2E Relating to financing and operation of state and local government

ARTICLE 1 - INCOME TAX

Adding certain fines to federal taxable income; providing an income tax subtraction for the amount of national service education awards received from the national service trust for service in an approved AmeriCorps national service program; providing an income tax credit for investments in qualified new business ventures; prohibiting businesses from deducting criminal or civil fines, penalties or damages; modifying and increasing the income tax credit for military service; establishing the Minnesota home care income tax credit, determining the amount of credit allowed and credit limitations, providing credit to be refundable, requiring certain caregiver training; providing an refundable income tax credit for qualified citizenship expenses; prohibiting businesses from deducting criminal or civil fines, penalties or damages; requiring compensation earned while a resident to be included as taxable income even if the recipient was a nonresident when the compensation was received; requiring a withholding tax on certain contractor payments, requiring the commissioner of revenue to conduct a random sample audit of the withholdings and to report to the legislature; appropriating money to the commissioner of revenue to make grants to nonprofit organizations to coordinate and aid low income taxpayer assistance services

ARTICLE 2 - FEDERAL UPDATE

Updating and conforming certain provisions to federal law including administrative provisions, taxable income, credits and individual alternative minimum tax, property tax refunds and estate taxes

ARTICLE 3 - CORPORATE INCOME TAX

Modifying the definition of foreign operating corporation; modifying provisions relating to deemed income; adding interest and intangible expenses to federal taxable income, defining intangible property; modifying the net income apportionment formula for corporations franchise tax purposes; providing for transactions without economic substance; providing for purpose and effect

ARTICLE 4 - SALES AND USE TAXES

Requiring the state agricultural society (state fair) to spend the amount of sales tax retained on capital improvements to state owned buildings and facilities on the state fairgrounds, match requirement; exempting emergency response vehicles and repair parts from the motor vehicle sales tax; modifying the percentage of the estimated June tax liability required to be paid before June 30; exempting milk and water sold through vending machines from the sales and use tax; exempting grain bins and fencing materials from the sales and use tax; modifying sourcing rules for modular and manufactured homes; eliminating the imposition and refund of sales tax on capital equipment; extending the agricultural sales tax exemption to logging tires under certain conditions; exempting materials, supplies and equipment used in livestock farming operations from the sales tax; expanding the sales tax exemption for public safety radio communication products and services to include Itasca county; exempting sales by the department of transportation for materials and supplies used or consumed in and equipment for commuter rail transportation systems including railroad cars and engines from the sales tax; modifying the accelerated June payment percentage for cigarette and tobacco products; authorizing the city of Duluth to increase the rate of tax on the sales of food and beverages; authorizing the use of proceeds of the tax for a new arena at the Duluth entertainment and convention center (DECC); authorizing Cook county to extend the local sales tax upon voter approval at a special election held prior to a certain date, requiring use of sales tax for county community center and recreation area and Grand Marais pool and public library construction and improvements, specifying a new taxing authority expiration and expenditure limitation; authorizing county bond issuance without election, specifying bond limit and debt limitation and tax levy computation exclusion for bonds; authorizing and providing for the city of Proctor to impose by ordinance an additional sales and use tax to be used for construction of and improvements to city streets, public utilities, sidewalks, bikeways, trails and parks and recreation and increasing the bonding authority of the city for the projects; providing for a sales tax exemption for a nonprofit organization constructing a community or regional center in Thief River Falls; authorizing the city of Bemidji to extend the imposition of a sales and use tax authority to finance certain authorized projects and to pay costs for the construction of a regional event center; modifying the bond issuance and termination of tax provisions; requiring approval by the city voters; authorizing and providing for the city of Clearwater to by ordinance and with voter approval impose a sales and use tax and a sales tax on motor vehicles and to issue state bonds to pay for costs of acquisition, construction, improvement and development of regional parks, bicycle trails, park land, pedestrian walkways, open space and land and buildings for a community and recreation center; providing for termination of the taxes; authorizing and providing for the city of Cloquet by ordinance and with voter approval to impose a sales and use tax and a sales tax on motor vehicles and to issue bonds to finance the construction and completion of certain park improvement projects, the extension of utilities and other improvements for construction of a city industrial park; providing for termination of the taxes; authorizing the city of Crookston by ordinance and with voter approval to impose a sales and use tax and to issue bonds to finance the construction and completion of a regional recreation center, providing for termination of the taxes; authorizing the Cook county board of commissioners to impose by ordinance a tax of up to a certain amount on lodging tax gross receipts, entertainment and recreation facilities admissions and recreation equipment rental; requiring tax revenues use for a new Cook county event and visitors bureau, requiring board of commissioners annual budget approval prior to revenues receipt; authorizing and providing for the city of Ely to by ordinance and with voter approval impose a sales and use tax and to issue bonds for certain improvements; providing for termination taxes; exempting materials, supplies and equipment used in the construction of the Minnetonka water treatment facility from the sales tax; authorizing and providing for the city of North Mankato to by ordinance and with voter approval impose a sales and use tax and to issue bonds to pay all or part of the capital costs of the city share of the marked trunk highway #14 and county state aid highway #41 interchange project, development of regional park and hiking and biking trails, expansion of the North Mankato Taylor library, redevelopment of the central business district and lake improvement projects; providing for termination of the taxes; authorizing and providing for the city of Winona upon voter approval to impose a sales and use tax to pay for construction of a street connection from the city of Winona to highways #61 and #43; authorizing the issuance of bonds; providing for termination of the taxes

ARTICLE 5 - PROPERTY TAXES

Modifying the tax base used to calculate school district debt service levies; defining debt service net tax capacity, requiring use to compute debt service levy limits and aid; requiring the commissioner of revenue to recompute debt service net tax capacity amounts using an alterative sales ratio comparing the sale price to the estimated market value of the property; exempting homesteads of certain veterans with total and permanent service connected disabilities from the property tax; providing a carryover to spouses of qualifying veterans upon the death of the veteran; providing for application; exempting from the property tax modular homes used as models by dealers; exempting property used to operate state or federally approved apprenticeship training facilities from the property tax; exempting monosloped roofs for feedlots and manure storage areas from the property tax; exempting from the property tax personal property of a certain simple cycle combustion turbine electric generation facilities, specifying certain proposed electric generation peaking plant qualification requirements and certain exclusions; modifying certificate of value provisions; including certain homestead resort property under limited market value provisions; modifying the public policy statement relating to property taxation; adding watershed districts and drainage authorities under special assessment provisions; establishing an aggregate resource preservation property tax program for the valuation and classification of property containing certain unmined commercial aggregate deposit; adding soccer as an acceptable use under the open space property tax; modifying conservation property tax valuation provisions; modifying the homestead local option disaster abatement provision to include homestead property destroyed by arson or vandalism by other than the owner; extending homestead classification to certain property used for nonhomestead purposes; requiring annual registration of certain relative homesteads; increasing the value threshold for taxability of certain structures; extending the application of 4d property classification for low income rental property; exempting homesteads of certain veterans with total and permanent service connected disabilities from the property tax; providing a carryover to spouses of qualifying veterans upon the death of the veteran, providing for application; modifying provisions relating to agricultural property; increasing the property tax class rates on certain utility property; expanding residential real estate property classification to certain nonprofit community service oriented organizations; classifying certain seasonal restaurant property as residential real estate under certain conditions; modifying the levy amount determination for the state general property tax; modifying commercial industrial tax capacity; modifying provisions relating to apportionment and levy of state general tax; increasing the value threshold for taxability of certain structures; modifying qualifications for confessions of judgment on delinquent taxes; modifying the calculation of the incentive payment under the sustainable forest resource management incentive program; redefining transit tax district; authorizing transit tax levies outside the existing metropolitan transit taxing district; modifying certain duties of the commissioner of revenue relating to transit tax imposition determinations; modifying the levy authority and clarifying the effective date for the hospital district tax levy in the cities of Cook and Orr and St. Louis and Koochiching counties; modifying the levy authority of the Cook county hospital district; appropriating money to the education improvement account; requiring the commissioner of revenue to develop a method of valuing agricultural property accurately reflecting the actual value of the property and report to the legislature by a certain date; repealing certain provisions relating to seasonal residential recreational property and additions to transit taxing districts

ARTICLE 6 - AIDS AND CREDITS; PROPERTY TAX REFUND

Allowing towns incorporating into cities to continue to receive payment in lieu of tax allocations for public hunting areas and game refuges; modifying the determination of the residential homestead market value credit and the agricultural homestead market value credit; increasing the homeowners and renters maximum allowable property tax state refund; modifying the determination of the inflation adjustment for property tax refunds; modifying the definition of city aid base; modifying the determination of county tax base equalization aid; eliminating the sunset for county transition aid; modifying local government aid (LGA) to towns and modifying the city formula aid; modifying the distribution of local government aid to cities to decrease volatility from year to year; modifying and increasing aids paid to cities and counties; providing for an increase in payments to counties by the commissioner of natural resources (DNR) on land utilization project land; making permanent certain temporary aid payments to certain taxing jurisdictions in Mahnomen county including the city of Mahnomen and independent school district #432, Mahnomen; requiring the legislature to form a group study aids to local governments and report to the legislature by a certain date

ARTICLE 7 - MINERALS

Modifying the definition of commercial industrial property; authorizing the iron range resources and rehabilitation board (IRRRB) to purchase certain forest lands using money from the Douglas J. Johnson economic protection trust fund; providing for the transfer of funds; limiting the amount of money to be released from the taconite economic development fund; modifying certain tax on taconite and iron sulphides provisions; modifying certain aggregate material tax provisions; authorizing the town of Scambler in Ottertail county to impose an aggregate material (gravel) removal tax under conditions; establishing the Iron Range Miners memorial forest; appropriating money to the commissioner of education for general education aid; repealing taconite deductions from general education aid

ARTICLE 8 - LOCAL DEVELOPMENT

Authorizing and providing for the designation of the campus of the former state regional treatment center in the city of Fergus Falls as a tax free renaissance zone, specifying the duration limit for the zone; exempting individuals residing in the zone and qualified businesses operating in the zone from income and property taxes, providing for an historic preservation tax credit; exempting materials, supplies and equipment used in the construction, improvement, renovation or expansion of a legal reference office and data center facility from the sales tax; exempting building materials, supplies and equipment used for the construction of a biobusiness center in the city of Rochester from the sales tax; modifying the boundaries of the Giants Ridge recreation area and certain other provisions relating to the recreation area and tax increment financing (TIF) district; providing for additional border city enterprise and development zone allocations by the commissioner of employment and economic development (DEED) to western border cities for certain tax reductions; authorizing and providing for the designation of the campus of the former state regional treatment center in the city of Fergus Falls as a tax free renaissance zone, specifying the duration limit for the zone; exempting individuals residing in the zone and qualified businesses operating in the zone from income and property taxes, providing for an historic preservation tax credit; providing for Bloomington phase II computation; providing for authority of the successor to the Minneapolis community development agency relating to housing replacement projects; increasing the number of city parcel designations for housing replacement districts; designating a certain amount of money from a prior appropriation to the commissioner of employment and economic development (DEED) to be used by the commissioner for a study to determine the economic viability of business plans for international economic development zones; relating to the Bloomington mall of America; exempting from the sales tax building materials and supplies used for improvements within the tax increment financing (TIF) district in the city of Bloomington; extending the duration of the TIF district; authorizing city of Bloomington to eliminate certain sections of the TIF district and expand the boundaries to include certain other areas; appropriating money and authorizing the issuance of state bonds for the construction of a parking facility at the mall of America; authorizing and providing for a local taxing authority for the city of Bloomington; authorizing the city of Burnsville to create certain tax increment financing (TIF) district subject to certain special rules and limits; authorizing and providing for the city of Columbia Heights to create a tax increment financing (TIF) district subject to certain special rules; authorizing the establishment of a housing revitalization district; sunset provision; providing for the applicability of other laws; authorizing and providing for the city of Columbia Heights to create a tax increment financing (TIF) district subject to certain special rules; authorizing the establishment of a housing revitalization district; sunset provision; providing for the applicability of other laws; authorizing the city of Eagan to create economic development tax increment financing (TIF) districts subject to certain restrictions and rules; sunset provision; deeming Elgin, Eyota, Byron and Oronoco as small cities for TIF purposes upon local approval; authorizing the city of Faribault to expend revenues from a certain tax increment financing (TIF) district for improvements to the downtown improvement district; authorizing and providing for the city of Fridley to create a tax increment financing (TIF) district subject to certain special rules; authorizing the city of New Brighton to expend increments generated from a certain tax increment financing district to facilitate certain activities outside the district; authorizing the city of North St. Paul to expend available increments from certain tax increment financing (TIF) districts for certain eligible activities among the districts and for outside districts within the defined redevelopment project area; providing for the use of a certain prior appropriation to the city of Fergus Falls for security, heat and utility service to the regional treatment center; repealing the distribution of certain Burnsville tax increments

ARTICLE 9 - PUBLIC FINANCE

Providing terms and conditions relating to the issuance of obligations and the financing of public improvements and services; modifying certain collateral amount requirements for the deposit of local public funds; extending the time for repayment of certain school district certificates or notes for equipment purchases; eliminating the limit on certain mail elections by a county, municipality or school district; extending the time for certain publications of a public notice; modifying the definition of subordinate service district and defining special services for towns; modifying certain requirements for the establishment of a subordinate service districts by town boards and specifying certain duties of town boards, authorizing the issuance of bonds and certain covenants to secure obligations for subordinate service districts; modifying county subordinate service districts provisions, authorizing the issuance of bonds and certain covenants to secure obligations for subordinate service districts; extending the time for repayment of Hennepin county equipment acquisition capital notes, modifying the definition of equipment; eliminating the expiration date for a home rule charter city and city councils to issue capital notes for software; modifying certain special service district ordinance adoption requirements; modifying the definition of city for municipal gas distribution purposes; providing for grant anticipation financing of transportation or transit projects and specifying certain authority of the metropolitan council and political subdivisions; authorizing the issuance of obligations and specifying the use of proceeds; authorizing political subdivisions with an actuarial liability to pay postemployment benefits to create a trust to pay benefits; providing for a trust administrator; specifying account maintenance and investment provisions; providing for a limit on deposit, withdrawal of funds and termination of account and the status of the irrevocable fund; increasing the bonding authority of the metropolitan council to issue certificates of indebtedness, bonds or other obligations for metropolitan area transit and paratransit capital expenditures, limit; authorizing municipalities to issue bonds for postemployment benefits to retired officers and employees; modifying certain conditions for street reconstruction financing obligations; providing for the validation of trusts; authorizing the town of Crane Lake in St. Louis county to issue certificates of indebtedness for property acquisition related to land exchange with the United States forest service; requiring a tax levy to pay the principal and interest; athorizing the city of Winsted to issue bonds to finance the acquisition and betterment of a facility consisting of a city hall, community center and police station; for park improvements including trails and an amphitheater, related public improvements and landscaping for the improvements

ARTICLE 10 - SPECIAL TAXES

Exempting from the insurance premiums tax certain life insurance premiums paid by state employees group insurance program (SEGIP) members; extending the expiration date for the authority of Hennepin and Ramsey counties to impose mortgage registry and deed taxes; authorizing St. Louis, Dakota and Anoka counties to impose a deed and mortgage tax, requiring proceeds to be deposited in the environmental response fund; creating an environmental response fund for acquisition of polluted or contaminated lands and the paying of certain costs; requiring the counties to seek matching funds; authorizing the counties to issue bonds and resell land at fair market value; extending the temporary petrofund fee exemption for Minnesota commercial airlines

ARTICLE 11 - DEPARTMENT INCOME AND FRANCHISE TAXES

Modifying the determination of debt under the revenue recapture act; requiring birth dates to be included in income tax returns; modifying withholding statement requirements by electronic means provisions; clarifying regulated investment companies requirement to file reports with the commissioner of revenue; prescribing penalties for partnership of S corporation filing with an incorrect tax identification number; clarifying penalties for excessive property tax refunds; requiring tax preparers identification numbers; clarifying a work opportunity credit provision; modifying the bovine testing credit; modifying the inflation adjustment for the dependent care credit and working family credit; modifying the military service credit; modifying the inflation adjustment for the alternative minimum tax on preference items; modifying the definition of deposit for apportionment of net income purposes; modifying the definition of dependent for property tax refund purposes; modifying the determination of estate tax; providing for pollution control facilities amortization transition

ARTICLE 12 - DEPARTMENT SALES AND USE TAXES

Modifying provisions relating to bad debt loss; providing for the computation of interest for border city zone refunds; clarifying provisions relating to the penalty for failure to properly complete sales and use tax returns; prescribing a penalty for failure to report liquor sales; including the furnishing of telecommunication services by a hotel, rooming house, resort, campground or trailer camp under the definition of sale; excluding aggregate materials deposited substantially in place from the definition of sale; including pest control services in the definition of sale; including ring tones in the definition of sale and clarifying the definition of telecommunication services to include air to ground radiotelephone services, mobile telecommunication service, postpaid calling service, prepaid calling service, prepaid wireless calling service and private communication services; providing for bundled transactions as a retail sale, exception; clarifying the definition of delivery charges relating to sales price; providing for sales price to include consideration received by the seller from third parties under certain conditions; eliminating prepaid calling cards from the definition of tangible personal property; clarifying the definition of telecommunication services; defining bundled transaction, ancillary services, conference bridging service, detailed telecommunications billing service, directory assistance, vertical service, voice mail service, ring tone and fur clothing for sales tax purposes; clarifying the imposition of tax on the use of personal tangible property for bundled transactions; clarifying procedures for seller burden of proof liability for nontaxable retail sales; clarifying the definition of prepaid calling service; defining prepaid wireless calling service; providing for the sale on ancillary service to be sourced to the customer place of primary use; including breast pumps in the definition of baby products for sales tax exemption purposes; clarifying the business sales tax exemption for advertising and packing materials and telecommunications, cable television and direct satellite equipment; authorizing an entity containing both a hospital and nonprofit unit to claim sales tax exemption under certain conditions; exempting private communication service for the state lottery from the sales tax; modifying provisions relating to tax exempt certificates; requiring liquor sellers to file an annual informational report annually by a certain date; clarifying the definition of sales price for interstate motor carriers as retailers; clarifying the sales tax on motor vehicle exemption on vehicles purchased by dealers or lessors; requiring furriers to file annual tax returns; repealing provisions relating to special fur clothing tax, prepaid telephone cars, multiple points of use and property brought into the state by nonresidents

ARTICLE 13 - DEPARTMENT SPECIAL TAXES

Modifying joint underwriting associations deficit assessments; clarifying a premium tax provision under reciprocals or interinsurance contract exchange provisions; clarifying a provision relating to mortgage registry and deed tax exemptions; setting the deed tax for a conveyance of tax-forfeited lands to a governmental subdivision for an authorized public uses or for redevelopment purposes; clarifying certain gross revenue and gross receipts taxes provisions relating to pharmacies; reducing the threshold for nonapplicability of tobacco products use tax to individuals; requiring and providing for consumer use tax on cigarettes under certain conditions; modifying the exemption provisions for the surcharge on fire safety premiums; modifying the joint underwriting association offset provision, clarifying the estimated tax provision for insurance taxes;
imposing a penalty for failure to file informational returns

ARTICLE 14 - DEPARTMENT PROPERTY TAXES AND AIDS

Modifying provisions relating to the metropolitan county wheelage tax; modifying provisions relating to the airline flight property tax; modifying the definition of flight property to include computers and software; modifying the assessment of flight property; modifying airline company report requirements; clarifying airflight property tax lien provisions; imposing a penalty for failure of airline company to file annual report by the required date; granting additional powers to the commissioner of revenue; modifying the determination of tax capacity for flight property; modifying appeal procedures; modifying provisions relating to the state board of assessors, modifying fees and rule provisions; authorizing the commissioner of revenue to abate airline company report filing penalties under certain conditions; requiring a business to notify the county assessor in writing of eligibility for JOBZ property tax exemption; modifying certificate of value filing requirements for married persons not an owner of record; permitting cites and townships a certain period of time from the date of incorporation to employ a licensed assessor; requiring county or local assessing districts to assume the cost of training assessors; modifying certain agricultural homestead property tax provisions; modifying certain property tax classification provisions; modifying disparity reduction credit provisions; modifying certain provisions relating to express, stage and transportation companies and companies supplying electric power; modifying certain provisions relating to the board of appeal and equalization; requiring the commissioner of revenue to develop a handbook by a certain date detailing procedures, responsibilities and requirements for county board of appeal and equalization; authorizing notice of proposed property taxes to be sent in electronic form or by electronic mail (e-mail) upon written request of the taxpayer; requiring the commissioner of revenue to annually prescribe the specific form and format of the advertisement for proposed property tax notice requirements; modifying certain special taxing districts provisions; authorizing counties to send tax statements by electronic means upon written request of the real property owner; modifying procedures for partial payments of delinquent taxes; defining authorized public use for tax-forfeited land sales provisions; modifying deed of conveyance return provisions; requiring governmental subdivisions to pay recording fees; providing for commissioner of revenue conveyance of tax-forfeited lands to governmental subdivisions under certain conditions; modifying qualifying homesteads under the senior citizens property tax deferral program; modifying certain provisions under the sustainable resource management incentive program, providing for appeals; repealing certain provisions relating to examinations and investigations, the board of assessors and county board abatement of penalties

ARTICLE 15 - DEPARTMENT MISCELLANEOUS

Prohibiting tax refunds or other payments payable by the commissioner of revenue to a taxpayer from being assignable, subject to execution, levy, attachment, garnishment, lien foreclosure or other legal process except as provided by law; expanding the requirement for the commissioner to publish lists of convicted tax preparers to include tax preparers assessed penalties exceeding a certain amount; modifying provisions relating to the state reimbursement for volunteer firefighters retirement supplemental benefit payments

ARTICLE 16 - MISCELLANEOUS

Modifying commissioner of finance impact notes provisions; changing and clarifying tax data classification; eliminating the requirement for the commissioner of revenue to report to the governor and the legislature on local government units exceeding revenue targets; regulating and increasing the state budget reserve; requiring referring agencies to refer debts electronically to the commissioner of revenue for collection; modifying computation of debt; modifying the definition of claimant agency under the revenue recapture act to include cities for collections purposes; authorizing the commissioner of revenue to use tax return information for debt collection purposes; providing for a notice of lien filed with the office of secretary of state to be transcribed to any county for a certain period of time; providing for administration and declaration of class 1b homestead property; providing for independent determination of the value of all property includable in the gross estate of a decedent; modifying judgment of forfeiture provisions; creating a joint legislative subcommittee on sales tax; requiring the commissioner of revenue to maintain certain data for the legislature; providing for a budget reserve transfer contingency; repealing certain rebate requirements
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