Legislative Session number- 83

Bill Name: SF2302

E Relating to financing and operation of state and local government ARTICLE 1
� INCOME TAXUpdating the definition of internal revenue code under tax
+administration and compliance provisions and certain income tax provisions to
the IRC; +exempting certain armed forces personnel on active duty outside the
state from +filing state income tax returns and extending the time limit for
filing +returns and appealing tax court orders affecting state income or
property taxes +for armed service members; eliminating military personnel in
active service +outside the state from the definition of nonresident; conforming
certain income +and estate tax provisions to the federal military family tax
relief act of 2003;+ requiring certain add backs to income relating to excess
mortgage interest and +the payment of fines, penalties, damages and expenses
paid to government +entities; providing income tax subtractions for certain
military compensation +and organ donation expenses; disallowing trade or
business expense income tax +deductions for fines, penalties, damages or
expenses paid to government +entities; exempting from the franchise tax
corporate income derived from +personal rapid transit systems; increasing the
income tax rate for the highest +income bracket; converting the transit pass
income tax credit to a refund and +defining employer for refund eligibility
purposes; providing income tax credits for +investments in qualifying regional
angel investment network funds and for certain carsharing expenses; modifying
the education tax credit; increasing +the charitable deduction from the
alternative minimum tax and the amount +of income exempt from AMT for certain
married and single filers; providing a +single sales income apportionment
formula under the franchise tax for corporations+ and financial institutions;
clarifying the sales factor for sales +originating in the state and shipped for
delivery to purchasers outside the state; +exempting publicly traded
partnerships from certain income tax withholding +requirements for nonresident
partners; reducing the percentage of rent +constituting property taxes for
property tax refund purposes, defining total scheduled rent+ for refund
calculation purposes and requiring certificates of rent paid +to show the
calculation of rent constituting property taxes under certain excess conditions;
appropriating the tax revenues collected between certain +years attributable to
the change in the amount of mortgage interest allowed+ to be deducted for income
tax purposes to the department of human services +and to the housing finance
agency (HFA) to be used for certain programs; +requiring the commissioners of
finance and revenue to conduct a study to identify +the reasons for the decline
in corporate tax receipts and report to the +legislature by a certain
dateARTICLE 2 � SALES TAXProviding sales tax exemptions for geothermal heating
and cooling +system equipment, biomass fuel stoves, commuter rail systems fuel
and +construction materials and equipment, inputs to movie and television
production, +personal rapid transit system, waste recovery facility and St.
Mary's Duluth +clinic health system hospital construction materials and
equipment and +certain donated meals and occasional sales; clarifying the
exclusion of +telecommunications equipment from the capital equipment sales tax
exemption; expanding +the sales tax exemption for regional public safety radio
communication systems +to statewide systems; exempting certain fuel efficient
vehicles sold to +the state or local government units from the motor vehicle
sales tax; +authorizing the city of St. Cloud to increase local sales and
lodging taxes upon +voter approval, the city of Mankato to issue bonds for
Riverfront 2000 and +the city of Hermantown to impose a use tax and issue bonds
for certain capital improvements; authorizing the city of Rochester to use local
sales +tax proceeds and increasing the city bonding authority to construct a
regional +highway and higher education facilities; authorizing the city of
Proctor to +impose an additional sales tax to fund certain capital improvements;
extending +the effective date for the sales tax exemption for construction of
+poultry litter and other biomass electric generation facilities; making
permanent +the additional sales tax rate on alcoholic beverages and rental cars;
+clarifying the exemption of the Thief River Falls nonprofit corporation from
the+ sales tax on construction of the community or regional center; authorizing
the +imposition of local sales taxes and the issuance of bonds by the cities of
+Beaver Bay, Bemidji, Cloquet, Clearwater, Medford, Park Rapids, St. Cloud,
+Sartell, Sauk Rapids, St. Augusta, St. Joseph, Waite Park, Waseca and Winona
for +certain projects; authorizing the city of Proctor to use certain lodging
tax +receipts for preservation of the caboose, the Baldwin locomotive and the
+F-101F aircraft; requiring the commissioner of revenue to reduce the
+compliance gap in the payment of sales and use taxes and to establish an
effective +method for payment of the tax after purchase; providing for the
distribution of +certain alcoholic beverage sales tax receipts to counties for
property tax +reduction ARTICLE 3 � PROPERTY TAXES Simplifying and
clarifying school district referendum ballot +questions, specifying certain
notice requirements; providing for property tax +valuation and classification of
wind energy conversion system land; extending +the construction date requirement
for poultry litter biomass electric +generation facilities for personal property
tax exemption purposes; modifying +certain requirements for the exemption of
personal property of certain +combined cycle combustion turbine electric
generation facilities from the personal +property tax and providing exemptions
for certain simple cycle combustion +turbine and biomass facilities and for
facilities exceeding a certain installed +capacity; exempting personal rapid
transit systems from property taxes under +certain conditions; accelerating the
due date for annual wind energy +production system production reports and for
notice by the commissioner of revenue to +system owners of the tax due and
requiring the distribution of tax revenues +to be based on the net tax capacity
based tax rate of the previous rather +than the current year; making the limited
market value provision permanent and subjecting certain resort and commercial
industrial property to +limited market value, modifying the calculation of
limited market value of the +property in the first assessment year; providing
property tax valuation exclusions +for sewage treatment system improvements and
for lead hazard reduction; +establishing an aggregate resource preservation
property tax program imposing the +property tax on certain qualifying properties
containing aggregate resources based+ on current use in lieu of potential
alternative or future use and a +valuation and tax deferment program for certain
temporary and seasonal homestead +resorts; qualifying real estate devoted to
polo for the open space valuation +and deferment program; providing for
homestead treatment of licensed +child care property located in family homes,
duplexes or triplexes assessed as +homesteads; reducing the property tax
classification rate for certain qualifying +low income rental housing; providing
a reduced market value homestead credit +reimbursement for homestead property
located in cities; specifying the effective +date for rules establishing the
method of valuing electric and transmission +pipeline utility property; fixing
the rate of the state property tax levy on +commercial industrial property,
providing for inflationary increases in the levy+ on seasonal residential
recreational property for deposit in the +education reserve account; authorizing
separate statement of library levies on Ramsey +county proposed property tax
(truth in taxation) notices and property tax +statements; modifying the basis
for petitions involving qualified low income +rental housing property;
temporarily delaying the due and penalty accrual dates for +payment of property
taxes on certain resort property; imposing a school +referendum tax on the
income tax liability of school district residents subject to +voter approval,
providing for determination by the commissioner, for +referendum equalization
and for distribution of the revenue; providing for +partial reimbursement of the
cost of uncompensated care provided by +qualifying hospitals in the metropolitan
area; providing for reimbursement of +Hennepin county public defender costs;
modifying certain conditions for +deferment of property taxes and special
assessments on the Caponi art park +property in the city of Eagan; authorizing
the lakes area economic development +authority to levy a property tax as a
special taxing district in lieu of +individual member levies; extending the date
for St. Louis county certification of +local approval of the law creating the
southern St. Louis county special taxing +district for the Chris Jensen nursing
home; establishing an education reserve +account to supplement general education
aid or higher education funding; +requiring the commissioner to study the
application of the personal property tax +exemption for electric general system
pollution control equipment for +limitation purposes and report to the
legislature by a certain date; repealing a certain +provision potentially
authorizing supplementary levy authority for school +districts for deferred
maintenance and capital projects and providing education aid+ in certain fiscal
years for certain specified uses; authorizing common +school district #815,
Prinsburg to continue to operate as a common school +district under certain
resolution adoption, statutory operating debt avoidance+ and levy referendum
conditions; authorizing the Sauk River watershed district +to levy for the
administrative fund; authorizing a local commercial +industrial land value tax
by certain larger municipalities or by municipalities in +the taconite tax
relief area; requiring and providing for legislative fiscal staff+ to conduct a
study of the metropolitan revenue distribution (fiscal +disparities) program and
report to the legislature by a certain date; authorizing +towns in Lincoln and
Pipestone counties to adjust payable 2004 levies for +estimated wind energy
production tax amounts; requiring studies and reports by state+ agency
commissioners on the type, amount and use of fees imposed on +individuals or
businesses and by the commissioner of education on the total annual +fees
collected under the public school fee law ARTICLE 4 � AIDS TO LOCAL
GOVERNMENTSModifying the city local government aid (LGA) calculation and
+distribution formulas, eliminating taconite aids from computation of the
formula, +increasing the appropriation for payment of the aid and clarifying the
aid +reduction; separately defining federal land utilization project (LUP) land
for +counties payment in lieu of taxes on natural resources land purposes and
+providing for payments to counties by the commissioner of natural resources
(DNR) +on the project landsARTICLE 5 � LOCAL DEVELOPMENTModifying certain
provisions regulating business subsidies, +requiring the goals for the number
of jobs to be created or retained to result in +job creation or retention by the
subsidy recipient within the overall +granting jurisdiction, providing for
certain enforcement actions; requiring +the commissioner of transportation (DOT)
to transfer ownership of the +parking facilities for I-394 to the city of
Minneapolis upon receipt of +payment from the city, specifying certain
responsibilities of the city upon +assumption of ownership; authorizing and
providing for housing and redevelopment +authorities to pledge the full faith
and credit for bonds issued to finance +housing development projects owned by
limited partnerships or other entities +of the HRA; modifying the definition of
structurally substandard building +relating to buildings originally constructed
for use as a school for tax +increment financing redevelopment district
purposes; modifying certain +restrictions on TIF districts for urban renewal
areas, defining urban renewal area; authorizing and providing for expenditure
of tax increments for job +training for employees of businesses located in TIF
districts; extending the +duration of pre-1979 TIF districts in certain larger
cities under certain +conditions; authorizing and providing for TIF districts
qualifying as housing +districts to contain mixed income occupancy projects,
specifying certain +qualification requirements; authorizing development
authorities to amend TIF plans +to establish affordable housing or hazardous
substance, pollutant or +contaminant remediation accounts for increments
pledging purposes; excluding +certain businesses engaged in retail sales from
the definition of qualified +business for job opportunity building zone tax
incentives eligibility +purposes; removing a certain duration limit on the
Minneapolis Lake street project +redevelopment tax increment financing district;
extending the duration of and +modifying certain requirements for the
establishment of TIF districts in the +city of New Brighton; authorizing the
Anoka county regional railroad authority to+ exercise economic development
authority powers, projects local approval +requirement; authorizing and
providing for the city of Detroit Lakes to create +redevelopment TIF districts,
sunset; designating the cities of Elgin, Eyota, Byron +and Oronoco as small
cities for TIF purposes; extending the duration of a+ certain TIF district in
the city of Brooklyn Center; authorizing the city of +Fairmont to reduce the
original tax capacity of a previously tax exempt parcel+ in a certain TIF
district to the value of the land; increasing the holding period for economic
development property tax +exemption purposes in the city of Fergus Falls;
authorizing the city of +Minneapolis to elect in the establishment of a special
service district to provide +for management of district activities by a
nonprofit corporation; +authorizing and providing for the cities of Richfield
and St. Michael to create +redevelopment TIF districts; authorizing the city of
Wabasha to extend the duration+ of a certain redevelopment TIF district and to
use the proceeds of tax +increment bonds issued before a certain date to pay the
costs of acquiring and constructing a national eagle center; requiring the
commissioners of +revenue and employment and economic development (DEED) to
estimate the total +amount of tax expenditures obligated for all JOBZ projects
approved before a +certain date, requiring annual audits by the office of the
state auditor ARTICLE 6 � PUBLIC FINANCEModifying the authority of cities and
counties to finance purchases +of computers and related items through the
issuance of capital notes; +clarifying county financing of conservation
easements; expanding the definition +of subsystems; authorizing the use of
public safety radio communication system revenue bonds to provide +money for
assistance to local government units for a certain percentage of the +cost of
building subsystems in the southeast or central districts of the +state patrol,
providing for issuance by the metropolitan council and appropriating +the
proceeds to the commissioner of public safety for assistance to local government
units, prohibiting use to finance portable or subscriber +audio sets and
providing for payment of certain operating costs; extending the +authority of
cities to establish special service districts and housing +improvement areas and
the maximum maturity of bonds issued by housing and redevelopment authorities
(HRA) for qualified housing development projects; +expanding the authority of
municipal utilities to enter into joint ventures to +provide utility services to
joint ventures with private investors; +authorizing cities to establish water
submetering programs to detect water leaks and +monitor water usage, defining
water submetering; authorizing loans and grants to +property owners to assist in
the cost of water conservation and leak detection+ and the issuance of revenue
obligations payable from fees and charges imposed+ for program costs and loan
repayments to finance the programs; +authorizing the metropolitan council to
issue certificates of indebtedness, bonds or +other obligations for metropolitan
area transit and paratransit capital +expenditures under the regional transit
master plan and transit capital +improvement program, limit; modifying the time
for notice of the issue to the department +of finance for obligations issued as
part of a series, the limit on city capital improvement bonds and the authority
of cities, counties, towns and +school districts to finance street
reconstruction; authorizing and providing+ for the city of St. Paul to
participate in the creation of and contract with +a nonprofit organization for
the management and operation of the +RiverCentre complex; authorizing and
providing for the transfer of housing +finance agency (HFA) student loan
bonding authority to the higher education services+ office (HESO) ARTICLE 7
� INTERNATIONAL ECONOMIC DEVELOPMENT ZONERequiring revisions of the state
transportation plan to include a +chapter setting out a state aviation plan,
specifying certain plan content requirements, requiring the commissioner of
transportation (DOT) to +create temporary advisory councils on aviation planning
to advise the +commissioner on the aviation chapter and revisions; providing for
designation of +foreign trade zones as international economic development zones
by federal foreign +trade zone authorities under certain conditions, providing
certain property, +income, franchise and sales and use tax exemptions for
businesses located and individuals operating a trade or business in the zones,
creating a +jobs credit for qualified businesses and appropriating money to the
commissioner +of revenue for the credit; requiring the commissioner of
employment and economic development (DEED) to study and analyze the benefits to
the state +from more than one international economic development zone and report
to the +legislature by a certain date ARTICLE 8 � MISCELLANEOUSProviding for
the delegation of authority by state agency +commissioners and for the
effectiveness and continuation of authority delegations; +modifying, clarifying
and recodifying certain provisions governing tax +preparers; specifying a
minimum or uniform dollar requirement for electronic +payment of taxes and fees,
exempting individual income, estate and airflight +property taxes from the
requirement; requiring electronic filing of certain +partnership returns;
requiring out of state cigarette retailers to register with +the department of
revenue and specifying certain reporting requirements; +defining direct business
for insurance gross premium tax purposes, clarifying +the taxation of property
and casualty insurance companies and reducing +the gross premium tax rate for
life insurance companies; providing for the +apportionment of occupation taxes;
prohibiting employers from misrepresenting the +nature of the employment
relationship with employees; regulating tobacco +product delivery sales;
limiting biotechnology and health sciences industry zone tax +credits; requiring
and providing for commissioner of employment and economic +development (DEED)
temporary issuance of grants to eligible businesses in the +biotechnology and
health sciences industry to support the startup and growth of +biotechnology and
health sciences businesses and for metropolitan council +preparation of annual
population estimates for reporting to governing bodies of +cities or towns in
the metropolitan area; providing for the filling of judicial+ vacancies on the
tax court; authorizing the commissioner of revenue to enter +into compact
agreements with other states to eliminate retaliatory insurance +premium tax
provisions; appropriating money to the commissioner for operation of +the
department; repealing certain provisions providing for electronic +payment of
certain taxes and the scope of tax preparation services ARTICLE 9 � DEPARTMENT
OF REVENUE POLICY PROVISIONSAuthorizing case reviewers under the state debt
collection procedure +to issue debtor assistance orders under certain unjust or
inequitable results determination conditions and transferring duties and
authority of +case reviewers to the taxpayer rights advocate; delegations of
authority +granted by the commissioner of revenue to remain in effect until
revoked by the commissioner or a successor; providing for notices of
determinations +or actions by the commissioner not provided for by law;
providing for +transcriptions of tax lien notices from counties to the secretary
of state; including certification of 1b property (homesteads of the blind or
disabled) in+ the definition of Minnesota tax laws for tax data classification
and +disclosure purposes; specifying a time limit for request for calculation of
+separate income tax liability after filing a joint return, exempting the
+commissioner from the requirement to calculate separate liability under certain
+conditions; providing for the calculation of interest on sales tax refund
claims +for qualifying purchases by businesses in biotechnology and border city
+zones; expanding the research and development franchise tax subtraction;
+modifying the withholding requirement for payments to out of state contractors;
+authorizing the commissioner to allow early withdrawal from the sustainable
+forest incentive act without penalty upon land acquisition by the state, +local
government units or other entities with the right of eminent domain; +clarifying
the definition of qualified business for job opportunity building +(JOBZ) and
biotechnology and health sciences industry zones purposes; exempting
biotechnology and health sciences industry zone qualified businesses +from the
corporate franchise tax minimum fee requirement under certain +conditions;
repealing the alternative levy power of the Alexandria Lakes area and+ Central
lakes region sanitary sewer districts ARTICLE 10 � MINERALS;
AGGREGATESubjecting property used in mining or refining nonferrous ores to the+
net proceeds tax and exempting associated property from property and +sales
taxes and mining corporations from the franchise tax, excluding the mining
+activities from the trade or business income apportionment formula; defining
the+ precious minerals tax relief area; expanding the occupation tax to persons
+engaged in the business of refining ores and of mining or producing metals or
+minerals; distinguishing between sales inside and outside the state for income
apportionment purposes; exempting taconite and iron mining companies +from the
alternative minimum tax; increasing the net proceeds tax rate and +providing for
deductions; modifying the definition of metal or mineral products +under the
gross proceeds tax; providing for the distribution of proceeds of the+ tax on
nonferrous minerals within the precious minerals assistance area; +imposing a
royalty tax on royalties paid for nonferrous minerals; modifying the +purpose of
the taconite environmental protection fund; suspending the averaging +provision
for computation of the taconite production tax and temporarily +exempting
commercial production of direct reduced ore from the tax; modifying +the payment
schedule for the taconite production tax; changing the taconite +economic
development fund to the mineral processing and energy development +assistance
fund for continuation purposes; providing for certain additional +distributions
to the taconite environmental protection fund; establishing a grant +and loan
fund, providing for distribution and specifying certain approval +requirements;
establishing the mineral processing and energy development assistance+ fund for
use by the commissioner of iron range resources and rehabilitation +(IRRRB) for
grants, loans or equity investments in mineral processing and energy +generating
facilities; excluding certain persons from the definition of operator+ for
aggregate material removal tax purposes and authorizing counties or +towns to
exempt operators from the tax under certain conditions; providing a transitional
provision for certain persons with an alternative +minimum tax credit; repealing
the AMT on ores, certain deductions from the +occupation tax and the taconite
economic development fund, requiring the +commissioner of iron range resources
and rehabilitation to transfer unobligated balances +to the mineral processing
and energy development assistance fund ARTICLE 11 � SALES AND USE TAXES
DEPARTMENT OF REVENUE TECHNICAL +CHANGESApplying the period for assessing
additional taxes for underpayment +of sales and withholding taxes to use taxes;
clarifying the definition of bad+ debt; eliminating the exclusion of
watercraft, aircraft, modular homes, +manufactured or mobile homes from the
sourcing rules and modifying the definition +of transportation equipment for
sourcing purposes; clarifying the +definition of industrial production relating
to qualifying for the materials sales +tax exemption and excluding machinery and
equipment used by restaurants +in furnishing, preparing or serving prepared
foods or used to furnish +certain services from qualification for the capital
equipment exemption; +applying the transition period for preexisting
construction contracts and bids to +tax rate increases in addition to sales tax
base changes; repealing certain +obsolete or duplicative sales and use tax rules
ARTICLE 12 � SPECIAL TAXES DEPARTMENT OF REVENUE TECHNICAL CHANGESExempting
mortgages on armories from the mortgage registry tax; +excluding housing with
services establishments from the definition of health +care provider for
MinnesotaCare gross earnings tax imposition purposes; +granting the commissioner
of revenue certain petroleum tax penalty abatement +authority; clarifying the
reporting requirement for cigarette manufacturers +involved in interstate
commerce and the due dates of returns for cigarette and +tobacco products
distributors subject to accelerated tax liability; defining reinsurance for
insurance gross premium tax administration purposes +and clarifying the taxation
of health maintenance organizations (HMO), +nonprofit health service plan
corporations and community integrated service +networks (CISN); repealing a
certain duplicative lawful gambling tax payments +crediting requirement ARTICLE
13 � PROPERTY TAXES AND AIDS DEPARTMENT OF REVENUE TECHNICAL
+PROVISIONSClarifying the requirement for the payment of personal property
taxes+ on manufactured homes for title transfer purposes; expanding the
+authority of the commissioner of revenue to disclose certain information for
property +tax residential homestead classification purposes; clarifying the
+property tax exemptions for property used under cooperative farming agreements,
+for certain housing and redevelopment authority (HRA) property, for property
+subject to taconite production or net proceeds taxes and for property of
+religious corporations and children's homes; clarifying the exclusion of
+government rent assistance and contract payments from donations or gifts for
public +charity institutions property tax exemption purposes; clarifying the
+provision requiring limited liability companies to operate family farms to
+receive an agricultural homestead classification; modifying certain proof of
+compliance requirements to the county assessor and eliminating certain obsolete
+language relating to meetings of county boards of equalization; modifying the
+date for county auditors to certify levy and tax rate information to other
+county auditors relating to taxing jurisdictions crossing county boundaries
+for proposed property tax (truth in taxation) notice purposes; +eliminating the
requirement for reduction of levies by disparity reduction aid; +granting the
commissioner the option of excluding detailed special levy +information from
levy information required to be annually reported by county auditors;+ modifying
the date for county treasurers to transmit the state share of +property tax
receipts to the department; clarifying certain tax-forfeited land provisions
relating to +prohibited purchasers and duties of the commissioners of finance,
natural +resources (DNR) and revenue; clarifying certain appropriations for
local impact note +and public defender costs; excluding attached machinery aid
from the levy plus +aid revenue base for 2004 county aid reductions computation
purposes; repealing +certain provisions relating to a limited property tax
exemption for certain hydroelectric facilities on government owned sites and
certain +obsolete provisionsARTICLE 14 � MISCELLANEOUS DEPARTMENT OF REVENUE
TECHNICAL CHANGESSpecifying the date of property assessment in taxpayer signed
consent+ agreement cases; requiring the commissioner of revenue to provide
estate tax +filing extensions upon request; providing for sufficiency of order
of +assessment notices sent by electronic mail; applying the penalty for false
or +fraudulent tax returns to persons failing to file with intent to evade or
defeat+ a tax or tax payments; clarifying the addition to federal taxable income
and +the credit for income taxes paid to other states or provinces; clarifying
the +curriculum areas for income tax education credit purposes; providing for
+consistency of the personal liability standard for withholding taxes with the
+general standard of personal liability for trust taxes; clarifying the
requirement for+ removal from the sustainable forest program for failure to
return the annual certification and providing for the effectiveness of covenants
under +the program; eliminating certain obsolete language relating to
revocation+ of distributor licenses under the unfair cigarette sales act;
applying +the penalties for corporate franchise tax violations to metropolitan
+solid waste landfill fee payment requirements; repealing certain rules relating
+to the estimated tax either replaced with or repealed by statutory language
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