shall, 
157.14 	upon request of the authority, certify the original net tax capacity of the tax increment 
157.15 	financing district and that portion of the district overlying any subdistrict as described in 
157.16 	the tax increment financing plan and shall certify in each year thereafter the amount by 
157.17 	which the original net tax capacity has increased or decreased as a result of a change in tax 
157.18 	exempt status of property within the district and any subdistrict, reduction or enlargement 
157.19 	of the district or changes pursuant to subdivision 4. The auditor shall certify the amount 
157.20 	within 30 days after receipt of the request and sufficient information to identify the parcels 
157.21 	included in the district. The certification relates to the taxes payable year as provided in 
157.22 	subdivision 6.
157.23 	(b) If the classification under section 273.13 of property located in a district changes 
157.24 	to a classification that has a different assessment ratio, the original net tax capacity of that 
157.25 	property must be redetermined at the time when its use is changed as if the property had 
157.26 	originally been classified in the same class in which it is classified after its use is changed.
157.27 	(c) The amount to be added to the original net tax capacity of the district as a result 
157.28 	of previously tax exempt real property within the district becoming taxable equals the net 
157.29 	tax capacity of the real property as most recently assessed pursuant to section 273.18 or, if 
157.30 	that assessment was made more than one year prior to the date of title transfer rendering 
157.31 	the property taxable, the net tax capacity assessed by the assessor at the time of the 
157.32 	transfer. If improvements are made to tax exempt property after the municipality approves 
157.33 	the district and before the parcel becomes taxable, the assessor shall, at the request of 
157.34 	the authority, separately assess the estimated market value of the improvements. If the 
157.35 	property becomes taxable, the county auditor shall add to original net tax capacity, the net 
158.1 	tax capacity of the parcel, excluding the separately assessed improvements. If substantial 
158.2 	taxable improvements were made to a parcel after certification of the district and if the 
158.3 	property later becomes tax exempt, in whole or part, as a result of the authority acquiring 
158.4 	the property through foreclosure or exercise of remedies under a lease or other revenue 
158.5 	agreement or as a result of tax forfeiture, the amount to be added to the original net tax 
158.6 	capacity of the district as a result of the property again becoming taxable is the amount 
158.7 	of the parcel's value that was included in original net tax capacity when the parcel was 
158.8 	first certified. The amount to be added to the original net tax capacity of the district as a 
158.9 	result of enlargements equals the net tax capacity of the added real property as most 
158.10 	recently certified by the commissioner of revenue as of the date of modification of the tax 
158.11 	increment financing plan pursuant to section 469.175, subdivision 4.
158.12 	(d) If the net tax capacity of a property increases because the property no longer 
158.13 	qualifies under the Minnesota Agricultural Property Tax Law, section 273.111; the 
158.14 	Minnesota Open Space Property Tax Law, section 273.112; or the Metropolitan 
158.15 	Agricultural Preserves Act, chapter 473H, or because platted, unimproved property is 
158.16 	improved or market value is increased after approval of the plat under section 273.11, 
158.17 	subdivision 14, 14a, or 14b, the increase in net tax capacity must be added to the original 
158.18 	net tax capacity.
158.19 	(e) The amount to be subtracted from the original net tax capacity of the district 
158.20 	as a result of previously taxable real property within the district becoming tax exempt, 
158.21 	or a reduction in the geographic area of the district, shall be the amount of original net 
158.22 	tax capacity initially attributed to the property becoming tax exempt or being removed 
158.23 	from the district. If the net tax capacity of property located within the tax increment 
158.24 	financing district is reduced by reason of a court-ordered abatement, stipulation agreement, 
158.25 	voluntary abatement made by the assessor or auditor or by order of the commissioner of 
158.26 	revenue, the reduction shall be applied to the original net tax capacity of the district when 
158.27 	the property upon which the abatement is made has not been improved since the date of 
158.28 	certification of the district and to the captured net tax capacity of the district in each year 
158.29 	thereafter when the abatement relates to improvements made after the date of certification. 
158.30 	The county auditor may specify reasonable form and content of the request for certification 
158.31 	of the authority and any modification thereof pursuant to section 469.175, subdivision 4.
158.32 	(f) If a parcel of property contained a substandard building or improvements 
158.33 	described in section 469.174, subdivision 10, paragraph (e), that was were demolished 
158.34 	or removed and if the authority elects to treat the parcel as occupied by a substandard 
158.35 	building under section 469.174, subdivision 10, paragraph (b), or by improvements under 
158.36 	section 469.174, subdivision 10, paragraph (e), the auditor shall certify the original net 
159.1 	tax capacity of the parcel using the greater of (1) the current net tax capacity of the 
159.2 	parcel, or (2) the estimated market value of the parcel for the year in which the building 
159.3 	wasor other improvements were demolished or removed, but applying the class rates 
159.4 	for the current year.
159.5 	(g) For a redevelopment district qualifying under section 469.174, subdivision 10, 
159.6 	paragraph (a), clause (4), as a qualified disaster area, the auditor shall certify the value of 
159.7 	the land as the original tax capacity for any parcel in the district that contains a building 
159.8 	that suffered substantial damage as a result of the disaster or emergency.

159.9 	EFFECTIVE DATE. This section is effective for requests for certification made 
159.10 	after June 30, 2007.

159.11 	Sec. 18. Minnesota Statutes 2006, section 469.178, subdivision 7, is amended to read:
159.12 		Subd. 7.Interfund loans. The authority or municipality may advance or loan 
159.13 	money to finance expenditures under section 469.176, subdivision 4, from its general 
159.14 	fund or any other fund under which it has legal authority to do so. The loan or advance 
159.15 	must be authorized, by resolution of the governing body or of the authority, whichever 
159.16 	has jurisdiction over the fund from which the advance or loan is made, before money 
159.17 	is transferred, advanced, or spent, whichever is earliest. The resolution may generally 
159.18 	grant to the authority the power to make interfund loans under one or more tax increment 
159.19 	financing plans or for one or more districts. The terms and conditions for repayment of the 
159.20 	loan must be provided in writing and include, at a minimum, the principal amount, the 
159.21 	interest rate, and maximum term. The maximum rate of interest permitted to be charged 
159.22 	is limited to the greater of the rates specified under section 270C.40 or 549.09 as of the 
159.23 	date the loan or advance is made, unless the written agreement states that the maximum 
159.24 	interest rate will fluctuate as the interest rates specified under section 270C.40 or 549.09
159.25 	are from time to time adjusted.

159.26 	EFFECTIVE DATE. This section is effective the day following final enactment 
159.27 	and applies to all districts subject to Minnesota Statutes, section 469.178, subdivision 7, 
159.28 	regardless of when the request for certification was made.

159.29 	Sec. 19. Minnesota Statutes 2006, section 469.1791, subdivision 3, is amended to read:
159.30 		Subd. 3.Preconditions to establish district. (a) A city may establish a special 
159.31 	taxing district within a tax increment financing district under this section only if the 
159.32 	conditions under paragraphs (b) and (c) are met or if the city elects to exercise the 
159.33 	authority under paragraph (d).
160.1 	(b) The city has determined that:
160.2 	(1) total tax increments from the district, including unspent increments from 
160.3 	previous years and increments transferred under paragraph (c), will be insufficient to pay 
160.4 	the amounts due in a year on preexisting obligations; and
160.5 	(2) this insufficiency of increments resulted from the reduction in property tax class 
160.6 	rates enacted in the 1997 and 1998 legislative sessions.
160.7 	(c) The city has agreed to transfer any available increments from other tax increment 
160.8 	financing districts in the city to pay the preexisting obligations of the district under section 
160.9 	469.1763, subdivision 6. This requirement does not apply to any available increments of a 
160.10 	qualified housing district. 
160.11 	(d) If a tax increment financing district does not qualify under paragraphs (b) and 
160.12 	(c), the governing body may elect to establish a special taxing district under this section. 
160.13 	If the city elects to exercise this authority, increments from the tax increment financing 
160.14 	district and the proceeds of the tax imposed under this section may only be used to pay 
160.15 	preexisting obligations and reasonable administrative expenses of the authority for the tax 
160.16 	increment financing district. The tax increment financing district must be decertified when 
160.17 	all preexisting obligations have been paid.

160.18 	EFFECTIVE DATE. This section is effective the day following final enactment 
160.19 	and applies to districts regardless of when the request for certification was made.

160.20 	Sec. 20. Minnesota Statutes 2006, section 469.310, is amended by adding a subdivision 
160.21 	to read:
160.22 		Subd. 11a.Qualified farm. "Qualified farm" means a person actively engaged in 
160.23 	farming, that invests in an agricultural processing facility on the farm, and that:
160.24 	(1) increases employment on the farm by a minimum of 25 percent of full-time 
160.25 	employment in the first full year of operation. The employment does not include family 
160.26 	members, as defined in section 267(c)(4) of the Internal Revenue Code of 1986, as 
160.27 	amended;
160.28 	(2) makes an investment equal to at least ten percent of the previous year's gross 
160.29 	revenue in the agricultural processing facility; 
160.30 	(3) is located outside the metropolitan area, as defined in section 473.121, 
160.31 	subdivision 2; and
160.32 	(4) enters into a binding written agreement with the commissioner that:
160.33 	(i) pledges the agricultural processing facility will meet the requirements of clauses 
160.34 	(1) and (2); and 
161.1 	(ii) provides the repayment of all tax benefits enumerated under section 469.315 
161.2 	to the business under the procedures in section 469.319, if the requirements of clauses 
161.3 	(1) and (2) are not met for the taxable year or for taxes payable during the year in which 
161.4 	the requirements are not met; and
161.5 	(iii) contains any other terms the commissioner deems appropriate.

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

161.7 	Sec. 21. Minnesota Statutes 2006, section 469.312, is amended by adding a subdivision 
161.8 	to read:
161.9 		Subd. 6.Restrictions on relocations. (a) If a business relocates or intends to 
161.10 	relocate under a proposed project more than 25 full-time equivalent jobs from a location 
161.11 	in Minnesota into a job opportunity building zone, the business must notify the local 
161.12 	government unit, the commissioner of employment and economic development, and the 
161.13 	city and the county governments from which the jobs are being or would be relocated. 
161.14 	A city or county that objects to the relocation of jobs must file a copy of the resolution 
161.15 	with the commissioner of employment and economic development and the local unit 
161.16 	of government.
161.17 	(b) If the governing body of the city or county from which the jobs are being 
161.18 	relocated adopts a qualified resolution objecting to the relocation within 60 days after its 
161.19 	receipt of the notice, the following rules apply until the requirements of paragraph (c) are 
161.20 	satisfied:
161.21 	(1) if the business has not entered into a business subsidy agreement, the local unit 
161.22 	of government may not enter into a business subsidy agreement with the business; or
161.23 	(2) if the local unit of government has entered into a business subsidy agreement 
161.24 	with the business, the business ceases to be a qualified business, effective for the current 
161.25 	taxable year, the current assessment year, and for taxable purchases made after the first 
161.26 	day of the month beginning after the filing of the objecting resolution.
161.27 	(c) To be a qualified resolution for purposes of this subdivision, the resolution must 
161.28 	identify one or more sites in the city or county that could serve as an appropriate site for 
161.29 	the facility proposed by the business. To satisfy this requirement a site must:
161.30 	(1) be of adequate size;
161.31 	(2) have appropriate transportation access, given the nature of the business;
161.32 	(3) be served by adequate public infrastructure and public utilities or the 
161.33 	governmental unit will provide reasonably necessary public infrastructure and public 
161.34 	utilities for the project in a timely manner; and
162.1 	(4) be under the ownership or control of either the governmental unit or the business 
162.2 	or be available for sale.
162.3 	(d) When each city and county that objected to the relocation rescinds its objection 
162.4 	by resolution, the provisions of paragraph (b) no longer apply to the business. 

162.5 	EFFECTIVE DATE. This section is effective the day following final enactment 
162.6 	and applies to business subsidy agreements entered into after that date.

162.7 	Sec. 22. Minnesota Statutes 2006, section 469.312, is amended by adding a subdivision 
162.8 	to read:
162.9 		Subd. 7.FARMZ; special rules. (a) Except as otherwise specifically provided in 
162.10 	this subdivision, sections 469.310 to 469.320 apply to family agricultural revitalization 
162.11 	zones designated under section 469.314, subdivision 1, paragraph (d).
162.12 	(b) Only the portion of a qualified farm that consists of the agricultural processing 
162.13 	facility qualifies for the tax incentives under section 469.315. In no case may the 
162.14 	maximum amount of income that is exempt from the individual income tax under section 
162.15 	469.316 or from the corporate franchise tax under section 469.317, exceed the total 
162.16 	income of the qualified farm multiplied by a fraction, the numerator of which is the total 
162.17 	income for the taxable year minus the income of the qualified farm for the last full year of 
162.18 	operation prior to the designation and the denominator of which is the total income for the 
162.19 	taxable year. In no case may the fraction be greater than one or less than zero.
162.20 	(c) A qualified farm is deemed to be a qualified business for purposes of the tax 
162.21 	incentives under section 469.315.
162.22 	(d) Only purchases of materials for use directly in the construction and operation 
162.23 	of the agricultural processing facility qualify for the sales tax exemption under section 
162.24 	297A.68, subdivision 37, and purchases of vehicles used exclusively in connection with 
162.25 	operation of the agricultural processing facility qualify for the motor vehicle sales tax 
162.26 	exemption under section 297B.03.
162.27 	(e) Payroll attributed to payment of family members, as defined in section 267(c)(4) 
162.28 	of the Internal Revenue Code, does not qualify for the jobs credit under section 469.318.

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

162.30 	Sec. 23. Minnesota Statutes 2006, section 469.314, subdivision 1, is amended to read:
162.31 		Subdivision 1.Commissioner to designate. (a) The commissioner, in consultation 
162.32 	with the commissioner of revenue, shall designate not more than ten job opportunity 
162.33 	building zones. In making the designations, the commissioner shall consider need and 
163.1 	likelihood of success to yield the most economic development and revitalization of 
163.2 	economically distressed rural areas of Minnesota.
163.3 	(b) In addition to the designations under paragraph (a), the commissioner may, in 
163.4 	consultation with the commissioners of agriculture and revenue, designate up to five 
163.5 	agricultural processing facility zones.
163.6 	(c) The commissioner may, upon designation of a zone, modify the development 
163.7 	plan, including the boundaries of the zone or subzones, if in the commissioner's opinion 
163.8 	a modified plan would better meet the objectives of the job opportunity building zone 
163.9 	program. The commissioner shall notify the applicant of the modification and provide a 
163.10 	statement of the reasons for the modifications.
163.11 	(d) Upon application by a qualified farm, the commissioner may transfer the 
163.12 	designation of one or more parcels in a job opportunity building zone to the site of the 
163.13 	qualified farm. Such a site is designated a farm agricultural revitalization zone. The 
163.14 	authority to transfer designation of parcels applies only to parcels on which no qualified 
163.15 	business is located when the transfer is made. At least 30 days prior to executing the 
163.16 	transfer of the designation, the commissioner must notify the zone administrator and the 
163.17 	local government in which the parcel proposed to be transferred is located for advice and 
163.18 	comment. Before transferring the designation of a parcel to the site of a qualified farm, 
163.19 	the commissioner shall consult with the commissioner of revenue and shall consider the 
163.20 	need for tax incentives to make the project feasible and the likelihood of success of the 
163.21 	project. A transferred parcel is subject to the duration limit that applies to the original 
163.22 	zone. The transferred parcel is not subject to reporting by the local government under 
163.23 	section 469.320.

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

163.25 	Sec. 24. Minnesota Statutes 2006, section 469.3201, is amended to read:
163.26 	469.3201 JOBZ EXPENDITURE LIMITATIONS; AUDITS STATE 
163.27 	AUDITOR; AUDITS OF JOB OPPORTUNITY BUILDING ZONES AND 
163.28 	BUSINESS SUBSIDY AGREEMENTS.
163.29 	The Tax Increment Financing, Investment and Finance Division of the Office of the 
163.30 	State Auditor must annually audit the creation and operation of all job opportunity building 
163.31 	zones and business subsidy agreements entered into under Minnesota Statutes, sections 
163.32 	469.310 to 469.320. To the extent necessary to perform this audit, the state auditor may 
163.33 	request from the commissioner of revenue tax return information of taxpayers who are 
163.34 	eligible to receive tax benefits authorized under section 469.315. To the extent necessary 
164.1 	to perform this audit, the state auditor may request from the commissioner of employment 
164.2 	and economic development wage detail report information required under section 268.044 
164.3 	of taxpayers eligible to receive tax benefits authorized under section 469.315.

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

164.5 	Sec. 25. [469.350] BIOSCIENCE BUSINESS GRANTS.
164.6 		Subdivision 1.Definitions. (a) For purposes of this section the following terms 
164.7 	have the meanings given.
164.8 	(b) "Commissioner" means the commissioner of employment and economic 
164.9 	development.
164.10 	(c) "Qualified bioscience business venture" means a business that satisfies all of 
164.11 	the following conditions:
164.12 	(1) the business has its headquarters in Minnesota;
164.13 	(2) at least 51 percent of the business's employees are employed in Minnesota;
164.14 	(3) the business is engaged in, or is committed to engage in:
164.15 	(i) manufacturing, processing, or assembling biotechnology or medical device 
164.16 	products, including biotechnology and device products for use in agriculture;
164.17 	(ii) conducting research in and development of biotechnology or medical device 
164.18 	products or services; or
164.19 	(iii) developing a new biotechnology or medical device product or business process;
164.20 	(4) the business is not engaged in real estate development, insurance, banking, 
164.21 	lending, lobbying, political consulting, wholesale or retail trade, leisure, hospitality, 
164.22 	transportation, construction, or professional services provided by attorneys, accountants, 
164.23 	business consultants, physicians, or health care consultants;
164.24 	(5) the business has fewer than 25 employees;
164.25 	(6) the business has been in operation for fewer than ten consecutive years;
164.26 	(7) the business has not previously received a grant under this section;
164.27 	(8) the business has less than $1,000,000 in annual gross sales receipts;
164.28 	(9) the business is not a subsidiary or an affiliate of a business that employs more 
164.29 	than 100 employees or has gross sales receipts for the previous year of $1,000,000, 
164.30 	computed by aggregating all of the employees and gross sales receipts of the business 
164.31 	entities affiliated with the business; and
164.32 	(10) the business has not received private equity investments of more than 
164.33 	$2,000,000.
165.1 	(d) "Private equity investments" means investments from individuals or pass-through 
165.2 	entities who do not own, control, or hold power to vote 20 percent or more of the 
165.3 	outstanding securities of the qualified business venture.
165.4 		Subd. 2.Bioscience grants authorized. The commissioner is authorized to make 
165.5 	grants to qualified bioscience business ventures that have obtained at least $100,000 
165.6 	in private equity investments. The grant amount equals 25 percent of private equity 
165.7 	investments obtained by the qualified bioscience business venture, up to a maximum 
165.8 	grant of $100,000.
165.9 		Subd. 3.Application; preliminary certification. (a) A qualified bioscience 
165.10 	business venture must apply to the commissioner in order to receive a grant. The 
165.11 	application must be in a form and manner prescribed by the commissioner. The application 
165.12 	must include information on:
165.13 	(1) private equity investments of at least $100,000 obtained or anticipated by the 
165.14 	business venture;
165.15 	(2) the technology under development;
165.16 	(3) the technology's potential merits; and
165.17 	(4) the purposes for which the business will use the grant.
165.18 	(b) The commissioner shall establish a grant evaluation team comprised of not 
165.19 	less than five members including:
165.20 	(1) the commissioner or the commissioner's designee or designees;
165.21 	(2) representatives of one or more bioscience businesses;
165.22 	(3) representatives of one or more private investment companies;
165.23 	(4) representatives of one or more nonprofit entities that meets the requirements of 
165.24 	section 501(c)3 or 501(c)6 of the Internal Revenue Code.
165.25 	(c) The grant evaluation team must evaluate applications for grants using criteria 
165.26 	agreed on by the team, including but not limited to:
165.27 	(1) the scientific merit of the business venture;
165.28 	(2) the market potential of the business venture;
165.29 	(3) the potential for job creation of the business venture; and
165.30 	(4) the ability of the business venture to attract private investment.
165.31 	The team may consult with outside experts, as needed, to best evaluate applications. 
165.32 	The team must recommend applications for preliminary certification to the commissioner 
165.33 	and may only recommend applications that have obtained or anticipate obtaining at least 
165.34 	$100,000 in private equity investments.
165.35 	(d) The commissioner must make preliminary certification of applications 
165.36 	recommended by the grant evaluation team semiannually during a fiscal year, with not 
166.1 	more than $500,000 of preliminary certifications issued each time, unless preliminary 
166.2 	certifications for that fiscal year have been cancelled as provided under subdivision 4. 
166.3 	The preliminary certification reserves a grant equal to 25 percent of the private equity 
166.4 	investments up to the maximum of $100,000.
166.5 	(e) The grant evaluation team and any outside experts consulted by the grant 
166.6 	evaluation team must handle grant applications in accordance with the requirements of 
166.7 	chapter 13. The grant applicant's name, address, and amount requested is classified as 
166.8 	public data. All other data contained in a grant application is classified as nonpublic 
166.9 	data, as defined in section 13.02, subdivision 9, or private data on individuals, as defined 
166.10 	in section 13.02, subdivision 12.
166.11 		Subd. 4.Award of grant. (a) A qualified bioscience business venture that 
166.12 	has received preliminary certification under subdivision 3 must demonstrate to the 
166.13 	commissioner receipt of the specified amount of private equity investments within 30 
166.14 	days of receiving preliminary certification.
166.15 	(b) The commissioner must provide a grant equal to 25 percent of private equity 
166.16 	investments up to the maximum grant of $100,000 within 30 days of verifying that the 
166.17 	qualified bioscience business venture has received the private equity investments. The 
166.18 	commissioner may not award more than $1,000,000 in grants during the fiscal year.
166.19 	(c) If a qualified bioscience business venture fails to demonstrate receipt of the 
166.20 	specified amount of private equity investments within 30 days of receiving preliminary 
166.21 	certification, the preliminary certification is cancelled and the reserved grant amount is 
166.22 	available to the commissioner for grants to other qualified bioscience business ventures.
166.23 		Subd. 5.Repayment obligation. (a) A qualified bioscience business venture must 
166.24 	repay the amount of the grant received under this section during the current year and 
166.25 	four preceding years if it:
166.26 	(1) no longer has its headquarters in Minnesota; or
166.27 	(2) no longer employs at least 51 percent of its employees in Minnesota.
166.28 	(b) A qualified bioscience venture that ceases business operations is not subject to 
166.29 	the repayment obligation in this subdivision.
166.30 		Subd. 6.Report. By February 1 of each year the commissioner must report to the 
166.31 	committees of the legislature with jurisdiction over bioscience and technology issues, in 
166.32 	compliance with sections 3.195 and 3.197, on the number and amount of grants awarded 
166.33 	under this section, the activities of grant recipients, and the geographic distribution 
166.34 	of businesses receiving grants.

167.1 	Sec. 26. Laws 1994, chapter 587, article 9, section 14, subdivision 1, is amended to 
167.2 	read:
167.3 		Subdivision 1.Establishment. The city of Brooklyn Center may establish an
167.4 	a redevelopment tax increment financing district in which 15 percent of the revenues 
167.5 	generated from tax increment in any year is deposited in the housing and environmental 
167.6 	remediation development account of the authority and expended according to the tax 
167.7 	increment financing plan.

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

167.9 	Sec. 27. Laws 1994, chapter 587, article 9, section 14, subdivision 2, is amended to 
167.10 	read:
167.11 		Subd. 2.Eligible activities. The authority must identify in the plan the housing 
167.12 	activities that will be assisted by the housing and environmental remediation development 
167.13 	account. Housing activities may include rehabilitation, acquisition, construction, 
167.14 	demolition, and financing of new or existing single family or multifamily housing. 
167.15 	Housing and environmental remediation activities listed in the plan need not be located 
167.16 	within the district or project area but must be activities that meet the income requirements 
167.17 	of a qualified housing district under Minnesota Statutes, section 273.1399 or469.1761, 
167.18 	subdivision 2.

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

167.20 	Sec. 28. Laws 1994, chapter 587, article 9, section 14, subdivision 3, is amended to 
167.21 	read:
167.22 		Subd. 3.Housing account. Tax increment to be expended for housing and 
167.23 	environmental remediation activities under this section must be segregated by the 
167.24 	authority into a special account on its official books and records. The account may also 
167.25 	receive funds from other public and private sources.

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

167.27 	Sec. 29. Laws 1995, chapter 264, article 5, section 44, subdivision 4, as amended by 
167.28 	Laws 1996, chapter 471, article 7, section 21, and Laws 1997, chapter 231, article 10, 
167.29 	section 12, is amended to read:
167.30 		Subd. 4.Authority. For housing replacement projects in the city of Crystal, 
167.31 	"authority" means the Crystal economic development authority. For housing replacement 
167.32 	projects in the city of Fridley, "authority" means the housing and redevelopment authority 
168.1 	in and for the city of Fridley or a successor in interest. For housing replacement 
168.2 	projects in the city of Minneapolis, "authority" means the Minneapolis community 
168.3 	development agency or its successors and assigns. For housing replacement projects 
168.4 	in the city of St. Paul, "authority" means the St. Paul housing and redevelopment 
168.5 	authority. For housing replacement projects in the city of Duluth, "authority" means the 
168.6 	Duluth economic development authority. For housing replacement projects in the city of 
168.7 	Richfield, "authority" is the authority as defined in Minnesota Statutes, section 469.174, 
168.8 	subdivision 2, that is designated by the governing body of the city of Richfield. For 
168.9 	housing replacement projects in the city of Columbia Heights, "authority" is the authority 
168.10 	as defined in Minnesota Statutes, section 469.174, subdivision 2, that is designated by the 
168.11 	governing body of the city of Columbia Heights.

168.12 	EFFECTIVE DATE. This section is effective the day following final enactment 
168.13 	and upon compliance by the governing body of the city of Minneapolis with Minnesota 
168.14 	Statutes, section 645.021, subdivision 3.

168.15 	Sec. 30. Laws 1995, chapter 264, article 5, section 45, subdivision 1, as amended by 
168.16 	Laws 1996, chapter 471, article 7, section 22, and Laws 1997, chapter 231, article 10, 
168.17 	section 13, and Laws 2002, chapter 377, article 7, section 6, is amended to read:
168.18 		Subdivision 1.Creation of projects. (a) An authority may create a housing 
168.19 	replacement project under sections 44 to 47, as provided in this section.
168.20 	(b) For the cities of Crystal, Fridley, Richfield, and Columbia Heights, the authority 
168.21 	may designate up to 50 parcels in the city to be included in a housing replacement 
168.22 	district. No more than ten parcels may be included in year one of the district, with up 
168.23 	to ten additional parcels added to the district in each of the following nine years. For 
168.24 	the cities of Minneapolis, St. Paul, and Duluth, each authority may designate not more 
168.25 	than 200 parcels in the city to be included in a housing replacement district over the life 
168.26 	of the district. For the city of Minneapolis, the authority may designate not more than 
168.27 	300 parcels in the city to be included in a housing replacement district over the life of 
168.28 	the district. The only parcels that may be included in a district are (1) vacant sites, (2) 
168.29 	parcels containing vacant houses, or (3) parcels containing houses that are structurally 
168.30 	substandard, as defined in Minnesota Statutes, section 469.174, subdivision 10.
168.31 	(c) The city in which the authority is located must pay at least 25 percent of the 
168.32 	housing replacement project costs from its general fund, a property tax levy, or other 
168.33 	unrestricted money, not including tax increments.
168.34 	(d) The housing replacement district plan must have as its sole object the acquisition 
168.35 	of parcels for the purpose of preparing the site to be sold for market rate housing. As 
169.1 	used in this section, "market rate housing" means housing that has a market value that 
169.2 	does not exceed 150 percent of the average market value of single-family housing in that 
169.3 	municipality.

169.4 	EFFECTIVE DATE. This section is effective the day following final enactment 
169.5 	and upon compliance by the governing body of the city of Minneapolis with Minnesota 
169.6 	Statutes, section 645.021, subdivision 3.

169.7 	Sec. 31. EAGAN; TAX INCREMENT FINANCING.
 169.8 		Subdivision 1.Establishment. (a) The city of Eagan may establish within the 
169.9 	corporate boundaries of the city one or more economic development tax increment 
169.10 	financing districts subject to the special rules under subdivision 2. The districts must be 
169.11 	located within the area described in paragraph (b).
169.12 	(b) For purposes of this section, the "area" is defined as Section 13, Township 27, 
169.13 	Range 23, Dakota County, Minnesota.
169.14 		Subd. 2.Special rules. (a) If the city elects upon adoption of the tax increment 
169.15 	financing plan for the district, the rules under this subdivision apply to the district.
169.16 	(b) The limitations in Minnesota Statutes, section 469.176, subdivision 4c, on 
169.17 	spending increment for developments more than 15 percent of the square footage of which 
169.18 	is used for purposes other than those listed in that subdivision, do not apply.
169.19 	(c) Increments may be expended on parking, including structured parking, wetland 
169.20 	mitigation, sanitary sewer, storm sewer, water, and street improvements inside and outside 
169.21 	the area defined in subdivision 1, paragraph (b), wherever located, whether or not included 
169.22 	in a tax increment financing district, and without regard to any limitations in Minnesota 
169.23 	Statutes, section 469.1763, subdivision 2, if the improvements are related to development 
169.24 	within the area defined in subdivision 1, paragraph (b), and on administrative expenses.
169.25 		Subd. 3.Business subsidy agreement required. Prior to approval of a tax 
169.26 	increment financing plan for a district authorized by this section, the city must enter 
169.27 	a business subsidy agreement with the recipient or beneficiary of expenditures of the 
169.28 	increments. The agreement must set minimum full-time employment goals, minimum 
169.29 	compensation amounts of the employment positions, and minimum investment amounts 
169.30 	for the project and must provide for repayment of all or part of the assistance, if the 
169.31 	established goals are not met by the recipient or beneficiaries.
169.32 		Subd. 4.Expiration. The authority to approve tax increment financing plans to 
169.33 	establish tax increment financing districts under this section expires on December 31, 2008.

170.1 	EFFECTIVE DATE. This section is effective upon compliance by the city of 
170.2 	Eagan with Minnesota Statutes, section 645.021.

170.3 	Sec. 32. TAX INCREMENT FINANCING; CITY OF DAYTON.
 170.4 		Subdivision 1.Authority. The city of Dayton may establish an economic 
170.5 	development tax increment financing district under the authority provided in this 
170.6 	section. The city may include area with the jurisdiction of the town of Hassan to the 
170.7 	extent authorized by a joint powers agreement with the town. This district must be 
170.8 	established within the area defined in subdivision 2 and is subject to the special rules 
170.9 	under subdivision 3.
170.10 		Subd. 2.Defined area. The district must be established within the area defined as 
170.11 	the southwestern corner of the city of Dayton bounded by Brockton Lane (also known 
170.12 	as Hennepin County Road 101) to the west, 109th Avenue North to the south, Hennepin 
170.13 	County Highway 81 diagonally to the north and east from 109th Avenue northwesterly 
170.14 	to a line 120 feet east of the extension of York Avenue northerly to a line 120 feet north 
170.15 	of Gay Wood Drive and then west to Brockton Lane (Hennepin County Road 101). The 
170.16 	area within the jurisdiction of the town of Hassan that may be included in the district is 
170.17 	limited to and defined as all the land within the town of Hassan north of 109th Avenue 
170.18 	North, east of Fletcher Lane (also know as Hennepin County Road 116), south of I-94 
170.19 	and west of Brockton Lane (Hennepin County Road 101).
170.20 		Subd. 3.Special rules. The district is subject to the rules under Minnesota Statutes, 
170.21 	sections 469.174 to 469.1799, with the following exceptions:
170.22 	(1) the city need not make the findings required by Minnesota Statutes, section 
170.23 	469.174, subdivision 12;
170.24 	(2) the restrictions on the expenditures of increments under Minnesota Statutes, 
170.25 	section 469.176, subdivision 4c, do not apply;
170.26 	(3) the provisions of Minnesota Statutes, section 469.176, subdivision 5, do not 
170.27 	apply to the district;
170.28 	(4) the provisions of Minnesota Statutes, section 469.176, subdivision 7, do not 
170.29 	apply to the district;
170.30 	(5) the district's tax increments must be used only to pay for the costs related 
170.31 	to Brockton interchange project, including land acquisition, public infrastructure, and 
170.32 	administrative costs, which are limited to ten percent of the improvement cost, whether 
170.33 	paid directly or to reimburse for payment of those costs or to repay bonds or other 
170.34 	obligations issued and sold to pay those costs initially;
171.1 	(6) for purposes of any joint powers agreement authorized by this section, the town 
171.2 	of Hassan is deemed to have all the powers of an authority, as defined in Minnesota 
171.3 	Statutes, section 469.174, subdivision 2; and
171.4 	(7) tax increments for the districts must be computed using an original local tax rate 
171.5 	equal to 80 percent of the rate under Minnesota Statutes, section 469.177, subdivision 1a.

171.6 	EFFECTIVE DATE. This section is effective upon compliance by the governing 
171.7 	body of the city of Dayton and by the board of supervisors of the town of Hassan with 
171.8 	Minnesota Statutes, section 645.021.

171.9 	Sec. 33. CITY OF FRIDLEY; TAX INCREMENT FINANCING DISTRICT; 
171.10 	SPECIAL RULES.
 171.11 	(a) If the city elects upon the adoption of a tax increment financing plan for a district, 
171.12 	the rules under this section apply to a redevelopment tax increment financing district 
171.13 	established by the city of Fridley or the housing and redevelopment authority of the city. 
171.14 	The redevelopment tax increment district includes the following parcels and adjacent 
171.15 	railroad property and shall be referred to as the Northstar Transit Station District: parcel 
171.16 	numbers 223024120010, 223024120009, 223024120017, 223024120016, 223024120018, 
171.17 	223024120012, 223024120011, 223024120005, 223024120004, 223024120003, 
171.18 	223024120013, 223024120008, 223024120007, 223024120006, 223024130005, 
171.19 	223024130010, 223024130011, 223024130003, 153024440039, 153024440037, 
171.20 	153024440041, 153024440042, 223024110013, 223024110016, 223024110017, 
171.21 	223024140008, 223024130002, 223024420004, 223024410002, 223024410003, 
171.22 	223024110008, 223024110007, 223024110019, 223024110018, 223024110003, 
171.23 	223024140003, 223024140009, 223024140002, 223024140010, and 223024410007.
171.24 	(b) The requirements for qualifying a redevelopment tax increment district under 
171.25 	Minnesota Statutes, section 469.174, subdivision 10, do not apply to the parcels located 
171.26 	within the Northstar Transit Station District, which are deemed eligible for inclusion 
171.27 	in a redevelopment tax increment district.
171.28 	(c) In addition to the costs permitted by Minnesota Statutes, section 469.176, 
171.29 	subdivision 4j, eligible expenditures within the Northstar Transit Station District include 
171.30 	those costs necessary to provide for the development or expanded use of a transfer station. 
171.31 	For purposes of this subdivision, transfer station means a physical structure or designated 
171.32 	area that supports the interconnection of various transportation modes, including light 
171.33 	rail, commuter rail, and bus rapid transit, and that promotes and achieves the loading, 
171.34 	discharging, and transporting of people.
172.1 	(d) Notwithstanding the provisions of Minnesota Statutes, section 469.1763, 
172.2 	subdivision 2, the city of Fridley may expend increments generated from its tax increment 
172.3 	financing districts numbers 11, 12, and 13 for costs permitted by paragraph (c) and 
172.4 	Minnesota Statutes, section 469.176, subdivision 4j, outside the boundaries of tax 
172.5 	increment financing districts numbers 11, 12, and 13, but only within the Northstar 
172.6 	Transit Station District.
172.7 	(e) The five-year rule under Minnesota Statutes, section 469.1763, subdivision 3, 
172.8 	does not apply to the Northstar Transit Station District or to tax increment financing 
172.9 	districts numbers 11, 12, and 13.
172.10 	(f) The use of revenues for decertification under Minnesota Statutes, section 
172.11 	469.1763, subdivision 4, does not apply to tax increment financing districts numbers 
172.12 	11, 12, and 13.

172.13 	EFFECTIVE DATE. This section is effective upon approval by the governing body 
172.14 	of the city of Fridley and upon compliance by the city with Minnesota Statutes, section 
172.15 	645.021, subdivision 3.

172.16 	Sec. 34. CITY OF TAYLORS FALLS; BORDER CITY DEVELOPMENT ZONE.
 172.17 		Subdivision 1.Authorization. The governing body of the city of Taylors Falls may 
172.18 	designate all or any part of the city as a border city development zone.
172.19 		Subd. 2.Application of general law. (a) Minnesota Statutes, sections 469.1731 to 
172.20 	469.1735, apply to the border city development zones designated under this section. The 
172.21 	governing body of the city may exercise the powers granted under Minnesota Statutes, 
172.22 	sections 469.1731 to 469.1735, including powers that apply outside of the zones.
172.23 	(b) The allocation under subdivision 3 for purposes of Minnesota Statutes, section 
172.24 	469.1735, subdivision 2, is appropriated to the commissioner of revenue.
172.25 		Subd. 3.Allocation of state tax reductions. (a) The cumulative total amount of the 
172.26 	state portion of the tax reductions for all years of the program under Minnesota Statutes, 
172.27 	sections 469.1731 to 469.1735, for the city of Taylors Falls, is limited to $100,000.
172.28 	(b) This allocation may be used for tax reductions provided in Minnesota Statutes, 
172.29 	section 469.1732 or 469.1734, or for reimbursements under Minnesota Statutes, section 
172.30 	469.1735, subdivision 3, but only if the governing body of the city of Taylors Falls 
172.31 	determines that the tax reduction or offset is necessary to enable a business to expand 
172.32 	within the city or to attract a business to the city.
172.33 	(c) The commissioner of revenue may waive the limit under this subdivision using 
172.34 	the same rules and standards provided in Minnesota Statutes, section 469.169, subdivision 
172.35 	12, paragraph (b).

173.1 	EFFECTIVE DATE. This section is effective upon approval by the governing 
173.2 	body of the city of Taylors Falls and upon timely compliance by the city with Minnesota 
173.3 	Statutes, section 645.021.

173.4 	Sec. 35. BIOSCIENCE GRANTS; APPROPRIATION.
 173.5 	$1,000,000 in fiscal year 2008 and $1,000,000 in fiscal year 2009 are appropriated 
173.6 	from the general fund to the commissioner of employment and economic development for 
173.7 	bioscience grants under Minnesota Statutes, section 469.350. The appropriations made 
173.8 	under this section are exempt from the requirements of Minnesota Statutes, sections 
173.9 	116J.994 and 116J.995.

173.10 	Sec. 36. APPROPRIATION; MINNESOTA FILM AND TV BOARD.
 173.11 	(a) $1,700,000 is appropriated from the general fund to the commissioner of 
173.12 	employment and economic development for a grant to the Minnesota Film and TV Board 
173.13 	for reimbursement of up to 15 percent of the film production costs incurred in Minnesota, 
173.14 	under Minnesota Statutes, section 116U.26. This appropriation is for fiscal years 2008 
173.15 	and 2009. This is a onetime appropriation.
173.16 	(b) This appropriation is contingent upon the availability in the November 2008 
173.17 	revenue forecast of additional revenues, as defined in Minnesota Statutes, section 16A.152, 
173.18 	subdivision 2, and this appropriation is the first priority for the use of those revenues, 
173.19 	notwithstanding the provisions of Minnesota Statutes, section 16A.152, subdivision 2, or 
173.20 	any amendments to that subdivision enacted in this or another law.

173.21 	Sec. 37. REPEALER.
 173.22 	Minnesota Statutes 2006, section 469.174, subdivision 29, is repealed.

173.23 	EFFECTIVE DATE. This section is effective the day following final enactment. 
173.24 	For purposes of any special law authorizing or limiting the use of increments to projects 
173.25 	meeting the requirements of a qualified housing district, expenditures for housing districts 
173.26 	satisfying the requirements of Minnesota Statutes, sections 469.174, subdivision 11; 
173.27 	469.176, subdivision 4d; and 469.1761, as amended, also satisfy the requirements of 
173.28 	the special law.

174.1 	ARTICLE 8
174.2 	MINERALS

174.3 	Section 1. Minnesota Statutes 2006, section 298.22, is amended by adding a 
174.4 	subdivision to read:
174.5 		Subd. 5a.Forest trust. The board may purchase forest lands in the taconite 
174.6 	assistance area under section 273.1341 with funds specifically authorized for the purchase. 
174.7 	All of these forest lands must be held in trust for the benefit of the citizens of the area as 
174.8 	the Iron Range Miners' Memorial Forest. The board may use the forest trust lands for 
174.9 	recreation and economic uses. The board must deposit the proceeds from the sale of 
174.10 	timber or removal of gravel or other minerals from these forest lands into an Iron Range 
174.11 	Miners' Memorial Forest account established by the board. By majority vote of the board, 
174.12 	money in the Iron Range Miners' Memorial Forest account may be transferred into the 
174.13 	Douglas J. Johnson economic protection trust fund under sections 298.291 to 298.294.

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

174.15 	Sec. 2. Minnesota Statutes 2006, section 298.2214, subdivision 2, is amended to read:
174.16 		Subd. 2.Iron Range Higher Education Committee; membership. The members 
174.17 	of the committee shall consist of:
174.18 	(1) one member appointed by the governor;
174.19 	(2) one member appointed by the president of the University of Minnesota;
174.20 	(3) two members appointed by the commissioner of the Iron Range resources and 
174.21 	rehabilitation appointed by the chair; and
174.22 	(4) the commissioner of Iron Range resources and rehabilitation; and
174.23 	(5) the President of the Northeast Higher Education District.

174.24 	Sec. 3. Minnesota Statutes 2006, section 298.28, subdivision 4, is amended to read:
174.25 		Subd. 4.School districts. (a) 17.1520.15 cents per taxable ton plus the increase 
174.26 	provided in paragraph (d) must be allocated to qualifying school districts to be distributed, 
174.27 	based upon the certification of the commissioner of revenue, under paragraphs (b) and (c), 
174.28 	except as otherwise provided in paragraph (f).
174.29 	(b)(i)3.43 cents per taxable ton must be distributed to the school districts in which 
174.30 	the lands from which taconite was mined or quarried were located or within which the 
174.31 	concentrate was produced. The distribution must be based on the apportionment formula 
174.32 	prescribed in subdivision 2.
175.1 	(ii) Three cents per taxable ton from each taconite facility must be distributed to 
175.2 	each affected school district for deposit in a fund dedicated to building maintenance 
175.3 	and repairs, as follows:
175.4 	(1) proceeds from Keewatin Taconite or its successor are distributed to Independent 
175.5 	School Districts Nos. 316, Coleraine, and 319, Nashwauk-Keewatin, or their successor 
175.6 	districts;
175.7 	(2) proceeds from the Hibbing Taconite Company or its successor are distributed to 
175.8 	Independent School Districts Nos. 695, Chisholm, and 701, Hibbing, or their successor 
175.9 	districts;
175.10 	(3) proceeds from the Mittal Steel Company, United Taconite, and Minntac or their 
175.11 	successors are distributed to Independent School Districts Nos. 712, Mountain Iron-Buhl, 
175.12 	706, Virginia, 2711, Mesabi East, and 2154, Eveleth-Gilbert, or their successor districts; 
175.13 	and
175.14 	(4) proceeds from the Northshore Mining Company or its successor are distributed 
175.15 	to Independent School District No. 2142, St. Louis County, or its successor district.
175.16 	Revenues that are required to be distributed to more than one district shall be 
175.17 	apportioned according to the number of pupil units identified in section 126C.05, 
175.18 	subdivision 1, enrolled in the second previous year. Any amounts received by a qualifying 
175.19 	school district under this provision shall not be applied to: (A) reduce any aid that the 
175.20 	school district is entitled to receive, or (B) reduce the permissible levies of the school 
175.21 	district.
175.22 	(c)(i) 13.72 cents per taxable ton, less any amount distributed under paragraph (e), 
175.23 	shall be distributed to a group of school districts comprised of those school districts which 
175.24 	qualify as a tax relief area under section 273.134, paragraph (b), or in which there is a 
175.25 	qualifying municipality as defined by section 273.134, paragraph (a), in direct proportion 
175.26 	to school district indexes as follows: for each school district, its pupil units determined 
175.27 	under section 126C.05 for the prior school year shall be multiplied by the ratio of the 
175.28 	average adjusted net tax capacity per pupil unit for school districts receiving aid under 
175.29 	this clause as calculated pursuant to chapters 122A, 126C, and 127A for the school year 
175.30 	ending prior to distribution to the adjusted net tax capacity per pupil unit of the district. 
175.31 	Each district shall receive that portion of the distribution which its index bears to the sum 
175.32 	of the indices for all school districts that receive the distributions.
175.33 	(ii) Notwithstanding clause (i), each school district that receives a distribution 
175.34 	under sections 298.018; 298.23 to 298.28, exclusive of any amount received under this 
175.35 	clause; 298.34 to 298.39; 298.391 to 298.396; 298.405; or any law imposing a tax on 
175.36 	severed mineral values after reduction for any portion distributed to cities and towns under 
176.1 	section 126C.48, subdivision 8, paragraph (5), that is less than the amount of its levy 
176.2 	reduction under section 126C.48, subdivision 8, for the second year prior to the year of the 
176.3 	distribution shall receive a distribution equal to the difference; the amount necessary to 
176.4 	make this payment shall be derived from proportionate reductions in the initial distribution 
176.5 	to other school districts under clause (i).
176.6 	(d) Any school district described in paragraph (c) where a levy increase pursuant to 
176.7 	section 126C.17, subdivision 9, was authorized by referendum for taxes payable in 2001, 
176.8 	shall receive a distribution of 21.3 cents per ton. Each district shall receive $175 times the 
176.9 	pupil units identified in section 126C.05, subdivision 1, enrolled in the second previous 
176.10 	year or the 1983-1984 school year, whichever is greater, less the product of 1.8 percent 
176.11 	times the district's taxable net tax capacity in the second previous year.
176.12 	If the total amount provided by paragraph (d) is insufficient to make the payments 
176.13 	herein required then the entitlement of $175 per pupil unit shall be reduced uniformly 
176.14 	so as not to exceed the funds available. Any amounts received by a qualifying school 
176.15 	district in any fiscal year pursuant to paragraph (d) shall not be applied to reduce general 
176.16 	education aid which the district receives pursuant to section 126C.13 or the permissible 
176.17 	levies of the district. Any amount remaining after the payments provided in this paragraph 
176.18 	shall be paid to the commissioner of Iron Range resources and rehabilitation who shall 
176.19 	deposit the same in the taconite environmental protection fund and the Douglas J. Johnson 
176.20 	economic protection trust fund as provided in subdivision 11.
176.21 	Each district receiving money according to this paragraph shall reserve the lesser of 
176.22 	the amount received under this paragraph or $25 times the number of pupil units served 
176.23 	in the district. It may use the money for early childhood programs or for outcome-based 
176.24 	learning programs that enhance the academic quality of the district's curriculum. The 
176.25 	outcome-based learning programs must be approved by the commissioner of education.
176.26 	(e) There shall be distributed to any school district the amount which the school 
176.27 	district was entitled to receive under section 298.32 in 1975.
176.28 	(f) Effective for the distribution in 2003 only, five percent of the distributions to 
176.29 	school districts under paragraphs (b), (c), and (e); subdivision 6, paragraph (c); subdivision 
176.30 	11; and section 298.225, shall be distributed to the general fund. The remainder less any 
176.31 	portion distributed to cities and towns under section 126C.48, subdivision 8, paragraph 
176.32 	(5), shall be distributed to the Douglas J. Johnson economic protection trust fund created 
176.33 	in section 298.292. Fifty percent of the amount distributed to the Douglas J. Johnson 
176.34 	economic protection trust fund shall be made available for expenditure under section 
176.35 	298.293 as governed by section 298.296. Effective in 2003 only, 100 percent of the 
176.36 	distributions to school districts under section 477A.15 less any portion distributed to 
177.1 	cities and towns under section 126C.48, subdivision 8, paragraph (5), shall be distributed 
177.2 	to the general fund.

177.3 	EFFECTIVE DATE. This section is effective for production in 2007, distributions 
177.4 	in 2008, and thereafter.

177.5 	Sec. 4. Minnesota Statutes 2006, section 298.28, is amended by adding a subdivision 
177.6 	to read:
177.7 		Subd. 9d.Iron Range higher education account. Two cents per taxable ton must 
177.8 	be allocated to the Iron Range Resources and Rehabilitation Board to be deposited in 
177.9 	an Iron Range higher education account that is hereby created, to be used for higher 
177.10 	education programs, scholarships, and grants to postsecondary students attending a higher 
177.11 	education institution located in the taconite assistance area defined in section 273.1341. 
177.12 	The Iron Range Higher Education committee under section 298.2214 must approve all 
177.13 	expenditures from the account. The account must be used for the educational expenses of 
177.14 	undergraduate and postgraduate education of eligible students enrolled in the University 
177.15 	of Minnesota, the Minnesota State Colleges and Universities, and private postsecondary 
177.16 	institutions located in the taconite assistance area defined under section 273.1341.

177.17 	EFFECTIVE DATE. This section is effective for production in 2007, distributions 
177.18 	in 2008, and thereafter.

177.19 	Sec. 5. Minnesota Statutes 2006, section 298.292, subdivision 2, is amended to read:
177.20 		Subd. 2.Use of money. Money in the Douglas J. Johnson economic protection trust 
177.21 	fund may be used for the following purposes:
177.22 	(1) to provide loans, loan guarantees, interest buy-downs and other forms of 
177.23 	participation with private sources of financing, but a loan to a private enterprise shall be 
177.24 	for a principal amount not to exceed one-half of the cost of the project for which financing 
177.25 	is sought, and the rate of interest on a loan to a private enterprise shall be no less than the 
177.26 	lesser of eight percent or an interest rate three percentage points less than a full faith 
177.27 	and credit obligation of the United States government of comparable maturity, at the 
177.28 	time that the loan is approved;
177.29 	(2) to fund reserve accounts established to secure the payment when due of the 
177.30 	principal of and interest on bonds issued pursuant to section 298.2211; 
177.31 	(3) to pay in periodic payments or in a lump sum payment any or all of the interest 
177.32 	on bonds issued pursuant to chapter 474 for the purpose of constructing, converting, 
178.1 	or retrofitting heating facilities in connection with district heating systems or systems 
178.2 	utilizing alternative energy sources; and
178.3 	(4) to invest in a venture capital fund or enterprise that will provide capital to other 
178.4 	entities that are engaging in, or that will engage in, projects or programs that have the 
178.5 	purposes set forth in subdivision 1. No investments may be made in a venture capital fund 
178.6 	or enterprise unless at least two other unrelated investors make investments of at least 
178.7 	$500,000 in the venture capital fund or enterprise, and the investment by the Douglas 
178.8 	J. Johnson economic protection trust fund may not exceed the amount of the largest 
178.9 	investment by an unrelated investor in the venture capital fund or enterprise. For purposes 
178.10 	of this subdivision, an "unrelated investor" is a person or entity that is not related to 
178.11 	the entity in which the investment is made or to any individual who owns more than 40 
178.12 	percent of the value of the entity, in any of the following relationships: spouse, parent, 
178.13 	child, sibling, employee, or owner of an interest in the entity that exceeds ten percent of 
178.14 	the value of all interests in it. For purposes of determining the limitations under this 
178.15 	clause, the amount of investments made by an investor other than the Douglas J. Johnson 
178.16 	economic protection trust fund is the sum of all investments made in the venture capital 
178.17 	fund or enterprise during the period beginning one year before the date of the investment 
178.18 	by the Douglas J. Johnson economic protection trust fund; and
178.19 	(5) to purchase forest land in the taconite assistance area under section 273.1341 to 
178.20 	be held as a public trust for the benefit of the area for recreational uses and for economic 
178.21 	purposes, including timber sales and gravel removal.
178.22 	Money from the trust fund shall be expended only in or for the benefit of the taconite 
178.23 	assistance area defined in section 273.1341. 

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

178.25 	Sec. 6. Minnesota Statutes 2006, section 298.2961, subdivision 4, is amended to read:
178.26 		Subd. 4.Grant and loan fund. (a) A fund is established to receive distributions 
178.27 	under section 298.28, subdivision 9b, and to make grants or loans as provided in this 
178.28 	subdivision. Any grant or loan made under this subdivision must be approved by 
178.29 	a majority of the members of the Iron Range Resources and Rehabilitation Board, 
178.30 	established under section 298.22.
178.31 	(b) Distributions received in calendar year 2005 are allocated to the city of Virginia 
178.32 	for improvements and repairs to the city's steam heating system.
178.33 	(c) Distributions received in calendar year 2006 are allocated to a project of the 
178.34 	public utilities commissions of the cities of Hibbing and Virginia to convert their electrical 
178.35 	generating plants to the use of biomass products, such as wood.
179.1 	(d) Distributions received in calendar year 2007 must be paid to the city of Tower to 
179.2 	be used for the East Two Rivers project in or near the city of Tower.
179.3 	(e) For distributions received in 2008, the first $2,000,000 of the 2008 distribution 
179.4 	must be paid to St. Louis County for deposit in its county road and bridge fund to be used 
179.5 	for relocation of St. Louis County Road 715, commonly referred to as Pike River Road. 
179.6 	The remainder of the 2008 distribution and the fullmust be paid to St. Louis County for a 
179.7 	grant to the City of Virginia for connecting sewer and water lines to the St. Louis County 
179.8 	maintenance garage on Highway 135, further extending the lines to interconnect with the 
179.9 	city of Gilbert's sewer and water lines. The total amount of the distributions in 2009 and 
179.10 	subsequent years is allocated for projects under section 298.223, subdivision 1.

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

179.12 	Sec. 7. IRON RANGE RESOURCES AND REHABILITATION BOARD; 
179.13 	APPROPRIATION; RETIRE BONDS.
 179.14 	Commencing with taxes payable in 2008 there is annually appropriated from 
179.15 	the distribution of the taconite production tax revenues to the taconite environmental 
179.16 	protection fund under Minnesota Statutes, section 298.28, subdivision 11, and to the 
179.17 	Douglas J. Johnson economic protection trust fund under Minnesota Statutes, section 
179.18 	298.28, subdivisions 9 and 11, in equal shares, an amount of $500,000 per year.
179.19 	The revenue received under this section shall be used only to retire Mesabi East 
179.20 	School District No. 2711 bonds in the amount of $9,000,000 issued September 1, 2006, 
179.21 	and in the amount of $6,250,000 issued March 1, 2007. The payments shall continue for a 
179.22 	period of ten years ending with taxes payable in 2017. Payments to the school district 
179.23 	shall be made on March 1.

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

179.25 	Sec. 8. IRON RANGE MEMORIAL FOREST.
 179.26 	Notwithstanding Minnesota Statutes, section 298.293, the Iron Range Resources and 
179.27 	Rehabilitation Board under Minnesota Statutes, section 298.22, may expend funds from 
179.28 	the principal of the Douglas J. Johnson economic protection trust fund under Minnesota 
179.29 	Statutes, sections 298.291 to 298.294, to purchase forest lands. All forest lands purchased 
179.30 	under this section must be held in trust for the benefit of the citizens of the taconite 
179.31 	assistance area under Minnesota Statutes, section 273.1341, as the Iron Range Miners' 
179.32 	Memorial Forest for the benefit of the area as provided under section 1.

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

180.1 	ARTICLE 9
180.2 	SPECIAL TAXES

180.3 	Section 1. Minnesota Statutes 2006, section 291.005, subdivision 1, is amended to read:
180.4 		Subdivision 1.Scope. Unless the context otherwise clearly requires, the following 
180.5 	terms used in this chapter shall have the following meanings:
180.6 	(1) "Federal gross estate" means the gross estate of a decedent as valued and 
180.7 	otherwise determined for federal estate tax purposes by federal taxing authorities pursuant 
180.8 	to the provisions of the Internal Revenue Code.
180.9 	(2) "Minnesota gross estate" means the federal gross estate of a decedent after (a) 
180.10 	excluding therefrom any property included therein which has its situs outside Minnesota, 
180.11 	and (b) including therein any property omitted from the federal gross estate which is 
180.12 	includable therein, has its situs in Minnesota, and was not disclosed to federal taxing 
180.13 	authorities.
180.14 	(3) "Personal representative" means the executor, administrator or other person 
180.15 	appointed by the court to administer and dispose of the property of the decedent. If there 
180.16 	is no executor, administrator or other person appointed, qualified, and acting within this 
180.17 	state, then any person in actual or constructive possession of any property having a situs in 
180.18 	this state which is included in the federal gross estate of the decedent shall be deemed 
180.19 	to be a personal representative to the extent of the property and the Minnesota estate tax 
180.20 	due with respect to the property.
180.21 	(4) "Resident decedent" means an individual whose domicile at the time of death 
180.22 	was in Minnesota.
180.23 	(5) "Nonresident decedent" means an individual whose domicile at the time of 
180.24 	death was not in Minnesota.
180.25 	(6) "Situs of property" means, with respect to real property, the state or country in 
180.26 	which it is located; with respect to tangible personal property, the state or country in which 
180.27 	it was normally kept or located at the time of the decedent's death; and with respect to 
180.28 	intangible personal property, the state or country in which the decedent was domiciled 
180.29 	at death.
180.30 	(7) "Commissioner" means the commissioner of revenue or any person to whom the 
180.31 	commissioner has delegated functions under this chapter.
180.32 	(8) "Internal Revenue Code" means the United States Internal Revenue Code of 
180.33 	1986, as amended through May 18 December 31, 2006.
180.34 	(9) "Minnesota adjusted taxable estate" means the following amount:
181.1 	(i) federal adjusted taxable estate as defined by section 2011(b)(3) of the Internal 
181.2 	Revenue Code, increased by; plus
181.3 	(ii) the amount of deduction for state death taxes allowed under section 2058 of 
181.4 	the Internal Revenue Code.; plus
181.5 	(iii) expenses which are deducted for federal income tax purposes under section 
181.6 	642(g) of the Internal Revenue Code; plus
181.7 	(iv) the amount of taxable gifts as defined in section 2503 of the Internal Revenue 
181.8 	Code made by the decedent within three years of the decedent's date of death. For 
181.9 	purposes of this clause, the amount of the addition equals the value of the gift under 
181.10 	section 2512 of the Internal Revenue Code and excludes any value of the gift included 
181.11 	in the federal adjusted taxable estate; less
181.12 	(v) the value of qualified farm property under section 291.03, subdivision 9, and 
181.13 	qualified small business property under section 291.03, subdivision 10, but not to exceed 
181.14 	$500,000. 

181.15 	EFFECTIVE DATE. This section is effective for decedents dying after December 
181.16 	31, 2006.

181.17 	Sec. 2. Minnesota Statutes 2006, section 291.03, subdivision 1, is amended to read:
181.18 		Subdivision 1.Tax amount. The tax imposed shall be an amount equal to the 
181.19 	proportion of the maximum credit for state death taxes computed under section 2011 of 
181.20 	the Internal Revenue Code, as amended through December 31, 2000, but using Minnesota 
181.21 	adjusted taxable estate instead of federal adjusted taxable estate, as the Minnesota gross 
181.22 	estate bears to the value of the federal gross estate. The tax determined under this 
181.23 	paragraph shall not be greater than the amount computed by applying the rates and 
181.24 	brackets under section 2001(c) of the Internal Revenue Code to the Minnesota adjusted 
181.25 	gross taxable estate and subtracting the federal credit allowed under section 2010 of 
181.26 	the Internal Revenue Code of 1986, as amended through December 31, 2000. For the 
181.27 	purposes of this section, expenses which are deducted for federal income tax purposes 
181.28 	under section 642(g) of the Internal Revenue Code as amended through December 31, 
181.29 	2002, are not allowable in computing the tax under this chapter.

181.30 	EFFECTIVE DATE. This section is effective for decedents dying after December 
181.31 	31, 2006.

181.32 	Sec. 3. Minnesota Statutes 2006, section 291.03, is amended by adding a subdivision 
181.33 	to read:
182.1 		Subd. 8.Definitions. (a) For purposes of this section, the following terms have the 
182.2 	meanings given in this subdivision.
182.3 	(b) "Family member" means a family member as defined in section 2032A(e)(2) of 
182.4 	the Internal Revenue Code.
182.5 	(c) "Qualified heir" means a family member who acquired qualified property from 
182.6 	the decedent and satisfies the requirement under subdivision 9, clause (4), or under 
182.7 	subdivision 10, clause (6), for the property.
182.8 	(d) "Qualified property" means qualified farm property under subdivision 9 and 
182.9 	qualified small business property under subdivision 10.

182.10 	EFFECTIVE DATE. This section is effective for decedents dying after December 
182.11 	31, 2006.

182.12 	Sec. 4. Minnesota Statutes 2006, section 291.03, is amended by adding a subdivision 
182.13 	to read:
182.14 		Subd. 9.Qualified farm property. Property is qualified farm property if it satisfies 
182.15 	all of the following requirements:
182.16 	(1) the value of the property was included in the Minnesota gross estate;
182.17 	(2) the property consists of a farm that meets the requirements of section 500.24 
182.18 	and was classified for property tax purposes as the homestead of the decedent or the 
182.19 	decedent's spouse or both under section 273.124, and as class 2a property under section 
182.20 	273.13, subdivision 23;
182.21 	(3) the decedent continuously owned the property for the three-year period ending 
182.22 	on the date of death of the decedent;
182.23 	(4) a family member continuously uses the property in the operation of the trade or 
182.24 	business for three years following the date of death of the decedent; and
182.25 	(5) the estate and the qualified heir elect to treat the property as qualified farm 
182.26 	property and agree, in a form prescribed by the commissioner, to pay the recapture tax 
182.27 	under subdivision 11, if applicable.

182.28 	EFFECTIVE DATE. This section is effective for decedents dying after December 
182.29 	31, 2006.

182.30 	Sec. 5. Minnesota Statutes 2006, section 291.03, is amended by adding a subdivision 
182.31 	to read:
182.32 		Subd. 10.Qualified small business property. Property satisfying all of the 
182.33 	following requirements is qualified small business property:
183.1 	(1) The value of the property was included in the Minnesota gross estate.
183.2 	(2) The property consists of the assets of a trade or business or shares of stock or 
183.3 	other ownership interests in a corporation or other entity engaged in a trade or business. 
183.4 	The decedent or the decedent's spouse must have materially participated in the trade or 
183.5 	business within the meaning of section 469 of the Internal Revenue Code during the 
183.6 	taxable year that ended before the date of the decedent's death. Shares of stock in a 
183.7 	corporation or an ownership interest in another type of entity do not qualify under this 
183.8 	subdivision if the shares or ownership interests are traded on a public stock exchange at 
183.9 	any time during the three-year period ending on the decedent's date of death.
183.10 	(3) The gross annual sales of the trade or business were $10,000,000 or less for the 
183.11 	last taxable year that ended before the date of the death of the decedent.
183.12 	(4) The property does not consist of cash or cash equivalents. For property consisting 
183.13 	of shares of stock or other ownership interests in an entity, the amount of cash or cash 
183.14 	equivalents held by the corporation or other entity must be deducted from the value of 
183.15 	the property qualifying under this subdivision in proportion to the decedent's share of 
183.16 	ownership of the entity on the date of death.
183.17 	(5) The decedent continuously owned the property for the three-year period ending 
183.18 	on the date of death of the decedent.
183.19 	(6) A family member continuously uses the property in the operation of the trade or 
183.20 	business for three years following the date of death of the decedent.
183.21 	(7) The estate and the qualified heir elect to treat the property as qualified small 
183.22 	business property and agree, in the form prescribed by the commissioner, to pay the 
183.23 	recapture tax under subdivision 11, if applicable.

183.24 	EFFECTIVE DATE. This section is effective for decedents dying after December 
183.25 	31, 2006.

183.26 	Sec. 6. Minnesota Statutes 2006, section 291.03, is amended by adding a subdivision 
183.27 	to read:
183.28 		Subd. 11.Recapture tax. (a) The tax under this subdivision applies, if, within three 
183.29 	years after the decedent's death and before the death of the qualified heir, the qualified 
183.30 	heir disposes of any interest in qualified property, other than by a disposition to a family 
183.31 	member who satisfies the requirement under subdivision 9, clause (4), and subdivision 
183.32 	10, clause (6), for the remainder of the three years following the date of death of the 
183.33 	decedent, and who agrees, in a form prescribed by the commissioner, to pay the recapture 
183.34 	tax under this subdivision, if applicable.
184.1 	(b) The amount of the additional tax equals the amount of the exclusion claimed 
184.2 	by the estate under section 291.005, subdivision 1, clause (9), item (v), multiplied by 
184.3 	16 percent.
184.4 	(c) The additional tax under this subdivision is due on the day which is six months 
184.5 	after the date of the disposition or cessation in paragraph (a).

184.6 	EFFECTIVE DATE. This section is effective for decedents dying after December 
184.7 	31, 2006.

184.8 	Sec. 7. Minnesota Statutes 2006, section 291.215, subdivision 1, is amended to read:
184.9 		Subdivision 1.Determination. All property includable in the Minnesota gross 
184.10 	estate of a decedent shall be valued in accordance with the provisions of sections 2031 or 
184.11 	2032 and, if applicable, 2032A, of the Internal Revenue Code and any elections made in 
184.12 	valuing the federal gross estate shall be applicable in valuing the Minnesota gross estate. 
184.13 	Values for purposes of the estate tax on both probate and nonprobate assets shall be the 
184.14 	same as those finally determined for purposes of the federal estate tax on a decedent's 
184.15 	estate. Except as otherwise provided in section 291.075, the value of all property 
184.16 	includable in the Minnesota gross estate of a decedent may be independently determined 
184.17 	under those sections of the Internal Revenue Code for Minnesota estate tax purposes.

184.18 	EFFECTIVE DATE. This section is effective retroactively for estates of decedents 
184.19 	dying after December 31, 2005.

184.20 	Sec. 8. [295.90] HOCKEY HERITAGE SURCHARGE.
184.21 		Subdivision 1.Imposition. A surcharge of ten cents is imposed on each ticket or 
184.22 	admission to a professional men's hockey game held in the state.
184.23 		Subd. 2.Collection, remittance. The surcharge imposed under this subdivision 
184.24 	shall be collected by the professional men's hockey team or association sponsoring or 
184.25 	holding the hockey game. The team or association shall annually report the surcharge on a 
184.26 	form prescribed by the commissioner of revenue and remit the surcharge with the return to 
184.27 	the commissioner of revenue by March 15 of the following calendar year.
184.28 		Subd. 3.Administration. The commissioner of revenue shall have authority to 
184.29 	administer, collect, enforce, refund, and audit the surcharge under this section. Interest 
184.30 	on late payments or refunds of the surcharge shall be at the rates specified under section 
184.31 	289A.55, and penalties for failure to file, pay, or underpay the surcharge shall be at the 
184.32 	rates provided under section 289A.60, subdivision 1, paragraph (e), and subdivision 2.
185.1 		Subd. 4.Deposit of revenues. The commissioner of revenue shall deposit all 
185.2 	revenues, including penalty and interest, derived from the surcharge imposed in this 
185.3 	section in the hockey surcharge account in the special revenue fund. The amount deposited 
185.4 	under this section is appropriated to the Iron Range Resources and Rehabilitation Board 
185.5 	for payment to the city of Eveleth to be used for the support of the Hockey Hall of Fame 
185.6 	Museum provided that it continues to operate in the city. Payments under this section for 
185.7 	the Hockey Hall of Fame Museum are in addition to and must not be used to supplant 
185.8 	funding under section 298.28, subdivision 9c.

185.9 	Sec. 9. Minnesota Statutes 2006, section 296A.18, subdivision 4, is amended to read:
185.10 		Subd. 4.All-terrain vehicle. Approximately 0.150.27 of one percent of all gasoline 
185.11 	received in or produced or brought into this state, except gasoline used for aviation 
185.12 	purposes, is being used for the operation of all-terrain vehicles in this state, and of the total 
185.13 	revenue derived from the imposition of the gasoline fuel tax, 0.150.27 of one percent is 
185.14 	the amount of tax on fuel used in all-terrain vehicles operated in this state.

185.15 	EFFECTIVE DATE. This section is effective for revenue received after June 
185.16 	30, 2008.

185.17 	Sec. 10. Minnesota Statutes 2006, section 297E.02, is amended by adding a subdivision 
185.18 	to read:
185.19 		Subd. 12.Tax rates for fiscal years 2008 to 2010. (a) Notwithstanding the 
185.20 	provisions of subdivisions 1, 4, and 6, the tax rates under this subdivision apply in lieu of 
185.21 	the rates in those subdivisions for the periods specified.
185.22 	(b) For purposes of subdivision 1, a rate of 7.9 percent must be used for gross 
185.23 	receipts received after June 30, 2007, and before July 1, 2010.
185.24 	(c) For purposes of subdivision 4, paragraph (a), a tax rate of 1.6 percent applies 
185.25 	from July 1, 2007, through June 30, 2010, and a refund or credit rate of 1.65 percent 
185.26 	applies for the February 2008 and February 2011 monthly returns and a refund or credit 
185.27 	rate of 1.6 percent applies for the February 2009 and February 2010 monthly returns.
185.28 	(d) For purposes of subdivision 6, the following combined receipts tax rates apply 
185.29 	for fiscal years 2008, 2009, and 2010:

185.30
185.31		If combined receipts for the fiscal 
year are:
		The tax is:
	
185.32		Not over $500,000
		zero
	
185.33
185.34		Over $500,000, but not over 
$700,000
		1.6 percent of the amount over 
$500,000, but not over $700,000
	
186.1
186.2
186.3		Over $700,000, but not over 
$900,000
		$3,200 plus 3.2 percent of the 
amount over $700,000, but not 
over $900,000
	
186.4
186.5		Over $900,000
		$9,600 plus 4.7 percent of the 
amount over $900,000

186.6 	EFFECTIVE DATE. This section is effective on July 1, 2007.

186.7 	Sec. 11. Minnesota Statutes 2006, section 297F.01, is amended by adding a subdivision 
186.8 	to read:
186.9 		Subd. 10b.Moist snuff. "Moist snuff" means any finely cut, ground, or powdered 
186.10 	smokeless tobacco that is intended to be placed or dipped in the oral cavity.

186.11 	Sec. 12. Minnesota Statutes 2006, section 297F.01, subdivision 19, is amended to read:
186.12 		Subd. 19.Tobacco products. "Tobacco products" means cigars; little cigars; 
186.13 	cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other 
186.14 	smoking tobacco; snuff, including moist snuff and dry snuff; snuff flour; cavendish; plug 
186.15 	and twist tobacco; fine-cut and other chewing tobacco; shorts; refuse scraps, clippings, 
186.16 	cuttings and sweepings of tobacco, and other kinds and forms of tobacco, prepared in 
186.17 	such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for 
186.18 	chewing and smoking; but does not include cigarettes as defined in this section.

186.19 	Sec. 13. Minnesota Statutes 2006, section 297F.05, subdivision 3, is amended to read:
186.20 		Subd. 3.Rates; tobacco products. A tax is imposed upon all tobacco products in 
186.21 	this state and upon any person engaged in business as a distributor, at the rate rates of:
186.22 	(i) 35 percent of the wholesale sales price of the tobacco products other than moist 
186.23 	snuff; and
186.24 	(ii) in the case of moist snuff, the greater of (A) 91 cents per ounce on the net weight 
186.25 	of the moist snuff in ounces, including a proportionate tax at the like rate on any fractional 
186.26 	parts of an ounce, as listed by the manufacturer and rounded up to the nearest one-tenth 
186.27 	of an ounce, or (B) $1.09 per container. 
186.28 	The tax is imposed at the time the distributor:
186.29 	(1) brings, or causes to be brought, into this state from outside the state tobacco 
186.30 	products for sale;
186.31 	(2) makes, manufactures, or fabricates tobacco products in this state for sale in 
186.32 	this state; or
187.1 	(3) ships or transports tobacco products to retailers in this state, to be sold by those 
187.2 	retailers.

187.3 	EFFECTIVE DATE. This section is effective July 1, 2007, but does not apply to 
187.4 	any moist snuff (i) that was in the inventory of a distributor, wholesaler, or retail dealer 
187.5 	within this state on that date, and (ii) as to which the tax levied by Minnesota Statutes, 
187.6 	section 297F.05, subdivision 3, and the tobacco health impact fee levied by Minnesota 
187.7 	Statutes, section 256.9658, subdivision 3, paragraph (b), had been paid as of August 
187.8 	1, 2007.

187.9 	Sec. 14. Minnesota Statutes 2006, section 297F.05, subdivision 4, is amended to read:
187.10 		Subd. 4.Use tax; tobacco products. A tax is imposed upon the use or storage by 
187.11 	consumers of tobacco products in this state, and upon such consumers, at the rate rates of:
187.12 	(i) 35 percent of the cost to the consumer of the tobacco products other than moist 
187.13 	snuff; and
187.14 	(ii) in the case of moist snuff, the greater of (A) 91 cents per ounce on the net weight 
187.15 	of the moist snuff in ounces, including a proportionate tax at the like rate on any fractional 
187.16 	parts of an ounce, as listed by the manufacturer and rounded up to the nearest one-tenth 
187.17 	of an ounce, or (B) $1.09 per container.

187.18 	EFFECTIVE DATE. This section is effective July 1, 2007, but does not apply to 
187.19 	any moist snuff (i) that was in the inventory of a distributor, wholesaler, or retail dealer 
187.20 	within this state on that date, or in the possession of a consumer within this state on 
187.21 	that date, and (ii) as to which the tax levied by Minnesota Statutes, section 297F.05, 
187.22 	subdivisions 3 and 4, and the tobacco health impact fee levied by Minnesota Statutes, 
187.23 	section 256.9658, subdivision 3, paragraph (b), had been paid as of August 1, 2007.

187.24 	Sec. 15. Minnesota Statutes 2006, section 297F.05, is amended by adding a subdivision 
187.25 	to read:
187.26 		Subd. 8.Adjustment for inflation. (a) Each year the rates of tax applicable to 
187.27 	moist snuff under subdivisions 3 and 4 are adjusted for inflation as provided in this 
187.28 	section. The inflation adjusted rate of tax applies to sales, use and possession of moist 
187.29 	snuff during the calendar year.
187.30 	(b) In making the inflation adjustment under this subdivision for a calendar year, the 
187.31 	commissioner shall adjust the tax rate by the percentage determined under the section 1(f) 
187.32 	of the Internal Revenue Code of 1986, except that in section 1(f)(3)(B) the word "2007" 
187.33 	is substituted for the word "1992." For 2009, the commissioner shall then determine the 
188.1 	percent change from the 12 months ending on August 31, 2007, to the 12 months ending 
188.2 	on August 31, 2008, and in each subsequent year, from the 12 months ending on August 
188.3 	31, 2007, to the 12 months ending on August 31 of the year preceding the calendar year. 
188.4 	The amount as adjusted must be rounded to the nearest cent. If the amount ends in 0.5 
188.5 	cent, the amount is rounded up to the nearest cent. 
188.6 	(c) The determination of the commissioner under this subdivision is not a "rule" and 
188.7 	is not subject to the Administrative Procedure Act in chapter 14.

188.8 	EFFECTIVE DATE. This section is effective beginning for calendar year 2009.

188.9 	Sec. 16. Minnesota Statutes 2006, section 297F.21, subdivision 3, is amended to read:
188.10 		Subd. 3.Inventory; judicial determination; appeal; disposition of seized 
188.11 	property. (a) Within ten days after the seizure of any alleged contraband, the person 
188.12 	making the seizure shall serve by certified mail an inventory of the property seized on the 
188.13 	person from whom the seizure was made, if known, and on any person known or believed 
188.14 	to have any right, title, interest, or lien in the property, at the last known address, and file 
188.15 	a copy with the commissioner. The notice must include an explanation of the right to 
188.16 	demand a judicial forfeiture determination.
188.17 	(b) Within 60 days after the date of service of the inventory, which is the date of 
188.18 	mailing, the person from whom the property was seized or any person claiming an interest 
188.19 	in the property may file a demand for a judicial determination of the question as to whether 
188.20 	the property was lawfully subject to seizure and forfeiture. The demand must be in the 
188.21 	form of a civil complaint and must be filed with the court administrator in the county in 
188.22 	which the seizure occurred, together with proof of service of a copy of the complaint 
188.23 	on the commissioner of revenue, and the standard filing fee for civil actions unless the 
188.24 	petitioner has the right to sue in forma pauperis under section 563.01. If the value of the 
188.25 	seized property is $7,500 or less, the claimant may file an action in conciliation court for 
188.26 	recovery of the property. If the value of the seized property is less than $500, the claimant 
188.27 	does not have to pay the conciliation court filing fee. 
188.28 	(c) The complaint must be captioned in the name of the claimant as plaintiff and 
188.29 	the seized property as defendant, and must state with specificity the grounds on which 
188.30 	the claimant alleges the property was improperly seized and the plaintiff's interest in the 
188.31 	property seized. No responsive pleading is required of the commissioner, and no court 
188.32 	fees may be charged for the commissioner's appearance in the matter. The proceedings 
188.33 	are governed by the Rules of Civil Procedure. Notwithstanding any law to the contrary, 
188.34 	an action for the return of property seized under this section may not be maintained by 
188.35 	or on behalf of any person who has been served with an inventory unless the person has 
189.1 	complied with this subdivision. The court shall decide whether the alleged contraband is 
189.2 	contraband, as defined in subdivision 1. The court shall hear the action without a jury and 
189.3 	shall try and determine the issues of fact and law involved.
189.4 	(d) When a judgment of forfeiture is entered, the commissioner may, unless the 
189.5 	judgment is stayed pending an appeal, either the commissioner:
189.6 	(1) deliver the forfeited cigarette packages or tobacco products to the commissioner 
189.7 	of human services for use by patients in state institutions may authorize the forfeited 
189.8 	property to be used for the purpose of enforcing a criminal provision of state or federal law;
189.9 	(2) shall cause the property in clause (1) forfeited cigarette packages or tobacco 
189.10 	products not used under clause (1) to be destroyed; or and products used under clause (1) 
189.11 	to be destroyed upon the completion of use; and
189.12 	(3) may cause the forfeited property, other than forfeited cigarette packages or 
189.13 	tobacco products, to be sold at public auction as provided by law.
189.14 	The person making a sale, after deducting the expense of keeping the property, the fee 
189.15 	for seizure, and the costs of the sale, shall pay all liens according to their priority, which 
189.16 	are established as being bona fide and as existing without the lienor having any notice 
189.17 	or knowledge that the property was being used or was intended to be used for or in 
189.18 	connection with the violation. The balance of the proceeds must be paid 75 percent to the 
189.19 	Department of Revenue for deposit as a supplement to its operating fund or similar fund 
189.20 	for official use, and 25 percent to the county attorney or other prosecuting agency that 
189.21 	handled the court proceeding, if there is one, for deposit as a supplement to its operating 
189.22 	fund or similar fund for prosecutorial purposes. If there is no prosecuting authority 
189.23 	involved in the forfeiture, the 25 percent of the proceeds otherwise designated for the 
189.24 	prosecuting authority must be deposited into the general fund.
189.25 	(e) If no demand for judicial determination is made, the property seized is considered 
189.26 	forfeited to the state by operation of law and may be disposed of by the commissioner as 
189.27 	provided in the case of a judgment of forfeiture.

189.28 	EFFECTIVE DATE. This section is effective for forfeitures after June 30, 2007.

189.29 	Sec. 17. Minnesota Statutes 2006, section 297I.15, is amended by adding a subdivision 
189.30 	to read:
189.31 		Subd. 11.Premiums paid to certain foreign insurance companies. With respect 
189.32 	to the state employees group insurance program established under sections 43A.23 to 
189.33 	43A.31, premiums paid for life insurance and accidental death and dismemberment 
189.34 	insurance for eligible employees and dependents, including premiums paid by employees 
190.1 	or dependents for optional coverage, are exempt from the taxes imposed under this chapter 
190.2 	to the extent the premiums are paid to a foreign insurance company domiciled in a state 
190.3 	that exempts its state employee group life insurance program from premium taxes.

190.4 	EFFECTIVE DATE. This section is effective for premiums paid after December 
190.5 	31, 2006.

190.6 	Sec. 18. [383D.75] DAKOTA COUNTY DEED AND MORTGAGE TAX.
190.7 		Subdivision 1.Authority to impose; rate. (a) The governing body of Dakota 
190.8 	County may impose a mortgage registry and deed tax.
190.9 	(b) The rate of the mortgage registry tax equals .0001 of the principal.
190.10 	(c) The rate of the deed tax equals .0001 of the amount.
190.11 		Subd. 2.General law provisions apply. The taxes under this section apply to 
190.12 	the same base and must be imposed, collected, administered, and enforced in the same 
190.13 	manner as provided under chapter 287 for the state mortgage registry and deed taxes. 
190.14 	All the provisions of chapter 287 apply to these taxes, except the rate is as specified in 
190.15 	subdivision 1, the term "Dakota County" must be substituted for "the state," and the 
190.16 	revenue must be deposited as provided in subdivision 3.
190.17 		Subd. 3.Deposit of revenues. All revenues from the tax are for the use of 
190.18 	the Dakota County Board of Commissioners and must be deposited in the county's 
190.19 	environmental response fund under section 383D.76.

190.20 	Sec. 19. [383D.76] DAKOTA COUNTY ENVIRONMENTAL RESPONSE FUND.
190.21 		Subdivision 1.Creation. An environmental response fund is created for the purposes 
190.22 	specified in this section. The taxes imposed by section 383D.75 must be deposited in the 
190.23 	fund. The Board of County Commissioners shall administer the fund either as a county 
190.24 	board, a housing and redevelopment authority, or a regional rail authority.
190.25 		Subd. 2.Uses of fund. The fund created in subdivision 1 must be used for the 
190.26 	following purposes:
190.27 	(1) acquisition through purchase or condemnation of lands or property which are 
190.28 	polluted or contaminated with hazardous substances;
190.29 	(2) paying the costs associated with indemnifying or holding harmless the 
190.30 	entity taking title to lands or property from any liability arising out of the ownership, 
190.31 	remediation, or use of the land or property;
190.32 	(3) paying for the costs of remediating the acquired land or property;
190.33 	(4) paying the costs associated with remediating lands or property which are polluted 
190.34 	or contaminated with hazardous substances; or
191.1 	(5) paying for the costs associated with improving the property for economic 
191.2 	development, recreational, housing, transportation or rail traffic.
191.3 		Subd. 3.Matching funds. In expending funds under this section, the county shall 
191.4 	seek matching funds from contamination cleanup funds administered by the commissioner 
191.5 	of the Department of Employment and Economic Development, the Metropolitan Council, 
191.6 	the federal government, the private sector, and any other source.
191.7 		Subd. 4.Bonds. The county may pledge the proceeds from the taxes imposed by 
191.8 	section 383D.75 to bonds issued under this chapter and chapters 398A, 462, 469, and 475. 
191.9 		Subd. 5.Land sales. Land or property acquired under this section may be resold 
191.10 	at fair market value. Proceeds from the sale of the land must be deposited in the 
191.11 	environmental response fund.

191.12 	Sec. 20. [383E.235] ANOKA COUNTY DEED AND MORTGAGE TAX.
191.13 		Subdivision 1.Authority to impose; rate. (a) The governing body of Anoka 
191.14 	County may impose a mortgage registry and deed tax.
191.15 	(b) The rate of the mortgage registry tax equals .0001 of the principal.
191.16 	(c) The rate of the deed tax equals .0001 of the amount.
191.17 		Subd. 2.General law provisions apply. The taxes under this section apply to 
191.18 	the same base and must be imposed, collected, administered, and enforced in the same 
191.19 	manner as provided under chapter 287 for the state mortgage registry and deed taxes. 
191.20 	All the provisions of chapter 287 apply to these taxes, except the rate is as specified 
191.21 	in subdivision 1, the term "Anoka County" must be substituted for "the state," and the 
191.22 	revenue must be deposited as provided in subdivision 3.
191.23 		Subd. 3.Deposit of revenues. All revenues from the tax are for the use of the Anoka 
191.24 	County Board of Commissioners and must be deposited in the county's environmental 
191.25 	response fund under section 383E.236.

191.26 	Sec. 21. [383E.236] ANOKA COUNTY ENVIRONMENTAL RESPONSE FUND.
191.27 		Subdivision 1.Creation. An environmental response fund is created for the purposes 
191.28 	specified in this section. The taxes imposed by section 383E.235 must be deposited in the 
191.29 	fund. The Board of County Commissioners shall administer the fund either as a county 
191.30 	board, a housing and redevelopment authority, or a regional rail authority.
191.31 		Subd. 2.Uses of fund. The fund created in subdivision 1 must be used for the 
191.32 	following purposes:
191.33 	(1) acquisition through purchase or condemnation of lands or property which are 
191.34 	polluted or contaminated with hazardous substances;
192.1 	(2) paying the costs associated with indemnifying or holding harmless the 
192.2 	entity taking title to lands or property from any liability arising out of the ownership, 
192.3 	remediation, or use of the land or property;
192.4 	(3) paying for the costs of remediating the acquired land or property;
192.5 	(4) paying the costs associated with remediating lands or property which are polluted 
192.6 	or contaminated with hazardous substances; or
192.7 	(5) paying for the costs associated with improving the property for economic 
192.8 	development, recreation, housing, transportation, or rail traffic.
192.9 		Subd. 3.Matching funds. In expending funds under this section, the county shall 
192.10 	seek matching funds from contamination cleanup funds administered by the commissioner 
192.11 	of the Department of Employment and Economic Development, the Metropolitan Council, 
192.12 	the federal government, the private sector, and any other source.
192.13 		Subd. 4.Bonds. The county may pledge the proceeds from the taxes imposed by 
192.14 	section 383E.235 to bonds issued under this section and Minnesota Statutes, chapters 
192.15 	398A, 462, 469, and 475. 
192.16 		Subd. 5.Land sales. Land or property acquired under this section may be resold 
192.17 	at fair market value. Proceeds from the sale of the land must be deposited in the 
192.18 	environmental response fund.
192.19 		Subd. 6.DOT assistance. The commissioner of transportation shall collaborate with 
192.20 	the county and any affected municipality by providing technical assistance and support in 
192.21 	cleaning up a contaminated site related to a trunk highway or railroad improvement.

192.22 	Sec. 22. REPEALER.
 192.23 	Minnesota Statutes 2006, sections 383A.80, subdivision 4; and 383B.80, subdivision 
192.24 	4, are repealed.

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

192.26 	ARTICLE 10
192.27 	DEPARTMENT INCOME AND FRANCHISE TAXES

192.28 	Section 1. Minnesota Statutes 2006, section 270A.03, subdivision 5, is amended to 
192.29 	read:
192.30 		Subd. 5.Debt. (a) "Debt" means a legal obligation of a natural person to pay a fixed 
192.31 	and certain amount of money, which equals or exceeds $25 and which is due and payable 
192.32 	to a claimant agency. The term includes criminal fines imposed under section 609.10 or 
192.33 	609.125, fines imposed for petty misdemeanors as defined in section 609.02, subdivision 
193.1 	4a, and restitution. The term also includes the co-payment for the appointment of a district 
193.2 	public defender imposed under section 611.17, paragraph (c). A debt may arise under a 
193.3 	contractual or statutory obligation, a court order, or other legal obligation, but need not 
193.4 	have been reduced to judgment.
193.5 	A debt includes any legal obligation of a current recipient of assistance which is 
193.6 	based on overpayment of an assistance grant where that payment is based on a client 
193.7 	waiver or an administrative or judicial finding of an intentional program violation; 
193.8 	or where the debt is owed to a program wherein the debtor is not a client at the time 
193.9 	notification is provided to initiate recovery under this chapter and the debtor is not a 
193.10 	current recipient of food support, transitional child care, or transitional medical assistance.
193.11 	(b) A debt does not include any legal obligation to pay a claimant agency for medical 
193.12 	care, including hospitalization if the income of the debtor at the time when the medical 
193.13 	care was rendered does not exceed the following amount:
193.14 	(1) for an unmarried debtor, an income of $8,800 or less;
193.15 	(2) for a debtor with one dependent, an income of $11,270 or less;
193.16 	(3) for a debtor with two dependents, an income of $13,330 or less;
193.17 	(4) for a debtor with three dependents, an income of $15,120 or less;
193.18 	(5) for a debtor with four dependents, an income of $15,950 or less; and
193.19 	(6) for a debtor with five or more dependents, an income of $16,630 or less.
193.20 	The income amounts in this subdivision shall be adjusted for inflation for debts 
193.21 	incurred in calendar years 2001 and thereafter. The dollar amount of each income level 
193.22 	that applied to debts incurred in the prior year shall be increased in the same manner 
193.23 	as provided in section 1(f) of the Internal Revenue Code of 1986, as amended through 
193.24 	December 31, 2000, except that for the purposes of this subdivision the percentage 
193.25 	increase shall be determined from the year starting September 1, 1999, and ending August 
193.26 	31, 2000, as the base year for adjusting for inflation for debts incurred after December 
193.27 	31, 2000. (c) The commissioner shall adjust the income amounts in paragraph (b) by the 
193.28 	percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue 
193.29 	Code, except that in section 1(f)(3)(B) the word "1999" shall be substituted for the word 
193.30 	"1992." For 2001, the commissioner shall then determine the percent change from the 12 
193.31 	months ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in 
193.32 	each subsequent year, from the 12 months ending on August 31, 1999, to the 12 months 
193.33 	ending on August 31 of the year preceding the taxable year. The determination of the 
193.34 	commissioner pursuant to this subdivision shall not be considered a "rule" and shall not 
193.35 	be subject to the Administrative Procedure Act contained in chapter 14. The income 
194.1 	amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in 
194.2 	$5, the amount is rounded up to the nearest $10 amount.
194.3 	(d) Debt also includes an agreement to pay a MinnesotaCare premium, regardless of 
194.4 	the dollar amount of the premium authorized under section 256L.15, subdivision 1a.

194.5 	EFFECTIVE DATE. This section is effective for debts incurred after December 
194.6 	31, 2006.

194.7 	Sec. 2. Minnesota Statutes 2006, section 289A.08, subdivision 11, is amended to read:
194.8 		Subd. 11.Information included in income tax return. (a) The return must state:
194.9 	(1) the name of the taxpayer, or taxpayers, if the return is a joint return, and the 
194.10 	address of the taxpayer in the same name or names and same address as the taxpayer has 
194.11 	used in making the taxpayer's income tax return to the United States, and must state;
194.12 	(2) the date or dates of birth of the taxpayer or taxpayers;
194.13 	(3) the Social Security number of the taxpayer, or taxpayers, if a Social Security 
194.14 	number has been issued by the United States with respect to the taxpayers, and must 
194.15 	state; and
194.16 	(4) the amount of the taxable income of the taxpayer as it appears on the federal 
194.17 	return for the taxable year to which the Minnesota state return applies. 
194.18 	(b) The taxpayer must attach to the taxpayer's Minnesota state income tax return 
194.19 	a copy of the federal income tax return that the taxpayer has filed or is about to file for 
194.20 	the period, unless the taxpayer is eligible to telefile the federal return and does file the 
194.21 	Minnesota return by telefiling.

194.22 	EFFECTIVE DATE. This section is effective for tax years beginning after 
194.23 	December 31, 2006.

194.24 	Sec. 3. Minnesota Statutes 2006, section 289A.09, subdivision 2, is amended to read:
194.25 		Subd. 2.Withholding statement to employee or payee and to commissioner. (a) 
194.26 	A person required to deduct and withhold from an employee a tax under section 290.92, 
194.27 	subdivision 2a or 3, or 290.923, subdivision 2, or who would have been required to 
194.28 	deduct and withhold a tax under section 290.92, subdivision 2a or 3, or persons required 
194.29 	to withhold tax under section 290.923, subdivision 2, determined without regard to 
194.30 	section 290.92, subdivision 19, if the employee or payee had claimed no more than one 
194.31 	withholding exemption, or who paid wages or made payments not subject to withholding 
194.32 	under section 290.92, subdivision 2a or 3, or 290.923, subdivision 2, to an employee or 
194.33 	person receiving royalty payments in excess of $600, or who has entered into a voluntary 
195.1 	withholding agreement with a payee under section 290.92, subdivision 20, must give 
195.2 	every employee or person receiving royalty payments in respect to the remuneration paid 
195.3 	by the person to the employee or person receiving royalty payments during the calendar 
195.4 	year, on or before January 31 of the succeeding year, or, if employment is terminated 
195.5 	before the close of the calendar year, within 30 days after the date of receipt of a written 
195.6 	request from the employee if the 30-day period ends before January 31, a written statement 
195.7 	showing the following: 
195.8 	(1) name of the person;
195.9 	(2) the name of the employee or payee and the employee's or payee's Social Security 
195.10 	account number;
195.11 	(3) the total amount of wages as that term is defined in section 290.92, subdivision 
195.12 	1, paragraph (1); the total amount of remuneration subject to withholding under section 
195.13 	290.92, subdivision 20; the amount of sick pay as required under section 6051(f) of the 
195.14 	Internal Revenue Code; and the amount of royalties subject to withholding under section 
195.15 	290.923, subdivision 2; and 
195.16 	(4) the total amount deducted and withheld as tax under section 290.92, subdivision 
195.17 	2a or 3, or 290.923, subdivision 2. 
195.18 	(b) The statement required to be furnished by this paragraph (a) with respect to any 
195.19 	remuneration must be furnished at those times, must contain the information required, and 
195.20 	must be in the form the commissioner prescribes.
195.21 	(c) The commissioner may prescribe rules providing for reasonable extensions of 
195.22 	time, not in excess of 30 days, to employers or payers required to give the statements to 
195.23 	their employees or payees under this subdivision.
195.24 	(d) A duplicate of any statement made under this subdivision and in accordance 
195.25 	with rules prescribed by the commissioner, along with a reconciliation in the form the 
195.26 	commissioner prescribes of the statements for the calendar year, including a reconciliation 
195.27 	of the quarterly returns required to be filed under subdivision 1, must be filed with the 
195.28 	commissioner on or before February 28 of the year after the payments were made.
195.29 	(e) If an employer cancels the employer's Minnesota withholding account number 
195.30 	required by section 290.92, subdivision 24, the information required by paragraph (d), 
195.31 	must be filed with the commissioner within 30 days of the end of the quarter in which 
195.32 	the employer cancels its account number. 
195.33 	(f) The employer must submit the statements required to be sent to the commissioner 
195.34 	on magnetic media, if the magnetic media wasin the same manner required to satisfy the 
195.35 	federal reporting requirements of section 6011(e) of the Internal Revenue Code and the 
195.36 	regulations issued under it. For wages paid in calendar year 2007, an employer must 
196.1 	submit statements to the commissioner required by this section by electronic means if the 
196.2 	employer is required to send more than 100 statements to the commissioner, even though 
196.3 	the employer is not required to submit the returns federally by electronic means. For 
196.4 	calendar year 2008, the 100 statements threshold is reduced to 25, and for calendar year 
196.5 	2009 and thereafter, the threshold is reduced to ten.
196.6 	(g) A "third-party bulk filer" as defined in section 290.92, subdivision 30, paragraph 
196.7 	(a), clause (2), must submit the returns required by this subdivision and subdivision 1, 
196.8 	paragraph (a), with the commissioner by electronic means. 

196.9 	EFFECTIVE DATE. This section is effective for wages paid after December 31, 
196.10 	2006.

196.11 	Sec. 4. Minnesota Statutes 2006, section 289A.12, subdivision 14, is amended to read:
196.12 		Subd. 14.Regulated investment companies; reporting exempt-interest 
196.13 	dividends. (a) A regulated investment company paying $10 or more in exempt-interest 
196.14 	dividends to an individual who is a resident of Minnesota must make a return indicating 
196.15 	the amount of the exempt-interest dividends, the name, address, and Social Security 
196.16 	number of the recipient, and any other information that the commissioner specifies. The 
196.17 	return must be provided to the shareholder no later than 30 days after the close of the 
196.18 	taxable year. The return provided to the shareholder must include a clear statement, in the 
196.19 	form prescribed by the commissioner, that the exempt-interest dividends must be included 
196.20 	in the computation of Minnesota taxable income. The commissioner may by notice and 
196.21 	demand require the regulated investment company is required in a manner prescribed by 
196.22 	the commissioner to file a copy of the return with the commissioner.
196.23 	(b) This subdivision applies to regulated investment companies required to register 
196.24 	under chapter 80A.
196.25 	(c) For purposes of this subdivision, the following definitions apply.
196.26 	(1) "Exempt-interest dividends" mean exempt-interest dividends as defined in 
196.27 	section 852(b)(5) of the Internal Revenue Code, but does not include the portion of 
196.28 	exempt-interest dividends that are not required to be added to federal taxable income 
196.29 	under section 290.01, subdivision 19a, clause (1)(ii). 
196.30 	(2) "Regulated investment company" means regulated investment company as 
196.31 	defined in section 851(a) of the Internal Revenue Code or a fund of the regulated 
196.32 	investment company as defined in section 851(g) of the Internal Revenue Code.

196.33 	EFFECTIVE DATE. This section is effective for tax years beginning after 
196.34 	December 31, 2006.

197.1 	Sec. 5. Minnesota Statutes 2006, section 289A.18, subdivision 1, is amended to read:
197.2 		Subdivision 1.Individual income, fiduciary income, corporate franchise, and 
197.3 	entertainment taxes; partnership and S corporation returns; information returns; 
197.4 	mining company returns. The returns required to be made under sections 289A.08 and 
197.5 	289A.12 must be filed at the following times:
197.6 	(1) returns made on the basis of the calendar year must be filed on April 15 following 
197.7 	the close of the calendar year, except that returns of corporations must be filed on March 
197.8 	15 following the close of the calendar year;
197.9 	(2) returns made on the basis of the fiscal year must be filed on the 15th day of the 
197.10 	fourth month following the close of the fiscal year, except that returns of corporations 
197.11 	must be filed on the 15th day of the third month following the close of the fiscal year;
197.12 	(3) returns for a fractional part of a year must be filed on the 15th day of the fourth 
197.13 	month following the end of the month in which falls the last day of the period for which 
197.14 	the return is made, except that the returns of corporations must be filed on the 15th day of 
197.15 	the third month following the end of the tax year of the unitary group in which falls the 
197.16 	last day of the period for which the return is made;
197.17 	(4) in the case of a final return of a decedent for a fractional part of a year, the return 
197.18 	must be filed on the 15th day of the fourth month following the close of the 12-month 
197.19 	period that began with the first day of that fractional part of a year;
197.20 	(5) in the case of the return of a cooperative association, returns must be filed on or 
197.21 	before the 15th day of the ninth month following the close of the taxable year;
197.22 	(6) if a corporation has been divested from a unitary group and files a return for 
197.23 	a fractional part of a year in which it was a member of a unitary business that files a 
197.24 	combined report under section 290.34, subdivision 2, the divested corporation's return 
197.25 	must be filed on the 15th day of the third month following the close of the common 
197.26 	accounting period that includes the fractional year;
197.27 	(7) returns of entertainment entities must be filed on April 15 following the close of 
197.28 	the calendar year;
197.29 	(8) returns required to be filed under section 289A.08, subdivision 4, must be filed 
197.30 	on the 15th day of the fifth month following the close of the taxable year;
197.31 	(9) returns of mining companies must be filed on May 1 following the close of the 
197.32 	calendar year; and
197.33 	(10) returns required to be filed with the commissioner under section 289A.12, 
197.34 	subdivision 2,or 4 to 10, or 14, must be filed within 30 days after being demanded by 
197.35 	the commissioner.

198.1 	EFFECTIVE DATE. This section is effective for tax years beginning after 
198.2 	December 31, 2006.

198.3 	Sec. 6. Minnesota Statutes 2006, section 289A.60, subdivision 8, is amended to read:
198.4 		Subd. 8.Penalty forPenalties; failure to file informational return; incorrect 
198.5 	taxpayer identification number. (a) In the case of a failure to file an informational return 
198.6 	required by section 289A.12 with the commissioner on the date prescribed (determined 
198.7 	with regard to any extension of time for filing), the person failing to file the return shall pay 
198.8 	a penalty of $50 for each failure or in the case of a partnership, S corporation, or fiduciary 
198.9 	return, $50 for each partner, shareholder, or beneficiary; but the total amount imposed on 
198.10 	the delinquent person for all failures during any calendar year must not exceed $25,000. If 
198.11 	a failure to file a return is due to intentional disregard of the filing requirement, then the 
198.12 	penalty imposed under the preceding sentence must not be less than an amount equal to: 
198.13 	(1) in the case of a return not described in clause (2) or (3), ten percent of the 
198.14 	aggregate amount of the items required to be reported;
198.15 	(2) in the case of a return required to be filed under section 289A.12, subdivision 5, 
198.16 	five percent of the gross proceeds required to be reported; and 
198.17 	(3) in the case of a return required to be filed under section 289A.12, subdivision 9, 
198.18 	relating to direct sales, $100 for each failure; however, the total amount imposed on the 
198.19 	delinquent person for intentional failures during a calendar year must not exceed $50,000. 
198.20 	The penalty must be collected in the same manner as a delinquent income tax. 
198.21 	(b) If a partnership or S corporation files a partnership or S corporation return with 
198.22 	an incorrect tax identification number used for a partner or shareholder after being notified 
198.23 	by the commissioner that the identification number is incorrect, the partnership or S 
198.24 	corporation must pay a penalty of $50 for each such incorrect number.

198.25 	EFFECTIVE DATE. This section is effective for returns filed after December 
198.26 	31, 2007.

198.27 	Sec. 7. Minnesota Statutes 2006, section 289A.60, subdivision 12, is amended to read:
198.28 		Subd. 12.Penalties relating to property tax refunds. (a) If it is determined that a 
198.29 	property tax refund claim is excessive and was negligently prepared, a claimant is liable 
198.30 	for a penalty of ten percent of the corrected claim must be disallowed claim. If the claim 
198.31 	has been paid, the amount disallowed must be recovered by assessment and collection.
198.32 	(b) An owner who without reasonable cause fails to give a certificate of rent 
198.33 	constituting property tax to a renter, as required by section 290A.19, paragraph (a), is 
198.34 	liable to the commissioner for a penalty of $100 for each failure.
199.1 	(c) If the owner or managing agent knowingly gives rent certificates that report total 
199.2 	rent constituting property taxes in excess of the amount of actual rent constituting property 
199.3 	taxes paid on the rented part of a property, the owner or managing agent is liable for a 
199.4 	penalty equal to the greater of (1) $100 or (2) 50 percent of the excess that is reported. An 
199.5 	overstatement of rent constituting property taxes is presumed to be knowingly made if it 
199.6 	exceeds by ten percent or more the actual rent constituting property taxes.

199.7 	EFFECTIVE DATE. This section is effective for property tax refund claims filed 
199.8 	on or after July 1, 2007.

199.9 	Sec. 8. Minnesota Statutes 2006, section 289A.60, subdivision 27, is amended to read:
199.10 		Subd. 27.Reportable transaction understatement. (a) If a taxpayer has a 
199.11 	reportable transaction understatement for any taxable year, an amount equal to 20 percent 
199.12 	of the amount of the reportable transaction understatement must be added to the tax.
199.13 	(b)(1) For purposes of this subdivision, "reportable transaction understatement" 
199.14 	means the product of:
199.15 	(i) the amount of the increase, if any, in taxable income that results from a difference 
199.16 	between the proper tax treatment of an item to which this section applies and the taxpayer's 
199.17 	treatment of that item as shown on the taxpayer's tax return; and
199.18 	(ii) the highest rate of tax imposed on the taxpayer under section 290.06 determined 
199.19 	without regard to the understatement.
199.20 	(2) For purposes of clause (1)(i), any reduction of the excess of deductions allowed 
199.21 	for the taxable year over gross income for that year, and any reduction in the amount of 
199.22 	capital losses which would, without regard to section 1211 of the Internal Revenue Code, 
199.23 	be allowed for that year, must be treated as an increase in taxable income.
199.24 	(c) This subdivision applies to any item that is attributable to:
199.25 	(1) any listed transaction under section 289A.121; and
199.26 	(2) any reportable transaction, other than a listed transaction, if a significant purpose 
199.27 	of that transaction is the avoidance or evasion of federal income tax liability.
199.28 	(d) Paragraph (a) applies by substituting "30 percent" for "20 percent" with respect 
199.29 	to the portion of any reportable transaction understatement with respect to which the 
199.30 	disclosure requirements of section 289A.121, subdivision 5, and section 6664(d)(2)(A) 
199.31 	of the Internal Revenue Code are not met.
199.32 	(e)(1) No penalty applies under this subdivision with respect to any portion of a 
199.33 	reportable transaction understatement if the taxpayer shows that there was reasonable 
199.34 	cause for the portion and that the taxpayer acted in good faith with respect to the portion. 
199.35 	This paragraph applies only if:
200.1 	(i) the relevant facts affecting the tax treatment of the item are adequately disclosed 
200.2 	as required under section 289A.121;
200.3 	(ii) there is or was substantial authority for the treatment; and
200.4 	(iii) the taxpayer reasonably believed that the treatment was more likely than not 
200.5 	the proper treatment.
200.6 	(2) A taxpayer who did not adequately disclose under section 289A.121 meets 
200.7 	the requirements of clause (1)(i), if the commissioner abates the penalty imposed by 
200.8 	subdivision 26, paragraph (d), under section 270C.34 subdivision 26, paragraph (g).
200.9 	(3) For purposes of clause (1)(iii), a taxpayer is treated as having a reasonable belief 
200.10 	with respect to the tax treatment of an item only if the belief:
200.11 	(i) is based on the facts and law that exist when the return of tax which includes the 
200.12 	tax treatment is filed; and
200.13 	(ii) relates solely to the taxpayer's chances of success on the merits of the treatment 
200.14 	and does not take into account the possibility that a return will not be audited, the 
200.15 	treatment will not be raised on audit, or the treatment will be resolved through settlement 
200.16 	if it is raised.
200.17 	(4) An opinion of a tax advisor may not be relied upon to establish the reasonable 
200.18 	belief of a taxpayer if:
200.19 	(i) the tax advisor:
200.20 	(A) is a material advisor, as defined in section 289A.121, and participates in the 
200.21 	organization, management, promotion, or sale of the transaction or is related (within the 
200.22 	meaning of section 267(b) or 707(b)(1) of the Internal Revenue Code) to any person 
200.23 	who so participates;
200.24 	(B) is compensated directly or indirectly by a material advisor with respect to the 
200.25 	transaction;
200.26 	(C) has a fee arrangement with respect to the transaction which is contingent on all 
200.27 	or part of the intended tax benefits from the transaction being sustained; or
200.28 	(D) has a disqualifying financial interest with respect to the transaction, as 
200.29 	determined under United States Treasury regulations prescribed to implement the 
200.30 	provisions of section 6664(d)(3)(B)(ii)(IV) of the Internal Revenue Code; or
200.31 	(ii) the opinion:
200.32 	(A) is based on unreasonable factual or legal assumptions, including assumptions 
200.33 	as to future events;
200.34 	(B) unreasonably relies on representations, statements, findings, or agreements of 
200.35 	the taxpayer or any other person;
200.36 	(C) does not identify and consider all relevant facts; or
201.1 	(D) fails to meet any other requirement as the Secretary of the Treasury may 
201.2 	prescribe under federal law.
201.3 	(f) The penalty imposed by this subdivision applies in lieu of the penalty imposed 
201.4 	under subdivision 4.

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

201.6 	Sec. 9. Minnesota Statutes 2006, section 289A.60, is amended by adding a subdivision 
201.7 	to read:
201.8 		Subd. 28.Preparer identification number. Any Minnesota individual income tax 
201.9 	return or claim for refund prepared by a "tax refund or return preparer" as defined in 
201.10 	subdivision 13, paragraph (f), shall bear the identification number the preparer is required 
201.11 	to use federally under section 6109(a)(4) of the Internal Revenue Code. A tax refund 
201.12 	or return preparer who prepares a Minnesota individual income tax return or claim for 
201.13 	refund and fails to include the required number on the return or claim is subject to a 
201.14 	penalty of $50 for each failure.

201.15 	EFFECTIVE DATE. This section is effective for returns prepared for tax years 
201.16 	beginning after December 31, 2006.

201.17 	Sec. 10. Minnesota Statutes 2006, section 290.06, subdivision 33, is amended to read:
201.18 		Subd. 33.Bovine testing credit. (a) An owner of cattle in Minnesota may take a 
201.19 	credit against the tax due under this chapter for an amount equal to one-half the expenses 
201.20 	incurred during the taxable year to conduct tuberculosis testing on those cattle. 
201.21 	(b) If the amount of credit which the taxpayer is eligible to receive under this 
201.22 	subdivision exceeds the taxpayer's tax liability under this chapter, the commissioner of 
201.23 	revenue shall refund the excess to the taxpayer.
201.24 	(c) The amount necessary to pay claims for the refund provided in this subdivision is 
201.25 	appropriated from the general fund to the commissioner of revenue.
201.26 	(d) Expenses incurred in a calendar year in which tuberculosis testing of cattle in 
201.27 	Minnesota is not federally required are not allowed in claiming the credit under paragraph 
201.28 	(a).

201.29 	EFFECTIVE DATE. This section is effective for tax years beginning after 
201.30 	December 31, 2007.

201.31 	Sec. 11. Minnesota Statutes 2006, section 290.067, subdivision 2b, is amended to read:
202.1 		Subd. 2b.Inflation adjustment. The commissioner shall adjust the dollar amount 
202.2 	of the income threshold at which the maximum credit begins to be reduced under 
202.3 	subdivision 2 must be adjusted for inflation. The commissioner shall make the inflation 
202.4 	adjustments in accordance with section 1(f) of the Internal Revenue Code except that for 
202.5 	the purposes of this subdivision the percentage increase must be determined from the year 
202.6 	starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting 
202.7 	for inflation for the tax year beginning after December 31, 2000. The determination of 
202.8 	the commissioner under this subdivision is not a rule under the Administrative Procedure 
202.9 	Act. by the percentage determined pursuant to the provisions of section 1(f) of the Internal 
202.10 	Revenue Code, except that in section 1(f)(3)(B) the word "1999" shall be substituted for 
202.11 	the word "1992." For 2001, the commissioner shall then determine the percent change 
202.12 	from the 12 months ending on August 31, 1999, to the 12 months ending on August 31, 
202.13 	2000, and in each subsequent year, from the 12 months ending on August 31, 1999, to the 
202.14 	12 months ending on August 31 of the year preceding the taxable year. The determination 
202.15 	of the commissioner pursuant to this subdivision must not be considered a "rule" and is 
202.16 	not subject to the Administrative Procedure Act contained in chapter 14. The threshold 
202.17 	amount as adjusted must be rounded to the nearest $10 amount. If the amount ends in 
202.18 	$5, the amount is rounded up to the nearest $10 amount.

202.19 	EFFECTIVE DATE. This section is effective for tax years beginning after 
202.20 	December 31, 2006.

202.21 	Sec. 12. Minnesota Statutes 2006, section 290.0671, subdivision 7, is amended to read:
202.22 		Subd. 7.Inflation adjustment. The earned income amounts used to calculate the 
202.23 	credit and the income thresholds at which the maximum credit begins to be reduced in 
202.24 	subdivision 1 must be adjusted for inflation. The commissioner shall make the inflation 
202.25 	adjustments in accordance with section 1(f) of the Internal Revenue Code except that for 
202.26 	the purposes of this subdivision the percentage increase shall be determined from the year 
202.27 	starting September 1, 1999, and ending August 31, 2000, as the base year for adjusting for 
202.28 	inflation for the tax year beginning after December 31, 2000.adjust by the percentage 
202.29 	determined pursuant to the provisions of section 1(f) of the Internal Revenue Code, except 
202.30 	that in section 1(f)(3)(B) the word "1999" shall be substituted for the word "1992." For 
202.31 	2001, the commissioner shall then determine the percent change from the 12 months 
202.32 	ending on August 31, 1999, to the 12 months ending on August 31, 2000, and in each 
202.33 	subsequent year, from the 12 months ending on August 31, 1999, to the 12 months ending 
202.34 	on August 31 of the year preceding the taxable year. The earned income thresholds as 
202.35 	adjusted for inflation must be rounded to the nearest $10 amount. If the amount ends 
203.1 	in $5, the amount is rounded up to the nearest $10 amount. The determination of the 
203.2 	commissioner under this subdivision is not a rule under the Administrative Procedure Act.

203.3 	EFFECTIVE DATE. This section is effective for tax years beginning after 
203.4 	December 31, 2006.

203.5 	Sec. 13. Minnesota Statutes 2006, section 290.191, subdivision 8, is amended to read:
203.6 		Subd. 8.Deposit; definition. (a) "Deposit," as used in subdivision 7 6, paragraph 
203.7 	(n), has the meanings in this subdivision.
203.8 	(b) "Deposit" means the unpaid balance of money or its equivalent received or 
203.9 	held by a financial institution in the usual course of business and for which it has given 
203.10 	or is obligated to give credit, either conditionally or unconditionally, to a commercial, 
203.11 	checking, savings, time, or thrift account whether or not advance notice is required to 
203.12 	withdraw the credited funds, or which is evidenced by its certificate of deposit, thrift 
203.13 	certificate, investment certificate, or certificate of indebtedness, or other similar name, or a 
203.14 	check or draft drawn against a deposit account and certified by the financial institution, 
203.15 	or a letter of credit or a traveler's check on which the financial institution is primarily 
203.16 	liable. However, without limiting the generality of the term "money or its equivalent," any 
203.17 	such account or instrument must be regarded as evidencing the receipt of the equivalent 
203.18 	of money when credited or issued in exchange for checks or drafts or for a promissory 
203.19 	note upon which the person obtaining the credit or instrument is primarily or secondarily 
203.20 	liable, or for a charge against a deposit account, or in settlement of checks, drafts, or other 
203.21 	instruments forwarded to the bank for collection.
203.22 	(c) "Deposit" means trust funds received or held by the financial institution, whether 
203.23 	held in the trust department or held or deposited in any other department of the financial 
203.24 	institution.
203.25 	(d) "Deposit" means money received or held by a financial institution, or the credit 
203.26 	given for money or its equivalent received or held by a financial institution, in the usual 
203.27 	course of business for a special or specific purpose, regardless of the legal relationship so 
203.28 	established. Under this paragraph, "deposit" includes, but is not limited to, escrow funds, 
203.29 	funds held as security for an obligation due to the financial institution or others, including 
203.30 	funds held as dealers reserves, or for securities loaned by the financial institution, funds 
203.31 	deposited by a debtor to meet maturing obligations, funds deposited as advance payment 
203.32 	on subscriptions to United States government securities, funds held for distribution or 
203.33 	purchase of securities, funds held to meet its acceptances or letters of credit, and withheld 
203.34 	taxes. It does not include funds received by the financial institution for immediate 
203.35 	application to the reduction of an indebtedness to the receiving financial institution, or 
204.1 	under condition that the receipt of the funds immediately reduces or extinguishes the 
204.2 	indebtedness.
204.3 	(e) "Deposit" means outstanding drafts, including advice or another such institution, 
204.4 	cashier's checks, money orders, or other officer's checks issued in the usual course 
204.5 	of business for any purpose, but not including those issued in payment for services, 
204.6 	dividends, or purchases or other costs or expenses of the financial institution itself.
204.7 	(f) "Deposit" means money or its equivalent held as a credit balance by a financial 
204.8 	institution on behalf of its customer if the entity is engaged in soliciting and holding such 
204.9 	balances in the regular course of its business.
204.10 	(g) Interinstitution fund transfers are not deposits.

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

204.12 	Sec. 14. Minnesota Statutes 2006, section 290A.03, subdivision 7, is amended to read:
204.13 		Subd. 7.Dependent. "Dependent" means any person who is considered a 
204.14 	dependent under sections 151 and 152 of the Internal Revenue Code. In the case of a son, 
204.15 	stepson, daughter, or stepdaughter of the claimant, amounts received as a Minnesota 
204.16 	family investment program grant, allowance to or on behalf of the child, surplus food, or 
204.17 	other relief in kind supplied by a governmental agency must not be taken into account 
204.18 	in determining whether the child received more than half of the child's support from 
204.19 	the claimant.

204.20 	EFFECTIVE DATE. This section is effective for property tax refunds based on 
204.21 	rents paid after December 31, 2006, and property taxes payable after December 31, 2007.

204.22 	ARTICLE 11
204.23 	DEPARTMENT SALES AND USE TAXES

204.24 	Section 1. Minnesota Statutes 2006, section 289A.40, subdivision 2, is amended to 
204.25 	read:
204.26 		Subd. 2.Bad debt loss. If a claim relates to an overpayment because of a failure to 
204.27 	deduct a loss due to a bad debt or to a security becoming worthless, the claim is considered 
204.28 	timely if filed within seven years from the date prescribed for the filing of the return. A 
204.29 	claim relating to an overpayment of taxes under chapter 297A must be filed within 3-1/2 
204.30 	years from the date prescribed for filing the return, plus any extensions granted for filing 
204.31 	the return, but only if filed within the extended time when the bad debt was (1) written off 
204.32 	as uncollectible in the taxpayer's books and records, and (2) either eligible to be deducted 
204.33 	for federal income tax purposes or would have been eligible for a bad debt deduction for 
205.1 	federal income tax purposes if the taxpayer were required to file a federal income tax 
205.2 	return, or within one year from the date the taxpayer's federal income tax return is timely 
205.3 	filed claiming the bad debt deduction, whichever period is later. The refund or credit is 
205.4 	limited to the amount of overpayment attributable to the loss. "Bad debt" for purposes 
205.5 	of this subdivision, has the same meaning as that term is used in United States Code, 
205.6 	title 26, section 166, except that for a claim relating to an overpayment of taxes under 
205.7 	chapter 297A the following are excluded from the calculation of bad debt: financing 
205.8 	charges or interest; sales or use taxes charged on the purchase price; uncollectible amounts 
205.9 	on property that remain in the possession of the seller until the full purchase price is 
205.10 	paid; expenses incurred in attempting to collect any debt; and repossessed property. For 
205.11 	purposes of reporting a payment received on previously claimed bad debt under chapter 
205.12 	297A, any payments made on a debt or account are applied first proportionally to the 
205.13 	taxable price of the property or service and the sales tax on it, and secondly to interest, 
205.14 	service charges, and any other charges.

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

205.16 	Sec. 2. Minnesota Statutes 2006, section 289A.56, is amended by adding a subdivision 
205.17 	to read:
205.18 		Subd. 8.Border city zone refunds. Notwithstanding subdivision 3, for refunds 
205.19 	payable under section 469.1734, subdivision 6, interest is computed from 90 days after the 
205.20 	refund claim is filed with the commissioner.

205.21 	EFFECTIVE DATE. This section is effective for refund claims filed on or after 
205.22 	July 1, 2007.

205.23 	Sec. 3. Minnesota Statutes 2006, section 289A.60, subdivision 25, is amended to read:
205.24 		Subd. 25.Penalty for failure to properly complete sales and use tax return. A 
205.25 	person who fails to report local sales taxtaxes required to be reported on a sales and use 
205.26 	tax return or who fails to report local sales taxtaxes on separate tax lines on the sales 
205.27 	and use tax return is subject to a penalty of five percent of the amount of tax not properly 
205.28 	reported on the return. A person who files a consolidated tax return but fails to report 
205.29 	location information is subject to a $500 penalty for each return not containing location 
205.30 	information. In addition, the commissioner may revoke the privilege for a taxpayer to 
205.31 	file consolidated returns and may require the taxpayer to separately register each location 
205.32 	and to file a tax return for each location.

205.33 	EFFECTIVE DATE. This section is effective for returns filed after June 30, 2007.

206.1 	Sec. 4. Minnesota Statutes 2006, section 289A.60, is amended by adding a subdivision 
206.2 	to read:
206.3 		Subd. 29.Penalty for failure to report liquor sales. In the case of a failure to file 
206.4 	an informational return required by section 297A.8155 with the commissioner on or before 
206.5 	the date prescribed, the person failing to file the report shall pay a penalty of $500 each 
206.6 	failure. If a failure to file a report is intentional, the penalty shall be $1,000 each failure.

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

206.8 	Sec. 5. Minnesota Statutes 2006, section 297A.61, subdivision 3, is amended to read:
206.9 		Subd. 3.Sale and purchase. (a) "Sale" and "purchase" include, but are not limited 
206.10 	to, each of the transactions listed in this subdivision.
206.11 	(b) Sale and purchase include:
206.12 	(1) any transfer of title or possession, or both, of tangible personal property, whether 
206.13 	absolutely or conditionally, for a consideration in money or by exchange or barter; and
206.14 	(2) the leasing of or the granting of a license to use or consume, for a consideration 
206.15 	in money or by exchange or barter, tangible personal property, other than a manufactured 
206.16 	home used for residential purposes for a continuous period of 30 days or more.
206.17 	(c) Sale and purchase include the production, fabrication, printing, or processing of 
206.18 	tangible personal property for a consideration for consumers who furnish either directly or 
206.19 	indirectly the materials used in the production, fabrication, printing, or processing.
206.20 	(d) Sale and purchase include the preparing for a consideration of food. 
206.21 	Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited 
206.22 	to, the following:
206.23 	(1) prepared food sold by the retailer;
206.24 	(2) soft drinks;
206.25 	(3) candy;
206.26 	(4) dietary supplements; and
206.27 	(5) all food sold through vending machines.
206.28 	(e) A sale and a purchase includes the furnishing for a consideration of electricity, 
206.29 	gas, water, or steam for use or consumption within this state.
206.30 	(f) A sale and a purchase includes the transfer for a consideration of prewritten 
206.31 	computer software whether delivered electronically, by load and leave, or otherwise.
206.32 	(g) A sale and a purchase includes the furnishing for a consideration of the following 
206.33 	services:
207.1 	(1) the privilege of admission to places of amusement, recreational areas, or athletic 
207.2 	events, and the making available of amusement devices, tanning facilities, reducing 
207.3 	salons, steam baths, turkish baths, health clubs, and spas or athletic facilities;
207.4 	(2) lodging and related services by a hotel, rooming house, resort, campground, 
207.5 	motel, or trailer camp, including furnishing the guest of the facility with access to 
207.6 	telecommunication services, and the granting of any similar license to use real property 
207.7 	in a specific facility, other than the renting or leasing of it for a continuous period of 
207.8 	30 days or more under an enforceable written agreement that may not be terminated 
207.9 	without prior notice;
207.10 	(3) nonresidential parking services, whether on a contractual, hourly, or other 
207.11 	periodic basis, except for parking at a meter;
207.12 	(4) the granting of membership in a club, association, or other organization if:
207.13 	(i) the club, association, or other organization makes available for the use of its 
207.14 	members sports and athletic facilities, without regard to whether a separate charge is 
207.15 	assessed for use of the facilities; and
207.16 	(ii) use of the sports and athletic facility is not made available to the general public 
207.17 	on the same basis as it is made available to members.
207.18 	Granting of membership means both onetime initiation fees and periodic membership 
207.19 	dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and 
207.20 	squash courts; basketball and volleyball facilities; running tracks; exercise equipment; 
207.21 	swimming pools; and other similar athletic or sports facilities;
207.22 	(5) delivery of aggregate materials and concrete block by a third party if the delivery 
207.23 	would be subject to the sales tax if provided by the seller of the aggregate material 
207.24 	or concrete block, unless the aggregate materials are deposited substantially in place. 
207.25 	Aggregate material is deposited substantially in place if the aggregate material is deposited 
207.26 	directly from the transporting vehicle, or through spreaders from the transporting vehicle, 
207.27 	at the actual place where it will be graded or compacted; and
207.28 	(6) services as provided in this clause:
207.29 	(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering, 
207.30 	and storing clothes, linen services and supply, cleaning and blocking hats, and carpet, 
207.31 	drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not 
207.32 	include services provided by coin operated facilities operated by the customer;
207.33 	(ii) motor vehicle washing, waxing, and cleaning services, including services 
207.34 	provided by coin operated facilities operated by the customer, and rustproofing, 
207.35 	undercoating, and towing of motor vehicles;
208.1 	(iii) building and residential cleaning, maintenance, and disinfecting services and 
208.2 	pest control and exterminating services;
208.3 	(iv) detective, security, burglar, fire alarm, and armored car services; but not 
208.4 	including services performed within the jurisdiction they serve by off-duty licensed peace 
208.5 	officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit 
208.6 	organization for monitoring and electronic surveillance of persons placed on in-home 
208.7 	detention pursuant to court order or under the direction of the Minnesota Department 
208.8 	of Corrections;
208.9 	(v) pet grooming services;
208.10 	(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting 
208.11 	and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor 
208.12 	plant care; tree, bush, shrub, and stump removal, except when performed as part of a land 
208.13 	clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for 
208.14 	public utility lines. Services performed under a construction contract for the installation of 
208.15 	shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
208.16 	(vii) massages, except when provided by a licensed health care facility or 
208.17 	professional or upon written referral from a licensed health care facility or professional for 
208.18 	treatment of illness, injury, or disease; and
208.19 	(viii) the furnishing of lodging, board, and care services for animals in kennels and 
208.20 	other similar arrangements, but excluding veterinary and horse boarding services.
208.21 	In applying the provisions of this chapter, the terms "tangible personal property" 
208.22 	and "retail sale" include taxable services listed in clause (6), items (i) to (vi) and (viii), 
208.23 	and the provision of these taxable services, unless specifically provided otherwise. 
208.24 	Services performed by an employee for an employer are not taxable. Services performed 
208.25 	by a partnership or association for another partnership or association are not taxable if 
208.26 	one of the entities owns or controls more than 80 percent of the voting power of the 
208.27 	equity interest in the other entity. Services performed between members of an affiliated 
208.28 	group of corporations are not taxable. For purposes of the preceding sentence, "affiliated 
208.29 	group of corporations" means those entities that would be classified as members of an 
208.30 	affiliated group as defined under United States Code, title 26, section 1504, disregarding 
208.31 	the exclusions in section 1504(b).
208.32 	(h) A sale and a purchase includes the furnishing for a consideration of tangible 
208.33 	personal property or taxable services by the United States or any of its agencies or 
208.34 	instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political 
208.35 	subdivisions.
209.1 	(i) A sale and a purchase includes the furnishing for a consideration 
209.2 	of telecommunications services, including ancillary services associated with 
209.3 	telecommunication services, cable television services and, direct satellite services, and 
209.4 	ring tones. Telecommunications Telecommunication services include, but are not limited 
209.5 	to, the following services, as defined in section 297A.669: air-to-ground radiotelephone 
209.6 	service, mobile telecommunication service, postpaid calling service, prepaid calling 
209.7 	service, prepaid wireless calling service, and private communication services. The
209.8 	services in this paragraph are taxed to the extent allowed under federal law.
209.9 	(j) A sale and a purchase includes the furnishing for a consideration of installation if 
209.10 	the installation charges would be subject to the sales tax if the installation were provided 
209.11 	by the seller of the item being installed.
209.12 	(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer 
209.13 	to a customer when (1) the vehicle is rented by the customer for a consideration, or (2) 
209.14 	the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section 
209.15 	65B.29, subdivision 1, clause (1).

209.16 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
209.17 	June 30, 2007, except that the amendments to paragraphs (g), clause (2), and (i), are 
209.18 	effective for sales and purchases made on or after January 1, 2008.

209.19 	Sec. 6. Minnesota Statutes 2006, section 297A.61, subdivision 4, is amended to read:
209.20 		Subd. 4.Retail sale. (a) A "retail sale" means any sale, lease, or rental for any 
209.21 	purpose, other than resale, sublease, or subrent of items by the purchaser in the normal 
209.22 	course of business as defined in subdivision 21.
209.23 	(b) A sale of property used by the owner only by leasing it to others or by holding it 
209.24 	in an effort to lease it, and put to no use by the owner other than resale after the lease or 
209.25 	effort to lease, is a sale of property for resale.
209.26 	(c) A sale of master computer software that is purchased and used to make copies for 
209.27 	sale or lease is a sale of property for resale.
209.28 	(d) A sale of building materials, supplies, and equipment to owners, contractors, 
209.29 	subcontractors, or builders for the erection of buildings or the alteration, repair, or 
209.30 	improvement of real property is a retail sale in whatever quantity sold, whether the sale is 
209.31 	for purposes of resale in the form of real property or otherwise.
209.32 	(e) A sale of carpeting, linoleum, or similar floor covering to a person who provides 
209.33 	for installation of the floor covering is a retail sale and not a sale for resale since a sale 
209.34 	of floor covering which includes installation is a contract for the improvement of real 
209.35 	property.
210.1 	(f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides 
210.2 	for installation of the items is a retail sale and not a sale for resale since a sale of 
210.3 	shrubbery, plants, sod, trees, and similar items that includes installation is a contract for 
210.4 	the improvement of real property.
210.5 	(g) A sale of tangible personal property that is awarded as prizes is a retail sale and 
210.6 	is not considered a sale of property for resale.
210.7 	(h) A sale of tangible personal property utilized or employed in the furnishing or 
210.8 	providing of services under subdivision 3, paragraph (g), clause (1), including, but not 
210.9 	limited to, property given as promotional items, is a retail sale and is not considered a 
210.10 	sale of property for resale.
210.11 	(i) A sale of tangible personal property used in conducting lawful gambling under 
210.12 	chapter 349 or the State Lottery under chapter 349A, including, but not limited to, 
210.13 	property given as promotional items, is a retail sale and is not considered a sale of 
210.14 	property for resale.
210.15 	(j) A sale of machines, equipment, or devices that are used to furnish, provide, or 
210.16 	dispense goods or services, including, but not limited to, coin-operated devices, is a retail 
210.17 	sale and is not considered a sale of property for resale.
210.18 	(k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease 
210.19 	payment becomes due under the terms of the agreement or the trade practices of the 
210.20 	lessor or (2) in the case of a lease of a motor vehicle, as defined in section 297B.01, 
210.21 	subdivision 5, but excluding vehicles with a manufacturer's gross vehicle weight rating 
210.22 	greater than 10,000 pounds and rentals of vehicles for not more than 28 days, at the time 
210.23 	the lease is executed.
210.24 	(l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of 
210.25 	title or possession of the tangible personal property.
210.26 	(m) A sale of a bundled transaction in which one or more of the products included 
210.27 	in the bundle is a taxable product is a retail sale, except that if one of the products 
210.28 	is a telecommunication service, ancillary service, Internet access, or audio or video 
210.29 	programming service, and the seller has maintained books and records identifying through 
210.30 	reasonable and verifiable standards the portions of the price that are attributable to the 
210.31 	distinct and separately identifiable products, then the products are not considered part of a 
210.32 	bundled transaction. For purposes of this paragraph:
210.33 	(1) the books and records maintained by the seller must be maintained in the regular 
210.34 	course of business, and do not include books and records created and maintained by the 
210.35 	seller primarily for tax purposes; 
211.1 	(2) books and records maintained in the regular course of business include, but are 
211.2 	not limited to, financial statements, general ledgers, invoicing and billing systems and 
211.3 	reports, and reports for regulatory tariffs and other regulatory matters; and
211.4 	(3) books and records are maintained primarily for tax purposes when the books 
211.5 	and records identify taxable and nontaxable portions of the price, but the seller maintains 
211.6 	other books and records that identify different prices attributable to the distinct products 
211.7 	included in the same bundled transaction.

211.8 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
211.9 	or after January 1, 2008.

211.10 	Sec. 7. Minnesota Statutes 2006, section 297A.61, subdivision 7, is amended to read:
211.11 		Subd. 7.Sales price. (a) "Sales price" means the measure subject to sales tax, and 
211.12 	means the total amount of consideration, including cash, credit, personal property, and 
211.13 	services, for which personal property or services are sold, leased, or rented, valued in 
211.14 	money, whether received in money or otherwise, without any deduction for the following:
211.15 	(1) the seller's cost of the property sold;
211.16 	(2) the cost of materials used, labor or service cost, interest, losses, all costs of 
211.17 	transportation to the seller, all taxes imposed on the seller, and any other expenses of 
211.18 	the seller;
211.19 	(3) charges by the seller for any services necessary to complete the sale, other than 
211.20 	delivery and installation charges;
211.21 	(4) delivery charges, except the percentage of the delivery charge allocated to 
211.22 	delivery of tax exempt property, when the delivery charge is allocated by using either (i) a 
211.23 	percentage based on the total sales price of the taxable property compared to the total sales 
211.24 	price of all property in the shipment, or (ii) a percentage based on the total weight of the 
211.25 	taxable property compared to the total weight of all property in the shipment; and
211.26 	(5) installation charges; and.
211.27 	(6) the value of exempt property given to the purchaser when taxable and exempt 
211.28 	personal property have been bundled together and sold by the seller as a single product 
211.29 	or piece of merchandise.
211.30 	(b) Sales price does not include:
211.31 	(1) discounts, including cash, terms, or coupons, that are not reimbursed by a third 
211.32 	party and that are allowed by the seller and taken by a purchaser on a sale;
211.33 	(2) interest, financing, and carrying charges from credit extended on the sale of 
211.34 	personal property or services, if the amount is separately stated on the invoice, bill of sale, 
211.35 	or similar document given to the purchaser; and
212.1 	(3) any taxes legally imposed directly on the consumer that are separately stated on 
212.2 	the invoice, bill of sale, or similar document given to the purchaser.
212.3 	(c) Sales price includes consideration received by the seller from third parties if:
212.4 	(1) the seller actually receives consideration from a party other than the purchaser 
212.5 	and the consideration is directly related to a price reduction or discount on the sale;
212.6 	(2) the seller has an obligation to pass the price reduction or discount through to 
212.7 	the purchaser; 
212.8 	(3) the amount of the consideration attributable to the sale is fixed and determinable 
212.9 	by the seller at the time of the sale of the item to the purchaser; and
212.10 	(4) one of the following criteria is met: 
212.11 	(i) the purchaser presents a coupon, certificate, or other documentation to the seller 
212.12 	to claim a price reduction or discount when the coupon, certificate, or documentation is 
212.13 	authorized, distributed, or granted by a third party with the understanding that the third 
212.14 	party will reimburse any seller to whom the coupon, certificate, or documentation is 
212.15 	presented; 
212.16 	(ii) the purchaser identifies himself or herself to the seller as a member of a group or 
212.17 	organization entitled to a price reduction or discount. A "preferred customer" card that is 
212.18 	available to any customer does not constitute membership in such a group; or 
212.19 	(iii) the price reduction or discount is identified as a third-party price reduction or 
212.20 	discount on the invoice received by the purchaser or on a coupon, certificate, or other 
212.21 	documentation presented by the purchaser.

212.22 	EFFECTIVE DATE. This section is effective for sales and purchases made on or 
212.23 	after January 1, 2008, except that the amendment to paragraph (a), clause (4), is effective 
212.24 	the day following final enactment.

212.25 	Sec. 8. Minnesota Statutes 2006, section 297A.61, subdivision 10, is amended to read:
212.26 		Subd. 10.Tangible personal property. (a) "Tangible personal property" means 
212.27 	personal property that can be seen, weighed, measured, felt, or touched, or that is in any 
212.28 	other manner perceptible to the senses. "Tangible personal property" includes, but is not 
212.29 	limited to, electricity, water, gas, steam, and prewritten computer software, and prepaid 
212.30 	calling cards.
212.31 	(b) Tangible personal property does not include:
212.32 	(1) large ponderous machinery and equipment used in a business or production 
212.33 	activity which at common law would be considered to be real property;
212.34 	(2) property which is subject to an ad valorem property tax;
212.35 	(3) property described in section 272.02, subdivision 9, clauses (a) to (d); and 
213.1 	(4) property described in section 272.03, subdivision 2, clauses (3) and (5). 

213.2 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
213.3 	or after January 1, 2008.

213.4 	Sec. 9. Minnesota Statutes 2006, section 297A.61, subdivision 24, is amended to read:
213.5 		Subd. 24.Telecommunications services. (a) "Telecommunications services" means 
213.6 	the electronic transmission, conveyance, or routing of voice, data, audio, video, or any 
213.7 	other information or signals to a point, or between or among points, by or through any 
213.8 	electronic, satellite, optical, microwave, or other medium or method now in existence or 
213.9 	hereafter devised, regardless of the protocol used for such transmission, conveyance, 
213.10 	or routing.
213.11 	(b) Telecommunications services includes the furnishing for consideration of access 
213.12 	to telephone services by a hotel to its guests. include transmission, conveyance, or routing 
213.13 	in which computer processing applications are used to act on the form, code, or protocol 
213.14 	of the content for purposes of transmission, conveyance, or routing, without regard to 
213.15 	whether the service is referred to as voice over Internet protocol services or is classified by 
213.16 	the Federal Communications Commission as enhanced or value added.
213.17 	(c) Telecommunications services do not include:
213.18 	(1) services purchased with a prepaid telephone calling card;
213.19 	(2) private communication service purchased by an agent acting on behalf of the 
213.20 	State Lottery;
213.21 	(3) information services; and
213.22 	(4) purchases of telecommunications when the purchaser uses the purchased services 
213.23 	as a component part of or integrates such service into another telecommunications service 
213.24 	that is sold by the purchaser in the normal course of business.
213.25 	(d) For purposes of this subdivision, "information services" means the offering of 
213.26 	the capability for generating, acquiring, storing, transforming, processing, retrieving, 
213.27 	utilizing, or making available information.
213.28 	(1) data processing and information services that allow data to be generated, 
213.29 	acquired, stored, processed, or retrieved and delivered by an electronic transmission to 
213.30 	a purchaser when the purchaser's primary purpose for the underlying transaction is the 
213.31 	processed data or information;
213.32 	(2) installation or maintenance of wiring or equipment on a customer's premises;
213.33 	(3) tangible personal property;
213.34 	(4) advertising, including, but not limited to, directory advertising;
213.35 	(5) billing and collection services provided to third parties;
214.1 	(6) Internet access service;
214.2 	(7) radio and television audio and video programming services, regardless of the 
214.3 	medium, including the furnishing of transmission, conveyance, and routing of such 
214.4 	services by the programming service provider. Radio and television audio and video 
214.5 	programming services includes, but is not limited to, cable service as defined in United 
214.6 	States Code, title 47, section 522(6), and audio and video programming services delivered 
214.7 	by commercial mobile radio service providers, as defined in Code of Federal Regulations, 
214.8 	title 47, section 20.3;
214.9 	(8) ancillary services; or
214.10 	(9) digital products delivered electronically, including, but not limited to, software, 
214.11 	music, video, reading materials, or ring tones.

214.12 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
214.13 	or after January 1, 2008.

214.14 	Sec. 10. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
214.15 	subdivision to read:
214.16 		Subd. 38.Bundled transaction. (a) "Bundled transaction" means the retail sale 
214.17 	of two or more products when the products are otherwise distinct and identifiable, and 
214.18 	the products are sold for one nonitemized price. As used in this subdivision, "product" 
214.19 	includes tangible personal property, services, intangibles, and digital goods, but does not 
214.20 	include real property or services to real property. A bundled transaction does not include 
214.21 	the sale of any products in which the sales price varies, or is negotiable, based on the 
214.22 	selection by the purchaser of the products included in the transaction.
214.23 	(b) For purposes of this subdivision, "distinct and identifiable" products does not 
214.24 	include:
214.25 	(1) packaging and other materials, such as containers, boxes, sacks, bags, and 
214.26 	bottles, wrapping, labels, tags, and instruction guides, that accompany the retail sale of the 
214.27 	products and are incidental or immaterial to the retail sale. Examples of packaging that are 
214.28 	incidental or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags, 
214.29 	and express delivery envelopes and boxes;
214.30 	(2) a promotional product provided free of charge with the required purchase of 
214.31 	another product. A promotional product is provided free of charge if the sales price of 
214.32 	another product, which is required to be purchased in order to receive the promotional 
214.33 	product, does not vary depending on the inclusion of the promotional product; and 
214.34 	(3) items included in the definition of sales price.
215.1 	(c) For purposes of this subdivision, the term "one nonitemized price" does not 
215.2 	include a price that is separately identified by product on binding sales or other supporting 
215.3 	sales-related documentation made available to the customer in paper or electronic form 
215.4 	including, but not limited to an invoice, bill of sale, receipt, contract, service agreement, 
215.5 	lease agreement, periodic notice of rates and services, rate card, or price list.
215.6 	(d) A transaction that otherwise meets the definition of a bundled transaction is 
215.7 	not a bundled transaction if it is: 
215.8 	(1) the retail sale of tangible personal property and a service and the tangible 
215.9 	personal property is essential to the use of the service, and is provided exclusively in 
215.10 	connection with the service, and the true object of the transaction is the service; 
215.11 	(2) the retail sale of services if one service is provided that is essential to the use or 
215.12 	receipt of a second service and the first service is provided exclusively in connection with 
215.13 	the second service and the true object of the transaction is the second service; 
215.14 	(3) a transaction that includes taxable products and nontaxable products and the 
215.15 	purchase price or sales price of the taxable products is de minimis; or 
215.16 	(4) the retail sale of exempt tangible personal property and taxable tangible personal 
215.17 	property if:
215.18 	(i) the transaction includes food and food ingredients, drugs, durable medical 
215.19 	equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices, 
215.20 	or medical supplies; and
215.21 	(ii) the seller's purchase price or sales price of the taxable tangible personal property 
215.22 	is 50 percent or less of the total purchase price or sales price of the bundled tangible 
215.23 	personal property. Sellers must not use a combination of the purchase price and sales 
215.24 	price of the tangible personal property when making the 50 percent determination for 
215.25 	a transaction.
215.26 	(e) For purposes of this subdivision, "purchase price" means the measure subject to 
215.27 	use tax on purchases made by the seller, and "de minimis" means that the seller's purchase 
215.28 	price or sales price of the taxable products is ten percent or less of the total purchase 
215.29 	price or sales price of the bundled products. Sellers shall use either the purchase price 
215.30 	or the sales price of the products to determine if the taxable products are de minimis. 
215.31 	Sellers must not use a combination of the purchase price and sales price of the products 
215.32 	to determine if the taxable products are de minimis. Sellers shall use the full term of a 
215.33 	service contract to determine if the taxable products are de minimis.

215.34 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
215.35 	or after January 1, 2008.

216.1 	Sec. 11. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
216.2 	subdivision to read:
216.3 		Subd. 39.Ancillary services. "Ancillary services" means services that are 
216.4 	associated with or incidental to the provision of telecommunications services, including, 
216.5 	but not limited to, conference bridging service, detailed telecommunications billing, 
216.6 	directory assistance, vertical service, and voice mail services.

216.7 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
216.8 	or after January 1, 2008.

216.9 	Sec. 12. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
216.10 	subdivision to read:
216.11 		Subd. 40.Conference bridging service. "Conference bridging service" means an 
216.12 	ancillary service that links two or more participants of an audio or video conference call 
216.13 	and may include the provision of a telephone number. Conference bridging service does 
216.14 	not include the telecommunications services used to reach the conference bridge.

216.15 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
216.16 	or after January 1, 2008.

216.17 	Sec. 13. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
216.18 	subdivision to read:
216.19 		Subd. 41.Detailed telecommunications billing service. "Detailed 
216.20 	telecommunications billing service" means an ancillary service of separately stating 
216.21 	information pertaining to individual calls on a customer's billing statement.

216.22 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
216.23 	or after January 1, 2008.

216.24 	Sec. 14. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
216.25 	subdivision to read:
216.26 		Subd. 42.Directory assistance. "Directory assistance" means an ancillary service 
216.27 	of providing telephone number information or address information, or both.

216.28 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
216.29 	or after January 1, 2008.

217.1 	Sec. 15. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
217.2 	subdivision to read:
217.3 		Subd. 43.Vertical service. "Vertical service" means an ancillary service that is 
217.4 	offered in connection with one or more telecommunications services and which offers 
217.5 	advanced calling features that allow customers to identify callers and to manage multiple 
217.6 	calls and call connections, including conference bridging services.

217.7 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
217.8 	or after January 1, 2008.

217.9 	Sec. 16. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
217.10 	subdivision to read:
217.11 		Subd. 44.Voice mail service. "Voice mail service" means an ancillary service that 
217.12 	enables the customer to store, send, or receive recorded messages. Voice mail service 
217.13 	does not include any vertical services that the customer may be required to have in order 
217.14 	to utilize the voice mail service.

217.15 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
217.16 	or after January 1, 2008.

217.17 	Sec. 17. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
217.18 	subdivision to read:
217.19 		Subd. 45.Ring tone. "Ring tone" means a digitized sound file that is downloaded 
217.20 	onto a device and that may be used to alert the customer of a telecommunication service 
217.21 	with respect to a communication.

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

217.23 	Sec. 18. Minnesota Statutes 2006, section 297A.61, is amended by adding a 
217.24 	subdivision to read:
217.25 		Subd. 46.Fur clothing. "Fur clothing" means human wearing apparel that is 
217.26 	required by the Federal Fur Products Labeling Act, United States Code, title 15, section 
217.27 	69, to be labeled as a fur product, and the value of the fur components in the product 
217.28 	is more than three times the value of the next most valuable tangible component. For 
217.29 	purposes of this subdivision, "fur" means any animal skin or part of an animal skin with 
217.30 	hair, fleece, or fur fibers attached to it, either in its raw or processed state, but does not 
217.31 	include animal skins that have been converted into leather or suede, or from which the 
217.32 	hair, fleece, or fur fiber has been completely removed in processing the skins.

218.1 	EFFECTIVE DATE. This section is effective for sales and purchases made on or 
218.2 	after July 1, 2007.

218.3 	Sec. 19. Minnesota Statutes 2006, section 297A.63, subdivision 1, is amended to read:
218.4 		Subdivision 1.Use of tangible personal property or taxable services. (a) For the 
218.5 	privilege of using, storing, distributing, or consuming in Minnesota tangible personal 
218.6 	property or taxable services purchased for use, storage, distribution, or consumption in 
218.7 	this state, a use tax is imposed on a person in Minnesota. The tax is imposed on the 
218.8 	purchase price of retail sales of the tangible personal property or taxable services at the 
218.9 	rate of tax imposed under section 297A.62. A person that purchases property from a 
218.10 	Minnesota retailer and returns the tangible personal property to a point within Minnesota, 
218.11 	except in the course of interstate commerce, after it was delivered outside of Minnesota, 
218.12 	is subject to the use tax. 
218.13 	(b) No tax is imposed under paragraph (a) if the tax imposed by section 297A.62
218.14 	was paid on the sales price of the tangible personal property or taxable services. 
218.15 	(c) No tax is imposed under paragraph (a) if the purchase meets the requirements for 
218.16 	exemption under section 297A.67, subdivision 21. 
218.17 	(d) When a transaction otherwise meets the definition of a bundled transaction, but 
218.18 	is not a bundled transaction under section 297A.61, subdivision 38, paragraph (d), and 
218.19 	the seller's purchase price of the taxable product or taxable tangible personal property is 
218.20 	equal to or greater than $100, then use tax is imposed on the purchase price of the taxable 
218.21 	product or taxable personal property. For purposes of this paragraph, "purchase price" 
218.22 	means the measure subject to use tax on purchases made by the seller.

218.23 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
218.24 	or after January 1, 2008.

218.25 	Sec. 20. Minnesota Statutes 2006, section 297A.665, is amended to read:
218.26 	297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.
218.27 	(a) For the purpose of the proper administration of this chapter and to prevent 
218.28 	evasion of the tax, until the contrary is established, it is presumed that:
218.29 	(1) all gross receipts are subject to the tax; and
218.30 	(2) all retail sales for delivery in Minnesota are for storage, use, or other consumption 
218.31 	in Minnesota.
218.32 	(b) The burden of proving that a sale is not a taxable retail sale is on the seller. 
218.33 	However, the seller may take from the purchaser at the time of the sale a fully completed 
219.1 	exemption certificate which conclusively relieves the seller from collecting and remitting 
219.2 	the tax. This However, a seller is relieved of liability if:
219.3 	(1) the seller obtains a fully completed exemption certificate or all the relevant 
219.4 	information required by section 297A.72, subdivision 2, at the time of the sale or within 
219.5 	90 days after the date of the sale; or
219.6 	(2) if the seller has not obtained a fully completed exemption certificate or all the 
219.7 	relevant information required by section 297A.72, subdivision 2, within the time provided 
219.8 	in clause (1), within 120 days after a request for substantiation by the commissioner, 
219.9 	the seller either:
219.10 	(i) obtains in good faith a fully completed exemption certificate or all the relevant 
219.11 	information required by section 297A.72, subdivision 2, from the purchaser; or
219.12 	(ii) proves by other means that the transaction was not subject to tax.
219.13 	(c) Notwithstanding paragraph (b), relief from liability does not apply to a seller who:
219.14 	(1) fraudulently fails to collect the tax; or 
219.15 	(2) solicits purchasers to participate in the unlawful claim of an exemption. If a 
219.16 	seller claiming that certain sales are exempt is not in possession of the required exemption 
219.17 	certificates within 60 days after receiving written notice from the commissioner that the 
219.18 	certificates are required, deductions claimed by the seller that required delivery of the 
219.19 	certificates must be disallowed. If the certificates are delivered to the commissioner within 
219.20 	the 60-day period, the commissioner may verify the reason or basis for the exemption 
219.21 	claimed in the certificates before allowing any deductions. A deduction must not be 
219.22 	granted on the basis of certificates delivered to the commissioner after the 60-day period.
219.23 	(c) (d) A purchaser of tangible personal property or any items listed in section 
219.24 	297A.63 that are shipped or brought to Minnesota by the purchaser has the burden 
219.25 	of proving that the property was not purchased from a retailer for storage, use, or 
219.26 	consumption in Minnesota. 

219.27 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
219.28 	or after January 1, 2008.

219.29 	Sec. 21. Minnesota Statutes 2006, section 297A.669, subdivision 3, is amended to read:
219.30 		Subd. 3.Defined telecommunications services sourcing. The sale of the following 
219.31 	telecommunication services shall be sourced to each level of taxing jurisdiction in 
219.32 	paragraphs (a) to (d).
219.33 	(a) A sale of mobile telecommunications services, other than air-to-ground 
219.34 	radiotelephone service and prepaid calling service, is sourced to the customer's place of 
219.35 	primary use as required by the Mobile Telecommunications Sourcing Act.
220.1 	(b) A sale of postpaid calling service is sourced to the origination point of the 
220.2 	telecommunications signal as first identified by either:
220.3 	(1) the seller's telecommunications system; or
220.4 	(2) information received by the seller from its service provider, where the system 
220.5 	used to transport such signals is not that of the seller.
220.6 	(c) A sale of prepaid calling service or prepaid wireless calling service is sourced in 
220.7 	accordance with section 297A.668, subdivision 2. However, in the case of a sale of mobile 
220.8 	telecommunications service that is a prepaid telecommunicationswireless calling service, 
220.9 	the rule provided in section 297A.668, subdivision 2, paragraph (f), shall include as an 
220.10 	option the location associated with the mobile telephone number. 
220.11 	(d) A sale of a private communication service is sourced as follows:
220.12 	(1) service for a separate charge related to a customer channel termination point is 
220.13 	sourced to each level of jurisdiction in which the customer channel termination point 
220.14 	is located;
220.15 	(2) service where all customer termination points are located entirely within one 
220.16 	jurisdiction or levels of jurisdiction is sourced in such jurisdiction in which the customer 
220.17 	channel termination points are located;
220.18 	(3) service for segments of a channel between two customer channel termination 
220.19 	points located in different jurisdictions and which segment of channel are separately 
220.20 	charged is sourced 50 percent in each level of jurisdiction in which the customer channel 
220.21 	termination points are located; and
220.22 	(4) service for segments of a channel located in more than one jurisdiction or 
220.23 	levels of jurisdiction and which segments are not separately billed is sourced in each 
220.24 	jurisdiction based on the percentage determined by dividing the number of customer 
220.25 	channel termination points in the jurisdiction by the total number of customer channel 
220.26 	termination points.

220.27 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
220.28 	or after January 1, 2008.

220.29 	Sec. 22. Minnesota Statutes 2006, section 297A.669, subdivision 13, is amended to 
220.30 	read:
220.31 		Subd. 13.Postpaid calling service. "Postpaid calling service," for purposes of 
220.32 	this section, means the telecommunications service obtained by making a payment 
220.33 	on a call-by-call basis either through the use of a credit card or payment mechanism 
220.34 	such as a bank card, travel card, credit card, or debit card, or by a charge made to 
220.35 	a telephone number that is not associated with the origination or termination of the 
221.1 	telecommunications service. A postpaid calling service includes a telecommunications 
221.2 	service, except a prepaid wireless calling service, that would be a prepaid calling service 
221.3 	except it is not exclusively a telecommunication service.

221.4 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
221.5 	or after January 1, 2008.

221.6 	Sec. 23. Minnesota Statutes 2006, section 297A.669, subdivision 14, is amended to 
221.7 	read:
221.8 		Subd. 14.Prepaid calling service. "Prepaid calling service," for purposes of this 
221.9 	section, means a telecommunications service that:
221.10 	(1) provides the right to access exclusively telecommunications services, which;
221.11 	(2) must be paid for in advance and which;
221.12 	(3) enables the origination of calls using an access number or authorization code, 
221.13 	whether manually or electronically dialed,; and that
221.14 	(4) is sold in predetermined units or dollars of which the number declines with 
221.15 	use in a known amount.

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

221.17 	Sec. 24. Minnesota Statutes 2006, section 297A.669, is amended by adding a 
221.18 	subdivision to read:
221.19 		Subd. 14a.Prepaid wireless calling service. "Prepaid wireless calling service," for 
221.20 	purposes of this section, means a telecommunications service that: 
221.21 	(1) provides the right to utilize mobile wireless service as well as other 
221.22 	nontelecommunications services, including the download of digital products delivered 
221.23 	electronically, content, and ancillary services; 
221.24 	(2) must be paid for in advance; and 
221.25 	(3) is sold in predetermined units or dollars of which the number declines with 
221.26 	use in a known amount.

221.27 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
221.28 	or after January 1, 2008.

221.29 	Sec. 25. Minnesota Statutes 2006, section 297A.669, is amended by adding a 
221.30 	subdivision to read:
221.31 		Subd. 17.Ancillary service. The sale of an ancillary service is sourced to the 
221.32 	customer's place of primary use.

222.1 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
222.2 	or after January 1, 2008.

222.3 	Sec. 26. Minnesota Statutes 2006, section 297A.67, subdivision 8, is amended to read:
222.4 		Subd. 8.Clothing. (a) Clothing is exempt. For purposes of this subdivision, 
222.5 	"clothing" means all human wearing apparel suitable for general use.
222.6 	(b) Clothing includes, but is not limited to, aprons, household and shop; athletic 
222.7 	supporters; baby receiving blankets; bathing suits and caps; beach capes and coats; belts 
222.8 	and suspenders; boots; coats and jackets; costumes; children and adult diapers, including 
222.9 	disposable; ear muffs; footlets; formal wear; garters and garter belts; girdles; gloves and 
222.10 	mittens for general use; hats and caps; hosiery; insoles for shoes; lab coats; neckties; 
222.11 	overshoes; pantyhose; rainwear; rubber pants; sandals; scarves; shoes and shoe laces; 
222.12 	slippers; sneakers; socks and stockings; steel-toed boots; underwear; uniforms, athletic 
222.13 	and nonathletic; and wedding apparel.
222.14 	(c) Clothing does not include the following:
222.15 	(1) belt buckles sold separately;
222.16 	(2) costume masks sold separately;
222.17 	(3) patches and emblems sold separately;
222.18 	(4) sewing equipment and supplies, including but not limited to, knitting needles, 
222.19 	patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles;
222.20 	(5) sewing materials that become part of clothing, including but not limited to, 
222.21 	buttons, fabric, lace, thread, yarn, and zippers;
222.22 	(6) clothing accessories or equipment;
222.23 	(7) sports or recreational equipment; and
222.24 	(8) protective equipment.
222.25 	Clothing also does not include apparel made from fur if a uniform definition of "apparel 
222.26 	made from fur" is developed by the member states of the Streamlined Sales and Use Tax 
222.27 	Agreement "fur clothing" as defined in section 297A.61, subdivision 46.
222.28 	For purposes of this subdivision, "clothing accessories or equipment" means 
222.29 	incidental items worn on the person or in conjunction with clothing. Clothing accessories 
222.30 	and equipment include, but are not limited to, briefcases; cosmetics; hair notions, including 
222.31 	barrettes, hair bows, and hairnets; handbags; handkerchiefs; jewelry; nonprescription 
222.32 	sunglasses; umbrellas; wallets; watches; and wigs and hairpieces. "Sports or recreational 
222.33 	equipment" means items designed for human use and worn in conjunction with an athletic 
222.34 	or recreational activity that are not suitable for general use. Sports and recreational 
222.35 	equipment includes, but is not limited to, ballet and tap shoes; cleated or spiked athletic 
223.1 	shoes; gloves, including, but not limited to, baseball, bowling, boxing, hockey, and golf 
223.2 	gloves; goggles; hand and elbow guards; life preservers and vests; mouth guards; roller 
223.3 	and ice skates; shin guards; shoulder pads; ski boots; waders; and wetsuits and fins. 
223.4 	"Protective equipment" means items for human wear and designed as protection of the 
223.5 	wearer against injury or disease or as protection against damage or injury of other persons 
223.6 	or property but not suitable for general use. Protective equipment includes, but is not 
223.7 	limited to, breathing masks; clean room apparel and equipment; ear and hearing protectors; 
223.8 	face shields; finger guards; hard hats; helmets; paint or dust respirators; protective gloves; 
223.9 	safety glasses and goggles; safety belts; tool belts; and welders gloves and masks.

223.10 	EFFECTIVE DATE. This section is effective for sales and purchases made on or 
223.11 	after July 1, 2007.

223.12 	Sec. 27. Minnesota Statutes 2006, section 297A.67, subdivision 9, is amended to read:
223.13 		Subd. 9.Baby products. Breast pumps, baby bottles and nipples, pacifiers, teething 
223.14 	rings, and infant syringes are exempt.

223.15 	EFFECTIVE DATE. This section is effective for sales and purchases made on or 
223.16 	after the day following final enactment.

223.17 	Sec. 28. Minnesota Statutes 2006, section 297A.68, subdivision 11, is amended to read:
223.18 		Subd. 11.Advertising materials. Materials designed to advertise and promote the 
223.19 	sale of merchandise or services are exempt if these materials are mailed or transferred to a 
223.20 	person outside the state for use solely outside the state. Mailing and reply envelopes and 
223.21 	cards and other shipping materials including, but not limited to, boxes, labels, containers, 
223.22 	and banding, used exclusively in connection with these advertising and promotional 
223.23 	materials are included in this exemption. The exemption applies regardless of where the 
223.24 	mailing occurs. The storage of these materials in the state for the purpose of subsequently 
223.25 	shipping or otherwise transferring the material out of state is also exempt if the other 
223.26 	conditions in this subdivision are met. For purposes of this subdivision, materials that have 
223.27 	a primary purpose other than advertising, such as fulfilling a legal obligation or furnishing 
223.28 	nonadvertising information, are not materials designed to advertise and promote the sale 
223.29 	of merchandise or services even if they do include advertising content.

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

223.31 	Sec. 29. Minnesota Statutes 2006, section 297A.68, subdivision 16, is amended to read:
224.1 		Subd. 16.Packing materials. Packing materials used to pack and ship household 
224.2 	goods and that are provided to and remain with the customer of a for-hire carrier are 
224.3 	exempt if the ultimate destination of the goods is outside Minnesota and if the goods
224.4 	packing materials are not later returned to a point within Minnesota, except in the course 
224.5 	of interstate commerce. This exemption does not apply to tools, equipment, pads, or 
224.6 	accessories owned or leased by the for-hire carrier.

224.7 	EFFECTIVE DATE. This section is effective for sales and purchases made after 
224.8 	June 30, 2007.

224.9 	Sec. 30. Minnesota Statutes 2006, section 297A.68, subdivision 35, is amended to read:
224.10 		Subd. 35.Telecommunications, cable television, and direct satellite equipment.
 224.11 	(a) Telecommunications, cable television, or direct satellite machinery and equipment 
224.12 	purchased or leased for use directly by a telecommunications, cable television, or 
224.13 	direct satellite service provider primarily in the provision of telecommunications, cable 
224.14 	television, or direct satellite services that are ultimately to be sold at retail are exempt, 
224.15 	regardless of whether purchased by the owner, a contractor, or a subcontractor.
224.16 	(b) For purposes of this subdivision, "telecommunications, cable television, or direct 
224.17 	satellite machinery and equipment" includes, but is not limited to:
224.18 	(1) machinery, equipment, and fixtures utilized in receiving, initiating, 
224.19 	amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring 
224.20 	telecommunications, cable television, or direct satellite services, such as computers, 
224.21 	transformers, amplifiers, routers, bridges, repeaters, multiplexers, and other items 
224.22 	performing comparable functions;
224.23 	(2) machinery, equipment, and fixtures used in the transportation of 
224.24 	telecommunications, cable television, or direct satellite services, radio transmitters and 
224.25 	receivers, satellite equipment, microwave equipment, and other transporting media, but 
224.26 	not wire, cable, fiber, poles, or conduit;
224.27 	(3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or 
224.28 	enable the machinery in clauses (1) and (2) to accomplish its intended function, such as 
224.29 	auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning 
224.30 	equipment necessary to the operation of the telecommunications, cable television, or direct 
224.31 	satellite equipment; and software necessary to the operation of the telecommunications, 
224.32 	cable television, or direct satellite equipment; and
224.33 	(4) repair and replacement parts, including accessories, whether purchased as spare 
224.34 	parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.
225.1 	(c) For purposes of this subdivision, "telecommunications services" means 
225.2 	telecommunications services as defined in section 297A.61, subdivision 24, paragraphs 
225.3 	(a), (c), and (d).

225.4 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
225.5 	or after January 1, 2008.

225.6 	Sec. 31. Minnesota Statutes 2006, section 297A.70, subdivision 7, is amended to read:
225.7 		Subd. 7.Hospitals and outpatient surgical centers. (a) Sales, except for those 
225.8 	listed in paragraph (c), to a hospital are exempt, if the items purchased are used in 
225.9 	providing hospital services. For purposes of this subdivision, "hospital" means a hospital 
225.10 	organized and operated for charitable purposes within the meaning of section 501(c)(3) of 
225.11 	the Internal Revenue Code, and licensed under chapter 144 or by any other jurisdiction, 
225.12 	and "hospital services" are services authorized or required to be performed by a "hospital" 
225.13 	under chapter 144.
225.14 	(b) Sales, except for those listed in paragraph (c), to an outpatient surgical center 
225.15 	are exempt, if the items purchased are used in providing outpatient surgical services. For 
225.16 	purposes of this subdivision, "outpatient surgical center" means an outpatient surgical 
225.17 	center organized and operated for charitable purposes within the meaning of section 
225.18 	501(c)(3) of the Internal Revenue Code, and licensed under chapter 144 or by any other 
225.19 	jurisdiction. For the purposes of this subdivision, "outpatient surgical services" means: 
225.20 	(1) services authorized or required to be performed by an outpatient surgical center under 
225.21 	chapter 144; and (2) urgent care. For purposes of this subdivision, "urgent care" means 
225.22 	health services furnished to a person whose medical condition is sufficiently acute to 
225.23 	require treatment unavailable through, or inappropriate to be provided by, a clinic or 
225.24 	physician's office, but not so acute as to require treatment in a hospital emergency room.
225.25 	(c) This exemption does not apply to the following products and services:
225.26 	(1) purchases made by a clinic, physician's office, or any other medical facility not 
225.27 	operating as a hospital or outpatient surgical center, even though the clinic, office, or 
225.28 	facility may be owned and operated by a hospital or outpatient surgical center;
225.29 	(2) sales under section 297A.61, subdivision 3, paragraph (g), clause (2), and 
225.30 	prepared food, candy, and soft drinks; 
225.31 	(3) building and construction materials used in constructing buildings or facilities 
225.32 	that will not be used principally by the hospital or outpatient surgical center;
225.33 	(4) building, construction, or reconstruction materials purchased by a contractor 
225.34 	or a subcontractor as a part of a lump-sum contract or similar type of contract with a 
226.1 	guaranteed maximum price covering both labor and materials for use in the construction, 
226.2 	alteration, or repair of a hospital or outpatient surgical center; or
226.3 	(5) the leasing of a motor vehicle as defined in section 297B.01, subdivision 5. 
226.4 	(d) A limited liability company also qualifies for exemption under this subdivision if 
226.5 	(1) it consists of a sole member that would qualify for the exemption, and (2) the items 
226.6 	purchased qualify for the exemption.
226.7 	(e) An entity that contains both a hospital and a nonprofit unit may claim this 
226.8 	exemption on purchases made for both the hospital and nonprofit unit provided that:
226.9 	(1) the nonprofit unit would have qualified for exemption under subdivision 4; and
226.10 	(2) the items purchased would have qualified for the exemption.

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

226.12 	Sec. 32. Minnesota Statutes 2006, section 297A.70, is amended by adding a 
226.13 	subdivision to read:
226.14 		Subd. 18.Private communication service for State Lottery. Private 
226.15 	communication service, as defined in section 297A.61, subdivision 26, is exempt if the 
226.16 	service is purchased by an agent acting on behalf of the State Lottery.

226.17 	EFFECTIVE DATE. This section is effective for sales and purchases made on 
226.18 	or after January 1, 2008.

226.19 	Sec. 33. Minnesota Statutes 2006, section 297A.72, is amended to read:
226.20 	297A.72 EXEMPTION CERTIFICATES.
226.21 		Subd. 2.Content and form of exemption certificate. An exemption certificate 
226.22 	must be substantially in the form prescribed by the commissioner and. To be fully 
226.23 	completed, the exemption certificate must:
226.24 	(1) either be signed by the purchaser if it is a paper form, or meet the requirements 
226.25 	of section 270C.304 if in electronic form;
226.26 	(2) bear the name and address of the purchaser; and
226.27 	(3) indicate the sales tax account identification number, if any, issued to the 
226.28 	purchaser. as follows:
226.29 	(i) the purchaser's Minnesota tax identification number;
226.30 	(ii) if the purchaser does not have a Minnesota tax identification number, then the 
226.31 	purchaser's state tax identification number that is issued by a state other than Minnesota, 
226.32 	and the name of that state;
227.1 	(iii) if the purchaser does not have an identification number described in either item 
227.2 	(i) or (ii), then the purchaser's federal Employer Identification Number; or
227.3 	(iv) if the purchaser does not have an identification number described in item (i), (ii), 
227.4 	or (iii), then either the number of the purchaser's state-issued driver's license, if valid in 
227.5 	the state of issue, or if the purchaser does not have a driver's license, a valid state-issued 
227.6 	identification number, and the name of the state of issue;
227.7 	(4) indicate the purchaser's type of business, using a business-type coding system 
227.8 	prescribed by the commissioner; and
227.9 	(5) indicate the reason for the exemption, using an exemption reason coding system 
227.10 	prescribed by the commissioner.
227.11 		Subd. 3.Purchaser requirement. A blanket exemption certificate is an exemption 
227.12 	certificate used for continuing future purchases. A purchaser using a blanket exemption 
227.13 	certificate must update it as needed to accurately reflect the information that is required 
227.14 	under subdivision 2.

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

227.16 	Sec. 34. [297A.8155] LIQUOR REPORTING REQUIREMENTS; PENALTY.
227.17 	A person who sells liquor, as defined in section 295.75, subdivision 1, in Minnesota 
227.18 	to a retailer that sells liquor, shall file with the commissioner an annual informational 
227.19 	report, in the form and manner prescribed by the commissioner, indicating the volume of 
227.20 	liquor sold to each retailer in the previous calendar year. The report must be filed on or 
227.21 	before February 28 of each calendar year beginning in 2008. A person failing to file this 
227.22 	report is subject to the penalty imposed under Minnesota Statutes, section 289A.60.

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

227.24 	Sec. 35. Minnesota Statutes 2006, section 297A.90, subdivision 2, is amended to read:
227.25 		Subd. 2.Payment of tax. (a) Persons who are registered as retailers may make 
227.26 	purchases in this state or import property into this state without payment of the sales or use 
227.27 	taxes imposed by this chapter at the time of purchase or importation, if the purchases or 
227.28 	importations come within the provisions of this section and are made in strict compliance 
227.29 	with the rules of the commissioner.
227.30 	(b) A person described in subdivision 1 may elect to pay directly to the commissioner 
227.31 	any sales or use tax that may be due under this chapter for the acquisition of mobile 
227.32 	transportation equipment and parts and accessories attached or to be attached to such 
227.33 	equipment registered under section 168.187. 
228.1 	(c) The total cost of such equipment and parts and accessories attached or to be 
228.2 	attached to such equipment must be multiplied by a fraction. The numerator of the fraction 
228.3 	is the Minnesota mileage as reported on the current pro rata application provided for in 
228.4 	section 168.187 and the denominator of the fraction is the total mileage reported on the 
228.5 	current pro rata registration application. The amount so determined must be multiplied by 
228.6 	the tax rate to obtain the tax due. 
228.7 	In computing the tax under this section "sales price" does not include the amount of any 
228.8 	tax, except any manufacturer's or importer's excise tax, imposed by the United States 
228.9 	upon or with respect to retail sales, whethertaxes imposed directly on the retailer or the
228.10 	consumer that are separately stated on the invoice, bill of sale, or similar document given 
228.11 	to the purchaser.
228.12 	(d) A retailer covered by this section shall make a return and remit to the 
228.13 	commissioner the tax due for the preceding calendar month in accordance with sections 
228.14 	289A.11 and 289A.20, subdivision 4. 

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

228.16 	Sec. 36. Minnesota Statutes 2006, section 297B.035, subdivision 1, is amended to read:
228.17 		Subdivision 1.Ordinary course of business. Except as provided in this section, 
228.18 	motor vehicles purchased solely for resale in the ordinary course of business by any motor 
228.19 	vehicle dealer, as defined in section 168.011, subdivision 21, who is licensed under section 
228.20 	168.27, subdivision 2 or 3, including vehicles which bear dealer plates as authorized by 
228.21 	section 168.27, subdivision 16, shall be exempt from the provisions of this chapter. 

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

228.23 	Sec. 37. Minnesota Statutes 2006, section 469.1734, subdivision 6, is amended to read:
228.24 		Subd. 6.Sales tax exemption; equipment; construction materials. (a) The gross 
228.25 	receipts from the sale of machinery and equipment and repair parts are exempt from 
228.26 	taxation under chapter 297A, if the machinery and equipment:
228.27 	(1) are used in connection with a trade or business;
228.28 	(2) are placed in service in a city that is authorized to designate a zone under section 
228.29 	469.1731, regardless of whether the machinery and equipment are used in a zone; and
228.30 	(3) have a useful life of 12 months or more.
228.31 	(b) The gross receipts from the sale of construction materials are exempt, if they are 
228.32 	used to construct:
229.1 	(1) a facility for use in a trade or business located in a city that is authorized to 
229.2 	designate a zone under section 469.1731, regardless of whether the facility is located in a 
229.3 	zone; or
229.4 	(2) housing that is located in a zone.
229.5 	The exemptions under this paragraph apply regardless of whether the purchase is made by 
229.6 	the owner, the user, or a contractor.
229.7 	(c) A purchaser may claim an exemption under this subdivision for tax on the 
229.8 	purchases up to, but not exceeding:
229.9 	(1) the amount of the tax credit certificates received from the city, less
229.10 	(2) any tax credit certificates used under the provisions of subdivisions 4 and 5, and 
229.11 	section 469.1732, subdivision 2.
229.12 	(d) The tax on sales of items exempted under this subdivision shall be imposed and 
229.13 	collected as if the applicable rate under section 297A.62 applied. Upon application by the 
229.14 	purchaser, on forms prescribed by the commissioner, a refund equal to the tax paid shall 
229.15 	be paid to the purchaser. The application must include sufficient information to permit 
229.16 	the commissioner to verify the sales tax paid and the eligibility of the claimant to receive 
229.17 	the credit. No more than two applications for refunds may be filed under this subdivision 
229.18 	in a calendar year. The provisions of section 289A.40 apply to the refunds payable 
229.19 	under this subdivision. There is annually appropriated to the commissioner of revenue 
229.20 	the amount required to make the refunds, which must be deducted from the amount of 
229.21 	the city's allocation under section 469.169, subdivision 12, that remains available and its 
229.22 	limitation under section 469.1735. 
229.23 	(e) The amount to be refunded shall bear interest at the rate in section 270C.405
229.24 	from the date90 days after the refund claim is filed with the commissioner.

229.25 	EFFECTIVE DATE. This section is effective for refund claims filed on or after 
229.26 	July 1, 2007.

229.27 	Sec. 38. FUR TAX PAYMENTS.
 229.28 	(a) Furriers must file the annual return, required by Minnesota Statutes, section 
229.29 	295.60, subdivision 5, which otherwise would be due March 15, 2008, by September 
229.30 	15, 2007.
229.31 	(b) If a furrier is required by Minnesota Statutes, section 295.60, subdivision 3, to 
229.32 	make installments of quarterly estimates, then the furrier shall make the last installment by 
229.33 	July 15, 2007.

230.1 	EFFECTIVE DATE. Effective July 1, 2007, for sales and purchases made prior to 
230.2 	July 1, 2007.

230.3 	Sec. 39. REPEALER.
 230.4 	(a) Minnesota Statutes 2006, section 295.60, is repealed.
230.5 	(b) Minnesota Statutes 2006, section 297A.61, subdivision 20, is repealed.
230.6 	(c) Minnesota Statutes 2006, section 297A.668, subdivision 6, is repealed.
230.7 	(d) Minnesota Statutes 2006, section 297A.67, subdivision 22, is repealed.

230.8 	EFFECTIVE DATE. Paragraph (a) is effective for sales and purchases made on 
230.9 	or after July 1, 2007; paragraph (b) is effective for sales and purchases made on or after 
230.10 	January 1, 2008; and paragraphs (c) and (d) are effective the day following final enactment.

230.11 	ARTICLE 12
230.12 	DEPARTMENT PROPERTY TAXES AND AIDS

230.13 	Section 1. Minnesota Statutes 2006, section 270.071, subdivision 7, is amended to read:
230.14 		Subd. 7.Flight property. "Flight property" means all aircraft and flight equipment 
230.15 	used in connection therewith, including spare flight equipment. Flight property also 
230.16 	includes computers and computer software used in operating, controlling, or regulating 
230.17 	aircraft and flight equipment.

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

230.19 	Sec. 2. Minnesota Statutes 2006, section 270.072, subdivision 2, is amended to read:
230.20 		Subd. 2.Assessment of flight property. The Flight property ofthat is owned by, 
230.21 	or is leased, loaned, or otherwise made available to all airline companies operating in 
230.22 	Minnesota shall be assessed and appraised annually by the commissioner with reference 
230.23 	to its value on January 2 of the assessment year in the manner prescribed by sections 
230.24 	270.071 to 270.079. Aircraft with a gross weight of less than 30,000 pounds and used on 
230.25 	intermittent or irregularly timed flights shall be excluded from the provisions of sections 
230.26 	270.071 to 270.079. 

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

230.28 	Sec. 3. Minnesota Statutes 2006, section 270.072, subdivision 3, is amended to read:
230.29 		Subd. 3.Report by airline company. Each year, on or before July 1, every airline 
230.30 	company engaged in air commerce in this state shall file with the commissioner on or 
231.1 	before the time fixed by the commissioner a report under oath setting forth specifically 
231.2 	the information prescribed by the commissioner to enable the commissioner to make the 
231.3 	assessment required in sections 270.071 to 270.079, unless the commissioner determines 
231.4 	that the airline company or person should be excluded from filing because its activities do 
231.5 	not constitute air commerce as defined herein. A penalty of five percent of the tax being 
231.6 	assessed is imposed on a late filing of the annual report. If the report is not filed within 
231.7 	30 days, an additional penalty of five percent of the assessed tax is imposed for each 
231.8 	additional 30 days or fraction of 30 days until the return is filed. The penalty imposed 
231.9 	under this section must not exceed the lesser of $25,000 or 25 percent of the assessed tax.

231.10 	EFFECTIVE DATE. This section is effective beginning January 2, 2007, for taxes 
231.11 	payable in 2008 and thereafter.

231.12 	Sec. 4. Minnesota Statutes 2006, section 270.072, subdivision 6, is amended to read:
231.13 		Subd. 6.Airflight property tax lien. The tax imposed under sections 270.071 to 
231.14 	270.079 is a lien on all real and personal property within this state of the airline company 
231.15 	in whose name the property is assessed. For purposes of sections 270C.62 and 270C.63, 
231.16 	the date of assessment for the tax imposed under sections 270.071 to 270.079 isThe lien 
231.17 	attaches on January 2 of each year for the taxes payable in the following year.

231.18 	EFFECTIVE DATE. This section is effective beginning January 2, 2007, for taxes 
231.19 	payable in 2008 and thereafter.

231.20 	Sec. 5. [270.0725] PENALTIES.
231.21 		Subdivision 1.Penalty for late filing. If an airline company does not file its annual 
231.22 	report by the date designated in section 270.072, subdivision 3, a penalty of five percent 
231.23 	of the tax being assessed is imposed on that company. On August 1, and on the first day 
231.24 	of each succeeding calendar month, an additional five percent penalty is imposed if the 
231.25 	report has not yet been filed. For each airline company, the penalties imposed under 
231.26 	this subdivision for any one year are limited to the lesser of $25,000 or 25 percent of 
231.27 	the assessed tax. 
231.28 		Subd. 2.Penalty for repeated instances of late filing. If there is a pattern of 
231.29 	repeated failures by an airline company to timely file the report required by this section, a 
231.30 	penalty of ten percent of the tax being assessed is imposed on that company.
231.31 		Subd. 3.Penalty for frivolous report. If an airline company files a frivolous annual 
231.32 	report, a penalty of 25 percent of the tax being assessed is imposed on that company. A 
231.33 	frivolous report under this section is a report that would fulfill the criteria for a frivolous 
232.1 	return under section 289A.60, subdivision 7, notwithstanding the restriction in section 
232.2 	289A.01. In a proceeding involving the issue of whether or not an airline company is 
232.3 	liable for this penalty, the burden of proof is on the commissioner.
232.4 		Subd. 4.Penalty for fraudulent report. If an airline company files a false or 
232.5 	fraudulent annual report with intent to evade or defeat the tax, a penalty equal to 50 
232.6 	percent of the tax being assessed is imposed on that company.
232.7 		Subd. 5.Penalties added to tax. Penalties imposed under this section are added to 
232.8 	the tax and collected as a part of it.

232.9 	EFFECTIVE DATE. This section is effective for annual reports due on or after 
232.10 	July 1, 2007.

232.11 	Sec. 6. [270.0735] EXAMINATION; INVESTIGATIONS; SUBPOENAS.
232.12 	In addition to the powers granted to the commissioner in this chapter, and in order to 
232.13 	determine net tax capacities and issue notices of net tax capacity and tax under sections 
232.14 	270.071 to 270.079, the commissioner has the powers contained in sections 270C.31 and 
232.15 	270C.32, for which purpose the word "taxpayer" as defined in section 270C.01 includes 
232.16 	an airline company.

232.17 	EFFECTIVE DATE. This section is effective beginning January 2, 2007, for taxes 
232.18 	payable in 2008 and thereafter.

232.19 	Sec. 7. Minnesota Statutes 2006, section 270.074, subdivision 3, is amended to read:
232.20 		Subd. 3.Tax capacity. (a) The net tax capacity of the flight property of every airline 
232.21 	company shall have a tax capacity ofis 70 percent of the value thereof apportioned to this 
232.22 	state under subdivision 1, except that the net tax capacity of quiet aircraft shall have a 
232.23 	tax capacity ofis 40 percent of the value determined under subdivision 1. Quiet aircraft 
232.24 	shall include "Quiet aircraft" means turboprops and aircraft defined as stage III or IV by 
232.25 	the Federal Aeronautics Administration. If, in the opinion of the commissioner, other 
232.26 	aircraft may be qualified as quiet aircraft, the commissioner may adopt rules providing 
232.27 	additional qualifications.
232.28 	(b) The flight property of an airline company that owns or leases aircraft the majority 
232.29 	of which are turboprops, and which provides, during six months or more of the year that 
232.30 	taxes are levied, scheduled passenger service to three or more airports inside or outside of 
232.31 	this state that serve small or medium sized communities, shall be assessed at 50 percent of 
232.32 	the assessment percentage otherwise set by paragraph (a).

233.1 	EFFECTIVE DATE. This section is effective beginning January 2, 2007, for taxes 
233.2 	payable in 2008 and thereafter.

233.3 	Sec. 8. Minnesota Statutes 2006, section 270.076, subdivision 1, is amended to read:
233.4 		Subdivision 1.Appeal. Any airline company against which a tax has been imposed 
233.5 	under sections 270.071 to 270.079 shall have the right to appeal within 60 days from the 
233.6 	date of notice of the levy of the taxThe notices of net tax capacity and of tax required 
233.7 	under section 270.075, subdivision 2, are orders of the commissioner. These orders must 
233.8 	be issued in conformance with section 270C.33, subdivisions 1 and 2, but are not subject 
233.9 	to administrative review under section 270C.35. These orders may be appealed to the Tax 
233.10 	Court in the manner provided by law in section 271.06 for appealing official orders of 
233.11 	the commissioner that do not deal with valuation, assessment, or taxation for property 
233.12 	tax purposes, and the provisions of section 273.125, subdivisions 4 and 5, and chapter 
233.13 	278 do not apply. 

233.14 	EFFECTIVE DATE. This section is effective beginning January 2, 2007, for taxes 
233.15 	payable in 2008 and thereafter.

233.16 	Sec. 9. Minnesota Statutes 2006, section 270.41, subdivision 1, is amended to read:
233.17 		Subdivision 1.Creation; purpose; powers. A Board of Assessors is created. 
233.18 	The board shall establish, conduct, review, supervise, coordinate, and approve courses 
233.19 	in assessment practices, and establish criteria for determining assessor's qualifications. 
233.20 	The board shall also consider other matters relating to assessment administration brought 
233.21 	before it by the commissioner of revenue. The board may grant, renew, suspend, or revoke 
233.22 	an assessor's license.

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

233.24 	Sec. 10. Minnesota Statutes 2006, section 270.41, is amended by adding a subdivision 
233.25 	to read:
233.26 		Subd. 1a.Definition. For purposes of sections 270.41 to 270.50, "board" means 
233.27 	the Board of Assessors.

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

233.29 	Sec. 11. Minnesota Statutes 2006, section 270.41, subdivision 2, is amended to read:
234.1 		Subd. 2.Members. The board shall consist of nine members, who shall be 
234.2 	appointed by the commissioner of revenue, in the manner provided herein. The members 
234.3 	shall include:
234.4 	(1) two from the Department of Revenue;
234.5 	(2) two county assessors;
234.6 	(3) two assessors who are not county assessors, one of whom shall be a township 
234.7 	assessor;
234.8 	(4) one from the private appraisal field holding a professional appraisal designation; 
234.9 	and
234.10 	(5) two public members as defined by section 214.02. 
234.11 	The appointment provided in clauses (2) and (3) may be made from two listsa list 
234.12 	of not less than three names each, one submitted to the commissioner of revenue by the 
234.13 	Minnesota Association of Assessing Officers or its successor organization containing 
234.14 	recommendations for the appointment of appointees described in clause clauses (2), 
234.15 	and one by the Minnesota Association of Assessors, Inc. or its successor organization 
234.16 	containing recommendations for the appointees described in clause (3) and (3). The lists
234.17 	list must be submitted 30 days before the commencement of the term. In the case of a 
234.18 	vacancy, a new list shall be furnished to the commissioner by the respective organization
234.19 	immediately. A member of the board who is no longer engaged in the capacity listed 
234.20 	abovethat was the basis of appointment is disqualified from membership in the board.
234.21 	The board shall annually elect a chair and a secretaryvice-chair of the board.

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

234.23 	Sec. 12. Minnesota Statutes 2006, section 270.41, subdivision 3, is amended to read:
234.24 		Subd. 3.Licenses; refusal or revocation. The board may refuse to grant or renew, 
234.25 	or may suspend or revoke, a license of an applicant or licensee for any of the following 
234.26 	causes or acts:
234.27 	(1) failure to complete required training;
234.28 	(2) inefficiency or neglect of duty;
234.29 	(3) "unprofessional conduct" which means knowingly neglecting to perform a duty 
234.30 	required by law, or violation of the laws of this state relating to the assessment of property 
234.31 	or unlawfully exempting property or knowingly and intentionally listing property on the 
234.32 	tax list at substantially less than its market value or the level required by law in order to 
234.33 	gain favor or benefit, or knowingly and intentionally misclassifying property in order to 
234.34 	gain favor or benefit failure to comply with the Code of Conduct and Ethics for Licensed 
235.1 	Minnesota Assessors adopted by the board pursuant to Laws 2005, First Special Session 
235.2 	chapter 3, article 1, section 38;
235.3 	(4) conviction of a crime involving moral turpitude; or
235.4 	(5) any other cause or act that in the board's opinion warrants a refusal to issue 
235.5 	or suspension or revocation of a license.

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

235.7 	Sec. 13. Minnesota Statutes 2006, section 270.41, subdivision 5, is amended to read:
235.8 		Subd. 5.Prohibited activity. An assessor, deputy assessor, assistant assessor, 
235.9 	appraiser,A licensed assessor or other person employed by an assessment jurisdiction 
235.10 	or contracting with an assessment jurisdiction for the purpose of valuing or classifying 
235.11 	property for property tax purposes is prohibited from making appraisals or analyses, 
235.12 	accepting an appraisal assignment, or preparing an appraisal report as defined in section 
235.13 	82B.02, subdivisions 2 to 5, on any property within the assessment jurisdiction where the 
235.14 	individual is employed or performing the duties of the assessor under contract. Violation 
235.15 	of this prohibition shall result in immediate revocation of the individual's license to assess 
235.16 	property for property tax purposes. This prohibition must not be construed to prohibit an 
235.17 	individual from carrying out any duties required for the proper assessment of property 
235.18 	for property tax purposes. If a formal resolution has been adopted by the governing body 
235.19 	of a governmental unit, which specifies the purposes for which such work will be done, 
235.20 	this prohibition does not apply to appraisal activities undertaken on behalf of and at the 
235.21 	request of the governmental unit that has employed or contracted with the individual. 
235.22 	The resolution may only allow appraisal activities which are related to condemnations, 
235.23 	right-of-way acquisitions, or special assessments. 

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

235.25 	Sec. 14. Minnesota Statutes 2006, section 270.44, is amended to read:
235.26 	270.44 CHARGES FOR COURSES, EXAMINATIONS OR MATERIALS.
235.27 	The board shall charge the following fees:
235.28 	(1) $105 for a senior accredited Minnesota assessor license;
235.29 	(2) $80 for an accredited Minnesota assessor license;
235.30 	(3) $65 for a certified Minnesota assessor specialist license;
235.31 	(4) $55 for a certified Minnesota assessor license;
235.32 	(5) $50 for a course challenge examination;
235.33 	(6)(5) $35 for grading a form appraisal;
236.1 	(7)(6) $60 for grading a narrative appraisal;
236.2 	(8)(7) $30 for a reinstatement fee;
236.3 	(9)(8) $25 for a record retention fee; and
236.4 	(10)(9) $20 for an educational transcript; and.
236.5 	(11) $30 for all retests of board-sponsored educational courses.

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

236.7 	Sec. 15. Minnesota Statutes 2006, section 270.45, is amended to read:
236.8 	270.45 DISPOSITION OF FEES.
236.9 	All fees so established and collected shall be paid to the commissioner of finance for 
236.10 	deposit in the general fund. The expenses of carrying out the provisions of sections 270.41
236.11 	to 270.53 shall be paid from appropriations made to the board of Assessors. 

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

236.13 	Sec. 16. Minnesota Statutes 2006, section 270.46, is amended to read:
236.14 	270.46 TRAINING COURSES, ESTABLISHMENT; OTHER COURSES,
236.15 	REGULATION.
236.16 	The board shall establishreview and approve training courses on assessment 
236.17 	practices and shall review and approve courses on assessment practices, techniques of 
236.18 	assessment, and ethics offered by schools, colleges and,  universities as well as courses that 
236.19 	are offered by any units of government on techniques of assessment. Courses shall be 
236.20 	established in various places throughout the state and be offered on regular intervals, units 
236.21 	of government, and other entities.

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

236.23 	Sec. 17. Minnesota Statutes 2006, section 270.47, is amended to read:
236.24 	270.47 RULES.
236.25 	The board shall establish theadopt rules necessary to accomplish the purpose of 
236.26 	sectionsections 270.41 to 270.51, and shall establish criteria required of assessing officials 
236.27 	in the state. Separate criteria may be established depending upon the responsibilities of the 
236.28 	assessor. The board shall prepare and give examinations from time to time to determine 
236.29 	whether assessing officials possess the necessary qualifications for performing the 
236.30 	functions of the office. Such tests shall be given immediately upon completion of courses 
236.31 	required by the board, or to persons who already possess the requisite qualifications under 
237.1 	the rules of the board. An action of the board in refusing to grant or renew a license or in 
237.2 	suspending or revoking a license is subject to review in accordance with chapter 14.

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

237.4 	Sec. 18. Minnesota Statutes 2006, section 270.48, is amended to read:
237.5 	270.48 LICENSURE OF QUALIFIED PERSONS.
237.6 	The board shall may license persons as possessing the necessary qualifications of an 
237.7 	assessing official. Different levels of licensure may be established as to classes of property 
237.8 	which assessors may be certified to assess at the discretion of the board. Every person, 
237.9 	except a local or county assessor, regularly employed by the assessor to assist in making 
237.10 	decisions regarding valuing and classifying property for assessment purposes shall be 
237.11 	required tomust become licensed within three years of the date of employment. Licensure 
237.12 	shall be required for local and county assessors as otherwise provided in sections 270.41
237.13 	to 270.53 section 273.061 and rules adopted by the board. 

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

237.15 	Sec. 19. Minnesota Statutes 2006, section 270.50, is amended to read:
237.16 	270.50 EMPLOYMENT OF LICENSED ASSESSORS.
237.17 	No assessor shall be employed who has not been licensed as qualified by the board, 
237.18 	provided the time to comply may be extended after application to the board upon a 
237.19 	showing that licensed assessors are not available for employment. The board may license 
237.20 	that a county or local assessor who has not received the training, but possesses the 
237.21 	necessary qualifications for performing the functions of the office by the passage of an 
237.22 	approved examination or may waive the examination if such person has demonstrated 
237.23 	competence in performing the functions of the office for a period of time the board deems 
237.24 	reasonable. The county or local assessing district shall assume the cost of training of its 
237.25 	assessors in courses approved by the board for the purpose of obtaining the assessor's 
237.26 	license to the extent of course fees, mileage, meals and lodging, and recognized travel 
237.27 	expenses not paid by the state. If the governing body of any township or city fails to 
237.28 	employ an assessor as required by sections 270.41 to 270.53, the assessment shall be 
237.29 	made by the county assessor. 
237.30 	In the case of cities incorporated or townships organized after April 11, 1974, except 
237.31 	cities or towns located in Ramsey county or which have elected a county assessor system 
237.32 	in accordance with section 273.055, the board shall allow the city or town 90 days from 
237.33 	the date of incorporation or organization to employ a licensed assessor.

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

238.2 	Sec. 20. Minnesota Statutes 2006, section 270C.306, is amended to read:
238.3 	270C.306 COMMISSIONER MAY REQUIRE SOCIAL SECURITY OR 
238.4 	IDENTIFYING NUMBERS ON FORMS.
238.5 	Notwithstanding the provisions of any other law except section 272.115, the 
238.6 	commissioner may require that a form required to be filed with the commissioner include 
238.7 	the Social Security number, federal employer identification number, or Minnesota 
238.8 	taxpayer identification number of the taxpayer or applicant.

238.9 	EFFECTIVE DATE. This section is effective July 1, 2007.

238.10 	Sec. 21. Minnesota Statutes 2006, section 270C.34, subdivision 1, is amended to read:
238.11 		Subdivision 1.Authority. (a) The commissioner may abate, reduce, or refund any 
238.12 	penalty or interest that is imposed by a law administered by the commissioner as a result 
238.13 	of the late payment of tax or late filing of a return, if the failure to timely pay the tax or 
238.14 	failure to timely file the return is due to reasonable cause, or if the taxpayer is located 
238.15 	in a presidentially declared disaster area.
238.16 	(b) The commissioner shall abate any part of a penalty or additional tax charge 
238.17 	under section 289A.25, subdivision 2, or 289A.26, subdivision 4, attributable to erroneous 
238.18 	advice given to the taxpayer in writing by an employee of the department acting in 
238.19 	an official capacity, if the advice:
238.20 	(1) was reasonably relied on and was in response to a specific written request of the 
238.21 	taxpayer; and
238.22 	(2) was not the result of failure by the taxpayer to provide adequate or accurate 
238.23 	information.
238.24 	(c) The commissioner may abate a penalty imposed under section 270.0725, 
238.25 	subdivision 1 or 2, if the failure to timely file is due to reasonable cause, or if the airline 
238.26 	company is located in a presidentially declared disaster area.

238.27 	EFFECTIVE DATE. This section is effective July 1, 2007.

238.28 	Sec. 22. Minnesota Statutes 2006, section 272.02, subdivision 64, is amended to read:
238.29 		Subd. 64.Job opportunity building zone property. (a) Improvements to real 
238.30 	property, and personal property, classified under section 273.13, subdivision 24, and 
238.31 	located within a job opportunity building zone, designated under section 469.314, are 
238.32 	exempt from ad valorem taxes levied under chapter 275.
239.1 	(b) Improvements to real property, and tangible personal property, of an agricultural 
239.2 	production facility located within an agricultural processing facility zone, designated 
239.3 	under section 469.314, is exempt from ad valorem taxes levied under chapter 275.
239.4 	(c) For property to qualify for exemption under paragraph (a), the occupant must be 
239.5 	a qualified business, as defined in section 469.310.
239.6 	(d) The exemption applies beginning for the first assessment year after designation 
239.7 	of the job opportunity building zone by the commissioner of employment and economic 
239.8 	development. The exemption applies to each assessment year that begins during the 
239.9 	duration of the job opportunity building zone. To be exempt, the property must be 
239.10 	occupied by July 1 of the assessment year by a qualified business that has signed the 
239.11 	business subsidy agreement and relocation agreement, if required, by July 1 of the 
239.12 	assessment year. This exemption does not apply to:
239.13 	(1) the levy under section 475.61 or similar levy provisions under any other law to 
239.14 	pay general obligation bonds; or
239.15 	(2) a levy under section 126C.17, if the levy was approved by the voters before the 
239.16 	designation of the job opportunity building zone.
239.17 	(e) Except for property of a business that was exempt under this subdivision for 
239.18 	taxes payable in 2007, a business must notify the county assessor in writing of eligibility 
239.19 	under this subdivision by July 1 in order to begin receiving the exemption under this 
239.20 	subdivision for taxes payable in the following year. The business need not annually notify 
239.21 	the county assessor of its continued exemption under this subdivision, but must notify the 
239.22 	county assessor immediately if the exemption no longer applies.

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

239.24 	Sec. 23. Minnesota Statutes 2006, section 272.115, subdivision 1, is amended to read:
239.25 		Subdivision 1.Requirement. Except as otherwise provided in subdivision 5, 
239.26 	whenever any real estate is sold for a consideration in excess of $1,000, whether by 
239.27 	warranty deed, quitclaim deed, contract for deed or any other method of sale, the grantor, 
239.28 	grantee or the legal agent of either shall file a certificate of value with the county 
239.29 	auditor in the county in which the property is located when the deed or other document 
239.30 	is presented for recording. Contract for deeds are subject to recording under section 
239.31 	507.235, subdivision 1. Value shall, in the case of any deed not a gift, be the amount of 
239.32 	the full actual consideration thereof, paid or to be paid, including the amount of any lien 
239.33 	or liens assumed. The items and value of personal property transferred with the real 
239.34 	property must be listed and deducted from the sale price. The certificate of value shall 
239.35 	include the classification to which the property belongs for the purpose of determining 
240.1 	the fair market value of the property. The certificate shall include financing terms and 
240.2 	conditions of the sale which are necessary to determine the actual, present value of 
240.3 	the sale price for purposes of the sales ratio study. The commissioner of revenue shall 
240.4 	promulgate administrative rules specifying the financing terms and conditions which must 
240.5 	be included on the certificate. Pursuant to the authority of the commissioner of revenue in 
240.6 	section 270C.306, The certificate of value must include the Social Security number or 
240.7 	the federal employer identification number of the grantors and grantees. However, a 
240.8 	married person who is not an owner of record and who is signing a conveyance instrument 
240.9 	along with the person's spouse solely because of the requirement in section 507.02 that 
240.10 	spouses of owners must sign certain conveyances is not a grantor for the purpose of the 
240.11 	preceding sentence. The identification numbers of the grantors and grantees are private 
240.12 	data on individuals or nonpublic data as defined in section 13.02, subdivisions 9 and 12, 
240.13 	but, notwithstanding that section, the private or nonpublic data may be disclosed to the 
240.14 	commissioner of revenue for purposes of tax administration. The information required to 
240.15 	be shown on the certificate of value is limited to the information required as of the date of 
240.16 	the acknowledgment on the deed or other document to be recorded.

240.17 	EFFECTIVE DATE. This section is effective for certificates of value filed on or 
240.18 	after July 1, 2007.

240.19 	Sec. 24. Minnesota Statutes 2006, section 273.05, is amended by adding a subdivision 
240.20 	to read:
240.21 		Subd. 3.Cities and townships; employment of licensed assessor. In the case 
240.22 	of cities or townships, except cities or towns located in Ramsey County or which have 
240.23 	elected a county assessor system in accordance with section 273.055, the commissioner 
240.24 	shall allow the city or town 90 days from the date of incorporation or organization to 
240.25 	employ a licensed assessor.

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

240.27 	Sec. 25. [273.0535] COUNTY OR LOCAL ASSESSING DISTRICT TO ASSUME 
240.28 	COST OF TRAINING.
240.29 	The county or local assessing district must assume the cost of training its assessors 
240.30 	in courses approved by the board for the purpose of obtaining the assessor's license to 
240.31 	the extent of course fees, mileage, meals, and lodging, and recognized travel expenses 
240.32 	not paid by the state.

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

241.1 	Sec. 26. Minnesota Statutes 2006, section 273.111, subdivision 3, is amended to read:
241.2 		Subd. 3.Requirements. (a) Real estate consisting of ten acres or more or a nursery 
241.3 	or greenhouse, and qualifying for classification as class 1b, 2a, or 2b under section 273.13, 
241.4 	shall be entitled to valuation and tax deferment under this section only if it is primarily 
241.5 	devoted to agricultural use, and meets the qualifications in subdivision 6, and either: 
241.6 	(1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the 
241.7 	owner or is real estate which is farmed with the real estate which contains the homestead 
241.8 	property; or
241.9 	(2) has been in possession of the applicant, the applicant's spouse, parent, or sibling, 
241.10 	or any combination thereof, for a period of at least seven years prior to application for 
241.11 	benefits under the provisions of this section, or is real estate which is farmed with the 
241.12 	real estate which qualifies under this clause and is within four townships or cities or 
241.13 	combination thereof from the qualifying real estate; or
241.14 	(3) is the homestead of a shareholder in a family farm corporation as defined in 
241.15 	section 500.24, notwithstanding the fact that legal title to the real estate may be held in the 
241.16 	name of the family farm corporation; or 
241.17 	(4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor, 
241.18 	partnership, or corporation which also owns the nursery or greenhouse operations on 
241.19 	the parcel or parcels.
241.20 	(b) Valuation of real estate under this section is limited to parcels the ownership of 
241.21 	which is in noncorporate entities except for:
241.22 	(1) family farm corporations organized pursuant to section 500.24; and 
241.23 	(2) corporations that derive 80 percent or more of their gross receipts from the 
241.24 	wholesale or retail sale of horticultural or nursery stock.
241.25 	Corporate entities who previously qualified for tax deferment pursuant to this section 
241.26 	and who continue to otherwise qualify under subdivisions 3 and 6 for a period of at least 
241.27 	three years following the effective date of Laws 1983, chapter 222, section 8, will not be 
241.28 	required to make payment of the previously deferred taxes, notwithstanding the provisions 
241.29 	of subdivision 9. Special assessments are payable at the end of the three-year period 
241.30 	or at time of sale, whichever comes first.
241.31 	(c) Land that previously qualified for tax deferment under this section and no longer 
241.32 	qualifies because it is not primarily used for agricultural purposes but would otherwise 
241.33 	qualify under subdivisions 3 and 6 for a period of at least three years will not be required 
241.34 	to make payment of the previously deferred taxes, notwithstanding the provisions of 
241.35 	subdivision 9. Sale of the land prior to the expiration of the three-year period requires 
241.36 	payment of deferred taxes as follows: sale in the year the land no longer qualifies requires 
242.1 	payment of the current year's deferred taxes plus payment of deferred taxes for the two 
242.2 	prior years; sale during the second year the land no longer qualifies requires payment of 
242.3 	the current year's deferred taxes plus payment of the deferred taxes for the prior year; and 
242.4 	sale during the third year the land no longer qualifies requires payment of the current 
242.5 	year's deferred taxes. Deferred taxes shall be paid even if the land qualifies pursuant to 
242.6 	subdivision 11a. When such property is sold or no longer qualifies under this paragraph, or 
242.7 	at the end of the three-year period, whichever comes first, all deferred special assessments 
242.8 	plus interest are payable in equal installments spread over the time remaining until the last 
242.9 	maturity date of the bonds issued to finance the improvement for which the assessments 
242.10 	were levied. If the bonds have matured, the deferred special assessments plus interest 
242.11 	are payable within 90 days. The provisions of section 429.061, subdivision 2, apply 
242.12 	to the collection of these installments. Penalties are not imposed on any such special 
242.13 	assessments if timely paid. 

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

242.15 	Sec. 27. Minnesota Statutes 2006, section 273.117, is amended to read:
242.16 	273.117 CONSERVATION PROPERTY TAX VALUATION.
242.17 	Real property which is subject to a conservation restriction or easement shallmay be 
242.18 	entitled to reduced valuation under this section if:
242.19 	(a) The restriction or easement is for a conservation purpose as defined in section 
242.20 	84.64, subdivision 2, and is recorded on the property; 
242.21 	(b) The property is being used in accordance with the terms of the conservation 
242.22 	restriction or easement.

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

242.24 	Sec. 28. Minnesota Statutes 2006, section 273.121, is amended to read:
242.25 	273.121 VALUATION OF REAL PROPERTY, NOTICE.
242.26 	Any county assessor or city assessor having the powers of a county assessor, valuing 
242.27 	or classifying taxable real property shall in each year notify those persons whose property 
242.28 	is to be included on the assessment roll that year if the person's address is known to the 
242.29 	assessor, otherwise the occupant of the property. The notice shall be in writing and shall be 
242.30 	sent by ordinary mail at least ten days before the meeting of the local board of appeal and 
242.31 	equalization under section 274.01 or the review process established under section 274.13, 
242.32 	subdivision 1c. Upon written request by the owner of the property, the assessor may send 
242.33 	the notice in electronic form or by electronic mail instead of on paper or by ordinary mail. 
243.1 	It shall contain: (1) the market value for the current and prior assessment, (2) the limited 
243.2 	market value under section 273.11, subdivision 1a, for the current and prior assessment, 
243.3 	(3) the qualifying amount of any improvements under section 273.11, subdivision 16, 
243.4 	for the current assessment, (4) the market value subject to taxation after subtracting the 
243.5 	amount of any qualifying improvements for the current assessment, (5) the classification 
243.6 	of the property for the current and prior assessment, (6) a note that if the property is 
243.7 	homestead and at least 45 years old, improvements made to the property may be eligible 
243.8 	for a valuation exclusion under section 273.11, subdivision 16, (7) the assessor's office 
243.9 	address, and (8) the dates, places, and times set for the meetings of the local board of 
243.10 	appeal and equalization, the review process established under section 274.13, subdivision 
243.11 	1c, and the county board of appeal and equalization. The commissioner of revenue shall 
243.12 	specify the form of the notice. The assessor shall attach to the assessment roll a statement 
243.13 	that the notices required by this section have been mailed. Any assessor who is not 
243.14 	provided sufficient funds from the assessor's governing body to provide such notices, 
243.15 	may make application to the commissioner of revenue to finance such notices. The 
243.16 	commissioner of revenue shall conduct an investigation and, if satisfied that the assessor 
243.17 	does not have the necessary funds, issue a certification to the commissioner of finance 
243.18 	of the amount necessary to provide such notices. The commissioner of finance shall 
243.19 	issue a warrant for such amount and shall deduct such amount from any state payment 
243.20 	to such county or municipality. The necessary funds to make such payments are hereby 
243.21 	appropriated. Failure to receive the notice shall in no way affect the validity of the 
243.22 	assessment, the resulting tax, the procedures of any board of review or equalization, or 
243.23 	the enforcement of delinquent taxes by statutory means. 

243.24 	EFFECTIVE DATE. This section is effective for notices required in 2008 and 
243.25 	thereafter.

243.26 	Sec. 29. Minnesota Statutes 2006, section 273.123, subdivision 2, is amended to read:
243.27 		Subd. 2.Reassessment of homestead property. The county assessor shall reassess 
243.28 	all homestead property located within a disaster or emergency area which is physically 
243.29 	damaged by the disaster or emergency and shall adjust the valuation for taxes payable the 
243.30 	following year to reflect the loss in market value caused by the damage as follows: Subtract 
243.31 	the market value of the property as reassessed from the market value of the property as 
243.32 	assessed under section 273.01 for January 1 of the year in which the disaster or emergency 
243.33 	occurred; multiply the remainder by a fraction, the numerator of which is the number of 
243.34 	full months remaining in the year on the date the disaster or emergency occurred, and the 
243.35 	denominator of which is 12; subtract the product of the calculation from the market value 
244.1 	of the property as assessed for January 1 of the year in which the disaster or emergency 
244.2 	occurred; the remainder is the estimated market value to be used for taxes payable the 
244.3 	following year. The assessor shall report to the county auditor the net tax capacity based 
244.4 	on the assessment of January 1 offor the year in which the disaster or emergency occurred 
244.5 	and the net tax capacity based on the reassessment made pursuant to this subdivision.

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

244.7 	Sec. 30. Minnesota Statutes 2006, section 273.123, subdivision 3, is amended to read:
244.8 		Subd. 3.Computation of local tax rates. When computing Local tax rates,must 
244.9 	be computed by the county auditor shall usebased upon the valuation as of January 2 as 
244.10 	reported by the assessor for the assessment made on January 1 of the year in which the 
244.11 	disaster or emergency occurred, and as returned by the local, county, and state boards of 
244.12 	review and equalization and the commissioner of revenue.

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

244.14 	Sec. 31. Minnesota Statutes 2006, section 273.124, subdivision 13, is amended to read:
244.15 		Subd. 13.Homestead application. (a) A person who meets the homestead 
244.16 	requirements under subdivision 1 must file a homestead application with the county 
244.17 	assessor to initially obtain homestead classification.
244.18 	(b) On or before January 2, 1993, each county assessor shall mail a homestead 
244.19 	application to the owner of each parcel of property within the county which was 
244.20 	classified as homestead for the 1992 assessment year. The format and contents of a 
244.21 	uniform homestead application shall be prescribed by the commissioner of revenue. The 
244.22 	commissioner shall consult with the chairs of the house and senate tax committees on the 
244.23 	contents of the homestead application form. The application must clearly inform the 
244.24 	taxpayer that this application must be signed by all owners who occupy the property or 
244.25 	by the qualifying relative and returned to the county assessor in order for the property to 
244.26 	continue receivingreceive homestead treatment. The envelope containing the homestead 
244.27 	application shall clearly identify its contents and alert the taxpayer of its necessary 
244.28 	immediate response.
244.29 	(c) Every property owner applying for homestead classification must furnish to the 
244.30 	county assessor the Social Security number of each occupant who is listed as an owner 
244.31 	of the property on the deed of record, the name and address of each owner who does not 
244.32 	occupy the property, and the name and Social Security number of each owner's spouse who 
244.33 	occupies the property. The application must be signed by each owner who occupies the 
245.1 	property and by each owner's spouse who occupies the property, or, in the case of property 
245.2 	that qualifies as a homestead under subdivision 1, paragraph (c), by the qualifying relative.
245.3 	If a property owner occupies a homestead, the property owner's spouse may not 
245.4 	claim another property as a homestead unless the property owner and the property owner's 
245.5 	spouse file with the assessor an affidavit or other proof required by the assessor stating that 
245.6 	the property qualifies as a homestead under subdivision 1, paragraph (e).
245.7 	Owners or spouses occupying residences owned by their spouses and previously 
245.8 	occupied with the other spouse, either of whom fail to include the other spouse's name 
245.9 	and Social Security number on the homestead application or provide the affidavits or 
245.10 	other proof requested, will be deemed to have elected to receive only partial homestead 
245.11 	treatment of their residence. The remainder of the residence will be classified as 
245.12 	nonhomestead residential. When an owner or spouse's name and Social Security number 
245.13 	appear on homestead applications for two separate residences and only one application is 
245.14 	signed, the owner or spouse will be deemed to have elected to homestead the residence for 
245.15 	which the application was signed.
245.16 	The Social Security numbers or affidavits or other proofs of the property owners 
245.17 	and spouses are private data on individuals as defined by section 13.02, subdivision 12, 
245.18 	but, notwithstanding that section, the private data may be disclosed to the commissioner 
245.19 	of revenue, or, for purposes of proceeding under the Revenue Recapture Act to recover 
245.20 	personal property taxes owing, to the county treasurer.
245.21 	(d) If residential real estate is occupied and used for purposes of a homestead by a 
245.22 	relative of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in 
245.23 	order for the property to receive homestead status, a homestead application must be filed 
245.24 	with the assessor. The Social Security number of each relative and spouse of a relative
245.25 	occupying the property and the Social Security number of each owner who is related to an 
245.26 	occupant of the property shall be required on the homestead application filed under this 
245.27 	subdivision. If a different relative of the owner subsequently occupies the property, the 
245.28 	owner of the property must notify the assessor within 30 days of the change in occupancy. 
245.29 	The Social Security number of a relative or relative's spouse occupying the property 
245.30 	is private data on individuals as defined by section 13.02, subdivision 12, but may be 
245.31 	disclosed to the commissioner of revenue, or, for the purposes of proceeding under the 
245.32 	Revenue Recapture Act to recover personal property taxes owing, to the county treasurer.
245.33 	(e) The homestead application shall also notify the property owners that the 
245.34 	application filed under this section will not be mailed annually and that if the property 
245.35 	is granted homestead status for the 1993 assessment, or any assessment year thereafter, 
245.36 	that same property shall remain classified as homestead until the property is sold or 
246.1 	transferred to another person, or the owners, the spouse of the owner, or the relatives no 
246.2 	longer use the property as their homestead. Upon the sale or transfer of the homestead 
246.3 	property, a certificate of value must be timely filed with the county auditor as provided 
246.4 	under section 272.115. Failure to notify the assessor within 30 days that the property has 
246.5 	been sold, transferred, or that the owner, the spouse of the owner, or the relative is no 
246.6 	longer occupying the property as a homestead, shall result in the penalty provided under 
246.7 	this subdivision and the property will lose its current homestead status.
246.8 	(f) If the homestead application is not returned within 30 days, the county will send a 
246.9 	second application to the present owners of record. The notice of proposed property taxes 
246.10 	prepared under section 275.065, subdivision 3, shall reflect the property's classification. 
246.11 	Beginning with assessment year 1993 for all properties, If a homestead application has 
246.12 	not been filed with the county by December 15, the assessor shall classify the property 
246.13 	as nonhomestead for the current assessment year for taxes payable in the following year, 
246.14 	provided that the owner may be entitled to receive the homestead classification by proper 
246.15 	application under section 375.192.
246.16 	(g) At the request of the commissioner, each county must give the commissioner a 
246.17 	list that includes the name and Social Security number of each occupant of homestead 
246.18 	property who is the property owner and the, property owner's spouse occupying the 
246.19 	property, or, qualifying relative of a property owner, applying for homestead classification 
246.20 	under this subdivision or a spouse of a qualifying relative. The commissioner shall use the 
246.21 	information provided on the lists as appropriate under the law, including for the detection 
246.22 	of improper claims by owners, or relatives of owners, under chapter 290A.
246.23 	(h) If the commissioner finds that a property owner may be claiming a fraudulent 
246.24 	homestead, the commissioner shall notify the appropriate counties. Within 90 days of 
246.25 	the notification, the county assessor shall investigate to determine if the homestead 
246.26 	classification was properly claimed. If the property owner does not qualify, the county 
246.27 	assessor shall notify the county auditor who will determine the amount of homestead 
246.28 	benefits that had been improperly allowed. For the purpose of this section, "homestead 
246.29 	benefits" means the tax reduction resulting from the classification as a homestead under 
246.30 	section 273.13, the taconite homestead credit under section 273.135, the residential 
246.31 	homestead and agricultural homestead credits under section 273.1384, and the 
246.32 	supplemental homestead credit under section 273.1391.
246.33 	The county auditor shall send a notice to the person who owned the affected property 
246.34 	at the time the homestead application related to the improper homestead was filed, 
246.35 	demanding reimbursement of the homestead benefits plus a penalty equal to 100 percent 
246.36 	of the homestead benefits. The person notified may appeal the county's determination 
247.1 	by serving copies of a petition for review with county officials as provided in section 
247.2 	278.01 and filing proof of service as provided in section 278.01 with the Minnesota Tax 
247.3 	Court within 60 days of the date of the notice from the county. Procedurally, the appeal 
247.4 	is governed by the provisions in chapter 271 which apply to the appeal of a property tax 
247.5 	assessment or levy, but without requiring any prepayment of the amount in controversy. If 
247.6 	the amount of homestead benefits and penalty is not paid within 60 days, and if no appeal 
247.7 	has been filed, the county auditor shall certify the amount of taxes and penalty to the county 
247.8 	treasurer. The county treasurer will add interest to the unpaid homestead benefits and 
247.9 	penalty amounts at the rate provided in section 279.03 for real property taxes becoming 
247.10 	delinquent in the calendar year during which the amount remains unpaid. Interest may be 
247.11 	assessed for the period beginning 60 days after demand for payment was made.
247.12 	If the person notified is the current owner of the property, the treasurer may add the 
247.13 	total amount of homestead benefits, penalty, interest, and costs to the ad valorem taxes 
247.14 	otherwise payable on the property by including the amounts on the property tax statements 
247.15 	under section 276.04, subdivision 3. The amounts added under this paragraph to the ad 
247.16 	valorem taxes shall include interest accrued through December 31 of the year preceding 
247.17 	the taxes payable year for which the amounts are first added. These amounts, when added 
247.18 	to the property tax statement, become subject to all the laws for the enforcement of real or 
247.19 	personal property taxes for that year, and for any subsequent year.
247.20 	If the person notified is not the current owner of the property, the treasurer may 
247.21 	collect the amounts due under the Revenue Recapture Act in chapter 270A, or use any of 
247.22 	the powers granted in sections 277.20 and 277.21 without exclusion, to enforce payment 
247.23 	of the homestead benefits, penalty, interest, and costs, as if those amounts were delinquent 
247.24 	tax obligations of the person who owned the property at the time the application related 
247.25 	to the improperly allowed homestead was filed. The treasurer may relieve a prior owner 
247.26 	of personal liability for the homestead benefits, penalty, interest, and costs, and instead 
247.27 	extend those amounts on the tax lists against the property as provided in this paragraph 
247.28 	to the extent that the current owner agrees in writing. On all demands, billings, property 
247.29 	tax statements, and related correspondence, the county must list and state separately the 
247.30 	amounts of homestead benefits, penalty, interest and costs being demanded, billed or 
247.31 	assessed.
247.32 	(i) Any amount of homestead benefits recovered by the county from the property 
247.33 	owner shall be distributed to the county, city or town, and school district where the 
247.34 	property is located in the same proportion that each taxing district's levy was to the total 
247.35 	of the three taxing districts' levy for the current year. Any amount recovered attributable 
247.36 	to taconite homestead credit shall be transmitted to the St. Louis County auditor to be 
248.1 	deposited in the taconite property tax relief account. Any amount recovered that is 
248.2 	attributable to supplemental homestead credit is to be transmitted to the commissioner of 
248.3 	revenue for deposit in the general fund of the state treasury. The total amount of penalty 
248.4 	collected must be deposited in the county general fund.
248.5 	(j) If a property owner has applied for more than one homestead and the county 
248.6 	assessors cannot determine which property should be classified as homestead, the county 
248.7 	assessors will refer the information to the commissioner. The commissioner shall make 
248.8 	the determination and notify the counties within 60 days.
248.9 	(k) In addition to lists of homestead properties, the commissioner may ask the 
248.10 	counties to furnish lists of all properties and the record owners. The Social Security 
248.11 	numbers and federal identification numbers that are maintained by a county or city 
248.12 	assessor for property tax administration purposes, and that may appear on the lists retain 
248.13 	their classification as private or nonpublic data; but may be viewed, accessed, and used by 
248.14 	the county auditor or treasurer of the same county for the limited purpose of assisting the 
248.15 	commissioner in the preparation of microdata samples under section 270C.12.
248.16 	(l) On or before April 30 each year beginning in 2007, each county must provide the 
248.17 	commissioner with the following data for each parcel of homestead property by electronic 
248.18 	means as defined in section 289A.02, subdivision 8:
248.19 	(i) the property identification number assigned to the parcel for purposes of taxes 
248.20 	payable in the current year;
248.21 	(ii) the name and Social Security number of each occupant of homestead property 
248.22 	who is the property owner and, property owner's spouse, as shown on the tax rolls for the 
248.23 	current and the prior assessment year qualifying relative of a property owner, or spouse 
248.24 	of a qualifying relative;
248.25 	(iii) the classification of the property under section 273.13 for taxes payable in the 
248.26 	current year and in the prior year;
248.27 	(iv) an indication of whether the property was classified as a homestead for taxes 
248.28 	payable in the current year or for taxes payable in the prior year because of occupancy by 
248.29 	a relative of the owner or by a spouse of a relative;
248.30 	(v) the property taxes payable as defined in section 290A.03, subdivision 13, for the 
248.31 	current year and the prior year;
248.32 	(vi) the market value of improvements to the property first assessed for tax purposes 
248.33 	for taxes payable in the current year;
248.34 	(vii) the assessor's estimated market value assigned to the property for taxes payable 
248.35 	in the current year and the prior year;
249.1 	(viii) the taxable market value assigned to the property for taxes payable in the 
249.2 	current year and the prior year;
249.3 	(ix) whether there are delinquent property taxes owing on the homestead;
249.4 	(x) the unique taxing district in which the property is located; and
249.5 	(xi) such other information as the commissioner decides is necessary.
249.6 	The commissioner shall use the information provided on the lists as appropriate 
249.7 	under the law, including for the detection of improper claims by owners, or relatives 
249.8 	of owners, under chapter 290A.

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

249.10 	Sec. 32. Minnesota Statutes 2006, section 273.124, subdivision 21, is amended to read:
249.11 		Subd. 21.Trust property; homestead. Real property held by a trustee under a trust 
249.12 	is eligible for classification as homestead property if:
249.13 	(1) the grantor or surviving spouse of the grantor of the trust occupies and uses the 
249.14 	property as a homestead;
249.15 	(2) a relative or surviving relative of the grantor who meets the requirements of 
249.16 	subdivision 1, paragraph (c), in the case of residential real estate; or subdivision 1, 
249.17 	paragraph (d), in the case of agricultural property, occupies and uses the property as 
249.18 	a homestead;
249.19 	(3) a family farm corporation, joint farm venture, limited liability company, or 
249.20 	partnership operating a family farm rents the property held by a trustee under a trust, and 
249.21 	the grantor, the spouse or surviving spouse of the grantor, or the sonchild or daughter
249.22 	grandchild of the grantor, who is also a shareholder, member, or partner of the corporation, 
249.23 	joint farm venture, limited liability company, or partnership occupies and uses the property 
249.24 	as a homestead, or is actively farming the property on behalf of the corporation, joint farm 
249.25 	venture, limited liability company, or partnership; or
249.26 	(4) a person who has received homestead classification for property taxes payable in 
249.27 	2000 on the basis of an unqualified legal right under the terms of the trust agreement to 
249.28 	occupy the property as that person's homestead and who continues to use the property as 
249.29 	a homestead or a person who received the homestead classification for taxes payable in 
249.30 	2005 under clause (3) who does not qualify under clause (3) for taxes payable in 2006 
249.31 	or thereafter but who continues to qualify under clause (3) as it existed for taxes payable 
249.32 	in 2005.
249.33 	For purposes of this subdivision, "grantor" is defined as the person creating or 
249.34 	establishing a testamentary, inter Vivos, revocable or irrevocable trust by written 
249.35 	instrument or through the exercise of a power of appointment.

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

250.2 	Sec. 33. Minnesota Statutes 2006, section 273.1398, subdivision 4, is amended to read:
250.3 		Subd. 4.Disparity reduction credit. (a) Beginning with taxes payable in 1989, 
250.4 	class 4a, class 3a, and class 3b property qualifies for a disparity reduction credit if: (1) 
250.5 	the property is located in a border city that has an enterprise zone designated pursuant 
250.6 	to section 469.168, subdivision 4; (2) the property is located in a city with a population 
250.7 	greater than 2,500 and less than 35,000 according to the 1980 decennial census; (3) the 
250.8 	city is adjacent to a city in another state or immediately adjacent to a city adjacent to a city 
250.9 	in another state; and (4) the adjacent city in the other state has a population of greater than 
250.10 	5,000 and less than 75,000 according to the 1980 decennial census. 
250.11 	(b) The credit is an amount sufficient to reduce (i) the taxes levied on class 4a 
250.12 	property to 2.3 percent of the property's market value and (ii) the tax on class 3a and class 
250.13 	3b property to 2.3 percent of market value.
250.14 	(c) The county auditor shall annually certify the costs of the credits to the 
250.15 	Department of Revenue. The department shall reimburse local governments for the 
250.16 	property taxes foregone as the result of the credits in proportion to their total levies.

250.17 	EFFECTIVE DATE. This section is effective retroactively for taxes payable in 
250.18 	2001 and thereafter.

250.19 	Sec. 34. Minnesota Statutes 2006, section 273.33, subdivision 2, is amended to read:
250.20 		Subd. 2.Listing and assessment by commissioner. The personal property, 
250.21 	consisting of the pipeline system of mains, pipes, and equipment attached thereto, of 
250.22 	pipeline companies and others engaged in the operations or business of transporting 
250.23 	natural gas, gasoline, crude oil, or other petroleum products by pipelines, shall be listed 
250.24 	with and assessed by the commissioner of revenue and the values provided to the city 
250.25 	or county assessor by order. This subdivision shall not apply to the assessment of 
250.26 	the products transported through the pipelines nor to the lines of local commercial gas 
250.27 	companies engaged primarily in the business of distributing gas to consumers at retail nor 
250.28 	to pipelines used by the owner thereof to supply natural gas or other petroleum products 
250.29 	exclusively for such owner's own consumption and not for resale to others. If more than 
250.30 	85 percent of the natural gas or other petroleum products actually transported over the 
250.31 	pipeline is used for the owner's own consumption and not for resale to others, then this 
250.32 	subdivision shall not apply; provided, however, that in that event, the pipeline shall be 
250.33 	assessed in proportion to the percentage of gas actually transported over such pipeline that 
250.34 	is not used for the owner's own consumption. On or before June 30, the commissioner 
251.1 	shall certify to the auditor of each county, the amount of such personal property assessment 
251.2 	against each company in each district in which such property is located.

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

251.4 	Sec. 35. Minnesota Statutes 2006, section 273.37, subdivision 2, is amended to read:
251.5 		Subd. 2.Listing and assessment by commissioner. Transmission lines of less 
251.6 	than 69 kv, transmission lines of 69 kv and above located in an unorganized township, 
251.7 	and distribution lines, and equipment attached thereto, having a fixed situs outside the 
251.8 	corporate limits of cities except distribution lines taxed as provided in sections 273.40
251.9 	and 273.41, shall be listed with and assessed by the commissioner of revenue in the 
251.10 	county where situated and the values provided to the city or county assessor by order. 
251.11 	The commissioner shall assess such property at the percentage of market value fixed by 
251.12 	law; and, on or before June 30, shall certify to the auditor of each county in which such 
251.13 	property is located the amount of the assessment made against each company and person 
251.14 	owning such property. 

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

251.16 	Sec. 36. Minnesota Statutes 2006, section 273.371, subdivision 1, is amended to read:
251.17 		Subdivision 1.Report required. Every electric light, power, gas, water, express, 
251.18 	stage, and transportation company and pipeline doing business in Minnesota shall 
251.19 	annually file with the commissioner on or before March 31 a report under oath setting 
251.20 	forth the information prescribed by the commissioner to enable the commissioner to make 
251.21 	valuations, recommended valuations, and equalization required under sections 273.33, 
251.22 	273.35, 273.36, and273.37, and 273.3711. If all the required information is not available 
251.23 	on March 31, the company or pipeline shall file the information that is available on or 
251.24 	before March 31, and the balance of the information as soon as it becomes available. 

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

251.26 	Sec. 37. [273.3711] RECOMMENDED AND ORDERED VALUES.
251.27 	For purposes of sections 273.33, 273.35, 273.36, 273.37, 273.371, and 273.372, 
251.28 	all values not required to be listed and assessed by the commissioner of revenue are 
251.29 	recommended values.

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

252.1 	Sec. 38. Minnesota Statutes 2006, section 274.01, subdivision 1, is amended to read:
252.2 		Subdivision 1.Ordinary board; meetings, deadlines, grievances. (a) The town 
252.3 	board of a town, or the council or other governing body of a city, is the board of appeal 
252.4 	and equalization except (1) in cities whose charters provide for a board of equalization or 
252.5 	(2) in any city or town that has transferred its local board of review power and duties to 
252.6 	the county board as provided in subdivision 3. The county assessor shall fix a day and 
252.7 	time when the board or the board of equalization shall meet in the assessment districts 
252.8 	of the county. Notwithstanding any law or city charter to the contrary, a city board of 
252.9 	equalization shall be referred to as a board of appeal and equalization. On or before 
252.10 	February 15 of each year the assessor shall give written notice of the time to the city or 
252.11 	town clerk. Notwithstanding the provisions of any charter to the contrary, the meetings 
252.12 	must be held between April 1 and May 31 each year. The clerk shall give published and 
252.13 	posted notice of the meeting at least ten days before the date of the meeting.
252.14 	The board shall meet at the office of the clerk to review the assessment and 
252.15 	classification of property in the town or city. No changes in valuation or classification 
252.16 	which are intended to correct errors in judgment by the county assessor may be made by 
252.17 	the county assessor after the board has adjourned in those cities or towns that hold a 
252.18 	local board of review; however, corrections of errors that are merely clerical in nature or 
252.19 	changes that extend homestead treatment to property are permitted after adjournment until 
252.20 	the tax extension date for that assessment year. The changes must be fully documented and 
252.21 	maintained in the assessor's office and must be available for review by any person. A copy 
252.22 	of the changes made during this period in those cities or towns that hold a local board of 
252.23 	review must be sent to the county board no later than December 31 of the assessment year.
252.24 	(b) The board shall determine whether the taxable property in the town or city has 
252.25 	been properly placed on the list and properly valued by the assessor. If real or personal 
252.26 	property has been omitted, the board shall place it on the list with its market value, and 
252.27 	correct the assessment so that each tract or lot of real property, and each article, parcel, 
252.28 	or class of personal property, is entered on the assessment list at its market value. No 
252.29 	assessment of the property of any person may be raised unless the person has been 
252.30 	duly notified of the intent of the board to do so. On application of any person feeling 
252.31 	aggrieved, the board shall review the assessment or classification, or both, and correct 
252.32 	it as appears just. The board may not make an individual market value adjustment or 
252.33 	classification change that would benefit the property if the owner or other person having 
252.34 	control over the property has refused the assessor access to inspect the property and the 
252.35 	interior of any buildings or structures as provided in section 273.20. A board member 
252.36 	shall not participate in any actions of the board which result in market value adjustments 
253.1 	or classification changes to property owned by the board member, the spouse, parent, 
253.2 	stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, aunt, nephew, 
253.3 	or niece of a board member, or property in which a board member has a financial interest. 
253.4 	The relationship may be by blood or marriage.
253.5 	(c) A local board may reduce assessments upon petition of the taxpayer but the total 
253.6 	reductions must not reduce the aggregate assessment made by the county assessor by more 
253.7 	than one percent. If the total reductions would lower the aggregate assessments made by 
253.8 	the county assessor by more than one percent, none of the adjustments may be made. The 
253.9 	assessor shall correct any clerical errors or double assessments discovered by the board 
253.10 	without regard to the one percent limitation.
253.11 	(d) A local board does not have authority to grant an exemption or to order property 
253.12 	removed from the tax rolls.
253.13 	(e) A majority of the members may act at the meeting, and adjourn from day to day 
253.14 	until they finish hearing the cases presented. The assessor shall attend, with the assessment 
253.15 	books and papers, and take part in the proceedings, but must not vote. The county assessor, 
253.16 	or an assistant delegated by the county assessor shall attend the meetings. The board shall 
253.17 	list separately, on a form appended to the assessment book, all omitted property added 
253.18 	to the list by the board and all items of property increased or decreased, with the market 
253.19 	value of each item of property, added or changed by the board, placed opposite the item. 
253.20 	The county assessor shall enter all changes made by the board in the assessment book.
253.21 	(f) Except as provided in subdivision 3, if a person fails to appear in person, by 
253.22 	counsel, or by written communication before the board after being duly notified of the 
253.23 	board's intent to raise the assessment of the property, or if a person feeling aggrieved by an 
253.24 	assessment or classification fails to apply for a review of the assessment or classification, 
253.25 	the person may not appear before the county board of appeal and equalization for a review 
253.26 	of the assessment or classification. This paragraph does not apply if an assessment was 
253.27 	made after the local board meeting, as provided in section 273.01, or if the person can 
253.28 	establish not having received notice of market value at least five days before the local 
253.29 	board meeting.
253.30 	(g) The local board must complete its work and adjourn within 20 days from the 
253.31 	time of convening stated in the notice of the clerk, unless a longer period is approved by 
253.32 	the commissioner of revenue. No action taken after that date is valid. All complaints 
253.33 	about an assessment or classification made after the meeting of the board must be heard 
253.34 	and determined by the county board of equalization. A nonresident may, at any time, 
253.35 	before the meeting of the board file written objections to an assessment or classification 
254.1 	with the county assessor. The objections must be presented to the board at its meeting by 
254.2 	the county assessor for its consideration.

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

254.4 	Sec. 39. Minnesota Statutes 2006, section 274.13, subdivision 1, is amended to read:
254.5 		Subdivision 1.Members; meetings; rules for equalizing assessments. The county 
254.6 	commissioners, or a majority of them, with the county auditor, or, if the auditor cannot be 
254.7 	present, the deputy county auditor, or, if there is no deputy, the court administrator of the 
254.8 	district court, shall form a board for the equalization of the assessment of the property 
254.9 	of the county, including the property of all cities whose charters provide for a board of 
254.10 	equalization. This board shall be referred to as the county board of appeal and equalization. 
254.11 	The board shall meet annually, on the date specified in section 274.14, at the office of the 
254.12 	auditor. Each member shall take an oath to fairly and impartially perform duties as a 
254.13 	member. Members shall not participate in any actions of the board which result in market 
254.14 	value adjustments or classification changes to property owned by the board member, the 
254.15 	spouse, parent, stepparent, child, stepchild, grandparent, grandchild, brother, sister, uncle, 
254.16 	aunt, nephew, or niece of a board member, or property in which a board member has a 
254.17 	financial interest. The relationship may be by blood or marriage. The board shall examine 
254.18 	and compare the returns of the assessment of property of the towns or districts, and 
254.19 	equalize them so that each tract or lot of real property and each article or class of personal 
254.20 	property is entered on the assessment list at its market value, subject to the following rules: 
254.21 	(1) The board shall raise the valuation of each tract or lot of real property which 
254.22 	in its opinion is returned below its market value to the sum believed to be its market 
254.23 	value. The board must first give notice of intention to raise the valuation to the person in 
254.24 	whose name it is assessed, if the person is a resident of the county. The notice must fix 
254.25 	a time and place for a hearing.
254.26 	(2) The board shall reduce the valuation of each tract or lot which in its opinion is 
254.27 	returned above its market value to the sum believed to be its market value.
254.28 	(3) The board shall raise the valuation of each class of personal property which 
254.29 	in its opinion is returned below its market value to the sum believed to be its market 
254.30 	value. It shall raise the aggregate value of the personal property of individuals, firms, or 
254.31 	corporations, when it believes that the aggregate valuation, as returned, is less than the 
254.32 	market value of the taxable personal property possessed by the individuals, firms, or 
254.33 	corporations, to the sum it believes to be the market value. The board must first give notice 
254.34 	to the persons of intention to do so. The notice must set a time and place for a hearing.
255.1 	(4) The board shall reduce the valuation of each class of personal property that 
255.2 	is returned above its market value to the sum it believes to be its market value. Upon 
255.3 	complaint of a party aggrieved, the board shall reduce the aggregate valuation of the 
255.4 	individual's personal property, or of any class of personal property for which the individual 
255.5 	is assessed, which in its opinion has been assessed at too large a sum, to the sum it believes 
255.6 	was the market value of the individual's personal property of that class.
255.7 	(5) The board must not reduce the aggregate value of all the property of its county, as 
255.8 	submitted to the county board of equalization, with the additions made by the auditor under 
255.9 	this chapter, by more than one percent of its whole valuation. The board may raise the 
255.10 	aggregate valuation of real property, and of each class of personal property, of the county, 
255.11 	or of any town or district of the county, when it believes it is below the market value of the 
255.12 	property, or class of property, to the aggregate amount it believes to be its market value.
255.13 	(6) The board shall change the classification of any property which in its opinion 
255.14 	is not properly classified.
255.15 	(7) The board does not have the authority to grant an exemption or to order property 
255.16 	removed from the tax rolls.

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

255.18 	Sec. 40. [274.135] COUNTY BOARDS; APPEALS AND EQUALIZATION 
255.19 	COURSE AND MEETING REQUIREMENTS.
255.20 		Subdivision 1.Handbook for county boards. By no later than January 1, 2009, the 
255.21 	commissioner of revenue must develop a handbook detailing procedures, responsibilities, 
255.22 	and requirements for county boards of appeal and equalization. The handbook must 
255.23 	include, but need not be limited to, the role of the county board in the assessment process, 
255.24 	the legal and policy reasons for fair and impartial appeal and equalization hearings, county 
255.25 	board meeting procedures that foster fair and impartial assessment reviews and other best 
255.26 	practices recommendations, quorum requirements for county boards, and explanations 
255.27 	of alternate methods of appeal.
255.28 		Subd. 2.Appeals and equalization course. Beginning in 2009, and each year 
255.29 	thereafter, there must be at least one member at each meeting of a county board of appeal 
255.30 	and equalization who has attended an appeals and equalization course developed or 
255.31 	approved by the commissioner within the last four years, as certified by the commissioner. 
255.32 	The course may be offered in conjunction with a meeting of the Minnesota Association 
255.33 	of Assessment Officers. The course content must include, but need not be limited to, a 
255.34 	review of the handbook developed by the commissioner under subdivision 1.
256.1 		Subd. 3.Proof of compliance; transfer of duties. (a) Any county that 
256.2 	conducts county boards of appeal and equalization meetings must provide proof to the 
256.3 	commissioner by December 1, 2009, and each year thereafter, that it is in compliance 
256.4 	with the requirements of subdivision 2. Beginning in 2009, this notice must also verify 
256.5 	that there was a quorum of voting members at each meeting of the board of appeal and 
256.6 	equalization in the current year. A county that does not comply with these requirements 
256.7 	is deemed to have transferred its board of appeal and equalization powers to the special 
256.8 	board of equalization appointed pursuant to section 274.13, subdivision 2, beginning 
256.9 	with the following year's assessment and continuing unless the powers are reinstated 
256.10 	under paragraph (c). A county that does not comply with the requirements of subdivision 
256.11 	2 and has not appointed a special board of equalization shall appoint a special board of 
256.12 	equalization before the following year's assessment.
256.13 	(b) The county shall notify the taxpayers when the board of appeal and equalization 
256.14 	for a county has been transferred to the special board of equalization under this subdivision 
256.15 	and, prior to the meeting time of the special board of equalization, the county shall make 
256.16 	available to those taxpayers a procedure for a review of the assessments, including, but 
256.17 	not limited to, open book meetings. This alternate review process must take place in 
256.18 	April and May.
256.19 	(c) A county board whose powers are transferred to the special board of equalization 
256.20 	under this subdivision may be reinstated by resolution of the county board and upon proof 
256.21 	of compliance with the requirements of subdivision 2. The resolution and proofs must be 
256.22 	provided to the commissioner by December 1 in order to be effective for the following 
256.23 	year's assessment.

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

256.25 	Sec. 41. Minnesota Statutes 2006, section 275.065, subdivision 3, is amended to read:
256.26 		Subd. 3.Notice of proposed property taxes. (a) The county auditor shall prepare 
256.27 	and the county treasurer shall deliver after November 10 and on or before November 24 
256.28 	each year, by first class mail to each taxpayer at the address listed on the county's current 
256.29 	year's assessment roll, a notice of proposed property taxes. Upon written request by 
256.30 	the taxpayer, the treasurer may send the notice in electronic form or by electronic mail 
256.31 	instead of on paper or by ordinary mail.
256.32 	(b) The commissioner of revenue shall prescribe the form of the notice.
256.33 	(c) The notice must inform taxpayers that it contains the amount of property taxes 
256.34 	each taxing authority proposes to collect for taxes payable the following year. In the case 
256.35 	of a town, or in the case of the state general tax, the final tax amount will be its proposed 
257.1 	tax. In the case of taxing authorities required to hold a public meeting under subdivision 6, 
257.2 	the notice must clearly state that each taxing authority, including regional library districts 
257.3 	established under section 134.201, and including the metropolitan taxing districts as 
257.4 	defined in paragraph (i), but excluding all other special taxing districts and towns, will 
257.5 	hold a public meeting to receive public testimony on the proposed budget and proposed or 
257.6 	final property tax levy, or, in case of a school district, on the current budget and proposed 
257.7 	property tax levy. It must clearly state the time and place of each taxing authority's 
257.8 	meeting, a telephone number for the taxing authority that taxpayers may call if they have 
257.9 	questions related to the notice, and an address where comments will be received by mail.
257.10 	(d) The notice must state for each parcel:
257.11 	(1) the market value of the property as determined under section 273.11, and used 
257.12 	for computing property taxes payable in the following year and for taxes payable in the 
257.13 	current year as each appears in the records of the county assessor on November 1 of the 
257.14 	current year; and, in the case of residential property, whether the property is classified as 
257.15 	homestead or nonhomestead. The notice must clearly inform taxpayers of the years to 
257.16 	which the market values apply and that the values are final values;
257.17 	(2) the items listed below, shown separately by county, city or town, and state general 
257.18 	tax, net of the residential and agricultural homestead credit under section 273.1384, voter 
257.19 	approved school levy, other local school levy, and the sum of the special taxing districts, 
257.20 	and as a total of all taxing authorities:
257.21 	(i) the actual tax for taxes payable in the current year; and
257.22 	(ii) the proposed tax amount.
257.23 	If the county levy under clause (2) includes an amount for a lake improvement 
257.24 	district as defined under sections 103B.501 to 103B.581, the amount attributable for that 
257.25 	purpose must be separately stated from the remaining county levy amount.
257.26 	In the case of a town or the state general tax, the final tax shall also be its proposed 
257.27 	tax unless the town changes its levy at a special town meeting under section 365.52. If a 
257.28 	school district has certified under section 126C.17, subdivision 9, that a referendum will 
257.29 	be held in the school district at the November general election, the county auditor must 
257.30 	note next to the school district's proposed amount that a referendum is pending and that, 
257.31 	if approved by the voters, the tax amount may be higher than shown on the notice. In 
257.32 	the case of the city of Minneapolis, the levy for the Minneapolis Library Board and the 
257.33 	levy for Minneapolis Park and Recreation shall be listed separately from the remaining 
257.34 	amount of the city's levy. In the case of the city of St. Paul, the levy for the St. Paul 
257.35 	Library Agency must be listed separately from the remaining amount of the city's levy. 
257.36 	In the case of Ramsey County, any amount levied under section 134.07 may be listed 
258.1 	separately from the remaining amount of the county's levy. In the case of a parcel where 
258.2 	tax increment or the fiscal disparities areawide tax under chapter 276A or 473F applies, 
258.3 	the proposed tax levy on the captured value or the proposed tax levy on the tax capacity 
258.4 	subject to the areawide tax must each be stated separately and not included in the sum of 
258.5 	the special taxing districts; and
258.6 	(3) the increase or decrease between the total taxes payable in the current year and 
258.7 	the total proposed taxes, expressed as a percentage.
258.8 	For purposes of this section, the amount of the tax on homesteads qualifying under 
258.9 	the senior citizens' property tax deferral program under chapter 290B is the total amount 
258.10 	of property tax before subtraction of the deferred property tax amount.
258.11 	(e) The notice must clearly state that the proposed or final taxes do not include 
258.12 	the following:
258.13 	(1) special assessments;
258.14 	(2) levies approved by the voters after the date the proposed taxes are certified, 
258.15 	including bond referenda and school district levy referenda;
258.16 	(3) a levy limit increase approved by the voters by the first Tuesday after the first 
258.17 	Monday in November of the levy year as provided under section 275.73;
258.18 	(4) amounts necessary to pay cleanup or other costs due to a natural disaster 
258.19 	occurring after the date the proposed taxes are certified;
258.20 	(5) amounts necessary to pay tort judgments against the taxing authority that become 
258.21 	final after the date the proposed taxes are certified; and
258.22 	(6) the contamination tax imposed on properties which received market value 
258.23 	reductions for contamination.
258.24 	(f) Except as provided in subdivision 7, failure of the county auditor to prepare or 
258.25 	the county treasurer to deliver the notice as required in this section does not invalidate the 
258.26 	proposed or final tax levy or the taxes payable pursuant to the tax levy.
258.27 	(g) If the notice the taxpayer receives under this section lists the property as 
258.28 	nonhomestead, and satisfactory documentation is provided to the county assessor by the 
258.29 	applicable deadline, and the property qualifies for the homestead classification in that 
258.30 	assessment year, the assessor shall reclassify the property to homestead for taxes payable 
258.31 	in the following year.
258.32 	(h) In the case of class 4 residential property used as a residence for lease or rental 
258.33 	periods of 30 days or more, the taxpayer must either:
258.34 	(1) mail or deliver a copy of the notice of proposed property taxes to each tenant, 
258.35 	renter, or lessee; or
258.36 	(2) post a copy of the notice in a conspicuous place on the premises of the property.
259.1 	The notice must be mailed or posted by the taxpayer by November 27 or within 
259.2 	three days of receipt of the notice, whichever is later. A taxpayer may notify the county 
259.3 	treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to 
259.4 	which the notice must be mailed in order to fulfill the requirements of this paragraph.
259.5 	(i) For purposes of this subdivision, subdivisions 5a and 6, "metropolitan special 
259.6 	taxing districts" means the following taxing districts in the seven-county metropolitan area 
259.7 	that levy a property tax for any of the specified purposes listed below:
259.8 	(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325, 
259.9 	473.446, 473.521, 473.547, or 473.834;
259.10 	(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672; 
259.11 	and
259.12 	(3) Metropolitan Mosquito Control Commission under section 473.711.
259.13 	For purposes of this section, any levies made by the regional rail authorities in the 
259.14 	county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 
259.15 	398A shall be included with the appropriate county's levy and shall be discussed at that 
259.16 	county's public hearing.
259.17 	(j) The governing body of a county, city, or school district may, with the consent 
259.18 	of the county board, include supplemental information with the statement of proposed 
259.19 	property taxes about the impact of state aid increases or decreases on property tax 
259.20 	increases or decreases and on the level of services provided in the affected jurisdiction. 
259.21 	This supplemental information may include information for the following year, the current 
259.22 	year, and for as many consecutive preceding years as deemed appropriate by the governing 
259.23 	body of the county, city, or school district. It may include only information regarding:
259.24 	(1) the impact of inflation as measured by the implicit price deflator for state and 
259.25 	local government purchases;
259.26 	(2) population growth and decline;
259.27 	(3) state or federal government action; and
259.28 	(4) other financial factors that affect the level of property taxation and local services 
259.29 	that the governing body of the county, city, or school district may deem appropriate to 
259.30 	include.
259.31 	The information may be presented using tables, written narrative, and graphic 
259.32 	representations and may contain instruction toward further sources of information or 
259.33 	opportunity for comment.

259.34 	EFFECTIVE DATE. This section is effective for notices required in 2007 and 
259.35 	thereafter, for taxes payable in 2008 and thereafter.

260.1 	Sec. 42. Minnesota Statutes 2006, section 275.065, subdivision 5a, is amended to read:
260.2 		Subd. 5a.Public advertisement. (a) A city that has a population of more than 
260.3 	2,500, county, a metropolitan special taxing district as defined in subdivision 3, paragraph 
260.4 	(i), a regional library district established under section   134.201, or school district shall 
260.5 	advertise in a newspaper a notice of its intent to adopt a budget and property tax levy or, 
260.6 	in the case of a school district, to review its current budget and proposed property taxes 
260.7 	payable in the following year, at a public hearing, if a public hearing is required under 
260.8 	subdivision 6. The notice must be published not less than two business days nor more 
260.9 	than six business days before the hearing. 
260.10 	The advertisement must be at least one-eighth page in size of a standard-size or a 
260.11 	tabloid-size newspaper. The advertisement must not be placed in the part of the newspaper 
260.12 	where legal notices and classified advertisements appear. The advertisement must be 
260.13 	published in an official newspaper of general circulation in the taxing authority. The 
260.14 	newspaper selected must be one of general interest and readership in the community, and 
260.15 	not one of limited subject matter. The advertisement must appear in a newspaper that is 
260.16 	published at least once per week.
260.17 	For purposes of this section, the metropolitan special taxing district's advertisement 
260.18 	must only be published in the Minneapolis Star and Tribune and the Saint Paul Pioneer 
260.19 	Press.
260.20 	In addition to other requirements, a county and a city having a population of 
260.21 	more than 2,500 must show in the public advertisement required under this subdivision 
260.22 	the current local tax rate, the proposed local tax rate if no property tax levy increase 
260.23 	is adopted, and the proposed rate if the proposed levy is adopted. For purposes of this 
260.24 	subdivision, "local tax rate" means the city's or county's net tax capacity levy divided by 
260.25 	the city's or county's taxable net tax capacity.
260.26 	(b) Subject to the provisions of paragraph (g), the advertisement for school districts, 
260.27 	metropolitan special taxing districts, and regional library districts must be in the following 
260.28 	form, except that the notice for a school district may include references to the current 
260.29 	budget in regard to proposed property taxes.
260.30 	"NOTICE OF
260.31 	PROPOSED PROPERTY TAXES
260.32 	(School District/Metropolitan
260.33 	Special Taxing District/Regional
260.34 	Library District) of .........
260.35 	The governing body of ........ will soon hold budget hearings and vote on the property 
260.36 	taxes for (metropolitan special taxing district/regional library district services that will be 
260.37 	provided in (year)/school district services that will be provided in (year) and (year)).
261.1 	NOTICE OF PUBLIC HEARING:
261.2 	All concerned citizens are invited to attend a public hearing and express their opinions 
261.3 	on the proposed (school district/metropolitan special taxing district/regional library 
261.4 	district) budget and property taxes, or in the case of a school district, its current budget 
261.5 	and proposed property taxes, payable in the following year. The hearing will be held on 
261.6 	(Month/Day/Year) at (Time) at (Location, Address)."
261.7 	(c) Subject to the provisions of paragraph (g), the advertisement for cities and 
261.8 	counties must be in the following form.
261.9 	"NOTICE OF PROPOSED
261.10 	TOTAL BUDGET AND PROPERTY TAXES
261.11 	The (city/county) governing body or board of commissioners will hold a public hearing to 
261.12 	discuss the budget and to vote on the amount of property taxes to collect for services the 
261.13 	(city/county) will provide in (year).
261.14 	SPENDING: The total budget amounts below compare (city's/county's) (year) total actual 
261.15 	budget with the amount the (city/county) proposes to spend in (year).

261.16
261.17	(Year) Total Actual 
Budget
		Proposed (Year) 
Budget
		Change from 
(Year)-(Year)

261.18	$...........
		$...........
		.....%
	
261.19 	TAXES: The property tax amounts below compare that portion of the current budget 
261.20 	levied in property taxes in (city/county) for (year) with the property taxes the (city/county) 
261.21 	proposes to collect in (year).

261.22
261.23	(Year) Property 
Taxes
		Proposed (Year) 
Property Taxes
		Change from 
(Year)-(Year)

261.24	$...........
		$...........
		.....%
	
261.25 	LOCAL TAX RATE COMPARISON: The current local tax rate, the local tax rate if no tax 
261.26 	levy increase is adopted, and the proposed local tax rate if the proposed levy is adopted.

261.27
261.28	(Year) Tax Rate
		(Year) Tax Rate if NO 
Levy Increase
		(Year) Proposed 
Tax Rate
	
261.29	...........
		...........
		.....
	
261.30 	ATTEND THE PUBLIC HEARING
261.31 	All (city/county) residents are invited to attend the public hearing of the (city/county) to 
261.32 	express your opinions on the budget and the proposed amount of (year) property taxes. 
261.33 	The hearing will be held on:
261.34 	(Month/Day/Year/Time)
261.35 	(Location/Address)
262.1 	If the discussion of the budget cannot be completed, a time and place for continuing the 
262.2 	discussion will be announced at the hearing. You are also invited to send your written 
262.3 	comments to:
262.4 	(City/County)
262.5 	(Location/Address)"
262.6 	(d) For purposes of this subdivision, the budget amounts listed on the advertisement 
262.7 	mean:
262.8 	(1) for cities, the total government fund expenditures, as defined by the state auditor 
262.9 	under section   471.6965, less any expenditures for improvements or services that are 
262.10 	specially assessed or charged under chapter 429, 430, 435, or the provisions of any other 
262.11 	law or charter; and 
262.12 	(2) for counties, the total government fund expenditures, as defined by the state 
262.13 	auditor under section   375.169, less any expenditures for direct payments to recipients or 
262.14 	providers for the human service aids listed below: 
262.15 	(i) Minnesota family investment program under chapters 256J and 256K;
262.16 	(ii) medical assistance under sections   256B.041, subdivision 5, and   256B.19, 
262.17 	subdivision 1; 
262.18 	(iii) general assistance medical care under section   256D.03, subdivision 6; 
262.19 	(iv) general assistance under section   256D.03, subdivision 2; 
262.20 	(v) emergency assistance under section   256J.48; 
262.21 	(vi) Minnesota supplemental aid under section   256D.36, subdivision 1; 
262.22 	(vii) preadmission screening under section   256B.0911, and alternative care grants 
262.23 	under section   256B.0913; 
262.24 	(viii) general assistance medical care claims processing, medical transportation and 
262.25 	related costs under section   256D.03, subdivision 4; 
262.26 	(ix) medical transportation and related costs under section   256B.0625, subdivisions 
262.27 	17 to 18a; 
262.28 	(x) group residential housing under section   256I.05, subdivision 8, transferred from 
262.29 	programs in clauses (iv) and (vi); or 
262.30 	(xi) any successor programs to those listed in clauses (i) to (x).
262.31 	(e) A city with a population of over 500 but not more than 2,500 that is required to 
262.32 	hold a public hearing under subdivision 6 must advertise by posted notice as defined in 
262.33 	section   645.12, subdivision 1. The advertisement must be posted at the time provided in 
262.34 	paragraph (a). It must be in the form required in paragraph (b). 
262.35 	(f) For purposes of this subdivision, the population of a city is the most recent 
262.36 	population as determined by the state demographer under section   4A.02. 
263.1 	(g) The commissioner of revenue, subject to the approval of the chairs of the house 
263.2 	and senate tax committees, shall annually prescribe the specific form and format of the 
263.3 	advertisements required under this subdivision, including such details as font size and 
263.4 	style, and spacing for the required items. The commissioner may prescribe alternate and 
263.5 	additional language for the advertisement for a taxing authority or for groups of taxing 
263.6 	authorities. At least two weeks before November 29 each year, the commissioner shall 
263.7 	provide a copy of the prescribed advertisements to the chairs of the committees of the 
263.8 	house of representatives and the senate with jurisdiction over taxes.

263.9 	EFFECTIVE DATE. This section is effective for advertisements in 2007 and 
263.10 	thereafter, for proposed taxes payable in 2008 and thereafter.

263.11 	Sec. 43. Minnesota Statutes 2006, section 275.067, is amended to read:
263.12 	275.067 SPECIAL TAXING DISTRICTS; ORGANIZATION DATE; 
263.13 	CERTIFICATION OF LEVY OR SPECIAL ASSESSMENTS.
263.14 	Special taxing districts as defined in section 275.066 organized on or before July 1 in 
263.15 	athe current calendar year may, and special taxing districts organized in a prior year that 
263.16 	have not previously certified a levy to the county auditor, are allowed to certify a levy to 
263.17 	the county auditor in that samethe current year for property taxes or special assessments 
263.18 	to be payable in the following calendar year to the extent that the special taxing district is 
263.19 	authorized by statute or special act to levy taxes or special assessments, but only if the 
263.20 	county auditor receives written notice from the district on or before July 1 of the current 
263.21 	year that the district may be certifying a levy in the current year, and the notice includes a 
263.22 	complete list or other description of the tax parcels in the district and a map showing the 
263.23 	boundaries of the district. Special taxing districts organized after July 1 in a calendar year 
263.24 	may not certify a levy of property taxes or special assessments to the county auditor under 
263.25 	the powers granted to them by statute or special act and subject to the requirements of 
263.26 	this section until the following calendar year. All special taxing districts must notify the 
263.27 	county auditor by July 1 in order for its boundaries for the levy to be certified that year 
263.28 	to be different than its boundaries for levies certified in prior years, and the notice must 
263.29 	include a complete list or other description of the tax parcels within the new boundaries 
263.30 	and a map showing the new boundaries of the district.

263.31 	EFFECTIVE DATE. This section is effective for taxes payable in 2008 and 
263.32 	thereafter.

264.1 	Sec. 44. Minnesota Statutes 2006, section 276.04, is amended by adding a subdivision 
264.2 	to read:
264.3 		Subd. 5.Electronic tax statements. Upon written request by the owner of real 
264.4 	property located in the county, or by the owner's agent, a county may send tax statements 
264.5 	by electronic means instead of by mailing. For the purposes of the payment deadlines 
264.6 	specified in section 279.01, the postmark date on the envelope containing these property 
264.7 	tax statements is the date the statements were sent by electronic means.

264.8 	EFFECTIVE DATE. This section is effective for tax statements for taxes payable 
264.9 	in 2008 and thereafter.

264.10 	Sec. 45. Minnesota Statutes 2006, section 277.01, subdivision 2, is amended to read:
264.11 		Subd. 2.Partial payments. The county treasurer may accept payments of more or 
264.12 	less than the exact amount of a tax installment due. Payments must be applied first to the 
264.13 	oldest installment that is due but which has not been fully paid. If the accepted payment is 
264.14 	less than the amount due, payments must bethe payment is applied first to the penalty 
264.15 	accrued for the year the payment is made or the installment being paid. Acceptance of 
264.16 	partial payment of tax does not constitute a waiver of the minimum payment required as a 
264.17 	condition for filing an appeal under section 278.03 or any other law, nor does it affect the 
264.18 	order of payment of delinquent taxes under section 280.39. 

264.19 	EFFECTIVE DATE. This section is effective for payments made on or after the 
264.20 	day following final enactment.

264.21 	Sec. 46. Minnesota Statutes 2006, section 279.01, subdivision 1, is amended to read:
264.22 		Subdivision 1.Due dates; penalties. Except as provided in subdivision 3 or 4, on 
264.23 	May 16 or 21 days after the postmark date on the envelope containing the property tax 
264.24 	statement, whichever is later, a penalty shall accrueaccrues and thereafter beis charged 
264.25 	upon all unpaid taxes on real estate on the current lists in the hands of the county treasurer. 
264.26 	The penalty shall beis at a rate of two percent on homestead property until May 31 and 
264.27 	four percent on June 1. The penalty on nonhomestead property shall beis at a rate of four 
264.28 	percent until May 31 and eight percent on June 1. This penalty shalldoes not accrue until 
264.29 	June 1 of each year, or 21 days after the postmark date on the envelope containing the 
264.30 	property tax statements, whichever is later, on commercial use real property used for 
264.31 	seasonal residential recreational purposes and classified as class 1c or 4c, and on other 
264.32 	commercial use real property classified as class 3a, provided that over 60 percent of the 
264.33 	gross income earned by the enterprise on the class 3a property is earned during the months 
265.1 	of May, June, July, and August. Any property owner of such class 3a property who pays
265.2 	In order for the first half of the tax due on theclass 3a property to be paid after May 15 
265.3 	and before June 1, or 21 days after the postmark date on the envelope containing the 
265.4 	property tax statement, whichever is later, shallwithout penalty, the owner of the property 
265.5 	must attach an affidavit to the payment attesting to compliance with the income provision 
265.6 	of this subdivision. Thereafter, for both homestead and nonhomestead property, on the 
265.7 	first day of each month beginning July 1, up to and including October 1 following, an 
265.8 	additional penalty of one percent for each month shall accrueaccrues and beis charged on 
265.9 	all such unpaid taxes provided that if the due date was extended beyond May 15 as the 
265.10 	result of any delay in mailing property tax statements no additional penalty shall accrue 
265.11 	if the tax is paid by the extended due date. If the tax is not paid by the extended due 
265.12 	date, then all penalties that would have accrued if the due date had been May 15 shall be 
265.13 	charged. When the taxes against any tract or lot exceed $50, one-half thereof may be paid 
265.14 	prior to May 16 or 21 days after the postmark date on the envelope containing the property 
265.15 	tax statement, whichever is later; and, if so paid, no penalty shall attach attaches; the 
265.16 	remaining one-half shallmay be paid at any time prior to October 16 following, without 
265.17 	penalty; but, if not so paid, then a penalty of two percent shall accrueaccrues thereon for 
265.18 	homestead property and a penalty of four percent on nonhomestead property. Thereafter, 
265.19 	for homestead property, on the first day of November an additional penalty of four percent 
265.20 	shall accrueaccrues and on the first day of December following, an additional penalty of 
265.21 	two percent shall accrueaccrues and beis charged on all such unpaid taxes. Thereafter, 
265.22 	for nonhomestead property, on the first day of November and December following, an 
265.23 	additional penalty of four percent for each month shall accrueaccrues and beis charged 
265.24 	on all such unpaid taxes. If one-half of such taxes shallare not be paid prior to May 16 or 
265.25 	21 days after the postmark date on the envelope containing the property tax statement, 
265.26 	whichever is later, the same may be paid at any time prior to October 16, with accrued 
265.27 	penalties to the date of payment added, and thereupon no penalty shall attachattaches to 
265.28 	the remaining one-half until October 16 following.
265.29 	This section applies to payment of personal property taxes assessed against 
265.30 	improvements to leased property, except as provided by section 277.01, subdivision 3. 
265.31 	A county may provide by resolution that in the case of a property owner that has 
265.32 	multiple tracts or parcels with aggregate taxes exceeding $50, payments may be made in 
265.33 	installments as provided in this subdivision.
265.34 	The county treasurer may accept payments of more or less than the exact amount of 
265.35 	a tax installment due. Payments must be applied first to the oldest installment that is due 
265.36 	but which has not been fully paid. If the accepted payment is less than the amount due, 
266.1 	payments must be applied first to the penalty accrued for the year the payment is made
266.2 	or the installment being paid. Acceptance of partial payment of tax does not constitute 
266.3 	a waiver of the minimum payment required as a condition for filing an appeal under 
266.4 	section 278.03 or any other law, nor does it affect the order of payment of delinquent 
266.5 	taxes under section 280.39. 

266.6 	EFFECTIVE DATE. This section is effective for payments made on or after the 
266.7 	day following final enactment.

266.8 	Sec. 47. Minnesota Statutes 2006, section 290C.02, subdivision 3, is amended to read:
266.9 		Subd. 3.Claimant. (a) "Claimant" means:
266.10 	(1) a person, as that term is defined in section 290.01, subdivision 2, who owns 
266.11 	forest land in Minnesota and files an application authorized by the Sustainable Forest 
266.12 	Incentive Act. Claimant includes;
266.13 	(2) a purchaser or grantee if property enrolled in the program was sold or transferred 
266.14 	after the original application was filed and prior to the annual incentive payment being 
266.15 	made.; or
266.16 	(3) an owner of land previously covered by an auxiliary forest contract that 
266.17 	automatically qualifies for inclusion in the Sustainable Forest Incentive Act program 
266.18 	pursuant to section 88.49, subdivision 9a, or 88.491, subdivision 2.
266.19 	 The purchaser or grantee must notify the commissioner in writing of the sale or 
266.20 	transfer of the property. Owners of land that qualifies for inclusion pursuant to section 
266.21 	88.49, subdivision 9a, or 88.491, subdivision 2, must notify the commissioner in writing 
266.22 	of the expiration of the auxiliary forest contract or land trade with a governmental unit and 
266.23 	submit an application to the commissioner by August 15 in order to be eligible to receive a 
266.24 	payment by October 1 of that same year. For purposes of section 290C.11, claimant also 
266.25 	includes any person bound by the covenant required in section 290C.04. 
266.26 	(b) No more than one claimant is entitled to a payment under this chapter with 
266.27 	respect to any tract, parcel, or piece of land enrolled under this chapter that has been 
266.28 	assigned the same parcel identification number. When enrolled forest land is owned by 
266.29 	two or more persons, the owners must determine between them which person is eligible to 
266.30 	claim the payments provided under sections 290C.01 to 290C.11. In the case of property 
266.31 	sold or transferred, the former owner and the purchaser or grantee must determine between 
266.32 	them which person is eligible to claim the payments provided under sections 290C.01 to 
266.33 	290C.11. The owners, transferees, or grantees must notify the commissioner in writing 
266.34 	which person is eligible to claim the payments. 

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

267.2 	Sec. 48. Minnesota Statutes 2006, section 290C.04, is amended to read:
267.3 	290C.04 APPLICATIONS.
267.4 	(a) A landowner may apply to enroll forest land for the sustainable forest incentive 
267.5 	program under this chapter. The claimant must complete, sign, and submit an application 
267.6 	to the commissioner by September 30 in order for the land to become eligible beginning 
267.7 	in the next year. The application shall be on a form prescribed by the commissioner and 
267.8 	must include the information the commissioner deems necessary. At a minimum, the 
267.9 	application must show the following information for the land and the claimant: (i) the 
267.10 	claimant's Social Security number or state or federal business tax registration number and 
267.11 	date of birth, (ii) the claimant's address, (iii) the claimant's signature, (iv) the county's 
267.12 	parcel identification numbers for the tax parcels that completely contain the claimant's 
267.13 	forest land that is sought to be enrolled, (v) the number of acres eligible for enrollment 
267.14 	in the program, (vi) the approved plan writer's signature and identification number, and 
267.15 	(vii) proof, in a form specified by the commissioner, that the claimant has executed and 
267.16 	acknowledged in the manner required by law for a deed, and recorded, a covenant that the 
267.17 	land is not and shall not be developed in a manner inconsistent with the requirements and 
267.18 	conditions of this chapter. The covenant shall state in writing that the covenant is binding 
267.19 	on the claimant and the claimant's successor or assignee, and that it runs with the land 
267.20 	for a period of not less than eight years. The commissioner shall specify the form of the 
267.21 	covenant and provide copies upon request. The covenant must include a legal description 
267.22 	that encompasses all the forest land that the claimant wishes to enroll under this section or 
267.23 	the certificate of title number for that land if it is registered land.
267.24 	(b) In all cases, the commissioner shall notify the claimant within 90 days after 
267.25 	receipt of a completed application that either the land has or has not been approved for 
267.26 	enrollment. A claimant whose application is denied may appeal the denial as provided in 
267.27 	section 290C.11, paragraph (a) 290C.13. 
267.28 	(c) Within 90 days after the denial of an application, or within 90 days after the 
267.29 	final resolution of any appeal related to the denial, the commissioner shall execute and 
267.30 	acknowledge a document releasing the land from the covenant required under this chapter. 
267.31 	The document must be mailed to the claimant and is entitled to be recorded.
267.32 	(d) The Social Security numbers collected from individuals under this section are 
267.33 	private data as provided in section 13.355. The federal business tax registration number 
267.34 	and date of birth data collected under this section are also private data on individuals or 
267.35 	nonpublic data, as defined in section 13.02, subdivisions 9 and 12, but may be shared 
268.1 	with county assessors for purposes of tax administration and with county treasurers for 
268.2 	purposes of the revenue recapture under chapter 270A. 

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

268.4 	Sec. 49. Minnesota Statutes 2006, section 290C.05, is amended to read:
268.5 	290C.05 ANNUAL CERTIFICATION.
268.6 	On or before July 1 of each year, beginning with the year after the original claimant 
268.7 	has received an approved application, the commissioner shall send each claimant enrolled 
268.8 	under the sustainable forest incentive program a certification form. For purposes of this 
268.9 	section, the original claimant is the person that filed the first application under section 
268.10 	290C.04 to enroll the land in the program. The claimant must sign the certification, 
268.11 	attesting that the requirements and conditions for continued enrollment in the program are 
268.12 	currently being met, and must return the signed certification form to the commissioner by 
268.13 	August 15 of that same year. If the claimant does not return an annual certification form 
268.14 	by the due date, the provisions in section 290C.11 apply.

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

268.16 	Sec. 50. Minnesota Statutes 2006, section 290C.11, is amended to read:
268.17 	290C.11 PENALTIES FOR REMOVAL.
268.18 	(a) If the commissioner determines that land enrolled in the sustainable forest 
268.19 	incentive program is in violation of the conditions for enrollment as specified in section 
268.20 	290C.03, the commissioner shall notify the claimant of the intent to remove all enrolled 
268.21 	land from the sustainable forest incentive program. The claimant has 60 days to appeal 
268.22 	this determination under the provisions of section 290C.13. The appeal must be made 
268.23 	in writing to the commissioner, who shall, within 60 days, notify the claimant as to the 
268.24 	outcome of the appeal. Within 60 days after the commissioner denies an appeal, or within 
268.25 	120 days after the commissioner received a written appeal if the commissioner has not 
268.26 	made a determination in that time, the owner may appeal to Tax Court under chapter 271 
268.27 	as if the appeal is from an order of the commissioner.
268.28 	(b) If the commissioner determines the land is to be removed from the sustainable 
268.29 	forest incentive program, the claimant is liable for payment to the commissioner in the 
268.30 	amount equal to the payments received under this chapter for the previous four-year 
268.31 	period, plus interest. The claimant has 90 days to satisfy the payment for removal of land 
268.32 	from the sustainable forest incentive program under this section. If the penalty is not paid 
268.33 	within the 90-day period under this paragraph, the commissioner shall certify the amount 
269.1 	to the county auditor for collection as a part of the general ad valorem real property taxes 
269.2 	on the land in the following taxes payable year.

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

269.4 	Sec. 51. [290C.13] APPEALS.
269.5 		Subdivision 1.Claimant right to reconsideration. A claimant may obtain 
269.6 	reconsideration by the commissioner of a determination removing enrolled land from the 
269.7 	sustainable forest incentive program, a determination denying an application to enroll land 
269.8 	in the program, or a denial of part or all of an incentive payment by filing an administrative 
269.9 	appeal under subdivision 4. A claimant cannot obtain reconsideration under this section if 
269.10 	the action taken by the commissioner is the outcome of an administrative appeal.
269.11 		Subd. 2.Appeal by claimant. A claimant who wishes to seek administrative review 
269.12 	must follow the procedures in subdivision 4.
269.13 		Subd. 3.Notice date. For purposes of this section, the term "notice date" means 
269.14 	the date of the determination removing enrolled land or the date of the notice denying an 
269.15 	application to enroll land or denying part or all of an incentive payment.
269.16 		Subd. 4.Time and content for administrative appeal. Within 60 days after the 
269.17 	notice date, the claimant must file a written appeal with the commissioner. The appeal 
269.18 	need not be in any particular form but must contain the following information:
269.19 	(1) name and address of the claimant;
269.20 	(2) if a corporation, the state of incorporation of the claimant, and the principal 
269.21 	place of business of the corporation;
269.22 	(3) the Minnesota or federal business identification number or Social Security 
269.23 	number of the claimant;
269.24 	(4) the date;
269.25 	(5) the periods involved and the amount of payment involved for each year or period;
269.26 	(6) the findings in the notice that the claimant disputes;
269.27 	(7) a summary statement that the claimant relies on for each exception; and
269.28 	(8) the claimant's signature or signature of the claimant's duly authorized agent.
269.29 		Subd. 5.Extensions. When requested in writing and within the time allowed for 
269.30 	filing an administrative appeal, the commissioner may extend the time for filing an appeal 
269.31 	for a period not more than 30 days from the expiration of the 60 days from the notice date.
269.32 		Subd. 6.Determination of appeal. On the basis of applicable law and available 
269.33 	information, the commissioner shall determine the validity, if any, in whole or in part, 
269.34 	of the appeal and notify the claimant of the decision. This notice must be in writing 
269.35 	and contain the basis for the determination.
270.1 		Subd. 7.Agreement determining issues under appeal. When it appears to be in 
270.2 	the best interests of the state, the commissioner may settle the amount of any incentive 
270.3 	payments, payments owed by the claimant under section 290C.11, paragraph (b), penalties, 
270.4 	or interest that the commissioner has under consideration by virtue of an appeal filed 
270.5 	under this section. An agreement must be in writing and signed by the commissioner and 
270.6 	the claimant, or the claimant's representative authorized by the claimant to enter into an 
270.7 	agreement. The agreement is final and conclusive and, except upon a showing of fraud or 
270.8 	malfeasance, or misrepresentation of a material fact, the case must not be reopened as to 
270.9 	the matters agreed upon.
270.10 		Subd. 8.Appeal to Tax Court. Within 60 days after the commissioner denies 
270.11 	an appeal, or within 120 days after the commissioner received a written appeal if the 
270.12 	commissioner has not made a determination in that time, the claimant may appeal to Tax 
270.13 	Court under chapter 271 as if the appeal is from an order of the commissioner.
270.14 		Subd. 9.Exemption from Administrative Procedure Act. This section is not 
270.15 	subject to chapter 14.

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

270.17 	Sec. 52. REPEALER.
 270.18 	(a) Minnesota Statutes 2006, section 270.073, is repealed.
270.19 	(b) Minnesota Statutes 2006, sections 270.41, subdivision 4; 270.43; 270.51; 270.52; 
270.20 	and 270.53, are repealed.

270.21 	EFFECTIVE DATE. Paragraph (a) of this section is effective beginning January 2, 
270.22 	2007, for taxes payable in 2008 and thereafter. Paragraph (b) of this section is effective 
270.23 	the day following final enactment.

270.24 	ARTICLE 13
270.25 	DEPARTMENT SPECIAL TAXES

270.26 	Section 1. Minnesota Statutes 2006, section 62I.06, subdivision 6, is amended to read:
270.27 		Subd. 6.Deficits Deficit assessments. The association shall certify to the 
270.28 	commissioner the estimated amount of any deficit remaining after the stabilization reserve 
270.29 	fund has been exhausted and payment of the maximum final premium for all policyholders 
270.30 	of the association. Within 60 days after the certification, the commissioner shall authorize 
270.31 	the association to recover the members' respective shares of the deficit by assessing 
270.32 	all members an amount sufficient to fully fund the obligations of the association. The 
270.33 	assessment of each member shall be determined in the manner provided in section 62I.07. 
271.1 	An assessment made pursuant to this section shall be deductible by the member from past 
271.2 	or future premium taxes due the state as provided in section 297I.20, subdivision 2. 

271.3 	EFFECTIVE DATE. This section is effective for tax returns due on or after January 
271.4 	1, 2008.

271.5 	Sec. 2. Minnesota Statutes 2006, section 71A.04, subdivision 1, is amended to read:
271.6 		Subdivision 1.Premium tax. The attorney-in-fact, in lieu of all taxes, state, county, 
271.7 	and municipal, shall file with the commissioner of revenue all returns and pay to the 
271.8 	commissioner of revenue all amounts required under chapter 297I.

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

271.10 	Sec. 3. Minnesota Statutes 2006, section 287.22, is amended to read:
271.11 	287.22 EXEMPTIONS.
271.12 	The tax imposed by section 287.21 does not apply to: 
271.13 	(1) An executory contract for the sale of real property under which the purchaser is 
271.14 	entitled to or does take possession of the real property, or any assignment or cancellation 
271.15 	of the contract;
271.16 	(2) A mortgage or an amendment, assignment, extension, partial release, or 
271.17 	satisfaction of a mortgage;
271.18 	(3) A will;
271.19 	(4) A plat;
271.20 	(5) A lease, amendment of lease, assignment of lease, or memorandum of lease;
271.21 	(6) A deed, instrument, or writing in which the United States or any agency or 
271.22 	instrumentality thereof is the grantor, assignor, transferor, conveyor, grantee, or assignee;
271.23 	(7) A deed for a cemetery lot or lots;
271.24 	(8) A deed of distribution by a personal representative;
271.25 	(9) A deed to or from a co-owner partitioning their undivided interest in the same 
271.26 	piece of real property;
271.27 	(10) A deed or other instrument of conveyance issued pursuant to a permanent 
271.28 	school fund land exchange under section 92.121 and related laws; 
271.29 	(11) A referee's or sheriff's certificate of sale in a mortgage or lien foreclosure sale;
271.30 	(12) A referee's, sheriff's, or certificate holder's certificate of redemption from a 
271.31 	mortgage or lien foreclosure sale issued to the redeeming mortgagor or lienee pursuant to 
271.32 	section 580.23 or other statute applicable to redemption by an owner of real property;
272.1 	(13) A deed, instrument, or writing which grants, creates, modifies, or terminates an 
272.2 	easement; and
272.3 	(14) A decree of marriage dissolution, as defined in section 287.01, subdivision 4, 
272.4 	or a deed or other instrument between the parties to the dissolution made pursuant to 
272.5 	the terms of the decree. 

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

272.7 	Sec. 4. Minnesota Statutes 2006, section 287.2205, is amended to read:
272.8 	287.2205 TAX-FORFEITED LAND.
272.9 	Before a state deed for tax-forfeited land may be issued, the deed tax must be paid 
272.10 	by the purchaser of tax-forfeited land whether the purchase is the result of a public 
272.11 	auction or private sale or a repurchase of tax-forfeited land. State agencies and local 
272.12 	units of government that acquire tax-forfeited land by purchase or any other means are 
272.13 	subject to this section. The deed tax is $1.65 for a conveyance of tax-forfeited lands to a 
272.14 	governmental subdivision for an authorized public use under section 282.01, subdivision 
272.15 	1a, or for redevelopment purposes under section 282.01, subdivision 1b.

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

272.17 	Sec. 5. Minnesota Statutes 2006, section 295.52, subdivision 4, is amended to read:
272.18 		Subd. 4.Use tax; prescription drugs. (a) A person that receives prescription drugs 
272.19 	for resale or use in Minnesota, other than from a wholesale drug distributor that is subject 
272.20 	to tax under subdivision 3, is subject to a tax equal to the price paid to the wholesale drug 
272.21 	distributor multiplied by the tax percentage specified in this section. Liability for the tax is 
272.22 	incurred when prescription drugs are received or delivered in Minnesota by the person.
272.23 	(b) A person that receives prescription drugs for use in Minnesota from a nonresident 
272.24 	pharmacy required to be registered under section 151.19 is subject to a tax equal to 
272.25 	the price paid by the nonresident pharmacy to the wholesale drug distributor or the 
272.26 	price received by the nonresident pharmacy, whichever is lower, multiplied by the tax 
272.27 	percentage specified in this section. Liability for the tax is incurred when prescription 
272.28 	drugs are received in Minnesota by the person.
272.29 	(c) (b) A tax imposed under this subdivision does not apply to purchases by an 
272.30 	individual for personal consumption.

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

273.1 	Sec. 6. Minnesota Statutes 2006, section 295.52, subdivision 4a, is amended to read:
273.2 		Subd. 4a.Tax collection. A wholesale drug distributor with nexus in Minnesota, 
273.3 	who is not subject to tax under subdivision 3, on all or a particular transaction or a 
273.4 	nonresident pharmacy with nexus in Minnesota, is required to collect the tax imposed 
273.5 	under subdivision 4, from the purchaser of the drugs and give the purchaser a receipt 
273.6 	for the tax paid. The tax collected shall be remitted to the commissioner in the manner 
273.7 	prescribed by section 295.55, subdivision 3. 

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

273.9 	Sec. 7. Minnesota Statutes 2006, section 295.54, subdivision 2, is amended to read:
273.10 		Subd. 2.Pharmacy refund. A pharmacy may claim an annual refund against the 
273.11 	total amount of tax, if any, the pharmacy owes during that calendar year under section 
273.12 	295.52, subdivision 2. The refund shall equal the amount paid by the pharmacy to a 
273.13 	wholesale drug distributor subject to tax under section 295.52, subdivision 3, for legend 
273.14 	drugs delivered by the pharmacy outside of Minnesota, multiplied by the tax percentage 
273.15 	specified in section 295.52. If the amount of the refund exceeds the tax liability of the 
273.16 	pharmacy under section 295.52, subdivision 1b 2, the commissioner shall provide the 
273.17 	pharmacy with a refund equal to the excess amount. Each qualifying pharmacy must apply 
273.18 	for the refund on the annual return as provided under section 295.55, subdivision 5. The 
273.19 	refund must be claimed within one year of the due date of the return. Interest on refunds 
273.20 	paid under this subdivision will begin to accrue 60 days after the date a claim for refund is 
273.21 	filed. For purposes of this subdivision, the date a claim is filed is the due date of the return 
273.22 	or the date of the actual claim for refund, whichever is later. 

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

273.24 	Sec. 8. Minnesota Statutes 2006, section 297F.06, subdivision 4, is amended to read:
273.25 		Subd. 4.Tobacco products use tax. The tobacco products use tax does not apply to 
273.26 	the possession, use, or storage of tobacco products thatif (1) the tobacco products have an 
273.27 	aggregate cost in any calendar month to the consumer of $100 $50 or less, and (2) the 
273.28 	tobacco products were carried into this state by that consumer.

273.29 	EFFECTIVE DATE. This section is effective for the possession, use, or storage of 
273.30 	tobacco products on or after July 1, 2007.

273.31 	Sec. 9. Minnesota Statutes 2006, section 297F.25, is amended by adding a subdivision 
273.32 	to read:
274.1 		Subd. 3a.Consumer use tax; use tax return; cigarette consumer. (a) On or before 
274.2 	the 18th day of each calendar month, a consumer who, during the preceding calendar 
274.3 	month, has acquired title to or possession of cigarettes for use or storage in this state, upon 
274.4 	which the sales tax imposed by this section has not been paid, shall file a return with the 
274.5 	commissioner showing the quantity of cigarettes so acquired or possessed. The return 
274.6 	must be made in the form and manner prescribed by the commissioner, and must contain 
274.7 	any other information required by the commissioner. The return must be accompanied by 
274.8 	a remittance for the full unpaid sales tax liability shown by it.
274.9 	(b) The tax imposed under paragraph (a) does not apply if (1) the consumer has 
274.10 	acquired title to or possession of cigarettes for use or storage in this state in quantities 
274.11 	of 200 or fewer in the month, and (2) the cigarettes were carried into this state by that 
274.12 	consumer.

274.13 	EFFECTIVE DATE. This section is effective for cigarettes which a consumer has 
274.14 	acquired title to or possession of on or after July 1, 2007.

274.15 	Sec. 10. Minnesota Statutes 2006, section 297I.06, subdivision 1, is amended to read:
274.16 		Subdivision 1.Insurance policies surcharge. (a) Except as otherwise provided in 
274.17 	subdivision 2, each licensed insurer engaged in writing policies of homeowner's insurance 
274.18 	authorized in section 60A.06, subdivision 1, clause (1)(c), or commercial fire policies or 
274.19 	commercial nonliability policies shall collect a surcharge equal to 0.65 percent of the 
274.20 	gross premiums and assessments, less return premiums, on direct business received by 
274.21 	the company, or by its agents for it, for homeowner's insurance policies, commercial fire 
274.22 	policies, and commercial nonliability insurance policies in this state.
274.23 	(b) The surcharge amount collected under paragraph (a) or subdivision 2, paragraph 
274.24 	(b), may not be considered premium for any other purpose. The surcharge amount 
274.25 	under paragraph (a) must be separately stated on either a billing or policy declaration or 
274.26 	document containing similar information sent to an insured.
274.27 	(c) Amounts collected by the commissioner under this section must be deposited in 
274.28 	the fire safety account established pursuant to subdivision 3.

274.29 	EFFECTIVE DATE. This section is effective July 1, 2007, and applies to policies 
274.30 	written or renewed on or after July 1, 2007.

274.31 	Sec. 11. Minnesota Statutes 2006, section 297I.06, subdivision 2, is amended to read:
275.1 		Subd. 2.Exemptions. (a) This section does not apply to a farmers' mutual fire 
275.2 	insurance company or township mutual fire insurance company in Minnesota organized 
275.3 	under chapter 67A.
275.4 	(b) An insurer described in section 297I.05, subdivisions 3 and 4, authorized to 
275.5 	transact business in Minnesota shall elect to remit to the Department of Revenue for 
275.6 	deposit in the fire safety account either (1) the surcharge amount collected imposed under 
275.7 	this section subdivision 1 on all premiums subject to that surcharge, or (2) a surcharge of 
275.8 	one-half of one percent on the gross fire premiums and assessments, less return premiums, 
275.9 	on all direct business received by the insurer or agents of the insurer in Minnesota, in 
275.10 	cash or otherwise, during the year. 
275.11 	(c) The election must be made prior to July 1, 2007, for policies written or renewed 
275.12 	between July 1, 2007, and December 31, 2007, and by December 31 of each year for 
275.13 	insurance for policies written or renewed in the succeeding calendar year. An insurer 
275.14 	who elects to remit the one-half of one percent surcharge on gross fire premiums and 
275.15 	assessments must not charge the insured the surcharge imposed under subdivision 1.
275.16 	(c)(d) For purposes of this subdivision, "gross fire premiums and assessments" 
275.17 	includes premiums on policies covering fire risks only on automobiles, whether written or 
275.18 	under floater form or otherwise.

275.19 	EFFECTIVE DATE. The requirement for certain insurers to make an election 
275.20 	before July 1, 2007, is effective the day following final enactment. The rest of this section 
275.21 	is effective July 1, 2007, and applies to insurance policies written or renewed on or after 
275.22 	that date.

275.23 	Sec. 12. Minnesota Statutes 2006, section 297I.20, subdivision 2, is amended to read:
275.24 		Subd. 2.Joint Underwriting Association offset. An insurance company may offset 
275.25 	against its premium tax liability to this state any amount paid for an assessment made 
275.26 	pursuant to section 62I.06, subdivision 6, shall be deductible by the member from past 
275.27 	or future premium taxes due the state. The offset against premium tax liability must be 
275.28 	claimed beginning with the taxable year that the assessment is paid. To the extent that the 
275.29 	allowable offset exceeds the tax liability, the remaining offset must be carried forward to 
275.30 	succeeding taxable years until the entire offset has been credited against the insurance 
275.31 	company's liability for premium tax under this chapter.

275.32 	EFFECTIVE DATE. This section is effective for tax returns due on or after January 
275.33 	1, 2008.

276.1 	Sec. 13. Minnesota Statutes 2006, section 297I.40, subdivision 5, is amended to read:
276.2 		Subd. 5.Definition of tax. The term "tax" as used in this section means the tax 
276.3 	imposed by section 297I.05, subdivisions 1 to 6, 11, and 12, paragraphs (a), clauses (1) 
276.4 	to (5), (b), and (e) (d), without regard to the retaliatory provisions of section 297I.05, 
276.5 	subdivision 11, and the less any offset in section 297I.20. 

276.6 	EFFECTIVE DATE. This section is effective for tax returns due on or after January 
276.7 	1, 2008.

276.8 	ARTICLE 14
276.9 	MISCELLANEOUS

276.10 	Section 1. Minnesota Statutes 2006, section 16A.152, subdivision 1b, is amended to 
276.11 	read:
276.12 		Subd. 1b.Budget reserve increase. On July 1, 2003, the commissioner of finance 
276.13 	shall transfer $300,000,000 to the budget reserve account in the general fund. On July 
276.14 	1, 2004, the commissioner of finance shall transfer $296,000,000 to the budget reserve 
276.15 	account in the general fund. On July 1, 2007, the commissioner of finance shall transfer 
276.16 	$30,000,000 to the budget reserve account in the general fund. The amounts necessary 
276.17 	for this purpose are appropriated from the general fund.

276.18 	Sec. 2. Minnesota Statutes 2006, section 16A.152, subdivision 2, is amended to read:
276.19 		Subd. 2.Additional revenues; priority. (a) If on the basis of a forecast of general 
276.20 	fund revenues and expenditures, the commissioner of finance determines that there will 
276.21 	be a positive unrestricted budgetary general fund balance at the close of the current 
276.22 	biennium, the commissioner of finance must allocate money to the following accounts and 
276.23 	purposes in priority order:
276.24 	(1) the cash flow account established in subdivision 1 until that account reaches 
276.25 	$350,000,000;
276.26 	(2) the budget reserve account established in subdivision 1a until that account 
276.27 	reaches $653,000,000 $683,000,000; and
276.28 	(3) the amount necessary to increase the aid payment schedule for school district 
276.29 	aids and credits payments in section 127A.45 to not more than 90 percent rounded to the 
276.30 	nearest tenth of a percent without exceeding the amount available and with any remaining 
276.31 	funds deposited in the budget reserve; and the tax volatility reduction account until that 
276.32 	account reaches the amount designated for transfer in the current biennium as provided 
276.33 	in subdivision 8, paragraph (c).
277.1 	(4) the amount necessary to restore all or a portion of the net aid reductions under 
277.2 	section 127A.441 and to reduce the property tax revenue recognition shift under section 
277.3 	123B.75, subdivision 5, paragraph (c), and Laws 2003, First Special Session chapter 9, 
277.4 	article 5, section 34, as amended by Laws 2003, First Special Session chapter 23, section 
277.5 	20, by the same amount.
277.6 	(b) If on the basis of a forecast of general fund revenues and expenditures, the 
277.7 	commissioner of finance determines that there will be a positive unrestricted budgetary 
277.8 	general fund balance at the close of the next biennium, the commissioner of finance must 
277.9 	allocate money to the tax volatility reduction account until that account reaches the amount 
277.10 	designated for transfer in the next biennium as provided in subdivision 8, paragraph (f).
277.11 	(c) The amounts necessary to meet the requirements of this sectionparagraph (a) 
277.12 	are appropriated from the general fund within two weeks after the forecast is released 
277.13 	or, in the case of transfers under paragraph (a), clauses (3) and (4), as necessary to meet 
277.14 	the appropriations schedules otherwise established in statute. The amount necessary to 
277.15 	meet the requirements of paragraph (b) are transferred from the general fund on the first 
277.16 	day of the next biennium.
277.17 	(c)(d) To the extent that a positive unrestricted budgetary general fund balance is 
277.18 	projected, appropriations under this section must be made before section 16A.1522 takes 
277.19 	effect.
277.20 	(d) The commissioner of finance shall certify the total dollar amount of the 
277.21 	reductions under paragraph (a), clauses (3) and (4), to the commissioner of education. The 
277.22 	commissioner of education shall increase the aid payment percentage and reduce the 
277.23 	property tax shift percentage by these amounts and apply those reductions to the current 
277.24 	fiscal year and thereafter.

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

277.26 	Sec. 3. Minnesota Statutes 2006, section 16A.152, is amended by adding a subdivision 
277.27 	to read:
277.28 		Subd. 8.Tax volatility reduction account. (a) A tax volatility reduction account is 
277.29 	created in the general fund.
277.30 	(b) Beginning with the November 2007 economic forecast and for each subsequent 
277.31 	economic forecast, the commissioner of finance, in consultation with the commissioner of 
277.32 	revenue, shall estimate the revenue gain or loss anticipated for the current biennium and 
277.33 	the next biennium, as a result of changes in taxpayer behavior in anticipation of (1) the 
277.34 	sunset of favorable federal income tax rates for capital gains income under Public Law 
278.1 	108-27; (2) the extension of the sunset referenced in (1); or (3) any other federal law that 
278.2 	changes federal income tax rates for capital gains income.
278.3 	(c) If the commissioner estimates a revenue gain under paragraph (b) for the current 
278.4 	biennium, and if the amount of gain estimated for the current biennium is more than the 
278.5 	amount forecast to be in the tax volatility reduction account at the close of the current 
278.6 	biennium, then the difference is designated for transfer to the tax volatility reduction 
278.7 	account.
278.8 	(d) If the commissioner estimates a revenue gain under paragraph (b) for the current 
278.9 	biennium, and if the amount of gain estimated for the current biennium is less than the 
278.10 	amount forecast to be in the tax volatility reduction account at the close of the current 
278.11 	biennium, then the difference is transferred from the tax volatility reduction account 
278.12 	to the general fund.
278.13 	(e) If the commissioner estimates a revenue loss under paragraph (b) in the current 
278.14 	biennium, then the amount adequate to offset the loss, to the extent it is available, is 
278.15 	transferred from the tax volatility reduction account to the general fund.
278.16 	(f) If the commissioner estimates a revenue gain for the next biennium under 
278.17 	paragraph (b), and if the amount of gain estimated for the next biennium is more than 
278.18 	the amount forecast to be in the tax volatility reduction account at the close of the next 
278.19 	biennium, then the difference is designated for transfer to the tax volatility reduction 
278.20 	account on the first day of the next biennium.
278.21 	(g) If the commissioner estimates a revenue gain for the next biennium under 
278.22 	paragraph (b), and if the amount of gain estimated for the next biennium is less than 
278.23 	the amount forecast to be in the tax volatility reduction account at the close of the next 
278.24 	biennium, then the difference is transferred from the tax volatility reduction account to the 
278.25 	general fund on the first day of the next biennium.
278.26 	(h) If the commissioner estimates a revenue loss under paragraph (a) in the next 
278.27 	biennium, then the amount adequate to offset the loss, to the extent it is available, is 
278.28 	transferred from the tax volatility reduction account to the general fund on the first day of 
278.29 	the next biennium.
278.30 	(i) For purposes of this subdivision "economic forecast" means the economic 
278.31 	forecast prepared according to section 16A.103.

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

278.33 	Sec. 4. Minnesota Statutes 2006, section 16D.04, subdivision 1, is amended to read:
278.34 		Subdivision 1.Duties. The commissioner shall provide services to the state and its
278.35 	referring agencies to collect debts owed the state referred for collection under this chapter. 
279.1 	The commissioner is not a collection agency as defined by section 332.31, subdivision 3, 
279.2 	and is not licensed, bonded, or regulated by the commissioner of commerce under sections 
279.3 	332.31 to 332.35 or 332.38 to 332.45. The commissioner is subject to section 332.37, 
279.4 	except clause (9), (10), (12), or (19). Debts referred to the commissioner for collection 
279.5 	under section 256.9792 may in turn be referred by the commissioner to the enterprise. 
279.6 	An audited financial statement may not be required as a condition of debt placement with 
279.7 	a private agency if the private agency: (1) has errors and omissions coverage under a 
279.8 	professional liability policy in an amount of at least $1,000,000; or (2) has a fidelity bond 
279.9 	to cover actions of its employees, in an amount of at least $100,000. In cases of debts 
279.10 	referred under section 256.9792, the provisions of this chapter and section 256.9792 apply 
279.11 	to the extent they are not in conflict. If they are in conflict, the provisions of section 
279.12 	256.9792 control. For purposes of this chapter, the referring agency for such debts remains 
279.13 	the Department of Human Services. 

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

279.15 	Sec. 5. Minnesota Statutes 2006, section 16D.04, subdivision 2, is amended to read:
279.16 		Subd. 2.Agency participation. (a) A referring agency may, at its option, must
279.17 	refer, by electronic means, debts to the commissioner for collection. The ultimate
279.18 	Responsibility for the debt, including the reporting of the debt to the commissioner of 
279.19 	finance and the decision with regard to the continuing collection and uncollectibility of the 
279.20 	debt, remains with the referring agency.
279.21 	(b) Before a debt becomes 121 days past due, a referring agency may refer the 
279.22 	debt to the commissioner for collection at any time after a debt becomes delinquent and 
279.23 	uncontested and the debtor has no further administrative appeal of the amount of the 
279.24 	debt. When a debt owed to a statereferring agency becomes 121 days past due, the state
279.25 	referring agency must refer the debt to the commissioner for collection. This requirement 
279.26 	does not apply if there is a dispute over the amount or validity of the debt, if the debt is the 
279.27 	subject of legal action or administrative proceedings, or the agency determines that the 
279.28 	debtor is adhering to acceptable payment arrangements. The commissioner, in consultation 
279.29 	with the commissioner of finance, may provide that certain types of debt need not be 
279.30 	referred to the commissioner for collection under this paragraph. Methods and procedures 
279.31 	for referral must follow internal guidelines prepared by the commissioner of finance.
279.32 	(c) If the referring agency is a court, the court must furnish a debtor's Social Security 
279.33 	number to the commissioner when the court refers the debt.

280.1 	EFFECTIVE DATE. This section is effective for debts referred on or after January 
280.2 	1, 2008.

280.3 	Sec. 6. Minnesota Statutes 2006, section 16D.11, subdivision 2, is amended to read:
280.4 		Subd. 2.Computation. At the time a debt is referred, the amount of collection 
280.5 	costs is equal to 1517 percent of the debt, or 25 percent of the debt remaining unpaid if 
280.6 	the commissioner or private collection agency has to take enforced collection action 
280.7 	by serving a summons and complaint on or entering judgment against the debtor, or by 
280.8 	utilizing any of the remedies authorized under section 16D.08, subdivision 2, except for 
280.9 	the remedies in sections 270C.32 and 270C.65 or when referred by the commissioner for 
280.10 	additional collection activity by a private collection agency. If, after referral of a debt to 
280.11 	a private collection agency, the debtor requests cancellation of collection costs under 
280.12 	subdivision 3, the debt must be returned to the commissioner for resolution of the request.

280.13 	EFFECTIVE DATE. This section is effective for debts referred on or after January 
280.14 	1, 2008.

280.15 	Sec. 7. Minnesota Statutes 2006, section 16D.11, subdivision 7, is amended to read:
280.16 		Subd. 7.Adjustment of rate. By June 1 of each year, the commissioner of finance
280.17 	shall determine the rate of collection costs for debts referred to the enterprise during 
280.18 	the next fiscal year. The rate is a percentage of the debts in an amount that most nearly 
280.19 	equals the costs of the enterprise necessary to process and collect referred debts under this 
280.20 	chapter. In no event shall the rate of collection costs when a debt is first referred exceed 
280.21 	three-fifths of the maximum collection costs, and in no event shall the rate of the maximum
280.22 	collection costs exceed 25 percent of the debt. Determination of the rate of collection costs 
280.23 	under this section is not subject to the fee setting requirements of section 16A.1285. 

280.24 	EFFECTIVE DATE. This section is effective January 1, 2008.

280.25 	Sec. 8. [84.635] MINNESOTA LAND CONSERVATION INCENTIVES ACT.
280.26 		Subdivision 1.Citation. This section may be cited as the "Minnesota Land 
280.27 	Conservation Incentives Act of 2007."
280.28 		Subd. 2.Purpose and findings. (a) The legislature finds that Minnesota's unique 
280.29 	natural resources are of significant benefit to the state and the public.
280.30 	(b) The legislature finds that the state of Minnesota's unique natural resources and 
280.31 	distinctive natural heritage, including habitat for plants, animals, and natural communities, 
280.32 	are being lost at an alarming rate.
281.1 	(c) The legislature finds that much of Minnesota's unique natural resources and 
281.2 	habitats are found on lands which are privately owned.
281.3 	(d) The legislature shall provide private landowners with incentives to encourage 
281.4 	protection of private lands for natural resources, biodiversity conservation, and outdoor 
281.5 	recreation purposes. 
281.6 		Subd. 3.Definitions. For the purposes of this section, the following terms have 
281.7 	the meanings given.
281.8 	(a) "Fee interest in real property" means fee title in real property that can be legally 
281.9 	conveyed.
281.10 	(b) "Public conservation agency" means the state of Minnesota or a county of the 
281.11 	state.
281.12 	(c) "Landowner" means an individual, estate, trust, partnership, or S-corporation.
281.13 	(d) "Eligible landowner" means a landowner who makes a donation of fee interest in 
281.14 	real property to a public conservation agency.
281.15 	(e) "Donation of fee interest in real property" means the unconditional donation of a 
281.16 	fee interest in real property located in Minnesota and determined by the commissioner 
281.17 	of natural resources to meet the criteria for designation as a scientific and natural area 
281.18 	under section 86A.05, subdivision 5.
281.19 		Subd. 4.Land conservation grant; eligibility. (a) An eligible landowner is eligible 
281.20 	for a grant equal to 30 percent of the fair market value of a donation of fee interest in real 
281.21 	property which satisfies the requirements and purposes of this section, up to a maximum 
281.22 	grant of $200,000.
281.23 	(b) The donation of fee interest in real property must be acceptable to the public 
281.24 	conservation agency, which must agree to hold and maintain the property for conservation 
281.25 	purposes, and which may not receive any payment in lieu of taxes or other compensation 
281.26 	for the property donated after the donation is accepted.
281.27 	(c) The fair market value of qualified donations made under this section shall be 
281.28 	substantiated by a qualified appraisal prepared by a qualified appraiser, as those terms are 
281.29 	defined under applicable federal law and regulations governing charitable contributions.
281.30 	(d) A landowner must establish eligibility by application in a form and manner 
281.31 	prescribed by the commissioner to be considered for a grant under subdivision 5.
281.32 	(e) The maximum amount of statewide grants is $1,000,000 for each fiscal year.
281.33 		Subd. 5.Land conservation grant; award by commissioner. The commissioner 
281.34 	shall:
281.35 	(1) approve donations of fee interest in real property to a public conservation agency 
281.36 	as qualifying for a grant under this section;
282.1 	(2) determine criteria and priorities for awarding grants to landowners approved 
282.2 	as qualifying for a grant under clause (1);
282.3 	(3) provide grants to landowners who qualify under clause (1) and meet the criteria 
282.4 	and priorities under clause (2); and
282.5 	(4) not award more than a total of $1,000,000 of land conservation grants per fiscal 
282.6 	year. 
282.7 		Subd. 6.Authorizing rulemaking; requiring report. The commissioner of natural 
282.8 	resources shall adopt such rules as may be deemed necessary to implement the land 
282.9 	conservation grant program under this section. The commissioner shall prepare a report 
282.10 	to the legislature each year, in compliance with sections 3.195 and 3.197, showing the 
282.11 	lands protected under this section.
282.12 		Subd. 7.Construction. No part of this section shall be interpreted to alter or 
282.13 	amend any permit requirements, reporting requirements, allocation procedures, or other 
282.14 	requirements set forth in any other provision of state law.

282.15 	Sec. 9. Minnesota Statutes 2006, section 270C.03, subdivision 1, is amended to read:
282.16 		Subdivision 1.Powers and duties. The commissioner shall have and exercise 
282.17 	the following powers and duties:
282.18 	(1) administer and enforce the assessment and collection of taxes;
282.19 	(2) make determinations, corrections, and assessments with respect to taxes, 
282.20 	including interest, additions to taxes, and assessable penalties;
282.21 	(3) use statistical or other sampling techniques consistent with generally accepted 
282.22 	auditing standards in examining returns or records and making assessments;
282.23 	(4) investigate the tax laws of other states and countries, and formulate and submit 
282.24 	to the legislature such legislation as the commissioner may deem expedient to prevent 
282.25 	evasions of state revenue laws and to secure just and equal taxation and improvement in 
282.26 	the system of state revenue laws;
282.27 	(5) consult and confer with the governor upon the subject of taxation, the 
282.28 	administration of the laws in regard thereto, and the progress of the work of the 
282.29 	department, and furnish the governor, from time to time, such assistance and information 
282.30 	as the governor may require relating to tax matters;
282.31 	(6) execute and administer any agreement with the secretary of the treasury or the 
282.32 	Bureau of Alcohol, Tobacco, Firearms, and Explosives in the Department of Justice of the 
282.33 	United States or a representative of another state regarding the exchange of information 
282.34 	and administration of the state revenue laws;
283.1 	(7) require town, city, county, and other public officers to report information as to the 
283.2 	collection of taxes received from licenses and other sources, and such other information 
283.3 	as may be needful in the work of the commissioner, in such form as the commissioner 
283.4 	may prescribe;
283.5 	(8) authorize the use of unmarked motor vehicles to conduct seizures or criminal 
283.6 	investigations pursuant to the commissioner's authority; and
283.7 	(9) maintain toll-free telephone access for taxpayer assistance for calls from 
283.8 	locations within the state; and
283.9 	(10) exercise other powers and authority and perform other duties required of or 
283.10 	imposed upon the commissioner by law.

283.11 	EFFECTIVE DATE. This section is effective January 1, 2008.

283.12 	Sec. 10. [270C.21] TAXPAYER ASSISTANCE GRANTS.
283.13 	When the commissioner awards grants to nonprofit organizations to coordinate, 
283.14 	facilitate, encourage, and aid in the provision of taxpayer assistance services, the 
283.15 	commissioner must provide public notice of the grants in a timely manner so that the 
283.16 	grant process is completed and grants are awarded by October 1, in order for recipient 
283.17 	organizations to adequately plan expenditures for the filing season. At the time the 
283.18 	commissioner provides public notice, the commissioner must also notify nonprofit 
283.19 	organizations that received grants in the previous biennium.

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

283.21 	Sec. 11. [270C.435] REFUNDS NOT SUBJECT TO ATTACHMENT OR 
283.22 	GARNISHMENT.
283.23 	No amount of a tax refund or other payment payable by the commissioner to 
283.24 	a taxpayer is assignable or subject to execution, levy, attachment, garnishment, lien 
283.25 	foreclosure, or other legal process, except as specifically provided by law.

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

283.27 	Sec. 12. Minnesota Statutes 2006, section 270C.446, subdivision 2, is amended to read:
283.28 		Subd. 2.Required and excluded tax preparers. (a) Subject to the limitations 
283.29 	of paragraph (b), the commissioner must publish lists of tax preparers as defined in 
283.30 	section 289A.60, subdivision 13, paragraph (f), who have been convicted under section 
283.31 	289A.63 or assessed penalties in excess of $1,000 under section 289A.60, subdivision 
283.32 	13, paragraph (a).
284.1 	(b) For the purposes of this section, tax preparers are not subject to publication if:
284.2 	(1) an administrative or court action contesting the penalty has been filed or served 
284.3 	and is unresolved at the time when notice would be given under subdivision 3;
284.4 	(2) an appeal period to contest the penalty has not expired; or
284.5 	(3) the commissioner has been notified that the tax preparer is deceased.

284.6 	EFFECTIVE DATE. This section is effective for penalties on returns filed after 
284.7 	December 31, 2007.

284.8 	Sec. 13. Minnesota Statutes 2006, section 270C.56, subdivision 1, is amended to read:
284.9 		Subdivision 1.Liability imposed. A person who, either singly or jointly with 
284.10 	others, has the control of, supervision of, or responsibility for filing returns or reports, 
284.11 	paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or 
284.12 	a person who is liable under any other law, is liable for the payment of taxes, penalties, 
284.13 	and interest arising under chapters 295, 296A, 297A, 297F, and 297G, or sections 290.92
284.14 	and 297E.02, and, for the taxes listed in this subdivision, the applicable penalties for 
284.15 	nonpayment under section 289A.60.

284.16 	EFFECTIVE DATE. This section is effective for personal liability assessments 
284.17 	made on or after the day following final enactment.

284.18 	Sec. 14. Minnesota Statutes 2006, section 270C.63, subdivision 9, is amended to read:
284.19 		Subd. 9.Period of limitations. The lien imposed by this section shall, 
284.20 	notwithstanding any other provision of law to the contrary, be enforceable from the time 
284.21 	the lien arises and for ten years from the date of filing the notice of lien, which must be 
284.22 	filed by the commissioner within five years after the date of assessment of the tax or final 
284.23 	administrative or judicial determination of the assessment. A notice of lien filed at the 
284.24 	Office of the Secretary of State may be transcribed to any county within ten years after the 
284.25 	date of its filing, but the transcription does not extend the period during which the lien is 
284.26 	enforceable. A notice of lien filed in one county may be transcribed to the secretary of 
284.27 	state or to any other county within ten years after the date of its filing, but the transcription 
284.28 	shall not extend the period during which the lien is enforceable. A notice of lien may be 
284.29 	renewed by the commissioner before the expiration of the ten-year period for an additional 
284.30 	ten years. The taxpayer must receive written notice of the renewal.

284.31 	EFFECTIVE DATE. This section is effective for liens transcribed on or after the 
284.32 	day following final enactment.

285.1 	Sec. 15. Minnesota Statutes 2006, section 424A.10, subdivision 3, is amended to read:
285.2 		Subd. 3.State reimbursement. (a) By February 15 of each year, the treasurer of 
285.3 	the relief association shall apply to the commissioner of revenueEach year, to be eligible 
285.4 	for state reimbursement of the amount of supplemental benefits paid under subdivision 2 
285.5 	during the preceding calendar year, the relief association must apply to the commissioner 
285.6 	of revenue by February 15. By March 15 the commissioner shall reimburse the relief 
285.7 	association for the amount of the supplemental benefits paid to qualified recipients. 
285.8 	(b) The commissioner of revenue shall prescribe the form of and supporting 
285.9 	information that must be supplied as part of the application for state reimbursement.
285.10 	The commissioner of revenue shall reimburse the relief association by paying the 
285.11 	reimbursement amount to the treasurer of the municipality where the association is located. 
285.12 	Within 30 days after receipt, the municipal treasurer shall transmit the state reimbursement 
285.13 	to the treasurer of the association if the association has filed a financial report with the 
285.14 	municipality. If the relief association has not filed a financial report with the municipality, 
285.15 	the municipal treasurer shall delay transmission of the reimbursement payment to the 
285.16 	association until the complete financial report is filed. If the association has dissolved or 
285.17 	has been removed as a trustee of state aid, the treasurer shall deposit the money in a 
285.18 	special account in the municipal treasury, and the money may be disbursed only for the 
285.19 	purposes and in the manner provided in section 424A.08. When paid to the association,
285.20 	(c) the reimbursement payment must be deposited in the special fund of the relief 
285.21 	association. 
285.22 	(d)(c) A sum sufficient to make the payments is appropriated from the general fund 
285.23 	to the commissioner of revenue.

285.24 	EFFECTIVE DATE. This section is effective January 1, 2007, and thereafter.

285.25 	Sec. 16. FINANCIAL MANAGEMENT.
 285.26 	Notwithstanding the provisions of Minnesota Statutes, section 16A.1522, 
285.27 	subdivision 4, the commissioner of finance shall designate any positive general fund 
285.28 	budgetary balance on June 30, 2007, as an unrestricted balance. Money so designated shall 
285.29 	remain available for general fund appropriations authorized in fiscal years 2008 and 2009.

285.30 	Sec. 17. HOMESTEAD CREDIT STATE REFUND TRANSITION RESERVE.
 285.31 		Subdivision 1.Reserve account. A homestead credit state refund transition reserve 
285.32 	account is established in the general fund to provide two additional years of transition 
285.33 	funding for the homestead credit state refund.
286.1 		Subd. 2.Transfer to account. On June 29, 2009, the commissioner of finance 
286.2 	shall transfer $84,295,000 from the general fund to the homestead credit state refund 
286.3 	transition reserve account.
286.4 		Subd. 3.Transfer to general fund. On July 1, 2009, the commissioner of finance 
286.5 	shall transfer the balance in the homestead credit state refund transition reserve account 
286.6 	to the general fund.
286.7 		Subd. 4.Expiration date. This section expires July 2, 2009.

286.8 	Sec. 18. LIGNOCELLULOSIC ETHANOL PRODUCTION GRANT; 
286.9 	APPROPRIATION.
 286.10 	$4,735,000 is appropriated in fiscal year 2008 from the general fund to the 
286.11 	commissioner of agriculture for a competitive grant to a biofuel producer for the design 
286.12 	and construction of a new plant or the conversion of an existing plant in Minnesota that 
286.13 	produces ethanol from lignocellulosic feedstocks. The commissioner of agriculture shall 
286.14 	solicit proposals for demonstration projects. The proposals shall be reviewed and the 
286.15 	winning proposal chosen by the NextGen Energy Board established by the 85th Legislative 
286.16 	Session House File 2227, the third engrossment. Eligible lignocellulosic feedstocks 
286.17 	include dedicated energy crops and trees, wood and wood residues, plants, grasses, 
286.18 	agricultural residues, fibers, animal wastes and other waste materials, and municipal solid 
286.19 	waste. The NextGen Energy Board shall select a proposal that: (1) demonstrates sufficient 
286.20 	funding from all sources to fully construct or retrofit an ethanol plant and produce ethanol 
286.21 	from eligible lignocellulosic feedstocks; (2) demonstrates the continued economic viability 
286.22 	of the project once the initial construction costs are paid; and (3) proposes to construct or 
286.23 	retrofit an ethanol plant that can be easily replicated in Minnesota. Proposals solely to 
286.24 	replace energy inputs derived from fossil fuels with energy derived from lignocellulosic 
286.25 	sources are not eligible. This appropriation is available until expended.

286.26 	Sec. 19. APPROPRIATION.
 286.27 	$1,000,000 in fiscal year 2008 and $1,000,000 in fiscal year 2009 are appropriated 
286.28 	from the general fund to the commissioner of natural resources to make land conservation 
286.29 	grants as provided in Minnesota Statutes, section 84.635.

286.30 	Sec. 20. APPROPRIATIONS.
 286.31 	(a) $342,500 is appropriated for fiscal year 2008 and $85,500 is appropriated for 
286.32 	fiscal year 2009 from the general fund to the commissioner of revenue to administer 
286.33 	this act.
287.1 	(b) Of these amounts:
287.2 	(i) $150,000 in fiscal year 2008 is for the fiscal disparities study required under 
287.3 	article 3;
287.4 	(ii) $87,000 in fiscal year 2008 is for the sales and use tax study required under 
287.5 	article 6; and
287.6 	(iii) $73,000 in fiscal year 2008 and $58,000 in fiscal year 2009 is for administering 
287.7 	1099 reporting requirements under article 5. The $58,000 in fiscal year 2009 becomes part 
287.8 	of the agency's base budget for fiscal years 2010 and 2011.