<a id="pl.1.3"></a><var>1.3</var>agricultural property tax provisions; establishing a land conservation property <br/>
<a id="pl.1.4"></a><var>1.4</var>tax program; requiring a report;amending Minnesota Statutes 2008, sections <br/>
<a id="pl.1.5"></a><var>1.5</var>273.111, subdivisions 3, 3a, 9; 273.13, subdivision 23; 289A.02, subdivision 7; <br/>
<a id="pl.1.6"></a><var>1.6</var>290.01, subdivisions 19, 19a, 31; 290.067, subdivision 2a; 290A.03, subdivisions <br/>
<a id="pl.1.7"></a><var>1.7</var>3, 15; 291.005, subdivision 1; proposing coding for new law in Minnesota <br/>
<a id="pl.1.8"></a><var>1.8</var>Statutes, chapter 273.<br/>
<a id="pl.1.9"></a><var>1.9</var>BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:<br/>
<br/>
<a id="bill.1.0.0"></a>

<a id="bill.1.1.0"></a><a id="pl.1.12"></a><var>1.12</var>    Section 1. Minnesota Statutes 2008, section 289A.02, subdivision 7, is amended to <br/>
<a id="pl.1.13"></a><var>1.13</var>read:<br/>
<a id="pl.1.14"></a><var>1.14</var>    Subd. 7.  <b>Internal Revenue Code.</b> Unless specifically defined otherwise, "Internal <br/>
<a id="pl.1.15"></a><var>1.15</var>Revenue Code" means the Internal Revenue Code of 1986, as amended through February <br/>
<a id="pl.1.16"></a><var>1.16</var>13 June 17, 2008. <br/>
<a id="pl.1.17"></a><var>1.17</var><b>EFFECTIVE DATE.</b>This section is effective the day following final enactment, <br/>
<a id="pl.1.18"></a><var>1.18</var>except the changes incorporated by federal changes are effective at the same time as the <br/>
<a id="pl.1.19"></a><var>1.19</var>changes were effective for federal purposes.<br/>
<br/>
<a id="bill.1.2.0"></a><a id="pl.1.20"></a><var>1.20</var>    Sec. 2. Minnesota Statutes 2008, section 290.01, subdivision 19, is amended to read:<br/>
<a id="pl.1.21"></a><var>1.21</var>    Subd. 19.  <b>Net income.</b> The term "net income" means the federal taxable income, <br/>
<a id="pl.1.22"></a><var>1.22</var>as defined in section 63 of the Internal Revenue Code of 1986, as amended through the <br/>
<a id="pl.1.23"></a><var>1.23</var>date named in this subdivision, incorporating the federal effective dates of changes to the <br/>
<a id="pl.1.24"></a><var>1.24</var>Internal Revenue Code and any elections made by the taxpayer in accordance with the <br/>
<a id="pl.2.1"></a><var>2.1</var>Internal Revenue Code in determining federal taxable income for federal income tax <br/>
<a id="pl.2.2"></a><var>2.2</var>purposes, and with the modifications provided in subdivisions 19a to 19f. <br/>
<a id="pl.2.3"></a><var>2.3</var>    In the case of a regulated investment company or a fund thereof, as defined in section <br/>
<a id="pl.2.4"></a><var>2.4</var>851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment <br/>
<a id="pl.2.5"></a><var>2.5</var>company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, <br/>
<a id="pl.2.6"></a><var>2.6</var>except that: <br/>
<a id="pl.2.7"></a><var>2.7</var>    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal <br/>
<a id="pl.2.8"></a><var>2.8</var>Revenue Code does not apply; <br/>
<a id="pl.2.9"></a><var>2.9</var>    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal <br/>
<a id="pl.2.10"></a><var>2.10</var>Revenue Code must be applied by allowing a deduction for capital gain dividends and <br/>
<a id="pl.2.11"></a><var>2.11</var>exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal <br/>
<a id="pl.2.12"></a><var>2.12</var>Revenue Code; and <br/>
<a id="pl.2.13"></a><var>2.13</var>    (3) the deduction for dividends paid must also be applied in the amount of any <br/>
<a id="pl.2.14"></a><var>2.14</var>undistributed capital gains which the regulated investment company elects to have treated <br/>
<a id="pl.2.15"></a><var>2.15</var>as provided in section 852(b)(3)(D) of the Internal Revenue Code. <br/>
<a id="pl.2.16"></a><var>2.16</var>    The net income of a real estate investment trust as defined and limited by section <br/>
<a id="pl.2.17"></a><var>2.17</var>856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust <br/>
<a id="pl.2.18"></a><var>2.18</var>taxable income as defined in section 857(b)(2) of the Internal Revenue Code. <br/>
<a id="pl.2.19"></a><var>2.19</var>    The net income of a designated settlement fund as defined in section 468B(d) of <br/>
<a id="pl.2.20"></a><var>2.20</var>the Internal Revenue Code means the gross income as defined in section 468B(b) of the <br/>
<a id="pl.2.21"></a><var>2.21</var>Internal Revenue Code. <br/>
<a id="pl.2.22"></a><var>2.22</var>    The Internal Revenue Code of 1986, as amended through February 13 June 17, <br/>
<a id="pl.2.23"></a><var>2.23</var>2008, other than changes included in Public Law 110-234, and as amended by division C, <br/>
<a id="pl.2.24"></a><var>2.24</var>sections 202, 203, and 204 of Public Law 110-343 and sections 3012 and 3023 of Public <br/>
<a id="pl.2.25"></a><var>2.25</var>Law 110-289, shall be in effect for taxable years beginning after December 31, 1996. <br/>
<a id="pl.2.26"></a><var>2.26</var>    Except as otherwise provided, references to the Internal Revenue Code in <br/>
<a id="pl.2.27"></a><var>2.27</var>subdivisions 19 to 19f mean the code in effect for purposes of determining net income for <br/>
<a id="pl.2.28"></a><var>2.28</var>the applicable year. <br/>
<a id="pl.2.29"></a><var>2.29</var><b>EFFECTIVE DATE.</b>This section is effective for taxable years beginning after <br/>
<a id="pl.2.30"></a><var>2.30</var>December 31, 2007.<br/>
<br/>
<a id="bill.1.3.0"></a><a id="pl.2.31"></a><var>2.31</var>    Sec. 3. Minnesota Statutes 2008, section 290.01, subdivision 19a, is amended to read:<br/>
<a id="pl.2.32"></a><var>2.32</var>    Subd. 19a.  <b>Additions to federal taxable income.</b> For individuals, estates, and <br/>
<a id="pl.2.33"></a><var>2.33</var>trusts, there shall be added to federal taxable income: <br/>
<a id="pl.2.34"></a><var>2.34</var>    (1)(i) interest income on obligations of any state other than Minnesota or a political <br/>
<a id="pl.2.35"></a><var>2.35</var>or governmental subdivision, municipality, or governmental agency or instrumentality <br/>
<a id="pl.3.1"></a><var>3.1</var>of any state other than Minnesota exempt from federal income taxes under the Internal <br/>
<a id="pl.3.2"></a><var>3.2</var>Revenue Code or any other federal statute; and <br/>
<a id="pl.3.3"></a><var>3.3</var>    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue <br/>
<a id="pl.3.4"></a><var>3.4</var>Code, except the portion of the exempt-interest dividends derived from interest income <br/>
<a id="pl.3.5"></a><var>3.5</var>on obligations of the state of Minnesota or its political or governmental subdivisions, <br/>
<a id="pl.3.6"></a><var>3.6</var>municipalities, governmental agencies or instrumentalities, but only if the portion of the <br/>
<a id="pl.3.7"></a><var>3.7</var>exempt-interest dividends from such Minnesota sources paid to all shareholders represents <br/>
<a id="pl.3.8"></a><var>3.8</var>95 percent or more of the exempt-interest dividends that are paid by the regulated <br/>
<a id="pl.3.9"></a><var>3.9</var>investment company as defined in section 851(a) of the Internal Revenue Code, or the <br/>
<a id="pl.3.10"></a><var>3.10</var>fund of the regulated investment company as defined in section 851(g) of the Internal <br/>
<a id="pl.3.11"></a><var>3.11</var>Revenue Code, making the payment; and <br/>
<a id="pl.3.12"></a><var>3.12</var>(iii) For the purposes of items (i) and (ii) this clause, interest on obligations of an Indian <br/>
<a id="pl.3.13"></a><var>3.13</var>tribal government described in section 7871(c) of the Internal Revenue Code shall be <br/>
<a id="pl.3.14"></a><var>3.14</var>treated as interest income on obligations of the state in which the tribe is located;, and <br/>
<a id="pl.3.15"></a><var>3.15</var>interest and dividends from obligations guaranteed by a federal home loan bank are <br/>
<a id="pl.3.16"></a><var>3.16</var>considered exempt from federal taxation to the same extent that they are exempt under <br/>
<a id="pl.3.17"></a><var>3.17</var>section 3023 of Public Law 110-289; <br/>
<a id="pl.3.18"></a><var>3.18</var>    (2) the amount of income or sales and use taxes paid or accrued within the taxable <br/>
<a id="pl.3.19"></a><var>3.19</var>year under this chapter and the amount of taxes based on net income paid or sales and use <br/>
<a id="pl.3.20"></a><var>3.20</var>taxes paid to any other state or to any province or territory of Canada, to the extent allowed <br/>
<a id="pl.3.21"></a><var>3.21</var>as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not <br/>
<a id="pl.3.22"></a><var>3.22</var>be more than the amount by which the itemized deductions as allowed under section 63(d) <br/>
<a id="pl.3.23"></a><var>3.23</var>of the Internal Revenue Code exceeds the amount of the standard deduction as defined <br/>
<a id="pl.3.24"></a><var>3.24</var>in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the <br/>
<a id="pl.3.25"></a><var>3.25</var>disallowance of itemized deductions under section 68 of the Internal Revenue Code of <br/>
<a id="pl.3.26"></a><var>3.26</var>1986, income or sales and use tax is the last itemized deduction disallowed; <br/>
<a id="pl.3.27"></a><var>3.27</var>    (3) the capital gain amount of a lump-sum distribution to which the special tax under <br/>
<a id="pl.3.28"></a><var>3.28</var>section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies; <br/>
<a id="pl.3.29"></a><var>3.29</var>    (4) the amount of income taxes paid or accrued within the taxable year under this <br/>
<a id="pl.3.30"></a><var>3.30</var>chapter and taxes based on net income paid to any other state or any province or territory <br/>
<a id="pl.3.31"></a><var>3.31</var>of Canada, to the extent allowed as a deduction in determining federal adjusted gross <br/>
<a id="pl.3.32"></a><var>3.32</var>income. For the purpose of this paragraph, income taxes do not include the taxes imposed <br/>
<a id="pl.3.33"></a><var>3.33</var>by sections 
         <statute_ref>290.0922, subdivision 1</statute_ref>, paragraph (b), 
         <statute_ref>290.9727</statute_ref>, 
         <statute_ref>290.9728</statute_ref>, and 
         <statute_ref>290.9729</statute_ref>; <br/>
<a id="pl.3.34"></a><var>3.34</var>    (5) the amount of expense, interest, or taxes disallowed pursuant to section 
         <statute_ref>290.10 <br/>
</statute_ref><a id="pl.3.35"></a><var>3.35</var>other than expenses or interest used in computing net interest income for the subtraction <br/>
<a id="pl.3.36"></a><var>3.36</var>allowed under subdivision 19b, clause (1); <br/>
<a id="pl.4.1"></a><var>4.1</var>    (6) the amount of a partner's pro rata share of net income which does not flow <br/>
<a id="pl.4.2"></a><var>4.2</var>through to the partner because the partnership elected to pay the tax on the income under <br/>
<a id="pl.4.3"></a><var>4.3</var>section 6242(a)(2) of the Internal Revenue Code; <br/>
<a id="pl.4.4"></a><var>4.4</var>    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the <br/>
<a id="pl.4.5"></a><var>4.5</var>Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that <br/>
<a id="pl.4.6"></a><var>4.6</var>in the taxable year generates a deduction for depreciation under section 168(k) and the <br/>
<a id="pl.4.7"></a><var>4.7</var>activity generates a loss for the taxable year that the taxpayer is not allowed to claim for <br/>
<a id="pl.4.8"></a><var>4.8</var>the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is <br/>
<a id="pl.4.9"></a><var>4.9</var>limited to excess of the depreciation claimed by the activity under section 168(k) over the <br/>
<a id="pl.4.10"></a><var>4.10</var>amount of the loss from the activity that is not allowed in the taxable year. In succeeding <br/>
<a id="pl.4.11"></a><var>4.11</var>taxable years when the losses not allowed in the taxable year are allowed, the depreciation <br/>
<a id="pl.4.12"></a><var>4.12</var>under section 168(k) is allowed; <br/>
<a id="pl.4.13"></a><var>4.13</var>    (8) 80 percent of the amount by which the deduction allowed by section 179 of the <br/>
<a id="pl.4.14"></a><var>4.14</var>Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal <br/>
<a id="pl.4.15"></a><var>4.15</var>Revenue Code of 1986, as amended through December 31, 2003; <br/>
<a id="pl.4.16"></a><var>4.16</var>    (9) to the extent deducted in computing federal taxable income, the amount of the <br/>
<a id="pl.4.17"></a><var>4.17</var>deduction allowable under section 199 of the Internal Revenue Code; <br/>
<a id="pl.4.18"></a><var>4.18</var>    (10) the exclusion allowed under section 139A of the Internal Revenue Code for <br/>
<a id="pl.4.19"></a><var>4.19</var>federal subsidies for prescription drug plans; <br/>
<a id="pl.4.20"></a><var>4.20</var>(11) the amount of expenses disallowed under section 290.10, subdivision 2;<br/>
<a id="pl.4.21"></a><var>4.21</var>    (12) for taxable years beginning after December 31, 2006, and before January 1, <br/>
<a id="pl.4.22"></a><var>4.22</var>2008, the amount deducted for qualified tuition and related expenses under section 222 of <br/>
<a id="pl.4.23"></a><var>4.23</var>the Internal Revenue Code, to the extent deducted from gross income; and <br/>
<a id="pl.4.24"></a><var>4.24</var>    (13) for taxable years beginning after December 31, 2006, and before January 1, <br/>
<a id="pl.4.25"></a><var>4.25</var>2008, the amount deducted for certain expenses of elementary and secondary school <br/>
<a id="pl.4.26"></a><var>4.26</var>teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted <br/>
<a id="pl.4.27"></a><var>4.27</var>from gross income; and<br/>
<a id="pl.4.28"></a><var>4.28</var>(14) the additional standard deduction for property taxes payable that is allowable <br/>
<a id="pl.4.29"></a><var>4.29</var>under division C, section 204 of Public Law 110-343 or section 3012 of Public Law <br/>
<a id="pl.4.30"></a><var>4.30</var>110-289. <br/>
<a id="pl.4.31"></a><var>4.31</var><b>EFFECTIVE DATE.</b>This section is effective for taxable years beginning after <br/>
<a id="pl.4.32"></a><var>4.32</var>December 31, 2007.<br/>
<br/>
<a id="bill.1.4.0"></a><a id="pl.4.33"></a><var>4.33</var>    Sec. 4. Minnesota Statutes 2008, section 290.01, subdivision 31, is amended to read:<br/>
<a id="pl.5.1"></a><var>5.1</var>    Subd. 31.  <b>Internal Revenue Code.</b> Unless specifically defined otherwise, "Internal <br/>
<a id="pl.5.2"></a><var>5.2</var>Revenue Code" means the Internal Revenue Code of 1986, as amended through February <br/>
<a id="pl.5.3"></a><var>5.3</var>13 June 17, 2008. <br/>
<a id="pl.5.4"></a><var>5.4</var><b>EFFECTIVE DATE.</b>This section is effective the day following final enactment, <br/>
<a id="pl.5.5"></a><var>5.5</var>except the changes incorporated by federal changes are effective at the same time as the <br/>
<a id="pl.5.6"></a><var>5.6</var>changes were effective for federal purposes.<br/>
<br/>
<a id="bill.1.5.0"></a><a id="pl.5.7"></a><var>5.7</var>    Sec. 5. Minnesota Statutes 2008, section 290.067, subdivision 2a, is amended to read:<br/>
<a id="pl.5.8"></a><var>5.8</var>    Subd. 2a. <b>Income.</b> (a) For purposes of this section, "income" means the sum of <br/>
<a id="pl.5.9"></a><var>5.9</var>the following:<br/>
<a id="pl.5.10"></a><var>5.10</var>(1) federal adjusted gross income as defined in section 62 of the Internal Revenue <br/>
<a id="pl.5.11"></a><var>5.11</var>Code; and<br/>
<a id="pl.5.12"></a><var>5.12</var>(2) the sum of the following amounts to the extent not included in clause (1):<br/>
<a id="pl.5.13"></a><var>5.13</var>(i) all nontaxable income;<br/>
<a id="pl.5.14"></a><var>5.14</var>(ii) the amount of a passive activity loss that is not disallowed as a result of section <br/>
<a id="pl.5.15"></a><var>5.15</var>469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity <br/>
<a id="pl.5.16"></a><var>5.16</var>loss carryover allowed under section 469(b) of the Internal Revenue Code;<br/>
<a id="pl.5.17"></a><var>5.17</var>(iii) an amount equal to the total of any discharge of qualified farm indebtedness <br/>
<a id="pl.5.18"></a><var>5.18</var>of a solvent individual excluded from gross income under section 108(g) of the Internal <br/>
<a id="pl.5.19"></a><var>5.19</var>Revenue Code;<br/>
<a id="pl.5.20"></a><var>5.20</var>(iv) cash public assistance and relief;<br/>
<a id="pl.5.21"></a><var>5.21</var>(v) any pension or annuity (including railroad retirement benefits, all payments <br/>
<a id="pl.5.22"></a><var>5.22</var>received under the federal Social Security Act, supplemental security income, and veterans <br/>
<a id="pl.5.23"></a><var>5.23</var>benefits), which was not exclusively funded by the claimant or spouse, or which was <br/>
<a id="pl.5.24"></a><var>5.24</var>funded exclusively by the claimant or spouse and which funding payments were excluded <br/>
<a id="pl.5.25"></a><var>5.25</var>from federal adjusted gross income in the years when the payments were made;<br/>
<a id="pl.5.26"></a><var>5.26</var>(vi) interest received from the federal or a state government or any instrumentality <br/>
<a id="pl.5.27"></a><var>5.27</var>or political subdivision thereof;<br/>
<a id="pl.5.28"></a><var>5.28</var>(vii) workers' compensation;<br/>
<a id="pl.5.29"></a><var>5.29</var>(viii) nontaxable strike benefits;<br/>
<a id="pl.5.30"></a><var>5.30</var>(ix) the gross amounts of payments received in the nature of disability income or <br/>
<a id="pl.5.31"></a><var>5.31</var>sick pay as a result of accident, sickness, or other disability, whether funded through <br/>
<a id="pl.5.32"></a><var>5.32</var>insurance or otherwise;<br/>
<a id="pl.5.33"></a><var>5.33</var>(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of <br/>
<a id="pl.5.34"></a><var>5.34</var>1986, as amended through December 31, 1995;<br/>
<a id="pl.6.1"></a><var>6.1</var>(xi) contributions made by the claimant to an individual retirement account, <br/>
<a id="pl.6.2"></a><var>6.2</var>including a qualified voluntary employee contribution; simplified employee pension plan; <br/>
<a id="pl.6.3"></a><var>6.3</var>self-employed retirement plan; cash or deferred arrangement plan under section 401(k) <br/>
<a id="pl.6.4"></a><var>6.4</var>of the Internal Revenue Code; or deferred compensation plan under section 457 of the <br/>
<a id="pl.6.5"></a><var>6.5</var>Internal Revenue Code;<br/>
<a id="pl.6.6"></a><var>6.6</var>(xii) nontaxable scholarship or fellowship grants;<br/>
<a id="pl.6.7"></a><var>6.7</var>(xiii) the amount of deduction allowed under section 199 of the Internal Revenue <br/>
<a id="pl.6.8"></a><var>6.8</var>Code; and<br/>
<a id="pl.6.9"></a><var>6.9</var>(xiv) the amount of deduction allowed under section 220 or 223 of the Internal <br/>
<a id="pl.6.10"></a><var>6.10</var>Revenue Code; and<br/>
<a id="pl.6.11"></a><var>6.11</var>(xv) the amount of tuition expenses and educator expenses required to be added to <br/>
<a id="pl.6.12"></a><var>6.12</var>income under section 290.01, subdivision 19a, clauses (12) and (13).<br/>
<a id="pl.6.13"></a><var>6.13</var>In the case of an individual who files an income tax return on a fiscal year basis, the <br/>
<a id="pl.6.14"></a><var>6.14</var>term "federal adjusted gross income" means federal adjusted gross income reflected in the <br/>
<a id="pl.6.15"></a><var>6.15</var>fiscal year ending in the next calendar year. Federal adjusted gross income may not be <br/>
<a id="pl.6.16"></a><var>6.16</var>reduced by the amount of a net operating loss carryback or carryforward or a capital loss <br/>
<a id="pl.6.17"></a><var>6.17</var>carryback or carryforward allowed for the year.<br/>
<a id="pl.6.18"></a><var>6.18</var>(b) "Income" does not include:<br/>
<a id="pl.6.19"></a><var>6.19</var>(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and <br/>
<a id="pl.6.20"></a><var>6.20</var>102;<br/>
<a id="pl.6.21"></a><var>6.21</var>(2) amounts of any pension or annuity that were exclusively funded by the claimant <br/>
<a id="pl.6.22"></a><var>6.22</var>or spouse if the funding payments were not excluded from federal adjusted gross income <br/>
<a id="pl.6.23"></a><var>6.23</var>in the years when the payments were made;<br/>
<a id="pl.6.24"></a><var>6.24</var>(3) surplus food or other relief in kind supplied by a governmental agency;<br/>
<a id="pl.6.25"></a><var>6.25</var>(4) relief granted under chapter 290A;<br/>
<a id="pl.6.26"></a><var>6.26</var>(5) child support payments received under a temporary or final decree of dissolution <br/>
<a id="pl.6.27"></a><var>6.27</var>or legal separation; and<br/>
<a id="pl.6.28"></a><var>6.28</var>(6) restitution payments received by eligible individuals and excludable interest as <br/>
<a id="pl.6.29"></a><var>6.29</var>defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of <br/>
<a id="pl.6.30"></a><var>6.30</var>2001, Public Law 107-16.<br/>
<a id="pl.6.31"></a><var>6.31</var><b>EFFECTIVE DATE.</b>This section is effective for taxable years beginning after <br/>
<a id="pl.6.32"></a><var>6.32</var>December 31, 2007.<br/>
<br/>
<a id="bill.1.6.0"></a><a id="pl.6.33"></a><var>6.33</var>    Sec. 6. Minnesota Statutes 2008, section 290A.03, subdivision 3, is amended to read:<br/>
<a id="pl.6.34"></a><var>6.34</var>    Subd. 3. <b>Income.</b> (1) "Income" means the sum of the following:<br/>
<a id="pl.6.35"></a><var>6.35</var>(a) federal adjusted gross income as defined in the Internal Revenue Code; and<br/>
<a id="pl.7.1"></a><var>7.1</var>(b) the sum of the following amounts to the extent not included in clause (a):<br/>
<a id="pl.7.2"></a><var>7.2</var>(i) all nontaxable income;<br/>
<a id="pl.7.3"></a><var>7.3</var>(ii) the amount of a passive activity loss that is not disallowed as a result of section <br/>
<a id="pl.7.4"></a><var>7.4</var>469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity <br/>
<a id="pl.7.5"></a><var>7.5</var>loss carryover allowed under section 469(b) of the Internal Revenue Code;<br/>
<a id="pl.7.6"></a><var>7.6</var>(iii) an amount equal to the total of any discharge of qualified farm indebtedness <br/>
<a id="pl.7.7"></a><var>7.7</var>of a solvent individual excluded from gross income under section 108(g) of the Internal <br/>
<a id="pl.7.8"></a><var>7.8</var>Revenue Code;<br/>
<a id="pl.7.9"></a><var>7.9</var>(iv) cash public assistance and relief;<br/>
<a id="pl.7.10"></a><var>7.10</var>(v) any pension or annuity (including railroad retirement benefits, all payments <br/>
<a id="pl.7.11"></a><var>7.11</var>received under the federal Social Security Act, Supplemental Security Income, and <br/>
<a id="pl.7.12"></a><var>7.12</var>veterans benefits), which was not exclusively funded by the claimant or spouse, or which <br/>
<a id="pl.7.13"></a><var>7.13</var>was funded exclusively by the claimant or spouse and which funding payments were <br/>
<a id="pl.7.14"></a><var>7.14</var>excluded from federal adjusted gross income in the years when the payments were made;<br/>
<a id="pl.7.15"></a><var>7.15</var>(vi) interest received from the federal or a state government or any instrumentality <br/>
<a id="pl.7.16"></a><var>7.16</var>or political subdivision thereof;<br/>
<a id="pl.7.17"></a><var>7.17</var>(vii) workers' compensation;<br/>
<a id="pl.7.18"></a><var>7.18</var>(viii) nontaxable strike benefits;<br/>
<a id="pl.7.19"></a><var>7.19</var>(ix) the gross amounts of payments received in the nature of disability income or <br/>
<a id="pl.7.20"></a><var>7.20</var>sick pay as a result of accident, sickness, or other disability, whether funded through <br/>
<a id="pl.7.21"></a><var>7.21</var>insurance or otherwise;<br/>
<a id="pl.7.22"></a><var>7.22</var>(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of <br/>
<a id="pl.7.23"></a><var>7.23</var>1986, as amended through December 31, 1995;<br/>
<a id="pl.7.24"></a><var>7.24</var>(xi) contributions made by the claimant to an individual retirement account, <br/>
<a id="pl.7.25"></a><var>7.25</var>including a qualified voluntary employee contribution; simplified employee pension plan; <br/>
<a id="pl.7.26"></a><var>7.26</var>self-employed retirement plan; cash or deferred arrangement plan under section 401(k) <br/>
<a id="pl.7.27"></a><var>7.27</var>of the Internal Revenue Code; or deferred compensation plan under section 457 of the <br/>
<a id="pl.7.28"></a><var>7.28</var>Internal Revenue Code;<br/>
<a id="pl.7.29"></a><var>7.29</var>(xii) nontaxable scholarship or fellowship grants;<br/>
<a id="pl.7.30"></a><var>7.30</var>(xiii) the amount of deduction allowed under section 199 of the Internal Revenue <br/>
<a id="pl.7.31"></a><var>7.31</var>Code; and<br/>
<a id="pl.7.32"></a><var>7.32</var>(xiv) the amount of deduction allowed under section 220 or 223 of the Internal <br/>
<a id="pl.7.33"></a><var>7.33</var>Revenue Code; and<br/>
<a id="pl.7.34"></a><var>7.34</var>(xv) the amount of tuition expenses and educator expenses required to be added to <br/>
<a id="pl.7.35"></a><var>7.35</var>income under section 290.01, subdivision 19a, clauses (12) and (13).<br/>
<a id="pl.8.1"></a><var>8.1</var>In the case of an individual who files an income tax return on a fiscal year basis, the <br/>
<a id="pl.8.2"></a><var>8.2</var>term "federal adjusted gross income" shall mean federal adjusted gross income reflected <br/>
<a id="pl.8.3"></a><var>8.3</var>in the fiscal year ending in the calendar year. Federal adjusted gross income shall not be <br/>
<a id="pl.8.4"></a><var>8.4</var>reduced by the amount of a net operating loss carryback or carryforward or a capital loss <br/>
<a id="pl.8.5"></a><var>8.5</var>carryback or carryforward allowed for the year.<br/>
<a id="pl.8.6"></a><var>8.6</var>(2) "Income" does not include:<br/>
<a id="pl.8.7"></a><var>8.7</var>(a) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and <br/>
<a id="pl.8.8"></a><var>8.8</var>102;<br/>
<a id="pl.8.9"></a><var>8.9</var>(b) amounts of any pension or annuity which was exclusively funded by the claimant <br/>
<a id="pl.8.10"></a><var>8.10</var>or spouse and which funding payments were not excluded from federal adjusted gross <br/>
<a id="pl.8.11"></a><var>8.11</var>income in the years when the payments were made;<br/>
<a id="pl.8.12"></a><var>8.12</var>(c) surplus food or other relief in kind supplied by a governmental agency;<br/>
<a id="pl.8.13"></a><var>8.13</var>(d) relief granted under this chapter;<br/>
<a id="pl.8.14"></a><var>8.14</var>(e) child support payments received under a temporary or final decree of dissolution <br/>
<a id="pl.8.15"></a><var>8.15</var>or legal separation; or<br/>
<a id="pl.8.16"></a><var>8.16</var>(f) restitution payments received by eligible individuals and excludable interest as <br/>
<a id="pl.8.17"></a><var>8.17</var>defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of <br/>
<a id="pl.8.18"></a><var>8.18</var>2001, Public Law 107-16.<br/>
<a id="pl.8.19"></a><var>8.19</var>(3) The sum of the following amounts may be subtracted from income:<br/>
<a id="pl.8.20"></a><var>8.20</var>(a) for the claimant's first dependent, the exemption amount multiplied by 1.4;<br/>
<a id="pl.8.21"></a><var>8.21</var>(b) for the claimant's second dependent, the exemption amount multiplied by 1.3;<br/>
<a id="pl.8.22"></a><var>8.22</var>(c) for the claimant's third dependent, the exemption amount multiplied by 1.2;<br/>
<a id="pl.8.23"></a><var>8.23</var>(d) for the claimant's fourth dependent, the exemption amount multiplied by 1.1;<br/>
<a id="pl.8.24"></a><var>8.24</var>(e) for the claimant's fifth dependent, the exemption amount; and<br/>
<a id="pl.8.25"></a><var>8.25</var>(f) if the claimant or claimant's spouse was disabled or attained the age of 65 <br/>
<a id="pl.8.26"></a><var>8.26</var>on or before December 31 of the year for which the taxes were levied or rent paid, the <br/>
<a id="pl.8.27"></a><var>8.27</var>exemption amount.<br/>
<a id="pl.8.28"></a><var>8.28</var>For purposes of this subdivision, the "exemption amount" means the exemption <br/>
<a id="pl.8.29"></a><var>8.29</var>amount under section 151(d) of the Internal Revenue Code for the taxable year for which <br/>
<a id="pl.8.30"></a><var>8.30</var>the income is reported.<br/>
<a id="pl.8.31"></a><var>8.31</var><b>EFFECTIVE DATE.</b>This section is effective for property tax refunds based on <br/>
<a id="pl.8.32"></a><var>8.32</var>property taxes payable after December 31, 2008, and rent paid after December 31, 2007.<br/>
<br/>
<a id="bill.1.7.0"></a><a id="pl.8.33"></a><var>8.33</var>    Sec. 7. Minnesota Statutes 2008, section 290A.03, subdivision 15, is amended to read:<br/>
<a id="pl.8.34"></a><var>8.34</var>    Subd. 15.  <b>Internal Revenue Code.</b>  "Internal Revenue Code" means the Internal <br/>
<a id="pl.8.35"></a><var>8.35</var>Revenue Code of 1986, as amended through February 13 June 17, 2008. <br/>
<a id="pl.9.1"></a><var>9.1</var><b>EFFECTIVE DATE.</b>This section is effective for property tax refunds based on <br/>
<a id="pl.9.2"></a><var>9.2</var>property taxes payable after December 31, 2008, and rent paid after December 31, 2007.<br/>
<br/>
<a id="bill.1.8.0"></a><a id="pl.9.3"></a><var>9.3</var>    Sec. 8. Minnesota Statutes 2008, section 291.005, subdivision 1, is amended to read:<br/>
<a id="pl.9.4"></a><var>9.4</var>    Subdivision 1.  <b>Scope.</b> Unless the context otherwise clearly requires, the following <br/>
<a id="pl.9.5"></a><var>9.5</var>terms used in this chapter shall have the following meanings: <br/>
<a id="pl.9.6"></a><var>9.6</var>    (1) "Federal gross estate" means the gross estate of a decedent as valued and <br/>
<a id="pl.9.7"></a><var>9.7</var>otherwise determined for federal estate tax purposes by federal taxing authorities pursuant <br/>
<a id="pl.9.8"></a><var>9.8</var>to the provisions of the Internal Revenue Code. <br/>
<a id="pl.9.9"></a><var>9.9</var>    (2) "Minnesota gross estate" means the federal gross estate of a decedent after (a) <br/>
<a id="pl.9.10"></a><var>9.10</var>excluding therefrom any property included therein which has its situs outside Minnesota, <br/>
<a id="pl.9.11"></a><var>9.11</var>and (b) including therein any property omitted from the federal gross estate which is <br/>
<a id="pl.9.12"></a><var>9.12</var>includable therein, has its situs in Minnesota, and was not disclosed to federal taxing <br/>
<a id="pl.9.13"></a><var>9.13</var>authorities. <br/>
<a id="pl.9.14"></a><var>9.14</var>    (3) "Personal representative" means the executor, administrator or other person <br/>
<a id="pl.9.15"></a><var>9.15</var>appointed by the court to administer and dispose of the property of the decedent. If there <br/>
<a id="pl.9.16"></a><var>9.16</var>is no executor, administrator or other person appointed, qualified, and acting within this <br/>
<a id="pl.9.17"></a><var>9.17</var>state, then any person in actual or constructive possession of any property having a situs in <br/>
<a id="pl.9.18"></a><var>9.18</var>this state which is included in the federal gross estate of the decedent shall be deemed <br/>
<a id="pl.9.19"></a><var>9.19</var>to be a personal representative to the extent of the property and the Minnesota estate tax <br/>
<a id="pl.9.20"></a><var>9.20</var>due with respect to the property. <br/>
<a id="pl.9.21"></a><var>9.21</var>    (4) "Resident decedent" means an individual whose domicile at the time of death <br/>
<a id="pl.9.22"></a><var>9.22</var>was in Minnesota. <br/>
<a id="pl.9.23"></a><var>9.23</var>    (5) "Nonresident decedent" means an individual whose domicile at the time of <br/>
<a id="pl.9.24"></a><var>9.24</var>death was not in Minnesota. <br/>
<a id="pl.9.25"></a><var>9.25</var>    (6) "Situs of property" means, with respect to real property, the state or country in <br/>
<a id="pl.9.26"></a><var>9.26</var>which it is located; with respect to tangible personal property, the state or country in which <br/>
<a id="pl.9.27"></a><var>9.27</var>it was normally kept or located at the time of the decedent's death; and with respect to <br/>
<a id="pl.9.28"></a><var>9.28</var>intangible personal property, the state or country in which the decedent was domiciled <br/>
<a id="pl.9.29"></a><var>9.29</var>at death. <br/>
<a id="pl.9.30"></a><var>9.30</var>    (7) "Commissioner" means the commissioner of revenue or any person to whom the <br/>
<a id="pl.9.31"></a><var>9.31</var>commissioner has delegated functions under this chapter. <br/>
<a id="pl.9.32"></a><var>9.32</var>    (8) "Internal Revenue Code" means the United States Internal Revenue Code of <br/>
<a id="pl.9.33"></a><var>9.33</var>1986, as amended through February 13 June 17, 2008. <br/>
<a id="pl.10.1"></a><var>10.1</var>    (9) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as <br/>
<a id="pl.10.2"></a><var>10.2</var>defined by section 2011(b)(3) of the Internal Revenue Code, increased by the amount of <br/>
<a id="pl.10.3"></a><var>10.3</var>deduction for state death taxes allowed under section 2058 of the Internal Revenue Code. <br/>
<a id="pl.10.4"></a><var>10.4</var><b>EFFECTIVE DATE.</b>This section is effective the day following final enactment, <br/>
<a id="pl.10.5"></a><var>10.5</var>except the changes incorporated by federal changes are effective at the same time as the <br/>
<a id="pl.10.6"></a><var>10.6</var>changes were effective for federal purposes.<br/>
<br/>
<a id="bill.1.9.0"></a><a id="pl.10.7"></a><var>10.7</var>    Sec. 9. <b>WITHHOLDING ON DIFFERENTIAL PAY.</b><br/>
<a id="pl.10.8"></a><var>10.8</var>The commissioner must not assess tax, penalty, or interest against an employer for <br/>
<a id="pl.10.9"></a><var>10.9</var>failing to withhold tax from differential wages, as defined in Internal Revenue Code, <br/>
<a id="pl.10.10"></a><var>10.10</var>section 3401(h)(2), paid before January 1, 2010, to an employee who has been called to <br/>
<a id="pl.10.11"></a><var>10.11</var>active duty in the military services.<br/>
<a id="pl.10.12"></a><var>10.12</var><b>EFFECTIVE DATE.</b>This section is effective the day following final enactment.<br/>
<br/>
<a id="bill.1.10.0"></a><a id="pl.10.13"></a><var>10.13</var>    Sec. 10. <b>MINNESOTA HOUSING BONDS EXCLUDED FROM INDIVIDUAL </b><br/>
<a id="pl.10.14"></a><var>10.14</var><b>ALTERNATIVE MINIMUM TAXABLE INCOME.</b><br/>
<a id="pl.10.15"></a><var>10.15</var>Except to the extent includable in alternative minimum taxable income pursuant to <br/>
<a id="pl.10.16"></a><var>10.16</var>Minnesota Statutes, section 290.091, subdivision 2, paragraph (a), clause (5), alternative <br/>
<a id="pl.10.17"></a><var>10.17</var>minimum taxable income under Minnesota Statutes, section 290.091, subdivision 2, <br/>
<a id="pl.10.18"></a><var>10.18</var>paragraph (a), does not include interest or dividends paid from certain housing bonds <br/>
<a id="pl.10.19"></a><var>10.19</var>described in section 3022(a) of Public Law 110-289, to the extent the obligations <br/>
<a id="pl.10.20"></a><var>10.20</var>are issued by Minnesota or a political or governmental subdivision, municipality, or <br/>
<a id="pl.10.21"></a><var>10.21</var>governmental agency or instrumentality of Minnesota.<br/>
<a id="pl.10.22"></a><var>10.22</var><b>EFFECTIVE DATE.</b>This section is effective for taxable years beginning after <br/>
<a id="pl.10.23"></a><var>10.23</var>December 31, 2007, and applies to interest and dividends paid on bonds issued after <br/>
<a id="pl.10.24"></a><var>10.24</var>July 30, 2008.<br/>
<br/>
<a id="bill.2.0.0"></a>

<a id="bill.2.1.0"></a><a id="pl.10.27"></a><var>10.27</var>    Section 1. Minnesota Statutes 2008, section 273.111, subdivision 3, is amended to read:<br/>
<a id="pl.10.28"></a><var>10.28</var>    Subd. 3.  <b>Requirements.</b> (a) Real estate consisting of ten acres or more or a nursery <br/>
<a id="pl.10.29"></a><var>10.29</var>or greenhouse, and qualifying for classification as class 2a under section 
         <statute_ref>273.13, </statute_ref>shall be <br/>
<a id="pl.10.30"></a><var>10.30</var>entitled to valuation and tax deferment under this section if it is primarily devoted to <br/>
<a id="pl.10.31"></a><var>10.31</var>agricultural use, and either: <br/>
<a id="pl.11.1"></a><var>11.1</var>    (1) is the homestead of the owner, or of a surviving spouse, child, or sibling of the <br/>
<a id="pl.11.2"></a><var>11.2</var>owner or is real estate which is farmed with the real estate which contains the homestead <br/>
<a id="pl.11.3"></a><var>11.3</var>property; or <br/>
<a id="pl.11.4"></a><var>11.4</var>    (2) has been in possession of the applicant, the applicant's spouse, parent, or sibling, <br/>
<a id="pl.11.5"></a><var>11.5</var>or any combination thereof, for a period of at least seven years prior to application for <br/>
<a id="pl.11.6"></a><var>11.6</var>benefits under the provisions of this section, or is real estate which is farmed with the <br/>
<a id="pl.11.7"></a><var>11.7</var>real estate which qualifies under this clause and is within four townships or cities or <br/>
<a id="pl.11.8"></a><var>11.8</var>combination thereof from the qualifying real estate; or <br/>
<a id="pl.11.9"></a><var>11.9</var>    (3) is the homestead of an individual who is part of an entity described in paragraph <br/>
<a id="pl.11.10"></a><var>11.10</var>(b), clause (1), (2), or (3); or <br/>
<a id="pl.11.11"></a><var>11.11</var>    (4) is in the possession of a nursery or greenhouse or an entity owned by a proprietor, <br/>
<a id="pl.11.12"></a><var>11.12</var>partnership, or corporation which also owns the nursery or greenhouse operations on the <br/>
<a id="pl.11.13"></a><var>11.13</var>parcel or parcels, provided that only the acres used to produce nursery stock qualify <br/>
<a id="pl.11.14"></a><var>11.14</var>for treatment under this section. <br/>
<a id="pl.11.15"></a><var>11.15</var>    (b) Valuation of real estate under this section is limited to parcels owned by <br/>
<a id="pl.11.16"></a><var>11.16</var>individuals except for: <br/>
<a id="pl.11.17"></a><var>11.17</var>    (1) a family farm entity or authorized farm entity regulated under section 
         <statute_ref>500.24</statute_ref>; <br/>
<a id="pl.11.18"></a><var>11.18</var>    (2) a poultry entity other than a limited liability entity in which the majority of the <br/>
<a id="pl.11.19"></a><var>11.19</var>members, partners, or shareholders are related and at least one of the members, partners, <br/>
<a id="pl.11.20"></a><var>11.20</var>or shareholders either resides on the land or actively operates the land; and<br/>
<a id="pl.11.21"></a><var>11.21</var>    (3) corporations that derive 80 percent or more of their gross receipts from the <br/>
<a id="pl.11.22"></a><var>11.22</var>wholesale or retail sale of horticultural or nursery stock. <br/>
<a id="pl.11.23"></a><var>11.23</var>    The terms in this paragraph have the meanings given in section 
         <statute_ref>500.24</statute_ref>, where <br/>
<a id="pl.11.24"></a><var>11.24</var>applicable.<br/>
<a id="pl.11.25"></a><var>11.25</var>    (c) Land that previously qualified for tax deferment under this section and no longer <br/>
<a id="pl.11.26"></a><var>11.26</var>qualifies because it is not primarily used for agricultural purposes but would otherwise <br/>
<a id="pl.11.27"></a><var>11.27</var>qualify under Minnesota Statutes 2006, section 
         <statute_ref>273.111</statute_ref>, subdivision 3, for a period of at <br/>
<a id="pl.11.28"></a><var>11.28</var>least three years will not be required to make payment of the previously deferred taxes, <br/>
<a id="pl.11.29"></a><var>11.29</var>notwithstanding the provisions of subdivision 9. Sale of the land prior to the expiration <br/>
<a id="pl.11.30"></a><var>11.30</var>of the three-year period requires payment of deferred taxes as follows: sale in the year <br/>
<a id="pl.11.31"></a><var>11.31</var>the land no longer qualifies requires payment of the current year's deferred taxes plus <br/>
<a id="pl.11.32"></a><var>11.32</var>payment of deferred taxes for the two prior years; sale during the second year the land <br/>
<a id="pl.11.33"></a><var>11.33</var>no longer qualifies requires payment of the current year's deferred taxes plus payment of <br/>
<a id="pl.11.34"></a><var>11.34</var>the deferred taxes for the prior year; and sale during the third year the land no longer <br/>
<a id="pl.11.35"></a><var>11.35</var>qualifies requires payment of the current year's deferred taxes. Deferred taxes shall be <br/>
<a id="pl.11.36"></a><var>11.36</var>paid even if the land qualifies pursuant to subdivision 11a. When such property is sold or <br/>
<a id="pl.12.1"></a><var>12.1</var>no longer qualifies under this paragraph, or at the end of the three-year period, whichever <br/>
<a id="pl.12.2"></a><var>12.2</var>comes first, all deferred special assessments plus interest are payable in equal installments <br/>
<a id="pl.12.3"></a><var>12.3</var>spread over the time remaining until the last maturity date of the bonds issued to finance <br/>
<a id="pl.12.4"></a><var>12.4</var>the improvement for which the assessments were levied. If the bonds have matured, the <br/>
<a id="pl.12.5"></a><var>12.5</var>deferred special assessments plus interest are payable within 90 days. The provisions of <br/>
<a id="pl.12.6"></a><var>12.6</var>section 
         <statute_ref>429.061, subdivision 2</statute_ref>, apply to the collection of these installments. Penalties are <br/>
<a id="pl.12.7"></a><var>12.7</var>not imposed on any such special assessments if timely paid. <br/>
<a id="pl.12.8"></a><var>12.8</var>    (d) Land that is enrolled in the reinvest in Minnesota program under sections <br/>
<a id="pl.12.9"></a><var>12.9</var><statute_ref>103F.501</statute_ref> to 
<statute_ref>103F.535</statute_ref>, the federal Conservation Reserve Program as contained in Public <br/>
<a id="pl.12.10"></a><var>12.10</var>Law 99-198, or a similar state or federal conservation program does not qualify for <br/>
<a id="pl.12.11"></a><var>12.11</var>valuation and assessment deferral under this section. This paragraph applies to land that <br/>
<a id="pl.12.12"></a><var>12.12</var>has not qualified under this section for taxes payable in 2009 or previous years.<br/>
<a id="pl.12.13"></a><var>12.13</var><b>EFFECTIVE DATE.</b>This section is effective the day following final enactment.<br/>
<br/>
<a id="bill.2.2.0"></a><a id="pl.12.14"></a><var>12.14</var>    Sec. 2. Minnesota Statutes 2008, section 273.111, subdivision 3a, is amended to read:<br/>
<a id="pl.12.15"></a><var>12.15</var>    Subd. 3a. <b>Property no longer eligible for deferment.</b> (a) Real estate receiving <br/>
<a id="pl.12.16"></a><var>12.16</var>the tax deferment under this section for assessment year 2008, but that does not qualify <br/>
<a id="pl.12.17"></a><var>12.17</var>for the 2009 assessment year due to changes in qualification requirements under Laws <br/>
<a id="pl.12.18"></a><var>12.18</var>2008, chapter 366, shall continue to qualify until any part of: (1) the land is sold, <br/>
<a id="pl.12.19"></a><var>12.19</var>transferred, or subdivided, or (2) the 2013 assessment, whichever is earlier, provided that <br/>
<a id="pl.12.20"></a><var>12.20</var>the property continues to meet the requirements of Minnesota Statutes 2006, section <br/>
<statute_ref><a id="pl.12.21"></a><var>12.21</var>273.111, subdivision 3
         </statute_ref>.<br/>
<a id="pl.12.22"></a><var>12.22</var>    (b) Except as provided in paragraph (c), and subdivision 9, paragraph (b), when <br/>
<a id="pl.12.23"></a><var>12.23</var>property assessed under this subdivision is withdrawn from the program or becomes <br/>
<a id="pl.12.24"></a><var>12.24</var>ineligible, the property shall be subject to additional taxes, in the amount equal to the <br/>
<a id="pl.12.25"></a><var>12.25</var>average difference between the taxes determined in accordance with subdivision 4, and the <br/>
<a id="pl.12.26"></a><var>12.26</var>amount determined under subdivision 5, for the current year and the two preceding years, <br/>
<a id="pl.12.27"></a><var>12.27</var>multiplied by (1) three, in the case of class 2a property under section 
<statute_ref>273.13, subdivision <br/>
<a id="pl.12.28"></a><var>12.28</var>23
</statute_ref>, or any property withdrawn before January 2, 2009, or (2) seven, in the case of property <br/>
<a id="pl.12.29"></a><var>12.29</var>withdrawn after January 2, 2009, that is not class 2a property. The number of years used as <br/>
<a id="pl.12.30"></a><var>12.30</var>the multiplier must not exceed the number of years during which the property was subject <br/>
<a id="pl.12.31"></a><var>12.31</var>to this section. The amount determined under subdivision 5 shall not be greater than it <br/>
<a id="pl.12.32"></a><var>12.32</var>would have been had the actual bona fide sale price of the real property at an arm's-length <br/>
<a id="pl.12.33"></a><var>12.33</var>transaction been used in lieu of the market value determined under subdivision 5. The <br/>
<a id="pl.12.34"></a><var>12.34</var>additional taxes shall be extended against the property on the tax list for the current year, <br/>
<a id="pl.13.1"></a><var>13.1</var>provided that no interest or penalties shall be levied on the additional taxes if timely <br/>
<a id="pl.13.2"></a><var>13.2</var>paid as provided in subdivision 9.<br/>
<a id="pl.13.3"></a><var>13.3</var>(c) If land described in paragraph (a) is sold or otherwise transferred to a son or <br/>
<a id="pl.13.4"></a><var>13.4</var>daughter of the owner, it will continue to qualify for treatment under this section as long <br/>
<a id="pl.13.5"></a><var>13.5</var>as it continues to meet the requirements of section 273.111, subdivision 3.<br/>
<a id="pl.13.6"></a><var>13.6</var>(d) When property assessed under this subdivision is removed from the program <br/>
<a id="pl.13.7"></a><var>13.7</var>and is enrolled in the land conservation property tax law program under section 273.114, <br/>
<a id="pl.13.8"></a><var>13.8</var>the property is not subject to the additional taxes required under this subdivision or <br/>
<a id="pl.13.9"></a><var>13.9</var>subdivision 9.<br/>
<a id="pl.13.10"></a><var>13.10</var><b>EFFECTIVE DATE.</b>This section is effective the day following final enactment.<br/>
<br/>
<a id="bill.2.3.0"></a><a id="pl.13.11"></a><var>13.11</var>    Sec. 3. Minnesota Statutes 2008, section 273.111, subdivision 9, is amended to read:<br/>
<a id="pl.13.12"></a><var>13.12</var>    Subd. 9. <b>Additional taxes.</b> (a) Except as provided in paragraph (b), when real <br/>
<a id="pl.13.13"></a><var>13.13</var>property which is being, or has been valued and assessed under this section no longer <br/>
<a id="pl.13.14"></a><var>13.14</var>qualifies under subdivision 3, the portion no longer qualifying shall be subject to additional <br/>
<a id="pl.13.15"></a><var>13.15</var>taxes, in the amount equal to the difference between the taxes determined in accordance <br/>
<a id="pl.13.16"></a><var>13.16</var>with subdivision 4, and the amount determined under subdivision 5. Provided, however, <br/>
<a id="pl.13.17"></a><var>13.17</var>that the amount determined under subdivision 5 shall not be greater than it would have <br/>
<a id="pl.13.18"></a><var>13.18</var>been had the actual bona fide sale price of the real property at an arm's-length transaction <br/>
<a id="pl.13.19"></a><var>13.19</var>been used in lieu of the market value determined under subdivision 5. Such additional <br/>
<a id="pl.13.20"></a><var>13.20</var>taxes shall be extended against the property on the tax list for the current year, provided, <br/>
<a id="pl.13.21"></a><var>13.21</var>however, that no interest or penalties shall be levied on such additional taxes if timely <br/>
<a id="pl.13.22"></a><var>13.22</var>paid, and provided further, that such additional taxes shall only be levied with respect to <br/>
<a id="pl.13.23"></a><var>13.23</var>the last three years that the said property has been valued and assessed under this section.<br/>
<a id="pl.13.24"></a><var>13.24</var>(b) Real property that has been valued and assessed under this section prior to May <br/>
<a id="pl.13.25"></a><var>13.25</var>29, 2008, and that ceases to qualify under this section after May 28, 2008, and before <br/>
<a id="pl.13.26"></a><var>13.26</var>January 1, 2010, is not subject to additional taxes under this subdivision or subdivision 3, <br/>
<a id="pl.13.27"></a><var>13.27</var>paragraph (c).<br/>
<br/>
<a id="bill.2.4.0"></a><a id="pl.13.28"></a><var>13.28</var>    Sec. 4. <b>[273.114] LAND CONSERVATION PROPERTY TAX.</b><br/>
<a id="pl.13.29"></a><var>13.29</var>    Subdivision 1. <b>Definitions.</b> (a) In this section, the terms defined in this subdivision <br/>
<a id="pl.13.30"></a><var>13.30</var>have the meanings given them.<br/>
<a id="pl.13.31"></a><var>13.31</var>(b) "Conservation management plan" means a written document providing a <br/>
<a id="pl.13.32"></a><var>13.32</var>framework for site-specific healthy, productive, and sustainable conservation resources. A <br/>
<a id="pl.13.33"></a><var>13.33</var>conservation management plan must include at least the following: <br/>
<a id="pl.13.34"></a><var>13.34</var>(1) conservation management goals for the land;<br/>
<a id="pl.14.1"></a><var>14.1</var>(2) a reliable field inventory of the individual conservation cover types; <br/>
<a id="pl.14.2"></a><var>14.2</var>(3) a description of the soil type and quality;<br/>
<a id="pl.14.3"></a><var>14.3</var>(4) an aerial photo or map of the vegetation and other natural features of the land <br/>
<a id="pl.14.4"></a><var>14.4</var>clearly indicating the boundaries of the conservation land; <br/>
<a id="pl.14.5"></a><var>14.5</var>(5) the proposed future conditions of the land; <br/>
<a id="pl.14.6"></a><var>14.6</var>(6) prescriptions to meet proposed future conditions of the land;<br/>
<a id="pl.14.7"></a><var>14.7</var>(7) a recommended timetable for implementing the prescribed activities; and<br/>
<a id="pl.14.8"></a><var>14.8</var>(8) a legal description of the land encompassing the parcels included in the plan.<br/>
<a id="pl.14.9"></a><var>14.9</var>(c) "Approved plan writers" are natural resource professionals who are <br/>
<a id="pl.14.10"></a><var>14.10</var>self-employed, employed by private companies or individuals, nonprofit organizations, <br/>
<a id="pl.14.11"></a><var>14.11</var>local units of government, or public agencies, and who are approved by the Board of <br/>
<a id="pl.14.12"></a><var>14.12</var>Water and Soil Resources. Persons employed to write conservation plans for soil and <br/>
<a id="pl.14.13"></a><var>14.13</var>water conservation districts or federal agencies shall be deemed to meet the standards <br/>
<a id="pl.14.14"></a><var>14.14</var>required under this subdivision. The Board of Water and Soil Resources shall issue a <br/>
<a id="pl.14.15"></a><var>14.15</var>unique identification number to each approved planner.<br/>
<a id="pl.14.16"></a><var>14.16</var>(d) All management activities prescribed in a plan must be in accordance with <br/>
<a id="pl.14.17"></a><var>14.17</var>the recommended conservation management guidelines. The commissioner of natural <br/>
<a id="pl.14.18"></a><var>14.18</var>resources shall provide a framework for plan content and updating and revising plans.<br/>
<a id="pl.14.19"></a><var>14.19</var>    Subd. 2. <b>Requirements.</b> Class 2b property that had been subject to Minnesota <br/>
<a id="pl.14.20"></a><var>14.20</var>Statutes 2006, section 273.111, or that is part of an agricultural homestead under section <br/>
<a id="pl.14.21"></a><var>14.21</var>273.13, subdivision 23, paragraph (a), is entitled to valuation and tax deferment under <br/>
<a id="pl.14.22"></a><var>14.22</var>this section if:<br/>
<a id="pl.14.23"></a><var>14.23</var>(1) the land consists of at least ten acres;<br/>
<a id="pl.14.24"></a><var>14.24</var>(2) a conservation management plan for the land must be prepared by an approved <br/>
<a id="pl.14.25"></a><var>14.25</var>plan writer and implemented during the period in which the land is subject to valuation <br/>
<a id="pl.14.26"></a><var>14.26</var>and deferment under this section;<br/>
<a id="pl.14.27"></a><var>14.27</var>(3) conservation management guidelines must be used in conjunction with any <br/>
<a id="pl.14.28"></a><var>14.28</var>conservation management activities conducted on the land during the period in which the <br/>
<a id="pl.14.29"></a><var>14.29</var>land is subject to valuation and deferment under this section;<br/>
<a id="pl.14.30"></a><var>14.30</var>(4) the land must be enrolled for a minimum of eight years; and<br/>
<a id="pl.14.31"></a><var>14.31</var>(5) there are no delinquent property taxes on the land.<br/>
<a id="pl.14.32"></a><var>14.32</var>Real estate may not be enrolled for valuation and deferment under this section and <br/>
<a id="pl.14.33"></a><var>14.33</var>section 273.111, 273.112, or 273.117 concurrently. <br/>
<a id="pl.14.34"></a><var>14.34</var>    Subd. 3. <b>Determination of value.</b> Notwithstanding sections 272.03, subdivision <br/>
<a id="pl.14.35"></a><var>14.35</var>8, and 273.11, the value of any real estate that qualifies under subdivision 2 must, upon <br/>
<a id="pl.14.36"></a><var>14.36</var>timely application by the owner in the manner provided in subdivision 5, be determined as <br/>
<a id="pl.15.1"></a><var>15.1</var>the value prescribed by the commissioner of revenue for class 2a tillable property in that <br/>
<a id="pl.15.2"></a><var>15.2</var>county. The house and garage, if any, and the immediately surrounding one acre of land <br/>
<a id="pl.15.3"></a><var>15.3</var>and a minor, ancillary nonresidential structure, if any, shall be valued according to their <br/>
<a id="pl.15.4"></a><var>15.4</var>appropriate value. In determining the value for ad valorem tax purposes, the assessor shall <br/>
<a id="pl.15.5"></a><var>15.5</var>not consider the presence of commercial, industrial, residential, or seasonal recreational <br/>
<a id="pl.15.6"></a><var>15.6</var>land use influences that may affect the value of real estate defined in subdivision 1. <br/>
<a id="pl.15.7"></a><var>15.7</var>    Subd. 4. <b>Separate determination of market value and tax.</b> The assessor shall <br/>
<a id="pl.15.8"></a><var>15.8</var>make a separate determination of the market value of the real estate based on its highest <br/>
<a id="pl.15.9"></a><var>15.9</var>and best use. The tax based upon that value and the appropriate local tax rate applicable to <br/>
<a id="pl.15.10"></a><var>15.10</var>the property in the taxing district shall be recorded on the property assessment records.<br/>
<a id="pl.15.11"></a><var>15.11</var>    Subd. 5. <b>Application and covenant agreement.</b> (a) Application for deferment <br/>
<a id="pl.15.12"></a><var>15.12</var>of taxes and assessment under this section shall be filed by May 1 of the year prior to <br/>
<a id="pl.15.13"></a><var>15.13</var>the year in which the taxes are payable. Any application filed under this subdivision <br/>
<a id="pl.15.14"></a><var>15.14</var>and granted shall continue in effect for subsequent years until the termination of the <br/>
<a id="pl.15.15"></a><var>15.15</var>covenant agreement under paragraph (b). The application must be filed with the assessor <br/>
<a id="pl.15.16"></a><var>15.16</var>of the taxing district in which the real property is located on the form prescribed by the <br/>
<a id="pl.15.17"></a><var>15.17</var>commissioner of revenue. The assessor may require proof by affidavit or otherwise that <br/>
<a id="pl.15.18"></a><var>15.18</var>the property qualifies under subdivision 2.<br/>
<a id="pl.15.19"></a><var>15.19</var>    (b) The owner of the property must sign a covenant agreement that is filed with the <br/>
<a id="pl.15.20"></a><var>15.20</var>county assessor and recorded in the county where the property is located. The covenant <br/>
<a id="pl.15.21"></a><var>15.21</var>agreement must include all of the following:<br/>
<a id="pl.15.22"></a><var>15.22</var>    (1) legal description of the area to which the covenant applies;<br/>
<a id="pl.15.23"></a><var>15.23</var>    (2) name and address of the owner;<br/>
<a id="pl.15.24"></a><var>15.24</var>    (3) a statement that the land described in the covenant must be kept as conservation <br/>
<a id="pl.15.25"></a><var>15.25</var>land, which meets the requirements of subdivision 2, for the duration of the covenant;<br/>
<a id="pl.15.26"></a><var>15.26</var>    (4) a statement that the landowner may terminate the covenant agreement by <br/>
<a id="pl.15.27"></a><var>15.27</var>notifying the county assessor in writing four years in advance of the date of proposed <br/>
<a id="pl.15.28"></a><var>15.28</var>termination, provided that the notice of intent to terminate may not be given at any time <br/>
<a id="pl.15.29"></a><var>15.29</var>before the land has been subject to the covenant for a period of four years;<br/>
<a id="pl.15.30"></a><var>15.30</var>    (5) a statement that the covenant is binding on the owner or the owner's successor or <br/>
<a id="pl.15.31"></a><var>15.31</var>assigns and runs with the land; and <br/>
<a id="pl.15.32"></a><var>15.32</var>    (6) a witnessed signature of the owner, agreeing by covenant, to maintain the land as <br/>
<a id="pl.15.33"></a><var>15.33</var>described in subdivision 2.<br/>
<a id="pl.15.34"></a><var>15.34</var>(c) After a covenant under this section has been terminated, the land that had been <br/>
<a id="pl.15.35"></a><var>15.35</var>subject to the covenant is ineligible for subsequent valuation under this section for a <br/>
<a id="pl.15.36"></a><var>15.36</var>period of three years after the termination.<br/>
<a id="pl.16.1"></a><var>16.1</var>    Subd. 6. <b>Additional taxes.</b> Upon termination of a covenant agreement in <br/>
<a id="pl.16.2"></a><var>16.2</var>subdivision 5, paragraph (b), the land to which the covenant applied shall be subject to <br/>
<a id="pl.16.3"></a><var>16.3</var>additional taxes in the amount equal to the difference between the taxes determined in <br/>
<a id="pl.16.4"></a><var>16.4</var>accordance with subdivision 3 and the amount determined under subdivision 4, provided <br/>
<a id="pl.16.5"></a><var>16.5</var>that the amount determined under subdivision 4 shall not be greater than it would have <br/>
<a id="pl.16.6"></a><var>16.6</var>been had the actual bona fide sale price of the real property at an arm's-length transaction <br/>
<a id="pl.16.7"></a><var>16.7</var>been used in lieu of the market value determined under subdivision 4. The additional taxes <br/>
<a id="pl.16.8"></a><var>16.8</var>shall be extended against the property on the tax list for the current year, provided that <br/>
<a id="pl.16.9"></a><var>16.9</var>no interest or penalties shall be levied on the additional taxes if timely paid and that the <br/>
<a id="pl.16.10"></a><var>16.10</var>additional taxes shall only be levied with respect to the last three years that the property <br/>
<a id="pl.16.11"></a><var>16.11</var>has been valued and assessed under this section. <br/>
<a id="pl.16.12"></a><var>16.12</var>    Subd. 7. <b>Lien.</b> The additional tax imposed by this section shall be a lien upon the <br/>
<a id="pl.16.13"></a><var>16.13</var>property assessed to the same extent and for the same duration as other taxes imposed on <br/>
<a id="pl.16.14"></a><var>16.14</var>the property in this state. The tax shall be annually extended by the county auditor and if <br/>
<a id="pl.16.15"></a><var>16.15</var>and when payable shall be collected and distributed in the manner provided by law for the <br/>
<a id="pl.16.16"></a><var>16.16</var>collection and distribution of other property taxes.<br/>
<a id="pl.16.17"></a><var>16.17</var>    Subd. 8. <b>Special local assessments.</b> The payment of special local assessments <br/>
<a id="pl.16.18"></a><var>16.18</var>levied after June 1, 2009, for improvements made to any real property described in <br/>
<a id="pl.16.19"></a><var>16.19</var>subdivision 1 together with the interest thereon shall, on timely application as provided <br/>
<a id="pl.16.20"></a><var>16.20</var>in subdivision 6, be deferred as long as the property meets the conditions contained in <br/>
<a id="pl.16.21"></a><var>16.21</var>subdivision 1. If special assessments against the property have been deferred pursuant to <br/>
<a id="pl.16.22"></a><var>16.22</var>this subdivision, the governmental unit shall file with the county recorder in the county <br/>
<a id="pl.16.23"></a><var>16.23</var>in which the property is located a certificate containing the legal description of the <br/>
<a id="pl.16.24"></a><var>16.24</var>affected property and of the amount deferred. When such property no longer qualifies <br/>
<a id="pl.16.25"></a><var>16.25</var>under subdivision 1, all deferred special assessments plus interest shall be payable in <br/>
<a id="pl.16.26"></a><var>16.26</var>equal installments spread over the time remaining until the last maturity date of the bonds <br/>
<a id="pl.16.27"></a><var>16.27</var>issued to finance the improvement for which the assessments were levied. If the bonds <br/>
<a id="pl.16.28"></a><var>16.28</var>have matured, the deferred special assessments plus interest shall be payable within 90 <br/>
<a id="pl.16.29"></a><var>16.29</var>days. The provisions of section 429.061, subdivision 2, apply to the collection of these <br/>
<a id="pl.16.30"></a><var>16.30</var>installments. Penalty shall not be levied on any such special assessments if timely paid. <br/>
<a id="pl.16.31"></a><var>16.31</var>This subdivision does not apply to special assessments levied at any time by a county or <br/>
<a id="pl.16.32"></a><var>16.32</var>district court under chapter 116A or by a watershed district under chapter 103D.<br/>
<a id="pl.16.33"></a><var>16.33</var><b>EFFECTIVE DATE.</b>This section is effective for deferred taxes payable in 2010 <br/>
<a id="pl.16.34"></a><var>16.34</var>and thereafter, except that for the 2009 assessment year, the application deadline in <br/>
<a id="pl.16.35"></a><var>16.35</var>subdivision 5 is extended to September 1.<br/>
<br/>
<a id="bill.2.5.0"></a><a id="pl.17.1"></a><var>17.1</var>    Sec. 5. Minnesota Statutes 2008, section 273.13, subdivision 23, is amended to read:<br/>
<a id="pl.17.2"></a><var>17.2</var>    Subd. 23.  <b>Class 2.</b> (a) An agricultural homestead consists of class 2a agricultural <br/>
<a id="pl.17.3"></a><var>17.3</var>land that is homesteaded, along with any class 2b rural vacant land that is contiguous to <br/>
<a id="pl.17.4"></a><var>17.4</var>the class 2a land under the same ownership. The market value of the house and garage <br/>
<a id="pl.17.5"></a><var>17.5</var>and immediately surrounding one acre of land has the same class rates as class 1a or 1b <br/>
<a id="pl.17.6"></a><var>17.6</var>property under subdivision 22. The value of the remaining land including improvements <br/>
<a id="pl.17.7"></a><var>17.7</var>up to the first tier valuation limit of agricultural homestead property has a net class rate <br/>
<a id="pl.17.8"></a><var>17.8</var>of 0.5 percent of market value. The remaining property over the first tier has a class rate <br/>
<a id="pl.17.9"></a><var>17.9</var>of one percent of market value. For purposes of this subdivision, the "first tier valuation <br/>
<a id="pl.17.10"></a><var>17.10</var>limit of agricultural homestead property" and "first tier" means the limit certified under <br/>
<a id="pl.17.11"></a><var>17.11</var>section 
         <statute_ref>273.11</statute_ref>, subdivision 23. <br/>
<a id="pl.17.12"></a><var>17.12</var>    (b) Class 2a agricultural land consists of parcels of property, or portions thereof, <br/>
<a id="pl.17.13"></a><var>17.13</var>that are agricultural land and buildings. Class 2a property has a net class rate of one <br/>
<a id="pl.17.14"></a><var>17.14</var>percent of market value, unless it is part of an agricultural homestead under paragraph <br/>
<a id="pl.17.15"></a><var>17.15</var>(a). Class 2a property may contain must also include any property that would otherwise <br/>
<a id="pl.17.16"></a><var>17.16</var>be classified as 2b, including but not limited to sloughs, wooded wind shelters, acreage <br/>
<a id="pl.17.17"></a><var>17.17</var>abutting ditches, ravines, rock piles, and other similar land that is impractical for the <br/>
<a id="pl.17.18"></a><var>17.18</var>assessor to value separately from the rest of the property or that is unlikely to be able to be <br/>
<a id="pl.17.19"></a><var>17.19</var>sold separately from the rest of the property.<br/>
<a id="pl.17.20"></a><var>17.20</var>    An assessor may classify the part of a parcel described in this subdivision that is used <br/>
<a id="pl.17.21"></a><var>17.21</var>for agricultural purposes as class 2a and the remainder in the class appropriate to its use.<br/>
<a id="pl.17.22"></a><var>17.22</var>    (c) Class 2b rural vacant land consists of parcels of property, or portions thereof, <br/>
<a id="pl.17.23"></a><var>17.23</var>that are unplatted real estate, rural in character and not used for agricultural purposes, <br/>
<a id="pl.17.24"></a><var>17.24</var>including land used for growing trees for timber, lumber, and wood and wood products, <br/>
<a id="pl.17.25"></a><var>17.25</var>that is not improved with a structure. The presence of a minor, ancillary nonresidential <br/>
<a id="pl.17.26"></a><var>17.26</var>structure as defined by the commissioner of revenue does not disqualify the property from <br/>
<a id="pl.17.27"></a><var>17.27</var>classification under this paragraph. Any parcel of 20 acres or more improved with a <br/>
<a id="pl.17.28"></a><var>17.28</var>structure that is not a minor, ancillary nonresidential structure must be split-classified, and <br/>
<a id="pl.17.29"></a><var>17.29</var>ten acres must be assigned to the split parcel containing the structure. Class 2b property <br/>
<a id="pl.17.30"></a><var>17.30</var>has a net class rate of one percent of market value unless it is part of an agricultural <br/>
<a id="pl.17.31"></a><var>17.31</var>homestead under paragraph (a), or qualifies as class 2c under paragraph (d).<br/>
<a id="pl.17.32"></a><var>17.32</var>    (d) Class 2c managed forest land consists of no less than 20 and no more than 1,920 <br/>
<a id="pl.17.33"></a><var>17.33</var>acres statewide per taxpayer that is being managed under a forest management plan that <br/>
<a id="pl.17.34"></a><var>17.34</var>meets the requirements of chapter 290C, but is not enrolled in the sustainable forest <br/>
<a id="pl.17.35"></a><var>17.35</var>resource management incentive program. It has a class rate of .65 percent, provided that <br/>
<a id="pl.17.36"></a><var>17.36</var>the owner of the property must apply to the assessor to receive the reduced class rate and <br/>
<a id="pl.18.1"></a><var>18.1</var>provide the information required by the assessor to verify that the property qualifies for <br/>
<a id="pl.18.2"></a><var>18.2</var>the reduced rate. The commissioner of natural resources must concur that the land is <br/>
<a id="pl.18.3"></a><var>18.3</var>qualified. The commissioner of natural resources shall annually provide county assessors <br/>
<a id="pl.18.4"></a><var>18.4</var>verification information on a timely basis.<br/>
<a id="pl.18.5"></a><var>18.5</var>    (e) Agricultural land as used in this section means contiguous acreage of ten <br/>
<a id="pl.18.6"></a><var>18.6</var>acres or more, used during the preceding year for agricultural purposes. "Agricultural <br/>
<a id="pl.18.7"></a><var>18.7</var>purposes" as used in this section means the raising, cultivation, drying, or storage of <br/>
<a id="pl.18.8"></a><var>18.8</var>agricultural products for sale, or the storage of machinery or equipment used in support <br/>
<a id="pl.18.9"></a><var>18.9</var>of agricultural production by the same farm entity. For a property to be classified as <br/>
<a id="pl.18.10"></a><var>18.10</var>agricultural based only on the drying or storage of agricultural products, the products <br/>
<a id="pl.18.11"></a><var>18.11</var>being dried or stored must have been produced by the same farm entity as the entity <br/>
<a id="pl.18.12"></a><var>18.12</var>operating the drying or storage facility. "Agricultural purposes" also includes enrollment <br/>
<a id="pl.18.13"></a><var>18.13</var>in the Reinvest in Minnesota program under sections 
         <statute_ref>103F.501</statute_ref> to 
         <statute_ref>103F.535</statute_ref> or the federal <br/>
<a id="pl.18.14"></a><var>18.14</var>Conservation Reserve Program as contained in Public Law 99-198 or a similar state <br/>
<a id="pl.18.15"></a><var>18.15</var>or federal conservation program if the property was classified as agricultural (i) under <br/>
<a id="pl.18.16"></a><var>18.16</var>this subdivision for the assessment year 2002 or (ii) in the year prior to its enrollment. <br/>
<a id="pl.18.17"></a><var>18.17</var>Agricultural classification shall not be based upon the market value of any residential <br/>
<a id="pl.18.18"></a><var>18.18</var>structures on the parcel or contiguous parcels under the same ownership. <br/>
<a id="pl.18.19"></a><var>18.19</var>    (f) Real estate of less than ten acres, which is exclusively or intensively used for <br/>
<a id="pl.18.20"></a><var>18.20</var>raising or cultivating agricultural products, shall be considered as agricultural land. To <br/>
<a id="pl.18.21"></a><var>18.21</var>qualify under this paragraph, property that includes a residential structure must be used <br/>
<a id="pl.18.22"></a><var>18.22</var>intensively for one of the following purposes:<br/>
<a id="pl.18.23"></a><var>18.23</var>    (i) for drying or storage of grain or storage of machinery or equipment used to <br/>
<a id="pl.18.24"></a><var>18.24</var>support agricultural activities on other parcels of property operated by the same farming <br/>
<a id="pl.18.25"></a><var>18.25</var>entity;<br/>
<a id="pl.18.26"></a><var>18.26</var>    (ii) as a nursery, provided that only those acres used to produce nursery stock are <br/>
<a id="pl.18.27"></a><var>18.27</var>considered agricultural land;<br/>
<a id="pl.18.28"></a><var>18.28</var>    (iii) for livestock or poultry confinement, provided that land that is used only for <br/>
<a id="pl.18.29"></a><var>18.29</var>pasturing and grazing does not qualify; or<br/>
<a id="pl.18.30"></a><var>18.30</var>    (iv) for market farming; for purposes of this paragraph, "market farming" means the <br/>
<a id="pl.18.31"></a><var>18.31</var>cultivation of one or more fruits or vegetables or production of animal or other agricultural <br/>
<a id="pl.18.32"></a><var>18.32</var>products for sale to local markets by the farmer or an organization with which the farmer <br/>
<a id="pl.18.33"></a><var>18.33</var>is affiliated. <br/>
<a id="pl.18.34"></a><var>18.34</var>    (g) Land shall be classified as agricultural even if all or a portion of the agricultural <br/>
<a id="pl.18.35"></a><var>18.35</var>use of that property is the leasing to, or use by another person for agricultural purposes. <br/>
<a id="pl.19.1"></a><var>19.1</var>    Classification under this subdivision is not determinative for qualifying under <br/>
<a id="pl.19.2"></a><var>19.2</var>section 
         <statute_ref>273.111</statute_ref>. <br/>
<a id="pl.19.3"></a><var>19.3</var>    (h) The property classification under this section supersedes, for property tax <br/>
<a id="pl.19.4"></a><var>19.4</var>purposes only, any locally administered agricultural policies or land use restrictions that <br/>
<a id="pl.19.5"></a><var>19.5</var>define minimum or maximum farm acreage. <br/>
<a id="pl.19.6"></a><var>19.6</var>    (i) The term "agricultural products" as used in this subdivision includes production <br/>
<a id="pl.19.7"></a><var>19.7</var>for sale of: <br/>
<a id="pl.19.8"></a><var>19.8</var>    (1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing <br/>
<a id="pl.19.9"></a><var>19.9</var>animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, <br/>
<a id="pl.19.10"></a><var>19.10</var>bees, and apiary products by the owner; <br/>
<a id="pl.19.11"></a><var>19.11</var>    (2) fish bred for sale and consumption if the fish breeding occurs on land zoned <br/>
<a id="pl.19.12"></a><var>19.12</var>for agricultural use; <br/>
<a id="pl.19.13"></a><var>19.13</var>    (3) the commercial boarding of horses if the boarding is done in conjunction with <br/>
<a id="pl.19.14"></a><var>19.14</var>raising or cultivating agricultural products as defined in clause (1); <br/>
<a id="pl.19.15"></a><var>19.15</var>    (4) property which is owned and operated by nonprofit organizations used for <br/>
<a id="pl.19.16"></a><var>19.16</var>equestrian activities, excluding racing; <br/>
<a id="pl.19.17"></a><var>19.17</var>    (5) game birds and waterfowl bred and raised for use on a shooting preserve licensed <br/>
<a id="pl.19.18"></a><var>19.18</var>under section 
         <statute_ref>97A.115</statute_ref>; <br/>
<a id="pl.19.19"></a><var>19.19</var>    (6) insects primarily bred to be used as food for animals; <br/>
<a id="pl.19.20"></a><var>19.20</var>    (7) trees, grown for sale as a crop, including short rotation woody crops, and not <br/>
<a id="pl.19.21"></a><var>19.21</var>sold for timber, lumber, wood, or wood products; and <br/>
<a id="pl.19.22"></a><var>19.22</var>    (8) maple syrup taken from trees grown by a person licensed by the Minnesota <br/>
<a id="pl.19.23"></a><var>19.23</var>Department of Agriculture under chapter 28A as a food processor. <br/>
<a id="pl.19.24"></a><var>19.24</var>    (j) If a parcel used for agricultural purposes is also used for commercial or industrial <br/>
<a id="pl.19.25"></a><var>19.25</var>purposes, including but not limited to: <br/>
<a id="pl.19.26"></a><var>19.26</var>    (1) wholesale and retail sales; <br/>
<a id="pl.19.27"></a><var>19.27</var>    (2) processing of raw agricultural products or other goods; <br/>
<a id="pl.19.28"></a><var>19.28</var>    (3) warehousing or storage of processed goods; and <br/>
<a id="pl.19.29"></a><var>19.29</var>    (4) office facilities for the support of the activities enumerated in clauses (1), (2), <br/>
<a id="pl.19.30"></a><var>19.30</var>and (3), <br/>
<a id="pl.19.31"></a><var>19.31</var>the assessor shall classify the part of the parcel used for agricultural purposes as class <br/>
<a id="pl.19.32"></a><var>19.32</var>1b, 2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its <br/>
<a id="pl.19.33"></a><var>19.33</var>use. The grading, sorting, and packaging of raw agricultural products for first sale is <br/>
<a id="pl.19.34"></a><var>19.34</var>considered an agricultural purpose. A greenhouse or other building where horticultural <br/>
<a id="pl.19.35"></a><var>19.35</var>or nursery products are grown that is also used for the conduct of retail sales must be <br/>
<a id="pl.19.36"></a><var>19.36</var>classified as agricultural if it is primarily used for the growing of horticultural or nursery <br/>
<a id="pl.20.1"></a><var>20.1</var>products from seed, cuttings, or roots and occasionally as a showroom for the retail sale of <br/>
<a id="pl.20.2"></a><var>20.2</var>those products. Use of a greenhouse or building only for the display of already grown <br/>
<a id="pl.20.3"></a><var>20.3</var>horticultural or nursery products does not qualify as an agricultural purpose. <br/>
<a id="pl.20.4"></a><var>20.4</var>    The assessor shall determine and list separately on the records the market value of <br/>
<a id="pl.20.5"></a><var>20.5</var>the homestead dwelling and the one acre of land on which that dwelling is located. If any <br/>
<a id="pl.20.6"></a><var>20.6</var>farm buildings or structures are located on this homesteaded acre of land, their market <br/>
<a id="pl.20.7"></a><var>20.7</var>value shall not be included in this separate determination. <br/>
<a id="pl.20.8"></a><var>20.8</var>    (k) Class 2d airport landing area consists of a landing area or public access area of <br/>
<a id="pl.20.9"></a><var>20.9</var>a privately owned public use airport. It has a class rate of one percent of market value. <br/>
<a id="pl.20.10"></a><var>20.10</var>To qualify for classification under this paragraph, a privately owned public use airport <br/>
<a id="pl.20.11"></a><var>20.11</var>must be licensed as a public airport under section 
         <statute_ref>360.018</statute_ref>. For purposes of this paragraph, <br/>
<a id="pl.20.12"></a><var>20.12</var>"landing area" means that part of a privately owned public use airport properly cleared, <br/>
<a id="pl.20.13"></a><var>20.13</var>regularly maintained, and made available to the public for use by aircraft and includes <br/>
<a id="pl.20.14"></a><var>20.14</var>runways, taxiways, aprons, and sites upon which are situated landing or navigational aids. <br/>
<a id="pl.20.15"></a><var>20.15</var>A landing area also includes land underlying both the primary surface and the approach <br/>
<a id="pl.20.16"></a><var>20.16</var>surfaces that comply with all of the following: <br/>
<a id="pl.20.17"></a><var>20.17</var>    (i) the land is properly cleared and regularly maintained for the primary purposes of <br/>
<a id="pl.20.18"></a><var>20.18</var>the landing, taking off, and taxiing of aircraft; but that portion of the land that contains <br/>
<a id="pl.20.19"></a><var>20.19</var>facilities for servicing, repair, or maintenance of aircraft is not included as a landing area; <br/>
<a id="pl.20.20"></a><var>20.20</var>    (ii) the land is part of the airport property; and <br/>
<a id="pl.20.21"></a><var>20.21</var>    (iii) the land is not used for commercial or residential purposes. <br/>
<a id="pl.20.22"></a><var>20.22</var>The land contained in a landing area under this paragraph must be described and certified <br/>
<a id="pl.20.23"></a><var>20.23</var>by the commissioner of transportation. The certification is effective until it is modified, <br/>
<a id="pl.20.24"></a><var>20.24</var>or until the airport or landing area no longer meets the requirements of this paragraph. <br/>
<a id="pl.20.25"></a><var>20.25</var>For purposes of this paragraph, "public access area" means property used as an aircraft <br/>
<a id="pl.20.26"></a><var>20.26</var>parking ramp, apron, or storage hangar, or an arrival and departure building in connection <br/>
<a id="pl.20.27"></a><var>20.27</var>with the airport. <br/>
<a id="pl.20.28"></a><var>20.28</var>    (l) Class 2e consists of land with a commercial aggregate deposit that is not actively <br/>
<a id="pl.20.29"></a><var>20.29</var>being mined and is not otherwise classified as class 2a or 2b. It has a class rate of one <br/>
<a id="pl.20.30"></a><var>20.30</var>percent of market value. To qualify for classification under this paragraph, the property <br/>
<a id="pl.20.31"></a><var>20.31</var>must be at least ten contiguous acres in size and the owner of the property must record with <br/>
<a id="pl.20.32"></a><var>20.32</var>the county recorder of the county in which the property is located an affidavit containing:<br/>
<a id="pl.20.33"></a><var>20.33</var>    (1) a legal description of the property;<br/>
<a id="pl.20.34"></a><var>20.34</var>    (2) a disclosure that the property contains a commercial aggregate deposit that is not <br/>
<a id="pl.20.35"></a><var>20.35</var>actively being mined but is present on the entire parcel enrolled;<br/>
<a id="pl.21.1"></a><var>21.1</var>    (3) documentation that the conditional use under the county or local zoning <br/>
<a id="pl.21.2"></a><var>21.2</var>ordinance of this property is for mining; and<br/>
<a id="pl.21.3"></a><var>21.3</var>    (4) documentation that a permit has been issued by the local unit of government <br/>
<a id="pl.21.4"></a><var>21.4</var>or the mining activity is allowed under local ordinance. The disclosure must include a <br/>
<a id="pl.21.5"></a><var>21.5</var>statement from a registered professional geologist, engineer, or soil scientist delineating <br/>
<a id="pl.21.6"></a><var>21.6</var>the deposit and certifying that it is a commercial aggregate deposit.<br/>
<a id="pl.21.7"></a><var>21.7</var>    For purposes of this section and section 
         <statute_ref>273.1115</statute_ref>, "commercial aggregate deposit" <br/>
<a id="pl.21.8"></a><var>21.8</var>means a deposit that will yield crushed stone or sand and gravel that is suitable for use <br/>
<a id="pl.21.9"></a><var>21.9</var>as a construction aggregate; and "actively mined" means the removal of top soil and <br/>
<a id="pl.21.10"></a><var>21.10</var>overburden in preparation for excavation or excavation of a commercial deposit.<br/>
<a id="pl.21.11"></a><var>21.11</var>    (m) When any portion of the property under this subdivision or subdivision 22 <br/>
<a id="pl.21.12"></a><var>21.12</var>begins to be actively mined, the owner must file a supplemental affidavit within 60 days <br/>
<a id="pl.21.13"></a><var>21.13</var>from the day any aggregate is removed stating the number of acres of the property that is <br/>
<a id="pl.21.14"></a><var>21.14</var>actively being mined. The acres actively being mined must be (1) valued and classified <br/>
<a id="pl.21.15"></a><var>21.15</var>under subdivision 24 in the next subsequent assessment year, and (2) removed from the <br/>
<a id="pl.21.16"></a><var>21.16</var>aggregate resource preservation property tax program under section 
         <statute_ref>273.1115</statute_ref>, if the <br/>
<a id="pl.21.17"></a><var>21.17</var>land was enrolled in that program. Copies of the original affidavit and all supplemental <br/>
<a id="pl.21.18"></a><var>21.18</var>affidavits must be filed with the county assessor, the local zoning administrator, and the <br/>
<a id="pl.21.19"></a><var>21.19</var>Department of Natural Resources, Division of Land and Minerals. A supplemental <br/>
<a id="pl.21.20"></a><var>21.20</var>affidavit must be filed each time a subsequent portion of the property is actively mined, <br/>
<a id="pl.21.21"></a><var>21.21</var>provided that the minimum acreage change is five acres, even if the actual mining activity <br/>
<a id="pl.21.22"></a><var>21.22</var>constitutes less than five acres.<br/>
<a id="pl.21.23"></a><var>21.23</var><b>EFFECTIVE DATE.</b>This section is effective for assessments in 2010 for taxes <br/>
<a id="pl.21.24"></a><var>21.24</var>payable in 2011, and thereafter.<br/>
<br/>
<a id="bill.2.6.0"></a><a id="pl.21.25"></a><var>21.25</var>    Sec. 6. <b>ANNUAL REPORT ON AGRICULTURAL VALUATION AND </b><br/>
<a id="pl.21.26"></a><var>21.26</var><b>CLASSIFICATION.</b><br/>
<a id="pl.21.27"></a><var>21.27</var>The commissioner of revenue must study and annually report to the chairs of the <br/>
<a id="pl.21.28"></a><var>21.28</var>committees on taxes of the senate and the house of representatives on:<br/>
<a id="pl.21.29"></a><var>21.29</var>(1) trends in market values of class 2a and 2b properties;<br/>
<a id="pl.21.30"></a><var>21.30</var>(2) green acres value methodology and determinations; and<br/>
<a id="pl.21.31"></a><var>21.31</var>(3) assessment and classification practices pertaining to class 2a and 2b property.<br/>