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HF 1

1st Engrossment - 90th Legislature, 2017 1st Special Session (2017 - 2017) Posted on 05/31/2017 11:30am

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A bill for an act
relating to financing and operation of state and local government; making changes
to individual income, corporate franchise, estate, property, sales and use, excise,
mineral, tobacco, special, local, and other miscellaneous taxes and tax-related
provisions; providing for new income tax subtractions, additions, and credits;
providing for a Social Security subtraction; providing a student loan credit;
modifying the research and development credit; establishing a first-time home
buyer savings account program; modifying the child and dependent care credit;
modifying residency definitions; modifying estate tax exemption amount and rates;
establishing and modifying property tax exemptions and classifications; establishing
school building bond agricultural credit; modifying state general levy; modifying
certain local government aids; establishing riparian protection aid; providing
exemption from certain property taxes for a Major League Soccer stadium;
authorizing assessor accreditation waivers; modifying provisions related to
tax-forfeited land; modifying sales tax definitions and exemptions; providing sales
tax exemptions; clarifying the appropriation for certain sales tax refunds;
establishing sales tax collection duties for marketplace providers and certain
retailers; dedicating certain sales and use tax revenues from the sale of fireworks;
providing an exemption from sales and use taxes for a Major League Soccer
stadium; providing sales tax exemptions for certain construction projects; modifying
the exemption for Super Bowl admission, events, and parking; establishing 2018
Super Bowl extended alcohol service hours; providing exemptions for suite licenses
and stadium builder's licenses; authorizing certain tax increment financing authority;
authorizing and modifying certain local sales and use taxes; modifying provisions
related to taconite; modifying taxes on tobacco products and cigarettes; modifying
tax administration procedures; making minor policy, technical, and conforming
changes; requiring reports; appropriating money;amending Minnesota Statutes
2016, sections 13.51, subdivision 2; 16A.152, subdivision 2; 40A.18, subdivision
2; 69.021, subdivision 5; 84.82, subdivision 10; 84.922, subdivision 11; 86B.401,
subdivision 12; 116J.8738, subdivisions 3, 4; 128C.24; 270.071, subdivisions 2,
7, 8, by adding a subdivision; 270.072, subdivisions 2, 3, by adding a subdivision;
270.074, subdivision 1; 270.078, subdivision 1; 270.12, by adding a subdivision;
270.82, subdivision 1; 270A.03, subdivision 5; 270B.14, subdivision 1, by adding
subdivisions; 270C.171, subdivision 1; 270C.30; 270C.33, subdivisions 5, 8;
270C.34, subdivision 2; 270C.35, subdivision 3, by adding a subdivision; 270C.38,
subdivision 1; 270C.445, subdivisions 2, 3, 5a, 6, 6a, 6b, 6c, 7, 8, by adding a
subdivision; 270C.446, subdivisions 2, 3, 4, 5; 270C.447, subdivisions 1, 2, 3, by
adding a subdivision; 270C.72, subdivision 4; 270C.89, subdivision 1; 270C.9901;
271.06, subdivisions 2, 2a, 6, 7; 271.08, subdivision 1; 271.18; 272.02, subdivisions
9, 10, 86, by adding subdivisions; 272.0211, subdivision 1; 272.0213; 272.025,
subdivision 1; 272.029, subdivisions 2, 4, by adding a subdivision; 272.0295,
subdivision 4, by adding a subdivision; 272.03, subdivision 1; 272.115, subdivisions
2, 3; 272.162; 273.061, subdivision 7; 273.0755; 273.08; 273.121, by adding a
subdivision; 273.124, subdivisions 13, 13d; 273.125, subdivision 8; 273.13,
subdivisions 22, 23, 25, 34; 273.135, subdivision 1; 273.1384, subdivision 2;
273.1392, as amended; 273.1393; 273.33, subdivisions 1, 2; 273.371; 273.372,
subdivisions 2, 4, by adding subdivisions; 274.01, subdivision 1; 274.014,
subdivision 3; 274.13, subdivision 1; 274.135, subdivision 3; 275.025, subdivisions
1, 2, 4, by adding a subdivision; 275.065, subdivisions 1, 3; 275.07, subdivisions
1, 2; 275.08, subdivision 1b; 275.62, subdivision 2; 276.017, subdivision 3; 276.04,
subdivision 2; 278.01, subdivision 1; 279.01, subdivisions 1, 2, 3; 279.37, by
adding a subdivision; 281.17; 281.173, subdivision 2; 281.174, subdivision 3;
282.01, subdivisions 1a, 1d, 4, by adding a subdivision; 282.016; 282.018,
subdivision 1; 282.02; 282.04, subdivision 2; 282.241, subdivision 1; 282.322;
287.08; 287.2205; 289A.08, subdivisions 11, 16, by adding a subdivision; 289A.09,
subdivisions 1, 2; 289A.10, subdivision 1; 289A.11, subdivision 1; 289A.12,
subdivision 14; 289A.18, subdivision 1, by adding a subdivision; 289A.19,
subdivision 7; 289A.20, subdivision 2; 289A.31, subdivision 1; 289A.35; 289A.37,
subdivision 2; 289A.38, subdivision 6; 289A.50, subdivisions 2a, 7; 289A.60,
subdivisions 13, 28, by adding a subdivision; 289A.63, by adding a subdivision;
290.01, subdivisions 4a, 7; 290.0131, by adding a subdivision; 290.0132,
subdivision 21, by adding subdivisions; 290.05, subdivision 1; 290.06, subdivision
22, by adding subdivisions; 290.067, subdivisions 1, 2b; 290.0671, subdivision 1,
as amended; 290.0672, subdivision 1; 290.0674, subdivision 2, by adding a
subdivision; 290.068, subdivisions 1, 2; 290.0692, by adding a subdivision;
290.081; 290.091, subdivision 2, as amended; 290.0922, subdivision 2; 290.17,
subdivisions 2, 4; 290.31, subdivision 1; 290A.03, subdivisions 3, 13; 290A.10;
290A.19; 290C.01; 290C.02, subdivisions 1, 3, 6; 290C.03; 290C.04; 290C.05;
290C.055; 290C.07; 290C.08, subdivision 1; 290C.10; 290C.11; 290C.13,
subdivision 6; 291.005, subdivision 1, as amended; 291.016, subdivisions 2, 3;
291.03, subdivisions 1, 9, 11; 291.075; 295.53, subdivision 1, as amended; 295.54,
subdivision 2; 295.55, subdivision 6; 296A.01, subdivisions 7, 12, 33, 42, by
adding subdivisions; 296A.02, by adding a subdivision; 296A.07, subdivisions 1,
4; 296A.08, subdivision 2; 296A.15, subdivisions 1, 4; 296A.17, subdivision 3;
296A.19, subdivision 1; 296A.22, subdivision 9; 296A.26; 297A.61, subdivisions
3, 10, 34, by adding a subdivision; 297A.66, subdivisions 1, 2, 4, by adding a
subdivision; 297A.67, subdivisions 2, 4, 5, 6, by adding subdivisions; 297A.68,
subdivisions 5, 9, 19, 35a, by adding a subdivision; 297A.70, subdivisions 4, 12,
14, by adding subdivisions; 297A.71, subdivision 44, by adding subdivisions;
297A.75, subdivisions 1, 2, 3, 5; 297A.82, subdivisions 4, 4a; 297A.94; 297A.9905;
297B.07; 297D.02; 297E.02, subdivisions 3, 7; 297E.04, subdivision 1; 297E.05,
subdivision 4; 297E.06, subdivision 1; 297F.01, subdivision 13a; 297F.05,
subdivisions 1, 3, 3a, 4, 4a; 297F.09, subdivision 1; 297F.23; 297G.03, by adding
a subdivision; 297G.09, subdivision 1; 297G.22; 297H.04, subdivision 2; 297H.06,
subdivision 2; 297I.05, subdivision 2; 297I.10, subdivisions 1, 3; 297I.30,
subdivision 7, by adding a subdivision; 297I.60, subdivision 2; 298.01, subdivisions
3, 4, 4c; 298.227; 298.24, subdivision 1, as amended; 298.28, subdivisions 2, 5;
366.095, subdivision 1; 383B.117, subdivision 2; 410.32; 412.301; 414.09,
subdivision 2; 469.034, subdivision 2; 469.101, subdivision 1; 469.169, by adding
a subdivision; 469.174, subdivision 12; 469.175, subdivision 3; 469.176,
subdivision 4c; 469.1761, by adding a subdivision; 469.1763, subdivisions 1, 2,
3; 469.178, subdivision 7; 469.319, subdivision 5; 473.39, by adding subdivisions;
473H.09; 473H.17, subdivision 1a; 475.58, subdivision 3b; 475.60, subdivision
2; 477A.011, subdivisions 34, 45; 477A.0124, subdivisions 2, 4, by adding a
subdivision; 477A.013, subdivisions 1, 8, 9, by adding a subdivision; 477A.015;
477A.03, subdivisions 2a, 2b; 477A.12, subdivision 1; 477A.17; 477A.19, by
adding subdivisions; 504B.285, subdivision 1; 559.202, subdivision 2; 609.5316,
subdivision 3; Laws 1980, chapter 511, sections 1, subdivision 2, as amended; 2,
as amended; Laws 1991, chapter 291, article 8, section 27, subdivisions 3, as
amended, 4, as amended, 5; Laws 1996, chapter 471, article 2, section 29,
subdivisions 1, as amended, 4, as amended; article 3, section 51; Laws 1999,
chapter 243, article 4, sections 17, subdivisions 3, 5, by adding a subdivision; 18,
subdivision 1, as amended; Laws 2005, First Special Session chapter 3, article 5,
sections 38, subdivisions 2, as amended, 4, as amended; 44, subdivisions 3, as
amended, 4, 5, as amended; Laws 2008, chapter 154, article 9, section 21,
subdivision 2; Laws 2008, chapter 366, article 7, section 20; Laws 2009, chapter
88, article 5, section 17, as amended; Laws 2010, chapter 216, sections 12, as
amended; 58, as amended; Laws 2014, chapter 308, article 6, sections 8, subdivision
1; 9; article 9, section 94; Laws 2016, chapter 187, section 5; proposing coding
for new law in Minnesota Statutes, chapters 41B; 88; 273; 281; 289A; 290; 290B;
290C; 293; 297A; 473; 477A; proposing coding for new law as Minnesota Statutes,
chapter 462D; repealing Minnesota Statutes 2016, sections 136A.129; 270.074,
subdivision 2; 270C.445, subdivision 1; 270C.447, subdivision 4; 272.02,
subdivision 23; 281.22; 290.06, subdivision 36; 290.067, subdivision 2; 290.9743;
290.9744; 290C.02, subdivisions 5, 9; 297F.05, subdivision 1a; 477A.0124,
subdivision 5; 477A.20; Minnesota Rules, parts 8092.1400; 8092.2000; 8100.0700;
8125.1300, subpart 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

INDIVIDUAL INCOME, CORPORATE FRANCHISE, AND ESTATE TAXES

Section 1.

[41B.0391] BEGINNING FARMER PROGRAM; TAX CREDITS.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Agricultural assets" means agricultural land, livestock, facilities, buildings, and
machinery used for farming in Minnesota.

(c) "Beginning farmer" means an individual who:

(1) is a resident of Minnesota;

(2) is seeking entry, or has entered within the last ten years, into farming;

(3) intends to farm land located within the state borders of Minnesota;

(4) is not and whose spouse is not a family member of the owner of the agricultural
assets from whom the beginning farmer is seeking to purchase or rent agricultural assets;

(5) is not and whose spouse is not a family member of a partner, member, shareholder,
or trustee of the owner of agricultural assets from whom the beginning farmer is seeking to
purchase or rent agricultural assets; and

(6) meets the following eligibility requirements as determined by the authority:

(i) has a net worth that does not exceed the limit provided under section 41B.03,
subdivision 3, paragraph (a), clause (2);

(ii) provides the majority of the day-to-day physical labor and management of the farm;

(iii) has, by the judgment of the authority, adequate farming experience or demonstrates
knowledge in the type of farming for which the beginning farmer seeks assistance from the
authority;

(iv) demonstrates to the authority a profit potential by submitting projected earnings
statements;

(v) asserts to the satisfaction of the authority that farming will be a significant source
of income for the beginning farmer;

(vi) participates in a financial management program approved by the authority or the
commissioner of agriculture;

(vii) agrees to notify the authority if the beginning farmer no longer meets the eligibility
requirements within the three-year certification period, in which case the beginning farmer
is no longer eligible for credits under this section; and

(viii) has other qualifications as specified by the authority.

(d) "Family member" means a family member within the meaning of the Internal Revenue
Code, section 267(c)(4).

(e) "Farm product" means plants and animals useful to humans and includes, but is not
limited to, forage and sod crops, oilseeds, grain and feed crops, dairy and dairy products,
poultry and poultry products, livestock, fruits, and vegetables.

(f) "Farming" means the active use, management, and operation of real and personal
property for the production of a farm product.

(g) "Owner of agricultural assets" means an individual, trust, or pass-through entity that
is the owner in fee of agricultural land or has legal title to any other agricultural asset. Owner
of agricultural assets does not mean an equipment dealer, livestock dealer defined in section
17A.03, subdivision 7, or comparable entity that is engaged in the business of selling
agricultural assets for profit and that is not engaged in farming as its primary business
activity. An owner of agricultural assets approved and certified by the authority under
subdivision 4 must notify the authority if the owner no longer meets the definition in this
paragraph within the three year certification period and is then no longer eligible for credits
under this section.

(h) "Resident" has the meaning given in section 290.01, subdivision 7.

(i) "Share rent agreement" means a rental agreement in which the principal consideration
given to the owner of agricultural assets is a predetermined portion of the production of
farm products produced from the rented agricultural assets and which provides for sharing
production costs or risk of loss, or both.

Subd. 2.

Tax credit for owners of agricultural assets.

(a) An owner of agricultural
assets may take a credit against the tax due under chapter 290 for the sale or rental of
agricultural assets to a beginning farmer in the amount allocated by the authority under
subdivision 4. An owner of agricultural assets is eligible for allocation of a credit equal to:

(1) five percent of the lesser of the sale price or the fair market value of the agricultural
asset, up to a maximum of $32,000;

(2) ten percent of the gross rental income in each of the first, second, and third years of
a rental agreement, up to a maximum of $7,000 per year; or

(3) 15 percent of the cash equivalent of the gross rental income in each of the first,
second, and third years of a share rent agreement, up to a maximum of $10,000 per year.

(b) A qualifying rental agreement includes cash rent of agricultural assets or a share rent
agreement. The agricultural asset must be rented at prevailing community rates as determined
by the authority.

(c) The credit may be claimed only after approval and certification by the authority, and
is limited to the amount stated on the certificate issued under subdivision 4. An owner of
agricultural assets must apply to the authority for certification and allocation of a credit, in
a form and manner prescribed by the authority.

(d) An owner of agricultural assets or beginning farmer may terminate a rental agreement,
including a share rent agreement, for reasonable cause upon approval of the authority. If a
rental agreement is terminated without the fault of the owner of agricultural assets, the tax
credits shall not be retroactively disallowed. In determining reasonable cause, the authority
must look at which party was at fault in the termination of the agreement. If the authority
determines the owner of agricultural assets did not have reasonable cause, the owner of
agricultural assets must repay all credits received as a result of the rental agreement to the
commissioner of revenue. The repayment is additional income tax for the taxable year in
which the authority makes its decision or when a final adjudication under subdivision 5,
paragraph (a), is made, whichever is later.

(e) The credit is limited to the liability for tax as computed under chapter 290 for the
taxable year. If the amount of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a beginning farmer incentive credit carryover according
to section 290.06, subdivision 37.

Subd. 3.

Beginning farmer management tax credit.

(a) A beginning farmer may take
a credit against the tax due under chapter 290 for participating in a financial management
program approved by the authority. A beginning farmer is eligible for allocation of a credit
equal to 100 percent of the amount paid for participating in the program, not to exceed
$1,500 per year. The credit is available for up to three years while the farmer is in the
program. The authority shall maintain a list of approved financial management programs
and establish a procedure for approving equivalent programs that are not on the list.

(b) The credit may be claimed only after approval and certification by the authority.

(c) The credit is limited to the liability for tax as computed under chapter 290 for the
taxable year. If the amount of the credit determined under this section for any taxable year
exceeds this limitation, the excess is a beginning farmer management credit carryover
according to section 290.06, subdivision 38.

Subd. 4.

Authority duties.

(a) The authority shall:

(1) approve and certify or recertify beginning farmers as eligible for the program under
this section;

(2) approve and certify or recertify owners of agricultural assets as eligible for the tax
credit under subdivision 2 subject to the allocation limits in paragraph (c);

(3) provide necessary and reasonable assistance and support to beginning farmers for
qualification and participation in financial management programs approved by the authority;

(4) refer beginning farmers to agencies and organizations that may provide additional
pertinent information and assistance; and

(5) notwithstanding section 41B.211, the Rural Finance Authority must share information
with the commissioner of revenue to the extent necessary to administer provisions under
this subdivision and section 290.06, subdivisions 37 and 38. The Rural Finance Authority
must annually notify the commissioner of revenue of approval and certification or
recertification of beginning farmers and owners of agricultural assets under this section.
For credits under subdivision 2, the notification must include the amount of credit approved
by the authority and stated on the credit certificate.

(b) The certification of a beginning farmer or an owner of agricultural assets under this
section is valid for the year of the certification and the two following years, after which
time the beginning farmer or owner of agricultural assets must apply to the authority for
recertification.

(c) For credits for owners of agricultural assets allowed under subdivision 2, the authority
must not allocate more than $5,000,000 for taxable years beginning after December 31,
2017, and before January 1, 2019, and must not allocate more than $6,000,000 for taxable
years beginning after December 31, 2018. The authority must allocate credits on a first-come,
first-served basis beginning on January 1 of each year, except that recertifications for the
second and third years of credits under subdivision 2, paragraph (a), clauses (1) and (2),
have first priority. Any amount authorized but not allocated in any taxable year does not
cancel and is added to the allocation for the next taxable year.

Subd. 5.

Appeals of authority determinations.

(a) Any decision of the authority under
this section may be challenged as a contested case under chapter 14. The contested case
proceeding must be initiated within 60 days of the date of written notification by the office.

(b) If a taxpayer challenges a decision of the authority under this subdivision, upon
perfection of the appeal the authority must notify the commissioner of revenue of the
challenge within 5 days.

(c) Nothing in this subdivision affects the commissioner of revenue's authority to audit,
review, correct, or adjust returns claiming the credit.

Subd. 6.

Report to legislature.

(a) No later than February 1, 2022, the Rural Finance
Authority, in consultation with the commissioner of revenue, must provide a report to the
chairs and ranking minority members of the legislative committees having jurisdiction over
agriculture, economic development, rural development, and taxes, in compliance with
sections 3.195 and 3.197, on the beginning farmer tax credits under this section issued in
tax years beginning after December 31, 2017, and before January 1, 2022.

(b) The report must include background information on beginning farmers in Minnesota
and any other information the commissioner and authority find relevant to evaluating the
effect of the credits on increasing opportunities for and the number of beginning farmers.

(c) For credits issued under subdivision 2, paragraph (a), clauses (1) to (3), the report
must include:

(1) the number and amount of credits issued under each clause;

(2) the geographic distribution of credits issued under each clause;

(3) the type of agricultural assets for which credits were issued under clause (1);

(4) the number and geographic distribution of beginning farmers whose purchase or
rental of assets resulted in credits for the seller or owner of the asset;

(5) the number and amount of credits disallowed under subdivision 2, paragraph (d);

(6) data on the number of beginning farmers by geographic region in calendar years
2017 through 2021; and

(7) the number and amount of credit applications that exceeded the allocation available
in each year.

(d) For credits issued under subdivision 3, the report must include:

(1) the number and amount of credits issued;

(2) the geographic distribution of credits;

(3) a listing and description of each approved financial management program for which
credits were issued; and

(4) a description of the approval procedure for financial management programs not on
the list maintained by the authority, as provided in subdivision 3, paragraph (a).

Subd. 7.

Sunset.

This section expires for taxable years beginning after December 31,
2023.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2017.

Sec. 2.

Minnesota Statutes 2016, section 289A.10, subdivision 1, is amended to read:


Subdivision 1.

Return required.

In the case of a decedent who has an interest in property
with a situs in Minnesota, the personal representative must submit a Minnesota estate tax
return to the commissioner, on a form prescribed by the commissioner, if:

(1) a federal estate tax return is required to be filed; or

(2) the sum of the federal gross estate and federal adjusted taxable gifts, as defined in
section 2001(b) of the Internal Revenue Code, made within three years of the date of the
decedent's death exceeds $1,200,000 for estates of decedents dying in 2014; $1,400,000 for
estates of decedents dying in 2015; $1,600,000 for estates of decedents dying in 2016;
$1,800,000 $2,100,000 for estates of decedents dying in 2017; $2,400,000 for estates of
decedents dying in 2018; $2,700,000 for estates of decedents dying in 2019;
and $2,000,000
$3,000,000
for estates of decedents dying in 2018 2020 and thereafter.

The return must contain a computation of the Minnesota estate tax due. The return must
be signed by the personal representative.

EFFECTIVE DATE.

This section is effective retroactively for estates of decedents
dying after December 31, 2016.

Sec. 3.

Minnesota Statutes 2016, section 289A.19, subdivision 7, is amended to read:


Subd. 7.

Federal extensions.

When an extension of time to file a partnership, fiduciary
income tax,
or S corporation tax return is granted by the Internal Revenue Service, the
commissioner shall grant an automatic extension to file the comparable Minnesota return
for that period. An extension granted under this subdivision does not affect the due date for
making payments of tax.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2016, section 290.01, subdivision 4a, is amended to read:


Subd. 4a.

Financial institution.

(a) "Financial institution" means:

(1) a holding company any corporation or other business entity registered (i) under state
law as a bank holding company; (ii) under the federal Bank Holding Company Act of 1956,
as amended; or (iii) as a savings and loan holding company under the federal National
Housing Act, as amended
;

(2) any regulated financial corporation; or a national bank organized and existing as a
national bank association pursuant to the provisions of United States Code, title 12, chapter
2;

(3) any other corporation organized under the laws of the United States or organized
under the laws of this state or any other state or country that is carrying on the business of
a financial institution.
a savings association or federal savings bank as defined in United
States Code, title 12, section 1813(b)(1);

(4) any bank or thrift institution incorporated or organized under the laws of any state;

(5) any corporation organized under United States Code, title 12, sections 611 to 631;

(6) any agency or branch of a foreign depository as defined under United States Code,
title 12, section 3101;

(7) any corporation or other business entity that is more than 50 percent owned, directly
or indirectly, by any person or business entity described in clauses (1) to (6), other than an
insurance company taxable under chapter 297I;

(8) a corporation or other business entity that derives more than 50 percent of its total
gross income for financial accounting purposes from finance leases. For the purposes of
this clause, "gross income" means the average from the current tax year and immediately
preceding two years and excludes gross income from incidental or occasional transactions.
For purposes of this clause, "finance lease" means any lease transaction that is the functional
equivalent of an extension of credit and that transfers substantially all the benefits and risks
incident to the ownership of property, including any direct financing lease or leverage lease
that meets the criteria of Financial Accounting Standards Board Statement No. 13, accounting
for leases, or any other lease that is accounted for as financing by a lessor under generally
accepted accounting principles; or

(9) any other person or business entity, other than an insurance company taxable under
chapter 297I, that derives more than 50 percent of its gross income from activities that an
entity described in clauses (2) to (6) or (8) is authorized to transact. For the purposes of this
clause, gross income does not include income from nonrecurring, extraordinary items.

(b) "Holding company" means any corporation registered under the Federal Bank Holding
Company Act of 1956, as amended, or registered as a savings and loan holding company
under the Federal National Housing Act, as amended, or a federal savings bank holding
company.
The commissioner is authorized to exclude any person from the application of
paragraph (a), clause (9), if the person proves by clear and convincing evidence that the
person's income-producing activity is not in substantial competition with any person described
in paragraph (a), clauses (2) to (6) or (8).

(c) "Regulated financial corporation" means an institution, the deposits or accounts of
which are insured under the Federal Deposit Insurance Act or by the Federal Savings and
Loan Insurance Corporation, any institution which is a member of a Federal Home Loan
Bank, any other bank or thrift institution incorporated or organized under the laws of any
state or any foreign country which is engaged in the business of receiving deposits, any
corporation organized under the provisions of United States Code, title 12, sections 611 to
631 (Edge Act Corporations), and any agency of a foreign depository as defined in United
States Code, title 12, section 3101.

(d) "Business of a financial institution" means:

(1) the business that any corporation organized under the authority of the United States
or organized under the laws of this state or any other state or country does or has authority
to do which is substantially similar to the business which a corporation may be created to
do under chapters 46 to 55 or any business which a corporation is authorized to do by those
laws; or

(2) the business that any corporation organized under the authority of the United States
or organized under the laws of this state or any other state or country does or has authority
to do if the corporation derives more than 50 percent of its gross income from lending
activities (including discounting obligations) in substantial competition with the businesses
described in clause (1). For purposes of this clause, the computation of the gross income of
a corporation does not include income from nonrecurring, extraordinary items.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 5.

Minnesota Statutes 2016, section 290.01, subdivision 7, is amended to read:


Subd. 7.

Resident.

(a) The term "resident" means any individual domiciled in Minnesota,
except that an individual is not a "resident" for the period of time that the individual is a
"qualified individual" as defined in section 911(d)(1) of the Internal Revenue Code, if the
qualified individual notifies the county within three months of moving out of the country
that homestead status be revoked for the Minnesota residence of the qualified individual,
and the property is not classified as a homestead while the individual remains a qualified
individual.

(b) "Resident" also means any individual domiciled outside the state who maintains a
place of abode in the state and spends in the aggregate more than one-half of the tax year
in Minnesota, unless:

(1) the individual or the spouse of the individual is in the armed forces of the United
States; or

(2) the individual is covered under the reciprocity provisions in section 290.081.

For purposes of this subdivision, presence within the state for any part of a calendar day
constitutes a day spent in the state. Individuals shall keep adequate records to substantiate
the days spent outside the state.

The term "abode" means a dwelling maintained by an individual, whether or not owned
by the individual and whether or not occupied by the individual, and includes a dwelling
place owned or leased by the individual's spouse.

(c) In determining where an individual is domiciled, neither the commissioner nor any
court shall consider:

(1) charitable contributions made by an the individual within or without the state in
determining if the individual is domiciled in Minnesota
;

(2) the location of the individual's attorney, certified public accountant, or financial
adviser; or

(3) the place of business of a financial institution at which the individual applies for any
new type of credit or at which the individual opens or maintains any type of account
.

(d) For purposes of this subdivision, the following terms have the meanings given them:

(1) "financial adviser" means:

(i) an individual or business entity engaged in business as a certified financial planner,
registered investment adviser, licensed insurance producer or agent, or registered securities
broker-dealer representative; or

(ii) a financial institution providing services related to trust or estate administration,
investment management, or financial planning; and

(2) "financial institution" means a financial institution as defined in section 47.015,
subdivision 1; a state or nationally chartered credit union; or a registered broker-dealer
under the Securities and Exchange Act of 1934.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 6.

Minnesota Statutes 2016, section 290.0131, is amended by adding a subdivision
to read:


Subd. 14.

First-time home buyer savings account.

The amount for a first-time home
buyer savings account required by section 462D.06, subdivision 2, is an addition.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 7.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:


Subd. 23.

Contributions to a section 529 plan.

(a) The amount equal to the contributions
made during the taxable year to a qualified account is a subtraction.

(b) The definitions under section 290.0684 apply for the purposes of this subdivision.

(c) The subtraction under this subdivision must not exceed $3,000 for married couples
filing joint returns and $1,500 for all other filers, and is limited to individuals who do not
claim the credit under section 290.0684.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 8.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:


Subd. 24.

Discharge of indebtedness; education loans.

(a) The amount equal to the
discharge of indebtedness of the taxpayer is a subtraction if:

(1) the indebtedness discharged is a qualified education loan; and

(2) the indebtedness was discharged under section 136A.1791, or following the taxpayer's
completion of an income-driven repayment plan.

(b) For the purposes of this subdivision, "qualified education loan" has the meaning
given in section 221 of the Internal Revenue Code.

(c) For purposes of this subdivision, "income-driven repayment plan" means a payment
plan established by the United States Department of Education that sets monthly student
loan payments based on income and family size under United States Code, title 20, section
1087e, or similar authority and specifically includes, but is not limited to:

(1) the income-based repayment plan under United States Code, title 20, section 1098e;

(2) the income contingent repayment plan established under United States Code, title
20, section 1087e, subsection (e); and

(3) the PAYE program or REPAYE program established by the Department of Education
under administrative regulations.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 9.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:


Subd. 25.

First-time home buyer savings account.

(a) For purposes of this subdivision,
the terms defined in section 462D.02 have the meanings given in that section.

(b) The earnings on a first-time home buyer savings account allowed by section 462D.06,
subdivision 1, is a subtraction.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 10.

Minnesota Statutes 2016, section 290.0132, is amended by adding a subdivision
to read:


Subd. 26.

Social Security benefits.

(a) A portion of Social Security benefits is allowed
as a subtraction. The subtraction equals the lesser of Social Security benefits or a maximum
subtraction subject to the limits under paragraphs (b), (c), and (d).

(b) For married taxpayers filing a joint return and surviving spouses, the maximum
subtraction equals $4,500. The maximum subtraction is reduced by 20 percent of provisional
income over $77,000. In no case is the subtraction less than zero.

(c) For single or head-of-household taxpayers, the maximum subtraction equals $3,500.
The maximum subtraction is reduced by 20 percent of provisional income over $60,200.
In no case is the subtraction less than zero.

(d) For married taxpayers filing separate returns, the maximum subtraction equals $2,250.
The maximum subtraction is reduced by 20 percent of provisional income over $38,500.
In no case is the subtraction less than zero.

(e) For purposes of this subdivision, "provisional income" means modified adjusted
gross income as defined in section 86(b)(2) of the Internal Revenue Code, plus one-half of
the Social Security benefits received during the taxable year, and "Social Security benefits"
has the meaning given in section 86(d)(1) of the Internal Revenue Code.

(f) The commissioner shall adjust the maximum subtraction and threshold amounts in
paragraphs (b) to (d) by the percentage determined pursuant to the provisions of section
1(f) of the Internal Revenue Code, except that in section 1(f)(3)(B) of the Internal Revenue
Code the word "2016" shall be substituted for the word "1992." For 2018, the commissioner
shall then determine the percentage change from the 12 months ending on August 31, 2016,
to the 12 months ending on August 31, 2017, and in each subsequent year, from the 12
months ending on August 31, 2016, to the 12 months ending on August 31 of the year
preceding the taxable year. The determination of the commissioner pursuant to this
subdivision must not be considered a rule and is not subject to the Administrative Procedure
Act contained in chapter 14, including section 14.386. The maximum subtraction and
threshold amounts as adjusted must be rounded to the nearest $10 amount. If the amount
ends in $5, the amount is rounded up to the nearest $10 amount.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 11.

[290.0137] ACCELERATED RECOGNITION OF CERTAIN
INSTALLMENT SALE GAINS.

(a) In the case of a nonresident individual or a person who becomes a nonresident
individual during the tax year, taxable net income shall include the allocable amount realized
upon a sale of the assets of, or any interest in, an S corporation or partnership that operated
in Minnesota during the year of sale, including any income or gain to be recognized in future
years pursuant to an installment sale method of reporting under the Internal Revenue Code.

(1) For the purposes of this paragraph, an individual who becomes a nonresident of
Minnesota in any year after an installment sale is required to recognize the full amount of
any income or gain described in this paragraph on the individual's final Minnesota resident
tax return to the extent that such income has not been recognized in a prior year.

(2) For the purposes of this section, "realized" has the meaning given in section 1001(b)
of the Internal Revenue Code.

(3) For the purposes of this section, "installment sale" means any installment sale under
section 453 of the Internal Revenue Code and any other sale that is reported utilizing a
method of accounting authorized under subchapter E of the Internal Revenue Code that
allows taxpayers to delay reporting or recognizing a realized gain until a future year.

(4) For the purposes of this section, "allocable amount" means the full amount to be
apportioned to Minnesota under section 290.191 or 290.20, or the full amount to be assigned
to Minnesota under section 290.17.

(b) Notwithstanding paragraph (a), nonresident taxpayers may elect to defer recognizing
unrecognized installment sale gains by making an election under this paragraph. The election
must be filed on a form to be determined or prescribed by the commissioner and must be
filed by the due date of the individual income tax return, including any extension. Electing
taxpayers must make an irrevocable agreement to:

(1) file Minnesota tax returns in all subsequent years when gains from the installment
sales are recognized and reported to the Internal Revenue Service;

(2) allocate gains to the state of Minnesota as though the gains were realized in the year
of sale under section 290.17, 290.191, or 290.20; and

(3) include all relevant federal tax documents reporting the installment sale with
subsequent Minnesota tax returns.

(c) Income or gain recognized for Minnesota purposes pursuant to paragraph (a) must
be excluded from taxable net income in any future year that the taxpayer files a Minnesota
tax return to the extent that the income or gain has already been subject to tax pursuant to
paragraph (a).

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 12.

Minnesota Statutes 2016, section 290.05, subdivision 1, is amended to read:


Subdivision 1.

Exempt entities.

The following corporations, individuals, estates, trusts,
and organizations shall be exempted from taxation under this chapter, provided that every
such person or corporation claiming exemption under this chapter, in whole or in part, must
establish to the satisfaction of the commissioner the taxable status of any income or activity:

(a) corporations, individuals, estates, and trusts engaged in the business of mining or
producing iron ore and mining, producing, or refining other ores, metals, and minerals, the
mining, production, or refining of which is subject to the occupation tax imposed by section
298.01; but if any such corporation, individual, estate, or trust engages in any other business
or activity or has income from any property not used in such business it shall be subject to
this tax computed on the net income from such property or such other business or activity.
Royalty shall not be considered as income from the business of mining or producing iron
ore within the meaning of this section;

(b) the United States of America, the state of Minnesota or any political subdivision of
either agencies or instrumentalities, whether engaged in the discharge of governmental or
proprietary functions; and

(c) any insurance company, as defined in section 290.17, subdivision 4, paragraph (j),
but including any insurance company licensed and domiciled in another state that grants,
on a reciprocal basis, exemption from retaliatory taxes
.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 13.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:


Subd. 2g.

First-time home buyer savings account.

(a) For purposes of this subdivision,
the terms defined in section 462D.02 have the meanings given in that section.

(b) In addition to the tax computed under subdivision 2c, an additional amount of tax
applies equal to the additional tax computed for the taxable year for the account holder of
a first-time home buyer account under section 462D.06, subdivision 3.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 14.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:


Subd. 2h.

Section 529 plan recapture.

(a) For the purposes of this subdivision:

(1) the definitions under section 290.0684 apply;

(2) "account owner" means an individual who owns one or more qualified accounts;

(3) "credit ratio" means the ratio of (i) two times the total amount of credits that an
account owner claimed under section 290.0684 for contributions to the account owner's
qualified accounts to (ii) the total contributions in all taxable years to the account owner's
qualified accounts; and

(4) "subtraction ratio" means the ratio of (i) the total amount of subtractions that an
account owner claimed under section 290.0132, subdivision 23, for contributions to the
account owner's qualified accounts to (ii) the total contributions in all taxable years to the
account owner's qualified accounts.

(b) If a distribution from a qualified account is used for a purpose other than to pay for
qualified higher education expenses, the account owner must pay an additional tax equal
to:

(1) 50 percent of the product of the credit ratio and the amount of the distribution; plus

(2) 10 percent of the product of the subtraction ratio and the amount of the distribution.

(c) The additional tax under this subdivision does not apply to any portion of a distribution
that is subject to the additional tax under section 529(c)(6) of the Internal Revenue Code.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 15.

Minnesota Statutes 2016, section 290.06, subdivision 22, is amended to read:


Subd. 22.

Credit for taxes paid to another state.

(a) A taxpayer who is liable for taxes
based on net income to another state, as provided in paragraphs (b) through (f), upon income
allocated or apportioned to Minnesota, is entitled to a credit for the tax paid to another state
if the tax is actually paid in the taxable year or a subsequent taxable year. A taxpayer who
is a resident of this state pursuant to section 290.01, subdivision 7, paragraph (b), and who
is subject to income tax as a resident in the state of the individual's domicile is not allowed
this credit unless the state of domicile does not allow a similar credit.

(b) For an individual, estate, or trust, the credit is determined by multiplying the tax
payable under this chapter by the ratio derived by dividing the income subject to tax in the
other state that is also subject to tax in Minnesota while a resident of Minnesota by the
taxpayer's federal adjusted gross income, as defined in section 62 of the Internal Revenue
Code, modified by the addition required by section 290.0131, subdivision 2, and the
subtraction allowed by section 290.0132, subdivision 2, to the extent the income is allocated
or assigned to Minnesota under sections 290.081 and 290.17.

(c) If the taxpayer is an athletic team that apportions all of its income under section
290.17, subdivision 5, the credit is determined by multiplying the tax payable under this
chapter by the ratio derived from dividing the total net income subject to tax in the other
state by the taxpayer's Minnesota taxable income.

(d)(1) The credit determined under paragraph (b) or (c) shall not exceed the amount of
tax so paid to the other state on the gross income earned within the other state subject to
tax under this chapter, nor shall; and

(2) the allowance of the credit does not reduce the taxes paid under this chapter to an
amount less than what would be assessed if such income amount was the gross income
earned within the other state were
excluded from taxable net income.

(e) In the case of the tax assessed on a lump-sum distribution under section 290.032, the
credit allowed under paragraph (a) is the tax assessed by the other state on the lump-sum
distribution that is also subject to tax under section 290.032, and shall not exceed the tax
assessed under section 290.032. To the extent the total lump-sum distribution defined in
section 290.032, subdivision 1, includes lump-sum distributions received in prior years or
is all or in part an annuity contract, the reduction to the tax on the lump-sum distribution
allowed under section 290.032, subdivision 2, includes tax paid to another state that is
properly apportioned to that distribution.

(f) If a Minnesota resident reported an item of income to Minnesota and is assessed tax
in such other state on that same income after the Minnesota statute of limitations has expired,
the taxpayer shall receive a credit for that year under paragraph (a), notwithstanding any
statute of limitations to the contrary. The claim for the credit must be submitted within one
year from the date the taxes were paid to the other state. The taxpayer must submit sufficient
proof to show entitlement to a credit.

(g) For the purposes of this subdivision, a resident shareholder of a corporation treated
as an "S" corporation under section 290.9725, must be considered to have paid a tax imposed
on the shareholder in an amount equal to the shareholder's pro rata share of any net income
tax paid by the S corporation to another state. For the purposes of the preceding sentence,
the term "net income tax" means any tax imposed on or measured by a corporation's net
income.

(h) For the purposes of this subdivision, a resident partner of an entity taxed as a
partnership under the Internal Revenue Code must be considered to have paid a tax imposed
on the partner in an amount equal to the partner's pro rata share of any net income tax paid
by the partnership to another state. For purposes of the preceding sentence, the term "net
income" tax means any tax imposed on or measured by a partnership's net income.

(i) For the purposes of this subdivision, "another state":

(1) includes:

(i) the District of Columbia; and

(ii) a province or territory of Canada; but

(2) excludes Puerto Rico and the several territories organized by Congress.

(j) The limitations on the credit in paragraphs (b), (c), and (d), are imposed on a state
by state basis.

(k) For a tax imposed by a province or territory of Canada, the tax for purposes of this
subdivision is the excess of the tax over the amount of the foreign tax credit allowed under
section 27 of the Internal Revenue Code. In determining the amount of the foreign tax credit
allowed, the net income taxes imposed by Canada on the income are deducted first. Any
remaining amount of the allowable foreign tax credit reduces the provincial or territorial
tax that qualifies for the credit under this subdivision.

(l)(1) The credit allowed to a qualifying individual under this section for tax paid to a
qualifying state equals the credit calculated under paragraphs (b) and (d), plus the amount
calculated by multiplying:

(i) the difference between the preliminary credit and the credit calculated under paragraphs
(b) and (d), by

(ii) the ratio derived by dividing the income subject to tax in the qualifying state that
consists of compensation for performance of personal or professional services by the total
amount of income subject to tax in the qualifying state.

(2) If the amount of the credit that a qualifying individual is eligible to receive under
clause (1) for tax paid to a qualifying state exceeds the tax due under this chapter before
the application of the credit calculated under clause (1), the commissioner shall refund the
excess to the qualifying individual. An amount sufficient to pay the refunds required by this
subdivision is appropriated to the commissioner from the general fund.

(3) For purposes of this paragraph, "preliminary credit" means the credit that a qualifying
individual is eligible to receive under paragraphs (b) and (d) for tax paid to a qualifying
state without regard to the limitation in paragraph (d), clause (2); "qualifying individual"
means a Minnesota resident under section 290.01, subdivision 7, paragraph (a), who received
compensation during the taxable year for the performance of personal or professional services
within a qualifying state; and "qualifying state" means a state with which an agreement
under section 290.081 is not in effect for the taxable year but was in effect for a taxable
year beginning before January 1, 2010.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 16.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:


Subd. 37.

Beginning farmer incentive credit.

(a) A beginning farmer incentive credit
is allowed against the tax due under this chapter for the sale or rental of agricultural assets
to a beginning farmer according to section 41B.0391, subdivision 2, and is limited to the
amount stated on the certificate issued under section 41B.0391, subdivision 4.

(b) The credit may be claimed only after approval and certification by the Rural Finance
Authority according to section 41B.0391.

(c) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a beginning farmer incentive credit carryover to
each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
the taxable year is carried first to the earliest of the taxable years to which the credit may
be carried and then to each successive year to which the credit may be carried. The amount
of the unused credit which may be added under this paragraph must not exceed the taxpayer's
liability for tax, less the beginning farmer incentive credit for the taxable year.

(d) Credits allowed to a partnership, a limited liability company taxed as a partnership,
an S corporation, or multiple owners of property are passed through to the partners, members,
shareholders, or owners, respectively, pro rata to each based on the partner's, member's,
shareholder's, or owner's share of the entity's assets or as specially allocated in the
organizational documents or any other executed agreement, as of the last day of the taxable
year.

(e) For a nonresident or part-year resident, the credit under this section must be allocated
using the percentage calculated in section 290.06, subdivision 2c, paragraph (e).

(f) Notwithstanding the approval and certification by the Rural Finance Authority under
section 41B.0391, the commissioner may utilize any audit and examination powers under
chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the
credit and to assess for the amount of any improperly claimed credit.

(g) This section expires at the same time and on the same terms as section 41B.0391,
except that the expiration of this section does not affect the commissioner of revenue's
authority to audit or power of examination and assessment for credits claimed under this
section.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2017.

Sec. 17.

Minnesota Statutes 2016, section 290.06, is amended by adding a subdivision to
read:


Subd. 38.

Beginning farmer management credit.

(a) A taxpayer who is a beginning
farmer may take a credit against the tax due under this chapter for participation in a financial
management program according to section 41B.0391, subdivision 3.

(b) The credit may be claimed only after approval and certification by the Rural Finance
Authority according to section 41B.0391.

(c) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a beginning farmer management credit carryover
to each of the three succeeding taxable years. The entire amount of the excess unused credit
for the taxable year is carried first to the earliest of the taxable years to which the credit
may be carried and then to each successive year to which the credit may be carried. The
amount of the unused credit which may be added under this paragraph must not exceed the
taxpayer's liability for tax, less the beginning farmer management credit for the taxable
year.

(d) For a part-year resident, the credit under this section must be allocated using the
percentage calculated in section 290.06, subdivision 2c, paragraph (e).

(e) Notwithstanding the approval and certification by the Rural Finance Authority under
section 41B.0391, the commissioner may utilize any audit and examination powers under
chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the
credit and to assess for the amount of any improperly claimed credit.

(f) This section expires at the same time and on the same terms as section 41B.0391,
except that the expiration of this section does not affect the commissioner of revenue's
authority to audit or power of examination and assessment for credits claimed under this
section.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2017.

Sec. 18.

Minnesota Statutes 2016, section 290.067, subdivision 1, is amended to read:


Subdivision 1.

Amount of credit.

(a) A taxpayer may take as a credit against the tax
due from the taxpayer and a spouse, if any, under this chapter an amount equal to the
dependent care credit for which the taxpayer is eligible pursuant to the provisions of section
21 of the Internal Revenue Code subject to the limitations provided in subdivision 2 except
that in determining whether the child qualified as a dependent, income received as a
Minnesota family investment program grant or allowance to or on behalf of the child must
not be taken into account in determining whether the child received more than half of the
child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of the Internal
Revenue Code do not apply.

(b) If a child who has not attained the age of six years at the close of the taxable year is
cared for at a licensed family day care home operated by the child's parent, the taxpayer is
deemed to have paid employment-related expenses. If the child is 16 months old or younger
at the close of the taxable year, the amount of expenses deemed to have been paid equals
the maximum limit for one qualified individual under section 21(c) and (d) of the Internal
Revenue Code. If the child is older than 16 months of age but has not attained the age of
six years at the close of the taxable year, the amount of expenses deemed to have been paid
equals the amount the licensee would charge for the care of a child of the same age for the
same number of hours of care.

(c) If a married couple:

(1) has a child who has not attained the age of one year at the close of the taxable year;

(2) files a joint tax return for the taxable year; and

(3) does not participate in a dependent care assistance program as defined in section 129
of the Internal Revenue Code, in lieu of the actual employment related expenses paid for
that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i)
the combined earned income of the couple or (ii) the amount of the maximum limit for one
qualified individual under section 21(c) and (d) of the Internal Revenue Code will be deemed
to be the employment related expense paid for that child. The earned income limitation of
section 21(d) of the Internal Revenue Code shall not apply to this deemed amount. These
deemed amounts apply regardless of whether any employment-related expenses have been
paid.

(d) If the taxpayer is not required and does not file a federal individual income tax return
for the tax year, no credit is allowed for any amount paid to any person unless:

(1) the name, address, and taxpayer identification number of the person are included on
the return claiming the credit; or

(2) if the person is an organization described in section 501(c)(3) of the Internal Revenue
Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name
and address of the person are included on the return claiming the credit.

In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information required.

(e) In the case of a nonresident, part-year resident, or a person who has earned income
not subject to tax under this chapter including earned income excluded pursuant to section
290.0132, subdivision 10, the credit determined under section 21 of the Internal Revenue
Code must be allocated based on the ratio by which the earned income of the claimant and
the claimant's spouse from Minnesota sources bears to the total earned income of the claimant
and the claimant's spouse.

(f) For residents of Minnesota, the subtractions for military pay under section 290.0132,
subdivisions 11
and 12, are not considered "earned income not subject to tax under this
chapter."

(g) For residents of Minnesota, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this
chapter."

(h) For taxpayers with federal adjusted gross income in excess of $50,000, the credit is
equal to the lesser of the credit otherwise calculated under this subdivision, or the amount
equal to $600 minus five percent of federal adjusted gross income in excess of $50,000 for
taxpayers with one qualified individual, or $1,200 minus five percent of federal adjusted
gross income in excess of $50,000 for taxpayers with two or more qualified individuals,
but in no case is the credit less than zero.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 19.

Minnesota Statutes 2016, section 290.067, subdivision 2b, is amended to read:


Subd. 2b.

Inflation adjustment.

The commissioner shall adjust the dollar amount of
the income threshold at which the maximum credit begins to be reduced under subdivision
2 1 by the percentage determined pursuant to the provisions of section 1(f) of the Internal
Revenue Code, except that in section 1(f)(3)(B) the word "1999" "2016" shall be substituted
for the word "1992." For 2001 2018, the commissioner shall then determine the percent
change from the 12 months ending on August 31, 1999 2016, to the 12 months ending on
August 31, 2000 2017, and in each subsequent year, from the 12 months ending on August
31, 1999 2016, to the 12 months ending on August 31 of the year preceding the taxable
year. The determination of the commissioner pursuant to this subdivision must not be
considered a "rule" and is not subject to the Administrative Procedure Act contained in
chapter 14. The threshold amount as adjusted must be rounded to the nearest $10 amount.
If the amount ends in $5, the amount is rounded up to the nearest $10 amount.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 20.

Minnesota Statutes 2016, section 290.0671, subdivision 1, as amended by Laws
2017, chapter 1, section 6, is amended to read:


Subdivision 1.

Credit allowed.

(a) An individual who is a resident of Minnesota is
allowed a credit against the tax imposed by this chapter equal to a percentage of earned
income. To receive a credit, a taxpayer must be eligible for a credit under section 32 of the
Internal Revenue Code, except that a taxpayer with no qualifying children who has attained
the age of 21, but not attained age 65 before the close of the taxable year and is otherwise
eligible for a credit under section 32 of the Internal Revenue Code may also receive a credit
.

(b) For individuals with no qualifying children, the credit equals 2.10 percent of the first
$6,180 of earned income. The credit is reduced by 2.01 percent of earned income or adjusted
gross income, whichever is greater, in excess of $8,130, but in no case is the credit less than
zero.

(c) For individuals with one qualifying child, the credit equals 9.35 percent of the first
$11,120 of earned income. The credit is reduced by 6.02 percent of earned income or adjusted
gross income, whichever is greater, in excess of $21,190, but in no case is the credit less
than zero.

(d) For individuals with two or more qualifying children, the credit equals 11 percent
of the first $18,240 of earned income. The credit is reduced by 10.82 percent of earned
income or adjusted gross income, whichever is greater, in excess of $25,130, but in no case
is the credit less than zero.

(e) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).

(f) For a person who was a resident for the entire tax year and has earned income not
subject to tax under this chapter, including income excluded under section 290.0132,
subdivision 10
, the credit must be allocated based on the ratio of federal adjusted gross
income reduced by the earned income not subject to tax under this chapter over federal
adjusted gross income. For purposes of this paragraph, the following clauses are not
considered "earned income not subject to tax under this chapter":

(1) the subtractions for military pay under section 290.0132, subdivisions 11 and 12,
are not considered "earned income not subject to tax under this chapter."For the purposes
of this paragraph,
;

(2) the exclusion of combat pay under section 112 of the Internal Revenue Code is not
considered "earned income not subject to tax under this chapter."
; and

(3) income derived from an Indian reservation by an enrolled member of the reservation
while living on the reservation.

(g) For tax years beginning after December 31, 2013, the $8,130 in paragraph (b), the
$21,190 in paragraph (c), and the $25,130 in paragraph (d), after being adjusted for inflation
under subdivision 7, are each increased by $5,000 for married taxpayers filing joint returns.
For tax years beginning after December 31, 2013, the commissioner shall annually adjust
the $5,000 by the percentage determined pursuant to the provisions of section 1(f) of the
Internal Revenue Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted
for the word "1992." For 2014, the commissioner shall then determine the percent change
from the 12 months ending on August 31, 2008, to the 12 months ending on August 31,
2013, and in each subsequent year, from the 12 months ending on August 31, 2008, to the
12 months ending on August 31 of the year preceding the taxable year. The earned income
thresholds as adjusted for inflation must be rounded to the nearest $10. If the amount ends
in $5, the amount is rounded up to the nearest $10. The determination of the commissioner
under this subdivision is not a rule under the Administrative Procedure Act.

(h) The commissioner shall construct tables showing the amount of the credit at various
income levels and make them available to taxpayers. The tables shall follow the schedule
contained in this subdivision, except that the commissioner may graduate the transition
between income brackets.

EFFECTIVE DATE.

The amendment to paragraph (a) is effective for taxable years
beginning after December 31, 2018. The amendment to paragraph (f) is effective for taxable
years beginning after December 31, 2016.

Sec. 21.

Minnesota Statutes 2016, section 290.0674, subdivision 2, is amended to read:


Subd. 2.

Limitations.

(a) For claimants with income not greater than $33,500, the
maximum credit allowed for a family is $1,000 multiplied by the number of qualifying
children in kindergarten through grade 12 in the family. The maximum credit for families
with one qualifying child in kindergarten through grade 12 is reduced by $1 for each $4 of
household income over $33,500, and the maximum credit for families with two or more
qualifying children in kindergarten through grade 12 is reduced by $2 for each $4 of
household income over $33,500, but in no case is the credit less than zero.

For purposes of this section "income" has the meaning given in section 290.067,
subdivision 2a
.
In the case of a married claimant, a credit is not allowed unless a joint income
tax return is filed.

(b) For a nonresident or part-year resident, the credit determined under subdivision 1
and the maximum credit amount in paragraph (a) must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 22.

Minnesota Statutes 2016, section 290.0674, is amended by adding a subdivision
to read:


Subd. 2a.

Income.

(a) For purposes of this section, "income" means the sum of the
following:

(1) federal adjusted gross income as defined in section 62 of the Internal Revenue Code;
and

(2) the sum of the following amounts to the extent not included in clause (1):

(i) all nontaxable income;

(ii) the amount of a passive activity loss that is not disallowed as a result of section 469,
paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss
carryover allowed under section 469(b) of the Internal Revenue Code;

(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a
solvent individual excluded from gross income under section 108(g) of the Internal Revenue
Code;

(iv) cash public assistance and relief;

(v) any pension or annuity (including railroad retirement benefits, all payments received
under the federal Social Security Act, Supplemental Security Income, and veterans benefits),
which was not exclusively funded by the claimant or spouse, or which was funded exclusively
by the claimant or spouse and which funding payments were excluded from federal adjusted
gross income in the years when the payments were made;

(vi) interest received from the federal or a state government or any instrumentality or
political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(ix) the gross amounts of payments received in the nature of disability income or sick
pay as a result of accident, sickness, or other disability, whether funded through insurance
or otherwise;

(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1995;

(xi) contributions made by the claimant to an individual retirement account, including
a qualified voluntary employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of
the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal
Revenue Code;

(xii) nontaxable scholarship or fellowship grants;

(xiii) the amount of deduction allowed under section 199 of the Internal Revenue Code;

(xiv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue
Code;

(xv) the amount deducted for tuition expenses under section 222 of the Internal Revenue
Code; and

(xvi) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code.

In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" means federal adjusted gross income reflected in the
fiscal year ending in the next calendar year. Federal adjusted gross income may not be
reduced by the amount of a net operating loss carryback or carryforward or a capital loss
carryback or carryforward allowed for the year.

(b) "Income" does not include:

(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;

(2) amounts of any pension or annuity that were exclusively funded by the claimant or
spouse if the funding payments were not excluded from federal adjusted gross income in
the years when the payments were made;

(3) surplus food or other relief in kind supplied by a governmental agency;

(4) relief granted under chapter 290A;

(5) child support payments received under a temporary or final decree of dissolution or
legal separation; and

(6) restitution payments received by eligible individuals and excludable interest as
defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001,
Public Law 107-16.

Sec. 23.

Minnesota Statutes 2016, section 290.068, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

A corporation, partners in a partnership, or shareholders
in a corporation treated as an "S" corporation under section 290.9725 are allowed a credit
against the tax computed under this chapter for the taxable year equal to:

(a) ten percent of the first $2,000,000 of the excess (if any) of

(1) the qualified research expenses for the taxable year, over

(2) the base amount; and

(b) 2.5 four percent on all of such excess expenses over $2,000,000.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 24.

[290.0682] STUDENT LOAN CREDIT.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Adjusted gross income" means federal adjusted gross income as defined in section
62 of the Internal Revenue Code.

(c) "Earned income" has the meaning given in section 32(c) of the Internal Revenue
Code.

(d) "Eligible individual" means a resident individual with one or more qualified education
loans related to an undergraduate or graduate degree program at a postsecondary educational
institution.

(e) "Eligible loan payments" means the amount the eligible individual paid during the
taxable year in principal and interest on qualified education loans.

(f) "Postsecondary educational institution" means a public or nonprofit postsecondary
institution eligible for state student aid under section 136A.103 or, if the institution is not
located in this state, a public or nonprofit postsecondary institution participating in the
federal Pell Grant program under title IV of the Higher Education Act of 1965, Public Law
89-329, as amended.

(g) "Qualified education loan" has the meaning given in section 221 of the Internal
Revenue Code, but is limited to indebtedness incurred on behalf of the eligible individual.

Subd. 2.

Credit allowed.

(a) An eligible individual is allowed a credit against the tax
due under this chapter.

(b) The credit for an eligible individual equals the least of:

(1) eligible loan payments minus ten percent of an amount equal to adjusted gross income
in excess of $10,000, but in no case less than zero;

(2) the earned income for the taxable year of the eligible individual, if any;

(3) the sum of:

(i) the interest portion of eligible loan payments made during the taxable year; and

(ii) ten percent of the original loan amount of all qualified education loans of the eligible
individual; or

(4) $500.

(c) For a part-year resident, the credit must be allocated based on the percentage calculated
under section 290.06, subdivision 2c, paragraph (e).

(d) In the case of a married couple, each spouse is eligible for the credit in this section.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 25.

[290.0684] SECTION 529 PLAN CREDIT.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given them.

(b) "Contribution" means the amount contributed to one or more qualified accounts
except that the amount:

(1) is reduced by any withdrawals or distributions, other than transfers or rollovers to
another qualified account, from a qualified account during the taxable year; and

(2) excludes the amount of any transfers or rollovers from a qualified account made
during the taxable year.

(c) "Federal adjusted gross income" has the meaning given under section 62(a) of the
Internal Revenue Code.

(d) "Qualified account" means an account qualifying under section 529 of the Internal
Revenue Code.

(e) "Qualified higher education expenses" has the meaning given in section 529 of the
Internal Revenue Code.

Subd. 2.

Credit allowed.

(a) An individual who is a resident of Minnesota is allowed a
credit against the tax imposed by this chapter. The credit is not allowed to an individual
who is eligible to be claimed as a dependent, as defined in sections 151 and 152 of the
Internal Revenue Code. The credit may not exceed the liability for tax under this chapter.

(b) The amount of the credit allowed equals 50 percent of contributions for the taxable
year. The maximum credit is $500, subject to the phaseout in paragraphs (c) and (d). In no
case is the credit less than zero.

(c) For individual filers, the maximum credit is reduced by two percent of adjusted gross
income in excess of $75,000.

(d) For married couples filing a joint return, the maximum credit is phased out as follows:

(1) for married couples with adjusted gross income in excess of $75,000, but not more
than $100,000, the maximum credit is reduced by one percent of adjusted gross income in
excess of $75,000;

(2) for married couples with adjusted gross income in excess of $100,000, but not more
than $135,000, the maximum credit is $250; and

(3) for married couples with adjusted gross income in excess of $135,000, the maximum
credit is $250, reduced by one percent of adjusted gross income in excess of $135,000.

(e) The income thresholds in paragraphs (c) and (d) used to calculate the maximum
credit must be adjusted for inflation. The commissioner shall adjust the income thresholds
by the percentage determined under the provisions of section 1(f) of the Internal Revenue
Code, except that in section 1(f)(3)(B) the word "2016" is substituted for the word "1992."
For 2018, the commissioner shall then determine the percent change from the 12 months
ending on August 31, 2016, to the 12 months ending on August 31, 2017, and in each
subsequent year, from the 12 months ending on August 31, 2016, to the 12 months ending
on August 31 of the year preceding the taxable year. The income thresholds as adjusted for
inflation must be rounded to the nearest $10 amount. If the amount ends in $5, the amount
is rounded up to the nearest $10 amount. The determination of the commissioner under this
subdivision is not subject to chapter 14, including section 14.386.

Subd. 3.

Allocation.

For a part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 26.

[290.0686] CREDIT FOR ATTAINING MASTER'S DEGREE IN
TEACHER'S LICENSURE FIELD.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given them.

(b) "Master's degree program" means a graduate-level program at an accredited university
leading to a master of arts or science degree in a core content area directly related to a
qualified teacher's licensure field. The master's degree program may not include pedagogy
or a pedagogy component. To be eligible under this credit, a licensed elementary school
teacher must pursue and complete a master's degree program in a core content area in which
the teacher provides direct classroom instruction.

(c) "Qualified teacher" means a person who:

(1) holds a teaching license issued by the licensing division in the Department of
Education on behalf of the Minnesota Board of Teaching both when the teacher begins the
master's degree program and when the teacher completes the master's degree program;

(2) began a master's degree program after June 30, 2017; and

(3) completes the master's degree program during the taxable year.

(d) "Core content area" means the academic subject of reading, English or language arts,
mathematics, science, foreign languages, civics and government, economics, arts, history,
or geography.

Subd. 2.

Credit allowed.

(a) An individual who is a qualified teacher is allowed a credit
against the tax imposed under this chapter. The credit equals the lesser of $2,500 or the
amount the individual paid for tuition, fees, books, and instructional materials necessary to
completing the master's degree program and for which the individual did not receive
reimbursement from an employer or scholarship.

(b) For a nonresident or a part-year resident, the credit under this subdivision must be
allocated based on the percentage calculated under section 290.06, subdivision 2c, paragraph
(e).

(c) A qualified teacher may claim the credit in this section only one time for each master's
degree program completed in a core content area.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 27.

Minnesota Statutes 2016, section 290.0692, is amended by adding a subdivision
to read:


Subd. 6.

Sunset.

This section expires at the same time and on the same terms as section
116J.8737, except that the expiration of this section does not affect the commissioner of
revenue's authority to audit or power of examination and assessment for credits claimed
under this section.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 28.

Minnesota Statutes 2016, section 290.081, is amended to read:


290.081 INCOME OF NONRESIDENTS, RECIPROCITY.

(a) The compensation received for the performance of personal or professional services
within this state by an individual whose residence, place of abode, and place customarily
returned to at least once a month is in another state, shall be excluded from gross income
to the extent such compensation is subject to an income tax imposed by the state of residence;
provided that such state allows a similar exclusion of compensation received by residents
of Minnesota for services performed therein.

(b) When it is deemed to be in the best interests of the people of this state, the
commissioner may determine that the provisions of paragraph (a) shall not apply. As long
as the provisions of paragraph (a) apply between Minnesota and Wisconsin, the provisions
of paragraph (a) shall apply to any individual who is domiciled in Wisconsin.

(c) For the purposes of paragraph (a), whenever the Wisconsin tax on Minnesota residents
which would have been paid Wisconsin without paragraph (a) exceeds the Minnesota tax
on Wisconsin residents which would have been paid Minnesota without paragraph (a), or
vice versa, then the state with the net revenue loss resulting from calculated under paragraph
(a) (e) shall receive from the other state the amount of such loss. This provision shall be
effective for all years beginning after December 31, 1972. The data used for computing the
loss to either state shall be determined on or before September 30 of the year following the
close of the previous calendar year.

(d)(1) Interest is payable on all amounts calculated under paragraph (c) relating to taxable
years beginning after December 31, 2000. Interest accrues from July 1 of the taxable year.

Payments for amounts calculated under paragraph (c) must equal one-quarter of the estimated
annual amount and must be paid at the midpoint of each quarter, on February 15, May 15,
August 15, and November 15.

(2) (e)(1) The commissioner of revenue is authorized to enter into agreements with the
state of Wisconsin specifying the reciprocity payment due dates, conditions constituting
delinquency, interest rates, and a method for computing interest due.

(3) (2) For agreements entered into before October 1, 2014 August 1, 2018, the annual
compensation required under paragraph (c) must equal at least the net revenue loss minus
$1,000,000 up to $3,000,000 per fiscal year.

(4) For agreements entered into after September 30, 2014, the annual compensation
required under paragraph (c) must equal the net revenue loss per fiscal year.

(5) (3) For the purposes of clauses (3) and (4) this section, "net revenue loss" means the
difference between the amount of Minnesota income taxes Minnesota forgoes by not taxing
Wisconsin residents on income subject to reciprocity and the credit Minnesota would have
been required to give under section 290.06, subdivision 22, to Minnesota residents working
in Wisconsin had there not been reciprocity.

(4) All agreements must include provisions:

(i) providing for a suspension of the agreement if one party to the agreement does not
pay in full by a time prescribed in the agreement;

(ii) setting the interest rate that will be applied, and that interest shall run from the date
the payment is due until the day the payment is made, except that interest from the
reconciliation payments runs from July 1 of the tax year until paid;

(iii) stating a time for annual reconciliation must be completed by October 31 of the
year following the tax year, and the time for payment of any amounts to be completed by
no later than December 1 of the year following the tax year;

(iv) requiring the parties to jointly conduct updated benchmark studies every five years
beginning tax year 2018;

(v) requiring each party to the agreement to require taxpayers who request exemption
from withholding in the state where they work to make an annual application and that a list
of participants will be exchanged annually; and

(vi) the sum of the amount of the quarterly payments must be a reasonable estimate of
the revenue loss as defined in item (iii).

(e) (f) If an agreement cannot be reached as to the amount of the loss, the commissioner
of revenue and the taxing official of the state of Wisconsin shall each appoint a member of
a board of arbitration and these members shall appoint the third member of the board. The
board shall select one of its members as chair. Such board may administer oaths, take
testimony, subpoena witnesses, and require their attendance, require the production of books,
papers and documents, and hold hearings at such places as are deemed necessary. The board
shall then make a determination as to the amount to be paid the other state which
determination shall be final and conclusive.

(f) (g) The commissioner may furnish copies of returns, reports, or other information to
the taxing official of the state of Wisconsin, a member of the board of arbitration, or a
consultant under joint contract with the states of Minnesota and Wisconsin for the purpose
of making a determination as to the amount to be paid the other state under the provisions
of this section. Prior to the release of any information under the provisions of this section,
the person to whom the information is to be released shall sign an agreement which provides
that the person will protect the confidentiality of the returns and information revealed thereby
to the extent that it is protected under the laws of the state of Minnesota.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2017.

Sec. 29.

Minnesota Statutes 2016, section 290.091, subdivision 2, as amended by Laws
2017, chapter 40, article 1, section 100, is amended to read:


Subd. 2.

Definitions.

For purposes of the tax imposed by this section, the following
terms have the meanings given:

(a) "Alternative minimum taxable income" means the sum of the following for the taxable
year:

(1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;

(2) the taxpayer's itemized deductions allowed in computing federal alternative minimum
taxable income, but excluding:

(i) the charitable contribution deduction under section 170 of the Internal Revenue Code;

(ii) the medical expense deduction;

(iii) the casualty, theft, and disaster loss deduction; and

(iv) the impairment-related work expenses of a disabled person;

(3) for depletion allowances computed under section 613A(c) of the Internal Revenue
Code, with respect to each property (as defined in section 614 of the Internal Revenue Code),
to the extent not included in federal alternative minimum taxable income, the excess of the
deduction for depletion allowable under section 611 of the Internal Revenue Code for the
taxable year over the adjusted basis of the property at the end of the taxable year (determined
without regard to the depletion deduction for the taxable year);

(4) to the extent not included in federal alternative minimum taxable income, the amount
of the tax preference for intangible drilling cost under section 57(a)(2) of the Internal Revenue
Code determined without regard to subparagraph (E);

(5) to the extent not included in federal alternative minimum taxable income, the amount
of interest income as provided by section 290.0131, subdivision 2; and

(6) the amount of addition required by section 290.0131, subdivisions 9 to 11;

less the sum of the amounts determined under the following:

(i) interest income as defined in section 290.0132, subdivision 2;

(ii) an overpayment of state income tax as provided by section 290.0132, subdivision
3
, to the extent included in federal alternative minimum taxable income;

(iii) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as defined
in section 163(d)(4) of the Internal Revenue Code. Interest does not include amounts deducted
in computing federal adjusted gross income;

(iv) amounts subtracted from federal taxable income as provided by section 290.0132,
subdivisions 7
, 9 to 15, 17, and 21, 24, and 26; and

(v) the amount of the net operating loss allowed under section 290.095, subdivision 11,
paragraph (c).

In the case of an estate or trust, alternative minimum taxable income must be computed
as provided in section 59(c) of the Internal Revenue Code.

(b) "Investment interest" means investment interest as defined in section 163(d)(3) of
the Internal Revenue Code.

(c) "Net minimum tax" means the minimum tax imposed by this section.

(d) "Regular tax" means the tax that would be imposed under this chapter (without regard
to this section and section 290.032), reduced by the sum of the nonrefundable credits allowed
under this chapter.

(e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable income
after subtracting the exemption amount determined under subdivision 3.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 30.

Minnesota Statutes 2016, section 290.17, subdivision 4, is amended to read:


Subd. 4.

Unitary business principle.

(a) If a trade or business conducted wholly within
this state or partly within and partly without this state is part of a unitary business, the entire
income of the unitary business is subject to apportionment pursuant to section 290.191.
Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary business is
considered to be derived from any particular source and none may be allocated to a particular
place except as provided by the applicable apportionment formula. The provisions of this
subdivision do not apply to business income subject to subdivision 5, income of an insurance
company, or income of an investment company determined under section 290.36.

(b) The term "unitary business" means business activities or operations which result in
a flow of value between them. The term may be applied within a single legal entity or
between multiple entities and without regard to whether each entity is a sole proprietorship,
a corporation, a partnership or a trust.

(c) Unity is presumed whenever there is unity of ownership, operation, and use, evidenced
by centralized management or executive force, centralized purchasing, advertising,
accounting, or other controlled interaction, but the absence of these centralized activities
will not necessarily evidence a nonunitary business. Unity is also presumed when business
activities or operations are of mutual benefit, dependent upon or contributory to one another,
either individually or as a group.

(d) Where a business operation conducted in Minnesota is owned by a business entity
that carries on business activity outside the state different in kind from that conducted within
this state, and the other business is conducted entirely outside the state, it is presumed that
the two business operations are unitary in nature, interrelated, connected, and interdependent
unless it can be shown to the contrary.

(e) Unity of ownership does not exist when two or more corporations are involved unless
more than 50 percent of the voting stock of each corporation is directly or indirectly owned
by a common owner or by common owners, either corporate or noncorporate, or by one or
more of the member corporations of the group. For this purpose, the term "voting stock"
shall include membership interests of mutual insurance holding companies formed under
section 66A.40.

(f) The net income and apportionment factors under section 290.191 or 290.20 of foreign
corporations and other foreign entities which are part of a unitary business shall not be
included in the net income or the apportionment factors of the unitary business; except that
the income and apportionment factors of a foreign entity, other than an entity treated as a
C corporation for federal income tax purposes, that are included in the federal taxable
income, as defined in section 63 of the Internal Revenue Code as amended through the date
named in section 290.01, subdivision 19, of a domestic corporation, domestic entity, or
individual must be included in determining net income and the factors to be used in the
apportionment of net income pursuant to section 290.191 or 290.20. A foreign corporation
or other foreign entity which is not included on a combined report and which is required to
file a return under this chapter shall file on a separate return basis.

(g) For purposes of determining the net income of a unitary business and the factors to
be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included only the income and apportionment factors of domestic corporations or
other domestic entities that are determined to be part of the unitary business pursuant to this
subdivision, notwithstanding that foreign corporations or other foreign entities might be
included in the unitary business; except that the income and apportionment factors of a
foreign entity, other than an entity treated as a C corporation for federal income tax purposes,
that is included in the federal taxable income, as defined in section 63 of the Internal Revenue
Code as amended through the date named in section 290.01, subdivision 19, of a domestic
corporation, domestic entity, or individual must be included in determining net income and
the factors to be used in the apportionment of net income pursuant to section 290.191 or
290.20.

(h) Each corporation or other entity, except a sole proprietorship, that is part of a unitary
business must file combined reports as the commissioner determines. On the reports, all
intercompany transactions between entities included pursuant to paragraph (g) must be
eliminated and the entire net income of the unitary business determined in accordance with
this subdivision is apportioned among the entities by using each entity's Minnesota factors
for apportionment purposes in the numerators of the apportionment formula and the total
factors for apportionment purposes of all entities included pursuant to paragraph (g) in the
denominators of the apportionment formula. Except as otherwise provided by paragraph
(f), all sales of the unitary business made within this state pursuant to section 290.191 or
290.20 must be included on the combined report of a corporation or other entity that is a
member of the unitary business and is subject to the jurisdiction of this state to impose tax
under this chapter.

(i) If a corporation has been divested from a unitary business and is included in a
combined report for a fractional part of the common accounting period of the combined
report:

(1) its income includable in the combined report is its income incurred for that part of
the year determined by proration or separate accounting; and

(2) its sales, property, and payroll included in the apportionment formula must be prorated
or accounted for separately.

(j) For purposes of this subdivision, "insurance company" means an insurance company,
as defined in section 290.01, subdivision 5b, that is:

(1) licensed to engage in the business of insurance in Minnesota pursuant to chapter
60A; or

(2) domiciled and licensed to engage in the business of insurance in another state or
country that imposes retaliatory taxes, fines, deposits, penalties, licenses, or fees and that
does not grant, on a reciprocal basis, exemption from such retaliatory taxes to insurance
companies or their agents domiciled in Minnesota.

(k) For purposes of this subdivision, "retaliatory taxes" means taxes imposed on insurance
companies organized in another state or country that result from the fact that an insurance
company organized in the taxing jurisdiction and doing business in the other jurisdiction is
subject to taxes, fines, deposits, penalties, licenses, or fees in an amount exceeding that
imposed by the taxing jurisdiction upon an insurance company organized in the other state
or country and doing business to the same extent in the taxing jurisdiction.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 31.

Minnesota Statutes 2016, section 290A.03, subdivision 13, is amended to read:


Subd. 13.

Property taxes payable.

"Property taxes payable" means the property tax
exclusive of special assessments, penalties, and interest payable on a claimant's homestead
after deductions made under sections 273.135, 273.1384, 273.1391, 273.42, subdivision 2,
and any other state paid property tax credits in any calendar year, and after any refund
claimed and allowable under section 290A.04, subdivision 2h, that is first payable in the
year that the property tax is payable. In the case of a claimant who makes ground lease
payments, "property taxes payable" includes the amount of the payments directly attributable
to the property taxes assessed against the parcel on which the house is located. No
apportionment or reduction of the "property taxes payable" shall be required for the use of
a portion of the claimant's homestead for a business purpose if the claimant does not deduct
any business depreciation expenses for the use of a portion of the homestead in the
determination of federal adjusted gross income.
Regardless of the limitations in section
280A(c)(5) of the Internal Revenue Code, "property taxes payable" must be apportioned or
reduced for the use of a portion of the claimant's homestead for a business purpose if the
claimant deducts any business depreciation expenses for the use of a portion of the homestead
or deducts expenses under section 280A of the Internal Revenue Code for a business operated
in the claimant's homestead.
For homesteads which are manufactured homes as defined in
section 273.125, subdivision 8, and for homesteads which are park trailers taxed as
manufactured homes under section 168.012, subdivision 9, "property taxes payable" shall
also include 17 percent of the gross rent paid in the preceding year for the site on which the
homestead is located. When a homestead is owned by two or more persons as joint tenants
or tenants in common, such tenants shall determine between them which tenant may claim
the property taxes payable on the homestead. If they are unable to agree, the matter shall
be referred to the commissioner of revenue whose decision shall be final. Property taxes
are considered payable in the year prescribed by law for payment of the taxes.

In the case of a claim relating to "property taxes payable," the claimant must have owned
and occupied the homestead on January 2 of the year in which the tax is payable and (i) the
property must have been classified as homestead property pursuant to section 273.124, on
or before December 15 of the assessment year to which the "property taxes payable" relate;
or (ii) the claimant must provide documentation from the local assessor that application for
homestead classification has been made on or before December 15 of the year in which the
"property taxes payable" were payable and that the assessor has approved the application.

EFFECTIVE DATE.

This section is effective for refunds based on rent paid after
December 31, 2015, and property taxes payable after December 31, 2016.

Sec. 32.

Minnesota Statutes 2016, section 291.005, subdivision 1, as amended by Laws
2017, chapter 1, section 8, is amended to read:


Subdivision 1.

Scope.

Unless the context otherwise clearly requires, the following terms
used in this chapter shall have the following meanings:

(1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.

(2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code,
increased by the value of any property in which the decedent had a qualifying income interest
for life and for which an election was made under section 291.03, subdivision 1d, for
Minnesota estate tax purposes, but was not made for federal estate tax purposes.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of 1986,
as amended through December 16, 2016.

(4) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included in the estate which has its situs outside Minnesota,
and (b) including any property omitted from the federal gross estate which is includable in
the estate, has its situs in Minnesota, and was not disclosed to federal taxing authorities.

(5) "Nonresident decedent" means an individual whose domicile at the time of death
was not in Minnesota.

(6) "Personal representative" means the executor, administrator or other person appointed
by the court to administer and dispose of the property of the decedent. If there is no executor,
administrator or other person appointed, qualified, and acting within this state, then any
person in actual or constructive possession of any property having a situs in this state which
is included in the federal gross estate of the decedent shall be deemed to be a personal
representative to the extent of the property and the Minnesota estate tax due with respect
to the property.

(7) "Resident decedent" means an individual whose domicile at the time of death was
in Minnesota. The provisions of section 290.01, subdivision 7, paragraphs (c) and (d), apply
to determinations of domicile under this chapter.

(8) "Situs of property" means, with respect to:

(i) real property, the state or country in which it is located;

(ii) tangible personal property, the state or country in which it was normally kept or
located at the time of the decedent's death or for a gift of tangible personal property within
three years of death, the state or country in which it was normally kept or located when the
gift was executed;

(iii) a qualified work of art, as defined in section 2503(g)(2) of the Internal Revenue
Code, owned by a nonresident decedent and that is normally kept or located in this state
because it is on loan to an organization, qualifying as exempt from taxation under section
501(c)(3) of the Internal Revenue Code, that is located in Minnesota, the situs of the art is
deemed to be outside of Minnesota, notwithstanding the provisions of item (ii); and

(iv) intangible personal property, the state or country in which the decedent was domiciled
at death or for a gift of intangible personal property within three years of death, the state or
country in which the decedent was domiciled when the gift was executed.

For a nonresident decedent with an ownership interest in a pass-through entity with
assets that include real or tangible personal property, situs of the real or tangible personal
property, including qualified works of art, is determined as if the pass-through entity does
not exist and the real or tangible personal property is personally owned by the decedent. If
the pass-through entity is owned by a person or persons in addition to the decedent, ownership
of the property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.

(9) "Pass-through entity" includes the following:

(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;

(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;

(iii) a single-member limited liability company or similar entity, regardless of whether
it is taxed as an association or is disregarded for federal income tax purposes under Code
of Federal Regulations, title 26, section 301.7701-3; or

(iv) a trust to the extent the property is includible in the decedent's federal gross estate;
but excludes

(v) an entity whose ownership interest securities are traded on an exchange regulated
by the Securities and Exchange Commission as a national securities exchange under section
6 of the Securities Exchange Act, United States Code, title 15, section 78f.

EFFECTIVE DATE.

This section is effective retroactively for estates of decedents
dying after December 31, 2016.

Sec. 33.

Minnesota Statutes 2016, section 291.016, subdivision 3, is amended to read:


Subd. 3.

Subtraction.

(a) For estates of decedents dying after December 31, 2016, a
subtraction is allowed in computing the Minnesota taxable estate, equal to the sum of:

(1) the exclusion amount for the year of death under paragraph (b); and

(2) the lesser of:

(i) the value of qualified small business property under section 291.03, subdivision 9,
and the value of qualified farm property under section 291.03, subdivision 10, or the result
of $5,000,000 minus the amount for the year of death listed in clauses (1) to (5), whichever
is less, may be subtracted in computing the Minnesota taxable estate but must not reduce
the Minnesota taxable estate to less than zero:

(1) $1,200,000 for estates of decedents dying in 2014;

(2) $1,400,000 for estates of decedents dying in 2015;

(3) $1,600,000 for estates of decedents dying in 2016;

(4) $1,800,000 for estates of decedents dying in 2017; and

(5) $2,000,000 for estates of decedents dying in 2018 and thereafter. ; or

(ii) $5,000,000 minus the exclusion amount for the year of death under paragraph (b).

(b) The following exclusion amounts apply for the year of death:

(1) $2,100,000 for decedents dying in 2017;

(2) $2,400,000 for decedents dying in 2018;

(3) $2,700,000 for decedents dying in 2019; and

(4) $3,000,000 for decedents dying in 2020 and thereafter.

(c) The subtraction under this subdivision must not reduce the Minnesota taxable estate
to less than zero.

EFFECTIVE DATE.

This section is effective retroactively for estates of decedents
dying after December 31, 2016.

Sec. 34.

Minnesota Statutes 2016, section 291.03, subdivision 1, is amended to read:


Subdivision 1.

Tax amount.

The tax imposed must be computed by applying to the
Minnesota taxable estate the following schedule of rates and then the resulting amount
multiplied by a fraction, not greater than one, the numerator of which is the value of the
Minnesota gross estate plus the value of gifts under section 291.016, subdivision 2, clause
(3), with a Minnesota situs, and the denominator of which is the federal gross estate plus
the value of gifts under section 291.016, subdivision 2, clause (3):

(a) For estates of decedents dying in 2014:

Amount of Minnesota Taxable Estate
Rate of Tax
Not over $1,200,000
None
Over $1,200,000 but not over $1,400,000
nine percent of the excess over $1,200,000
Over $1,400,000 but not over $3,600,000
$18,000 plus ten percent of the excess over
$1,400,000
Over $3,600,000 but not over $4,100,000
$238,000 plus 10.4 percent of the excess over
$3,600,000
Over $4,100,000 but not over $5,100,000
$290,000 plus 11.2 percent of the excess over
$4,100,000
Over $5,100,000 but not over $6,100,000
$402,000 plus 12 percent of the excess over
$5,100,000
Over $6,100,000 but not over $7,100,000
$522,000 plus 12.8 percent of the excess over
$6,100,000
Over $7,100,000 but not over $8,100,000
$650,000 plus 13.6 percent of the excess over
$7,100,000
Over $8,100,000 but not over $9,100,000
$786,000 plus 14.4 percent of the excess over
$8,100,000
Over $9,100,000 but not over $10,100,000
$930,000 plus 15.2 percent of the excess over
$9,100,000
Over $10,100,000
$1,082,000 plus 16 percent of the excess over
$10,100,000

(b) For estates of decedents dying in 2015:

Amount of Minnesota Taxable Estate
Rate of Tax
Not over $1,400,000
None
Over $1,400,000 but not over $3,600,000
ten percent of the excess over $1,400,000
Over $3,600,000 but not over $6,100,000
$220,000 plus 12 percent of the excess over
$3,600,000
Over $6,100,000 but not over $7,100,000
$520,000 plus 12.8 percent of the excess over
$6,100,000
Over $7,100,000 but not over $8,100,000
$648,000 plus 13.6 percent of the excess over
$7,100,000
Over $8,100,000 but not over $9,100,000
$784,000 plus 14.4 percent of the excess over
$8,100,000
Over $9,100,000 but not over $10,100,000
$928,000 plus 15.2 percent of the excess over
$9,100,000
Over $10,100,000
$1,080,000 plus 16 percent of the excess over
$10,100,000

(c) For estates of decedents dying in 2016:

Amount of Minnesota Taxable Estate
Rate of Tax
Not over $1,600,000
None
Over $1,600,000 but not over $2,600,000
ten percent of the excess over $1,600,000
Over $2,600,000 but not over $6,100,000
$100,000 plus 12 percent of the excess over
$2,600,000
Over $6,100,000 but not over $7,100,000
$520,000 plus 12.8 percent of the excess over
$6,100,000
Over $7,100,000 but not over $8,100,000
$648,000 plus 13.6 percent of the excess over
$7,100,000
Over $8,100,000 but not over $9,100,000
$784,000 plus 14.4 percent of the excess over
$8,100,000
Over $9,100,000 but not over $10,100,000
$928,000 plus 15.2 percent of the excess over
$9,100,000
Over $10,100,000
$1,080,000 plus 16 percent of the excess over
$10,100,000

(d) (a) For estates of decedents dying in 2017:

Amount of Minnesota Taxable Estate
Rate of Tax
Not over $1,800,000
None
Over $1,800,000 but not over $2,100,000
ten percent of the excess over $1,800,000
Over $2,100,000 but Not over $5,100,000
$30,000 plus 12 percent of the excess over
$2,100,000
12 percent
Over $5,100,000 but not over $7,100,000
$390,000 $612,000 plus 12.8 percent of the
excess over $5,100,000
Over $7,100,000 but not over $8,100,000
$646,000 $868,000 plus 13.6 percent of the
excess over $7,100,000
Over $8,100,000 but not over $9,100,000
$782,000 $1,004,000 plus 14.4 percent of the
excess over $8,100,000
Over $9,100,000 but not over $10,100,000
$926,000 $1,148,000 plus 15.2 percent of the
excess over $9,100,000
Over $10,100,000
$1,078,000 $1,300,000 plus 16 percent of the
excess over $10,100,000

(e) (b) For estates of decedents dying in 2018 and thereafter:

Amount of Minnesota Taxable Estate
Rate of Tax
Not over $2,000,000 $7,100,000
None 13 percent
Over $2,000,000 but not over $2,600,000
ten percent of the excess over $2,000,000
Over $2,600,000 but not over $7,100,000
$60,000 plus 13 percent of the excess over
$2,600,000
Over $7,100,000 but not over $8,100,000
$645,000 $923,000 plus 13.6 percent of the
excess over $7,100,000
Over $8,100,000 but not over $9,100,000
$781,000 $1,059,000 plus 14.4 percent of the
excess over $8,100,000
Over $9,100,000 but not over $10,100,000
$925,000 $1,203,000 plus 15.2 percent of the
excess over $9,100,000
Over $10,100,000
$1,077,000 $1,355,000 plus 16 percent of the
excess over $10,100,000

EFFECTIVE DATE.

This section is effective retroactively for estates of decedents
dying after December 31, 2016.

Sec. 35.

Minnesota Statutes 2016, section 291.03, subdivision 11, is amended to read:


Subd. 11.

Recapture tax.

(a) If, within three years after the decedent's death and before
the death of the qualified heir, the qualified heir disposes of any interest in the qualified
property, other than by a disposition to a family member, or a family member ceases to
satisfy the requirement under subdivision 9, clause (7); or 10, clause (5), an additional estate
tax is imposed on the property. In the case of a sole proprietor, if the qualified heir replaces
qualified small business property excluded under subdivision 9 with similar property, then
the qualified heir will not be treated as having disposed of an interest in the qualified property.

(b) The amount of the additional tax equals the amount of the exclusion claimed by the
estate under subdivision 8, paragraph (d), multiplied by 16 percent.

(c) The additional tax under this subdivision is due on the day which is six months after
the date of the disposition or cessation in paragraph (a).

(d) The tax under this subdivision does not apply to the acquisition of title or possession
of the qualified property by a federal, state, or local government unit, or any other entity
with the power of eminent domain for a public purpose, as defined in section 117.025,
subdivision 11, within the three-year holding period.

EFFECTIVE DATE.

This section is effective retroactively for estates of decedents
dying after June 30, 2011.

Sec. 36.

[462D.01] CITATION.

This chapter may be cited as the "First-Time Home Buyer Savings Account Act."

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 37.

[462D.02] DEFINITIONS.

Subdivision 1.

Definitions.

For purposes of this chapter, the following terms have the
meanings given.

Subd. 2.

Account holder.

"Account holder" means an individual who establishes,
individually or jointly with one or more other individuals, a first-time home buyer savings
account.

Subd. 3.

Allowable closing costs.

"Allowable closing costs" means a disbursement listed
on a settlement statement for the purchase of a single-family residence in Minnesota by a
qualified beneficiary.

Subd. 4.

Commissioner.

"Commissioner" means the commissioner of revenue.

Subd. 5.

Eligible costs.

"Eligible costs" means the down payment and allowable closing
costs for the purchase of a single-family residence in Minnesota by a qualified beneficiary.
Eligible costs include paying for the cost of construction of or financing the construction
of a single-family residence.

Subd. 6.

Financial institution.

"Financial institution" means a bank, bank and trust,
trust company with banking powers, savings bank, savings association, or credit union,
organized under the laws of this state, any other state, or the United States; an industrial
loan and thrift under chapter 53 or the laws of another state and authorized to accept deposits;
or a money market mutual fund registered under the federal Investment Company Act of
1940 and regulated under rule 2a-7, promulgated by the Securities and Exchange Commission
under that act.

Subd. 7.

First-time home buyer.

"First-time home buyer" means an individual, and if
married, the individual's spouse, who has no present ownership interest in a principal
residence during the three-year period ending on the earlier of:

(1) the date of the purchase of the single-family residence funded, in part, with proceeds
from the first-time home buyer savings account; or

(2) the close of the taxable year for which a subtraction is claimed under sections
290.0132, subdivision 25, and 462D.06.

Subd. 8.

First-time home buyer savings account.

"First-time home buyer savings
account" or "account" means an account with a financial institution that an account holder
designates as a first-time home buyer savings account, as provided in section 462D.03, to
pay or reimburse eligible costs for the purchase of a single-family residence by a qualified
beneficiary.

Subd. 9.

Internal Revenue Code.

"Internal Revenue Code" has the meaning given in
section 290.01.

Subd. 10.

Principal residence.

"Principal residence" has the meaning given in section
121 of the Internal Revenue Code.

Subd. 11.

Qualified beneficiary.

"Qualified beneficiary" means a first-time home buyer
who is a Minnesota resident and is designated as the qualified beneficiary of a first-time
home buyer savings account by the account holder.

Subd. 12.

Single-family residence.

"Single-family residence" means a single-family
residence located in this state and owned and occupied by or to be occupied by a qualified
beneficiary as the qualified beneficiary's principal residence, which may include a
manufactured home, trailer, mobile home, condominium unit, townhome, or cooperative.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 38.

[462D.03] ESTABLISHMENT OF ACCOUNTS.

Subdivision 1.

Accounts established.

An individual may open an account with a financial
institution and designate the account as a first-time home buyer savings account to be used
to pay or reimburse the designated qualified beneficiary's eligible costs.

Subd. 2.

Designation of qualified beneficiary.

(a) The account holder must designate
a first-time home buyer as the qualified beneficiary of the account by April 15 of the year
following the taxable year in which the account was established. The account holder may
be the qualified beneficiary. The account holder may change the designated qualified
beneficiary at any time, but no more than one qualified beneficiary may be designated for
an account at any one time. For purposes of the one beneficiary restriction, a married couple
qualifies as one beneficiary. Changing the designated qualified beneficiary of an account
does not affect computation of the ten-year period under section 462D.06, subdivision 2.

(b) The commissioner shall establish a process for account holders to notify the state
that permits recording of the account, the account holder or holders, any transfers under
section 462D.04, subdivision 2, and the designated qualified beneficiary for each account.
This may be done upon filing the account holder's income tax return or in any other way
the commissioner determines to be appropriate.

Subd. 3.

Joint account holders.

An individual may jointly own a first-time home buyer
account with another person if the joint account holders file a married joint income tax
return.

Subd. 4.

Multiple accounts.

(a) An individual may be the account holder of more than
one first-time home buyer savings account, but must not hold or own multiple accounts that
designate the same qualified beneficiary.

(b) An individual may be designated as the qualified beneficiary on more than one
first-time home buyer savings account.

Subd. 5.

Contributions.

Only cash may be contributed to a first-time home buyer savings
account. Individuals other than the account holder may contribute to an account. No more
than $14,000 ($28,000 for married joint filers) may be contributed in any year and no more
than $50,000 ($100,000 for married joint filers) may be contributed in all years. The
maximum amount in any account is limited to $150,000.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 39.

[462D.04] ACCOUNT HOLDER RESPONSIBILITIES.

Subdivision 1.

Expenses; reporting.

The account holder must:

(1) not use funds in a first-time home buyer savings account to pay expenses of
administering the account, except that a service fee may be deducted from the account by
the financial institution in which the account is held; and

(2) submit to the commissioner, in the form and manner required by the commissioner:

(i) detailed information regarding the first-time home buyer savings account, including
a list of transactions for the account during the taxable year and the Form 1099 issued by
the financial institution for the account for the taxable year; and

(ii) upon withdrawal of funds from the account, a detailed account of the eligible costs
for which the account funds were expended and a statement of the amount of funds remaining
in the account, if any.

Subd. 2.

Transfers.

An account holder may withdraw funds, in whole or part, from a
first-time home buyer savings account and deposit the funds in another first-time home
buyer savings account held by a different financial institution or the same financial institution.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 40.

[462D.05] FINANCIAL INSTITUTIONS.

(a) A financial institution is not required to take any action to ensure compliance with
this chapter, including to:

(1) designate an account, designate qualified beneficiaries, or modify the financial
institution's account contracts or systems in any way;

(2) track the use of money withdrawn from a first-time home buyer savings account;

(3) allocate funds in a first-time home buyer savings account among joint account holders
or multiple qualified beneficiaries; or

(4) report any information to the commissioner or any other government that is not
otherwise required by law.

(b) A financial institution is not responsible or liable for:

(1) determining or ensuring that an account satisfies the requirements of this chapter or
that its funds are used for eligible costs; or

(2) reporting or remitting taxes or penalties related to the use of a first-time home buyer
savings account.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 41.

[462D.06] SUBTRACTION; ADDITION; ADDITIONAL TAX.

Subdivision 1.

Subtraction.

(a) As provided in section 290.0132, subdivision 25, an
account holder is allowed a subtraction from the federal taxable income equal to interest or
dividends earned on the first-time home buyer savings account during the taxable year.

(b) The subtraction under paragraph (a) is allowed each year for the taxable years
including and following the taxable year in which the account was established. No person
other than the account holder is allowed a subtraction under this section.

Subd. 2.

Addition.

(a) As provided in section 290.0131, subdivision 14, an account
holder must add to federal taxable income the following amounts:

(1) the amount in excess of the total contributions for all taxable years that is withdrawn
and used for other than eligible costs, or for a transfer permitted under section 462D.04,
subdivision 2; and

(2) the amount remaining in the first-time home buyer savings account at the close of
the tenth taxable year that exceeds the total contributions to the account for all taxable years.

(b) For an account that received a transfer under section 462D.04, subdivision 2, the
ten-year period under paragraph (a), clause (2), ends at the close of the earliest taxable year
that applies to either account under that clause.

Subd. 3.

Additional tax.

The account holder is liable for an additional tax equal to ten
percent of the addition under subdivision 2 for the taxable year. This amount must be added
to the amount due under section 290.06. The tax under this subdivision does not apply to:

(1) a withdrawal because of the account holder's or designated qualified beneficiary's
death or disability;

(2) a disbursement of assets of the account under federal bankruptcy law; and

(3) a disbursement of assets of the account under chapter 550 or 551.

EFFECTIVE DATE.

This section is effective for taxable years beginning after December
31, 2016.

Sec. 42.

Laws 2010, chapter 216, section 12, the effective date, as amended by Laws 2016,
chapter 158, article 1, section 212, is amended to read:


EFFECTIVE DATE.

This section is effective for investments made after July 1, 2010,
for taxable years beginning after December 31, 2009, and before January 1, 2017, and only
applies to investments made after the qualified small business receiving the investment has
been certified by the commissioner of employment and economic development.

EFFECTIVE DATE; REVIVAL AND REENACTMENT.

This section is effective
retroactively from January 1, 2015, and Laws 2010, chapter 216, section 12, as amended
by Laws 2016, chapter 158, article 1, section 212, is revived and reenacted as of that date.

Sec. 43. INCOME TAX RECIPROCITY BENCHMARK STUDY;
APPROPRIATION.

Subdivision 1.

Study.

(a) The Department of Revenue, in conjunction with the Wisconsin
Department of Revenue, must, provided the conditions of paragraph (d) are satisfied, conduct
a study to determine at least the following:

(1) the number of residents of each state who earn income from personal services in the
other state;

(2) the total amount of income earned by residents of each state who earn income from
personal services in the other state; and

(3) the change in tax revenue in each state if an income tax reciprocity arrangement were
resumed between the two states under which the taxpayers were required to pay income
taxes on the income only in their state of residence.

(b) The study must use information obtained from each state's income tax returns for
tax year 2017 and from any other source of information the departments determine is
necessary to complete the study.

(c) No later than March 1, 2019, the Department of Revenue must submit a report
containing the results of the study to the governor and to the chairs and ranking minority
members of the legislative committees having jurisdiction over taxes, in compliance with
Minnesota Statutes, sections 3.195 and 3.197.

(d) The department shall conduct the study only if the commissioner of revenue enters
an agreement under Minnesota Statutes, section 290.081, by April 1, 2018, and receives
notice from the secretary of revenue that the Wisconsin Department of Revenue will fully
participate in the study.

Subd. 2.

Appropriation.

$300,000 in fiscal year 2018 is appropriated from the general
fund to the commissioner of revenue for the income tax reciprocity benchmark study in
subdivision 1. This is a onetime appropriation and is not added to the agency's base budget.

EFFECTIVE DATE.

This section is effective the day following final enactment. The
appropriation in subdivision 2 is only effective if the conditions of subdivision 1, paragraph
(d), are satisfied.

Sec. 44. REPEALER.

(a) Minnesota Statutes 2016, sections 136A.129; and 290.06, subdivision 36, are repealed.

(b) Minnesota Statutes 2016, section 290.067, subdivision 2, is repealed.

EFFECTIVE DATE.

Paragraph (a) is effective for agreements entered into after June
30, 2017, and for taxable years beginning after December 31, 2017. Paragraph (b) is effective
for taxable years beginning after December 31, 2016.

ARTICLE 2

PROPERTY TAX

Section 1.

Minnesota Statutes 2016, section 40A.18, subdivision 2, is amended to read:


Subd. 2.

Allowed commercial and industrial operations.

(a) Commercial and industrial
operations are not allowed on land within an agricultural preserve except:

(1) small on-farm commercial or industrial operations normally associated with and
important to farming in the agricultural preserve area;

(2) storage use of existing farm buildings that does not disrupt the integrity of the
agricultural preserve; and

(3) small commercial use of existing farm buildings for trades not disruptive to the
integrity of the agricultural preserve such as a carpentry shop, small scale mechanics shop,
and similar activities that a farm operator might conduct.; and

(4) wireless communication installments and related equipment and structure capable
of providing technology potentially beneficial to farming activities. A property owner who
installs wireless communication equipment does not violate a covenant made prior to January
1, 2018, under section 40A.10, subdivision 1.

(b) For purposes of paragraph (a), clauses (2) and (3), "existing" in clauses (2) and (3)
means existing on August 1, 1989.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2016, section 270C.9901, is amended to read:


270C.9901 ASSESSOR ACCREDITATION; WAIVER.

Subdivision 1.

Accreditation.

Every individual who appraises or physically inspects
real property for the purpose of determining its valuation or classification for property tax
purposes must obtain licensure as an accredited Minnesota assessor from the State Board
of Assessors by July 1, 2019 2022, or within four five years of that person having become
licensed as a certified Minnesota assessor, whichever is later.

Subd. 2.

Waiver.

(a) An individual may apply to the State Board of Assessors for a
waiver from licensure as an accredited Minnesota assessor as required by subdivision 1 if
the individual:

(1) was first licensed as a certified Minnesota assessor before July 1, 2004;

(2) has had an assessor license since July 1, 2004;

(3) has successfully passed a comprehensive examination substantially equivalent to the
requirements by the State Board of Assessors for the accredited Minnesota assessor license
designation before May 1, 2020; and

(4) submits an application to the State Board of Assessors no later than July 1, 2022.

The examination can only be taken once to fulfill the requirements of the waiver.

(b) The commissioner of revenue, in consultation with the State Board of Assessors and
the Minnesota Association of Assessing Officers, must determine the contents of the waiver
application and the comprehensive examination.

(c) A county assessor in any jurisdiction assessed by an applicant may submit additional
information to the State Board of Assessors to be considered as part of the waiver review
proceedings.

(d) The State Board of Assessors must not grant a waiver unless the applicant has met
the requirements in paragraph (a) and has the ability to perform the duties of assessment
required in each jurisdiction in which the applicant appraises or physically inspects real
property for the purposes of determining its valuation or classification for property tax
purposes.

(e) An individual granted a waiver under this subdivision is allowed to continue
assessment duties at the individual's licensure level, provided the individual complies with
the continuing education requirements for the accredited Minnesota assessor designation
as prescribed by the State Board of Assessors.

(f) An individual granted a waiver under this section:

(1) is not considered to have achieved the designation as an accredited Minnesota assessor
and may not represent himself or herself as an accredited Minnesota assessor; and

(2) is not authorized to value income-producing property as defined in section 273.11,
subdivision 13, unless the individual meets the requirements of that section.

(g) A waiver granted by the State Board of Assessors under this section remains in effect
unless the individual's licensure is revoked. If the individual's licensure is revoked, the
waiver is void and the individual is subject to the requirements of subdivision 1.

(h) A decision of the State Board of Assessors to grant or deny a waiver under this
subdivision is final and is not subject to appeal.

(i) Waivers granted under this subdivision expire on June 30, 2032.

(j) This subdivision expires July 1, 2032.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2016, section 272.02, subdivision 86, is amended to read:


Subd. 86.

Apprenticeship training facilities.

All or a portion of a building used
exclusively for a state-approved apprenticeship program through the Department of Labor
and Industry is exempt if:

(1) it is owned by a nonprofit organization or a nonprofit trust, and operated by a nonprofit
organization or a nonprofit trust;

(2) the program participants receive no compensation; and

(3) it is located:

(i) in the Minneapolis and St. Paul standard metropolitan statistical area as determined
by the 2000 federal census;

(ii) in a city outside the Minneapolis and St. Paul standard metropolitan statistical area
that has a population of 7,400 or greater according to the most recent federal census; or

(iii) in a township that has a population greater than 2,000 1,400 but less than 3,000
determined by the 2000 federal census and the building was previously used by a school
and was exempt for taxes payable in 2010.

Use of the property for advanced skills training of incumbent workers does not disqualify
the property for the exemption under this subdivision. This exemption includes up to five
acres of the land on which the building is located and associated parking areas on that land,
except that if the building meets the requirements of clause (3), item (iii), then the exemption
includes up to ten acres of land on which the building is located and associated parking
areas on that land. If a parking area associated with the facility is used for the purposes of
the facility and for other purposes, a portion of the parking area shall be exempt in proportion
to the square footage of the facility used for purposes of apprenticeship training.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 4.

Minnesota Statutes 2016, section 272.02, is amended by adding a subdivision to
read:


Subd. 100.

Electric generation facility; personal property.

(a) Notwithstanding
subdivision 9, clause (a), attached machinery and other personal property that is part of an
electric generation facility with more than 35 megawatts and less than 40 megawatts of
installed capacity and that meets the requirements of this subdivision is exempt from taxation
and payments in lieu of taxation. The facility must:

(1) be designed to utilize natural gas as a primary fuel;

(2) be owned and operated by a municipal power agency as defined in section 453.52,
subdivision 8;

(3) be located within 800 feet of an existing natural gas pipeline;

(4) satisfy a resource deficiency identified in an approved integrated resource plan filed
under section 216B.2422;

(5) be located outside the metropolitan area as defined under section 473.121, subdivision
2; and

(6) have received, by resolution, the approval of the governing bodies of the city and
county in which it is located for the exemption of personal property provided by this
subdivision.

(b) Construction of the facility must have been commenced after January 1, 2015, and
before January 1, 2017. Property eligible for this exemption does not include electric
transmission lines and interconnections or gas pipelines and interconnections appurtenant
to the property or the facility.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 5.

Minnesota Statutes 2016, section 272.02, is amended by adding a subdivision to
read:


Subd. 101.

Certain property owned by an Indian tribe.

(a) Property is exempt that:

(1) is located in a city of the first class with a population less than 100,000 as of the
2010 federal census;

(2) was on January 1, 2016, and is for the current assessment, owned by a federally
recognized Indian tribe, or its instrumentality, that is located within the state of Minnesota;
and

(3) is used exclusively as a medical clinic.

(b) Property that qualifies for the exemption under this subdivision is limited to no more
than two contiguous parcels and structures that do not exceed, in the aggregate, 30,000
square feet. Property acquired for single-family housing, market-rate apartments, agriculture,
or forestry does not qualify for this exemption. The exemption created by this subdivision
expires with taxes payable in 2028.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 6.

Minnesota Statutes 2016, section 272.0213, is amended to read:


272.0213 LEASED SEASONAL-RECREATIONAL LAND.

(a) A county board may elect, by resolution, to Qualified lands, as defined in this section,
are
exempt from taxation, including the tax under section 273.19, qualified lands. "Qualified
lands" for purposes of this section means property land that:

(1) is owned by a county, city, town, or the state; and

(2) is rented by the entity for noncommercial seasonal-recreational or, noncommercial
seasonal-recreational residential use; and, or class 1c commercial seasonal-recreational
residential use.

(3) was rented for the purposes specified in clause (2) and was exempt from taxation
for property taxes payable in 2008.

(b) Lands owned by the federal government and rented for noncommercial
seasonal-recreational or, noncommercial seasonal-recreational residential, or class 1c
commercial seasonal-recreational residential
use are exempt from taxation, including the
tax under section 273.19.

EFFECTIVE DATE.

This section is effective beginning with taxes assessed in 2018
and payable in 2019.

Sec. 7.

Minnesota Statutes 2016, section 272.03, subdivision 1, is amended to read:


Subdivision 1.

Real property.

(a) For the purposes of taxation, but not for chapter 297A,
"real property" includes the land itself, rails, ties, and other track materials annexed to the
land, and all buildings, structures, and improvements or other fixtures on it, bridges of bridge
companies, and all rights and privileges belonging or appertaining to the land, and all mines,
iron ore and taconite minerals not otherwise exempt, quarries, fossils, and trees on or under
it.

(b) A building or structure shall include the building or structure itself, together with all
improvements or fixtures annexed to the building or structure, which are integrated with
and of permanent benefit to the building or structure, regardless of the present use of the
building, and which cannot be removed without substantial damage to itself or to the building
or structure.

(c)(i) Real property does not include tools, implements, machinery, and equipment
attached to or installed in real property for use in the business or production activity
conducted thereon, regardless of size, weight or method of attachment, and mine shafts,
tunnels, and other underground openings used to extract ores and minerals taxed under
chapter 298 together with steel, concrete, and other materials used to support such openings.

(ii) The exclusion provided in clause (i) shall not apply to machinery and equipment
includable as real estate by paragraphs (a) and (b) even though such machinery and equipment
is used in the business or production activity conducted on the real property if and to the
extent such business or production activity consists of furnishing services or products to
other buildings or structures which are subject to taxation under this chapter.

(iii) The exclusion provided in clause (i) does not apply to the exterior shell of a structure
which constitutes walls, ceilings, roofs, or floors if the shell of the structure has structural,
insulation, or temperature control functions or provides protection from the elements, unless
the structure is primarily used in the production of biofuels, wine, beer, distilled beverages,
or dairy products. Such an exterior shell is included in the definition of real property even
if it also has special functions distinct from that of a building, or if such an exterior shell is
primarily used for the storage of ingredients or materials used in the production of biofuels,
wine, beer, distilled beverages, or dairy products, or for the storage of finished biofuels,
wine, beer, distilled beverages, or dairy products.

(d) The term real property does not include tools, implements, machinery, equipment,
poles, lines, cables, wires, conduit, and station connections which are part of a telephone
communications system, regardless of attachment to or installation in real property and
regardless of size, weight, or method of attachment or installation.

EFFECTIVE DATE.

This section is effective for sales and purchases made after the
day of final enactment.

Sec. 8.

Minnesota Statutes 2016, section 272.162, is amended to read:


272.162 RESTRICTIONS ON TRANSFERS OF SPECIFIC PARTS.

Subdivision 1.

Conditions restricting transfer.

When a deed or other instrument
conveying a parcel of land is presented to the county auditor for transfer or division under
sections 272.12, 272.16, and 272.161, the auditor shall not transfer or divide the land or its
net tax capacity in the official records and shall not certify the instrument as provided in
section 272.12, if:

(a) The land conveyed is less than a whole parcel of land as charged in the tax lists;

(b) The part conveyed appears within the area of application of municipal or county
subdivision regulations adopted and filed under section 394.35 or section 462.36, subdivision
1
; and

(c) The part conveyed is part of or constitutes a subdivision as defined in section 462.352,
subdivision 12
.

Subd. 2.

Conditions allowing transfer.

(a) Notwithstanding the provisions of subdivision
1, the county auditor may transfer or divide the land and its net tax capacity and may certify
the instrument if the instrument contains a certification by the clerk of the municipality or
designated county planning official
:

(a) (1) that the municipality's or county's subdivision regulations do not apply;

(b) (2) that the subdivision has been approved by the governing body of the municipality
or county
; or

(c) (3) that the restrictions on the division of taxes and filing and recording have been
waived by resolution of the governing body of the municipality or county in the particular
case because compliance would create an unnecessary hardship and failure to comply would
not interfere with the purpose of the regulations.

(b) If any of the conditions for certification by the municipality or county as provided
in this subdivision exist and the municipality or county does not certify that they exist within
24 hours after the instrument of conveyance has been presented to the clerk of the
municipality or designated county planning official, the provisions of subdivision 1 do not
apply.

(c) If an unexecuted instrument is presented to the municipality or county and any of
the conditions for certification by the municipality or county as provided in this subdivision
exist, the unexecuted instrument must be certified by the clerk of the municipality or the
designated county planning official
.

Subd. 3.

Applicability of restrictions.

(a) This section does not apply to the exceptions
set forth in section 272.12.

(b) This section applies only to land within municipalities or counties which choose to
be governed by its provisions. A municipality or county may choose to have this section
apply to the property within its boundaries by filing a certified copy of a resolution of its
governing body making that choice with the auditor and recorder of the county in which it
is located.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

Minnesota Statutes 2016, section 273.125, subdivision 8, is amended to read:


Subd. 8.

Manufactured homes; sectional structures.

(a) In this section, "manufactured
home" means a structure transportable in one or more sections, which is built on a permanent
chassis, and designed to be used as a dwelling with or without a permanent foundation when
connected to the required utilities, and contains the plumbing, heating, air conditioning, and
electrical systems in it. Manufactured home includes any accessory structure that is an
addition or supplement to the manufactured home and, when installed, becomes a part of
the manufactured home.

(b) Except as provided in paragraph (c), a manufactured home that meets each of the
following criteria must be valued and assessed as an improvement to real property, the
appropriate real property classification applies, and the valuation is subject to review and
the taxes payable in the manner provided for real property:

(1) the owner of the unit holds title to the land on which it is situated;

(2) the unit is affixed to the land by a permanent foundation or is installed at its location
in accordance with the Manufactured Home Building Code in sections 327.31 to 327.34,
and rules adopted under those sections, or is affixed to the land like other real property in
the taxing district; and

(3) the unit is connected to public utilities, has a well and septic tank system, or is serviced
by water and sewer facilities comparable to other real property in the taxing district.

(c) A manufactured home that meets each of the following criteria must be assessed at
the rate provided by the appropriate real property classification but must be treated as
personal property, and the valuation is subject to review and the taxes payable in the manner
provided in this section:

(1) the owner of the unit is a lessee of the land under the terms of a lease, or the unit is
located in a manufactured home park but is not the homestead of the park owner;

(2) the unit is affixed to the land by a permanent foundation or is installed at its location
in accordance with the Manufactured Home Building Code contained in sections 327.31 to
327.34, and the rules adopted under those sections, or is affixed to the land like other real
property in the taxing district; and

(3) the unit is connected to public utilities, has a well and septic tank system, or is serviced
by water and sewer facilities comparable to other real property in the taxing district.

(d) Sectional structures must be valued and assessed as an improvement to real property
if the owner of the structure holds title to the land on which it is located or is a qualifying
lessee of the land under section 273.19. In this paragraph "sectional structure" means a
building or structural unit that has been in whole or substantial part manufactured or
constructed at an off-site location to be wholly or partially assembled on site alone or with
other units and attached to a permanent foundation.

(e) The commissioner of revenue may adopt rules under the Administrative Procedure
Act to establish additional criteria for the classification of manufactured homes and sectional
structures under this subdivision.

(f) A storage shed, deck, or similar improvement constructed on property that is leased
or rented as a site for a manufactured home, sectional structure, park trailer, or travel trailer
is taxable as provided in this section. In the case of property that is leased or rented as a site
for a travel trailer, a storage shed, deck, or similar improvement on the site that is considered
personal property under this paragraph is taxable only if its total estimated market value is
over $1,000 $10,000. The property is taxable as personal property to the lessee of the site
if it is not owned by the owner of the site. The property is taxable as real estate if it is owned
by the owner of the site. As a condition of permitting the owner of the manufactured home,
sectional structure, park trailer, or travel trailer to construct improvements on the leased or
rented site, the owner of the site must obtain the permanent home address of the lessee or
user of the site. The site owner must provide the name and address to the assessor upon
request.

EFFECTIVE DATE.

This section is effective beginning for property taxes assessed
in 2018.

Sec. 10.

Minnesota Statutes 2016, section 273.13, subdivision 22, is amended to read:


Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b) and
(c), real estate which is residential and used for homestead purposes is class 1a. In the case
of a duplex or triplex in which one of the units is used for homestead purposes, the entire
property is deemed to be used for homestead purposes. The market value of class 1a property
must be determined based upon the value of the house, garage, and land.

The first $500,000 of market value of class 1a property has a net classification rate of
one percent of its market value; and the market value of class 1a property that exceeds
$500,000 has a classification rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured homes
used for the purposes of a homestead by:

(1) any person who is blind as defined in section 256D.35, or the blind person and the
blind person's spouse;

(2) any person who is permanently and totally disabled or by the disabled person and
the disabled person's spouse; or

(3) the surviving spouse of a permanently and totally disabled veteran homesteading a
property classified under this paragraph for taxes payable in 2008.

Property is classified and assessed under clause (2) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph, and that the
property is not eligible for the valuation exclusion under subdivision 34.

Property is classified and assessed under paragraph (b) only if the commissioner of
revenue or the county assessor certifies that the homestead occupant satisfies the requirements
of this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a condition
which is permanent in nature and totally incapacitates the person from working at an
occupation which brings the person an income. The first $50,000 market value of class 1b
property has a net classification rate of .45 percent of its market value. The remaining market
value of class 1b property has a classification rate using the rates for class 1a or class 2a
property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real and personal property that abuts public
water as defined in section 103G.005, subdivision 15, or abuts a state trail administered by
the Department of Natural Resources,
and is devoted to temporary and seasonal residential
occupancy for recreational purposes but not devoted to commercial purposes for more than
250 days in the year preceding the year of assessment, and that includes a portion used as
a homestead by the owner, which includes a dwelling occupied as a homestead by a
shareholder of a corporation that owns the resort, a partner in a partnership that owns the
resort, or a member of a limited liability company that owns the resort even if the title to
the homestead is held by the corporation, partnership, or limited liability company. For
purposes of this paragraph, property is devoted to a commercial purpose on a specific day
if any portion of the property, excluding the portion used exclusively as a homestead, is
used for residential occupancy and a fee is charged for residential occupancy. Class 1c
property must contain three or more rental units. A "rental unit" is defined as a cabin,
condominium, townhouse, sleeping room, or individual camping site equipped with water
and electrical hookups for recreational vehicles. Class 1c property must provide recreational
activities such as the rental of ice fishing houses, boats and motors, snowmobiles, downhill
or cross-country ski equipment; provide marina services, launch services, or guide services;
or sell bait and fishing tackle. Any unit in which the right to use the property is transferred
to an individual or entity by deeded interest, or the sale of shares or stock, no longer qualifies
for class 1c even though it may remain available for rent. A camping pad offered for rent
by a property that otherwise qualifies for class 1c is also class 1c, regardless of the term of
the rental agreement, as long as the use of the camping pad does not exceed 250 days. If
the same owner owns two separate parcels that are located in the same township, and one
of those properties is classified as a class 1c property and the other would be eligible to be
classified as a class 1c property if it was used as the homestead of the owner, both properties
will be assessed as a single class 1c property; for purposes of this sentence, properties are
deemed to be owned by the same owner if each of them is owned by a limited liability
company, and both limited liability companies have the same membership. The portion of
the property used as a homestead is class 1a property under paragraph (a). The remainder
of the property is classified as follows: the first $600,000 of market value is tier I, the next
$1,700,000 of market value is tier II, and any remaining market value is tier III. The
classification rates for class 1c are: tier I, 0.50 percent; tier II, 1.0 percent; and tier III, 1.25
percent. Owners of real and personal property devoted to temporary and seasonal residential
occupancy for recreation purposes in which all or a portion of the property was devoted to
commercial purposes for not more than 250 days in the year preceding the year of assessment
desiring classification as class 1c, must submit a declaration to the assessor designating the
cabins or units occupied for 250 days or less in the year preceding the year of assessment
by January 15 of the assessment year. Those cabins or units and a proportionate share of
the land on which they are located must be designated as class 1c as otherwise provided.
The remainder of the cabins or units and a proportionate share of the land on which they
are located must be designated as class 3a commercial. The owner of property desiring
designation as class 1c property must provide guest registers or other records demonstrating
that the units for which class 1c designation is sought were not occupied for more than 250
days in the year preceding the assessment if so requested. The portion of a property operated
as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center or meeting room, and (5)
other nonresidential facility operated on a commercial basis not directly related to temporary
and seasonal residential occupancy for recreation purposes does not qualify for class 1c.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time when
they work on that farm, and the occupants are not charged rent for the privilege of occupying
the property, provided that use of the structure for storage of farm equipment and produce
does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the appropriate
season; and

(4) the structure is not salable as residential property because it does not comply with
local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same classification rates as class 1a property
under paragraph (a).

EFFECTIVE DATE.

This section is effective beginning with assessment year 2018
for taxes payable in 2019.

Sec. 11.

Minnesota Statutes 2016, section 273.13, subdivision 23, is amended to read:


Subd. 23.

Class 2.

(a) An agricultural homestead consists of class 2a agricultural land
that is homesteaded, along with any class 2b rural vacant land that is contiguous to the class
2a land under the same ownership. The market value of the house and garage and immediately
surrounding one acre of land has the same classification rates as class 1a or 1b property
under subdivision 22. The value of the remaining land including improvements up to the
first tier valuation limit of agricultural homestead property has a classification rate of 0.5
percent of market value. The remaining property over the first tier has a classification rate
of one percent of market value. For purposes of this subdivision, the "first tier valuation
limit of agricultural homestead property" and "first tier" means the limit certified under
section 273.11, subdivision 23.

(b) Class 2a agricultural land consists of parcels of property, or portions thereof, that
are agricultural land and buildings. Class 2a property has a classification rate of one percent
of market value, unless it is part of an agricultural homestead under paragraph (a). Class 2a
property must also include any property that would otherwise be classified as 2b, but is
interspersed with class 2a property, including but not limited to sloughs, wooded wind
shelters, acreage abutting ditches, ravines, rock piles, land subject to a setback requirement,
and other similar land that is impractical for the assessor to value separately from the rest
of the property or that is unlikely to be able to be sold separately from the rest of the property.

An assessor may classify the part of a parcel described in this subdivision that is used
for agricultural purposes as class 2a and the remainder in the class appropriate to its use.

(c) Class 2b rural vacant land consists of parcels of property, or portions thereof, that
are unplatted real estate, rural in character and not used for agricultural purposes, including
land used for growing trees for timber, lumber, and wood and wood products, that is not
improved with a structure. The presence of a minor, ancillary nonresidential structure as
defined by the commissioner of revenue does not disqualify the property from classification
under this paragraph. Any parcel of 20 acres or more improved with a structure that is not
a minor, ancillary nonresidential structure must be split-classified, and ten acres must be
assigned to the split parcel containing the structure. Class 2b property has a classification
rate of one percent of market value unless it is part of an agricultural homestead under
paragraph (a), or qualifies as class 2c under paragraph (d).

(d) Class 2c managed forest land consists of no less than 20 and no more than 1,920
acres statewide per taxpayer that is being managed under a forest management plan that
meets the requirements of chapter 290C, but is not enrolled in the sustainable forest resource
management incentive program. It has a classification rate of .65 percent, provided that the
owner of the property must apply to the assessor in order for the property to initially qualify
for the reduced rate and provide the information required by the assessor to verify that the
property qualifies for the reduced rate. If the assessor receives the application and information
before May 1 in an assessment year, the property qualifies beginning with that assessment
year. If the assessor receives the application and information after April 30 in an assessment
year, the property may not qualify until the next assessment year. The commissioner of
natural resources must concur that the land is qualified. The commissioner of natural
resources shall annually provide county assessors verification information on a timely basis.
The presence of a minor, ancillary nonresidential structure as defined by the commissioner
of revenue does not disqualify the property from classification under this paragraph.

(e) Agricultural land as used in this section means:

(1) contiguous acreage of ten acres or more, used during the preceding year for
agricultural purposes; or

(2) contiguous acreage used during the preceding year for an intensive livestock or
poultry confinement operation, provided that land used only for pasturing or grazing does
not qualify under this clause.

"Agricultural purposes" as used in this section means the raising, cultivation, drying, or
storage of agricultural products for sale, or the storage of machinery or equipment used in
support of agricultural production by the same farm entity. For a property to be classified
as agricultural based only on the drying or storage of agricultural products, the products
being dried or stored must have been produced by the same farm entity as the entity operating
the drying or storage facility. "Agricultural purposes" also includes enrollment in a local
conservation program or
the Reinvest in Minnesota program under sections 103F.501 to
103F.535 or the federal Conservation Reserve Program as contained in Public Law 99-198
or a similar state or federal conservation program if the property was classified as agricultural
(i) under this subdivision for taxes payable in 2003 because of its enrollment in a qualifying
program and the land remains enrolled or (ii) in the year prior to its enrollment. For purposes
of this section, a local conservation program means a program administered by a town,
statutory or home rule charter city, or county, including a watershed district, water
management organization, or soil and water conservation district, in which landowners
voluntarily enroll land and receive incentive payments equal to at least $50 per acre in
exchange for use or other restrictions placed on the land. In order for property to qualify
under the local conservation program provision, a taxpayer must apply to the assessor by
February 1 of the assessment year and must submit the information required by the assessor,
including but not limited to a copy of the program requirements, the specific agreement
between the land owner and the local agency, if applicable, and a map of the conservation
area.
Agricultural classification shall not be based upon the market value of any residential
structures on the parcel or contiguous parcels under the same ownership.

"Contiguous acreage," for purposes of this paragraph, means all of, or a contiguous
portion of, a tax parcel as described in section 272.193, or all of, or a contiguous portion
of, a set of contiguous tax parcels under that section that are owned by the same person.

(f) Agricultural land under this section also includes:

(1) contiguous acreage that is less than ten acres in size and exclusively used in the
preceding year for raising or cultivating agricultural products; or

(2) contiguous acreage that contains a residence and is less than 11 acres in size, if the
contiguous acreage exclusive of the house, garage, and surrounding one acre of land was
used in the preceding year for one or more of the following three uses:

(i) for an intensive grain drying or storage operation, or for intensive machinery or
equipment storage activities used to support agricultural activities on other parcels of property
operated by the same farming entity;

(ii) as a nursery, provided that only those acres used intensively to produce nursery stock
are considered agricultural land; or

(iii) for intensive market farming; for purposes of this paragraph, "market farming"
means the cultivation of one or more fruits or vegetables or production of animal or other
agricultural products for sale to local markets by the farmer or an organization with which
the farmer is affiliated.

"Contiguous acreage," for purposes of this paragraph, means all of a tax parcel as
described in section 272.193, or all of a set of contiguous tax parcels under that section that
are owned by the same person.

(g) Land shall be classified as agricultural even if all or a portion of the agricultural use
of that property is the leasing to, or use by another person for agricultural purposes.

Classification under this subdivision is not determinative for qualifying under section
273.111.

(h) The property classification under this section supersedes, for property tax purposes
only, any locally administered agricultural policies or land use restrictions that define
minimum or maximum farm acreage.

(i) The term "agricultural products" as used in this subdivision includes production for
sale of:

(1) livestock, dairy animals, dairy products, poultry and poultry products, fur-bearing
animals, horticultural and nursery stock, fruit of all kinds, vegetables, forage, grains, bees,
and apiary products by the owner;

(2) fish bred aquacultural products for sale and consumption, as defined under section
17.47,
if the fish breeding aquaculture occurs on land zoned for agricultural use;

(3) the commercial boarding of horses, which may include related horse training and
riding instruction, if the boarding is done on property that is also used for raising pasture
to graze horses or raising or cultivating other agricultural products as defined in clause (1);

(4) property which is owned and operated by nonprofit organizations used for equestrian
activities, excluding racing;

(5) game birds and waterfowl bred and raised (i) on a game farm licensed under section
97A.105, provided that the annual licensing report to the Department of Natural Resources,
which must be submitted annually by March 30 to the assessor, indicates that at least 500
birds were raised or used for breeding stock on the property during the preceding year and
that the owner provides a copy of the owner's most recent schedule F; or (ii) for use on a
shooting preserve licensed under section 97A.115;

(6) insects primarily bred to be used as food for animals;

(7) trees, grown for sale as a crop, including short rotation woody crops, and not sold
for timber, lumber, wood, or wood products; and

(8) maple syrup taken from trees grown by a person licensed by the Minnesota
Department of Agriculture under chapter 28A as a food processor.

(j) If a parcel used for agricultural purposes is also used for commercial or industrial
purposes, including but not limited to:

(1) wholesale and retail sales;

(2) processing of raw agricultural products or other goods;

(3) warehousing or storage of processed goods; and

(4) office facilities for the support of the activities enumerated in clauses (1), (2), and
(3),

the assessor shall classify the part of the parcel used for agricultural purposes as class 1b,
2a, or 2b, whichever is appropriate, and the remainder in the class appropriate to its use.
The grading, sorting, and packaging of raw agricultural products for first sale is considered
an agricultural purpose. A greenhouse or other building where horticultural or nursery
products are grown that is also used for the conduct of retail sales must be classified as
agricultural if it is primarily used for the growing of horticultural or nursery products from
seed, cuttings, or roots and occasionally as a showroom for the retail sale of those products.
Use of a greenhouse or building only for the display of already grown horticultural or nursery
products does not qualify as an agricultural purpose.

(k) The assessor shall determine and list separately on the records the market value of
the homestead dwelling and the one acre of land on which that dwelling is located. If any
farm buildings or structures are located on this homesteaded acre of land, their market value
shall not be included in this separate determination.

(l) Class 2d airport landing area consists of a landing area or public access area of a
privately owned public use airport. It has a classification rate of one percent of market value.
To qualify for classification under this paragraph, a privately owned public use airport must
be licensed as a public airport under section 360.018. For purposes of this paragraph, "landing
area" means that part of a privately owned public use airport properly cleared, regularly
maintained, and made available to the public for use by aircraft and includes runways,
taxiways, aprons, and sites upon which are situated landing or navigational aids. A landing
area also includes land underlying both the primary surface and the approach surfaces that
comply with all of the following:

(i) the land is properly cleared and regularly maintained for the primary purposes of the
landing, taking off, and taxiing of aircraft; but that portion of the land that contains facilities
for servicing, repair, or maintenance of aircraft is not included as a landing area;

(ii) the land is part of the airport property; and

(iii) the land is not used for commercial or residential purposes.

The land contained in a landing area under this paragraph must be described and certified
by the commissioner of transportation. The certification is effective until it is modified, or
until the airport or landing area no longer meets the requirements of this paragraph. For
purposes of this paragraph, "public access area" means property used as an aircraft parking
ramp, apron, or storage hangar, or an arrival and departure building in connection with the
airport.

(m) Class 2e consists of land with a commercial aggregate deposit that is not actively
being mined and is not otherwise classified as class 2a or 2b, provided that the land is not
located in a county that has elected to opt-out of the aggregate preservation program as
provided in section 273.1115, subdivision 6. It has a classification rate of one percent of
market value. To qualify for classification under this paragraph, the property must be at
least ten contiguous acres in size and the owner of the property must record with the county
recorder of the county in which the property is located an affidavit containing:

(1) a legal description of the property;

(2) a disclosure that the property contains a commercial aggregate deposit that is not
actively being mined but is present on the entire parcel enrolled;

(3) documentation that the conditional use under the county or local zoning ordinance
of this property is for mining; and

(4) documentation that a permit has been issued by the local unit of government or the
mining activity is allowed under local ordinance. The disclosure must include a statement
from a registered professional geologist, engineer, or soil scientist delineating the deposit
and certifying that it is a commercial aggregate deposit.

For purposes of this section and section 273.1115, "commercial aggregate deposit"
means a deposit that will yield crushed stone or sand and gravel that is suitable for use as
a construction aggregate; and "actively mined" means the removal of top soil and overburden
in preparation for excavation or excavation of a commercial deposit.

(n) When any portion of the property under this subdivision or subdivision 22 begins to
be actively mined, the owner must file a supplemental affidavit within 60 days from the
day any aggregate is removed stating the number of acres of the property that is actively
being mined. The acres actively being mined must be (1) valued and classified under
subdivision 24 in the next subsequent assessment year, and (2) removed from the aggregate
resource preservation property tax program under section 273.1115, if the land was enrolled
in that program. Copies of the original affidavit and all supplemental affidavits must be
filed with the county assessor, the local zoning administrator, and the Department of Natural
Resources, Division of Land and Minerals. A supplemental affidavit must be filed each
time a subsequent portion of the property is actively mined, provided that the minimum
acreage change is five acres, even if the actual mining activity constitutes less than five
acres.

(o) The definitions prescribed by the commissioner under paragraphs (c) and (d) are not
rules and are exempt from the rulemaking provisions of chapter 14, and the provisions in
section 14.386 concerning exempt rules do not apply.

EFFECTIVE DATE.

This section is effective beginning with assessment year 2018.

Sec. 12.

Minnesota Statutes 2016, section 273.13, subdivision 25, is amended to read:


Subd. 25.

Class 4.

(a) Class 4a is residential real estate containing four or more units
and used or held for use by the owner or by the tenants or lessees of the owner as a residence
for rental periods of 30 days or more, excluding property qualifying for class 4d. Class 4a
also includes hospitals licensed under sections 144.50 to 144.56, other than hospitals exempt
under section 272.02, and contiguous property used for hospital purposes, without regard
to whether the property has been platted or subdivided. The market value of class 4a property
has a classification rate of 1.25 percent.

(b) Class 4b includes:

(1) residential real estate containing less than four units that does not qualify as class
4bb, other than seasonal residential recreational property;

(2) manufactured homes not classified under any other provision;

(3) a dwelling, garage, and surrounding one acre of property on a nonhomestead farm
classified under subdivision 23, paragraph (b) containing two or three units; and

(4) unimproved property that is classified residential as determined under subdivision
33.

The market value of class 4b property has a classification rate of 1.25 percent.

(c) Class 4bb includes:

(1) nonhomestead residential real estate containing one unit, other than seasonal
residential recreational property, and;

(2) a single family dwelling, garage, and surrounding one acre of property on a
nonhomestead farm classified under subdivision 23, paragraph (b).; and

(3) a condominium-type storage unit having an individual property identification number
that is not used for a commercial purpose.

Class 4bb property has the same classification rates as class 1a property under subdivision
22.

Property that has been classified as seasonal residential recreational property at any time
during which it has been owned by the current owner or spouse of the current owner does
not qualify for class 4bb.

(d) Class 4c property includes:

(1) except as provided in subdivision 22, paragraph (c), real and personal property
devoted to commercial temporary and seasonal residential occupancy for recreation purposes,
for not more than 250 days in the year preceding the year of assessment. For purposes of
this clause, property is devoted to a commercial purpose on a specific day if any portion of
the property is used for residential occupancy, and a fee is charged for residential occupancy.
Class 4c property under this clause must contain three or more rental units. A "rental unit"
is defined as a cabin, condominium, townhouse, sleeping room, or individual camping site
equipped with water and electrical hookups for recreational vehicles. A camping pad offered
for rent by a property that otherwise qualifies for class 4c under this clause is also class 4c
under this clause regardless of the term of the rental agreement, as long as the use of the
camping pad does not exceed 250 days. In order for a property to be classified under this
clause, either (i) the business located on the property must provide recreational activities,
at least 40 percent of the annual gross lodging receipts related to the property must be from
business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid
bookings by lodging guests during the year must be for periods of at least two consecutive
nights; or (B) at least 20 percent of the annual gross receipts must be from charges for
providing recreational activities, or (ii) the business must contain 20 or fewer rental units,
and must be located in a township or a city with a population of 2,500 or less located outside
the metropolitan area, as defined under section 473.121, subdivision 2, that contains a portion
of a state trail administered by the Department of Natural Resources. For purposes of item
(i)(A), a paid booking of five or more nights shall be counted as two bookings. Class 4c
property also includes commercial use real property used exclusively for recreational
purposes in conjunction with other class 4c property classified under this clause and devoted
to temporary and seasonal residential occupancy for recreational purposes, up to a total of
two acres, provided the property is not devoted to commercial recreational use for more
than 250 days in the year preceding the year of assessment and is located within two miles
of the class 4c property with which it is used. In order for a property to qualify for
classification under this clause, the owner must submit a declaration to the assessor
designating the cabins or units occupied for 250 days or less in the year preceding the year
of assessment by January 15 of the assessment year. Those cabins or units and a proportionate
share of the land on which they are located must be designated class 4c under this clause
as otherwise provided. The remainder of the cabins or units and a proportionate share of
the land on which they are located will be designated as class 3a. The owner of property
desiring designation as class 4c property under this clause must provide guest registers or
other records demonstrating that the units for which class 4c designation is sought were not
occupied for more than 250 days in the year preceding the assessment if so requested. The
portion of a property operated as a (1) restaurant, (2) bar, (3) gift shop, (4) conference center
or meeting room, and (5) other nonresidential facility operated on a commercial basis not
directly related to temporary and seasonal residential occupancy for recreation purposes
does not qualify for class 4c. For the purposes of this paragraph, "recreational activities"
means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country
ski equipment; providing marina services, launch services, or guide services; or selling bait
and fishing tackle;

(2) qualified property used as a golf course if:

(i) it is open to the public on a daily fee basis. It may charge membership fees or dues,
but a membership fee may not be required in order to use the property for golfing, and its
green fees for golfing must be comparable to green fees typically charged by municipal
courses; and

(ii) it meets the requirements of section 273.112, subdivision 3, paragraph (d).

A structure used as a clubhouse, restaurant, or place of refreshment in conjunction with
the golf course is classified as class 3a property;

(3) real property up to a maximum of three acres of land owned and used by a nonprofit
community service oriented organization and not used for residential purposes on either a
temporary or permanent basis, provided that:

(i) the property is not used for a revenue-producing activity for more than six days in
the calendar year preceding the year of assessment; or

(ii) the organization makes annual charitable contributions and donations at least equal
to the property's previous year's property taxes and the property is allowed to be used for
public and community meetings or events for no charge, as appropriate to the size of the
facility.

For purposes of this clause:

(A) "charitable contributions and donations" has the same meaning as lawful gambling
purposes under section 349.12, subdivision 25, excluding those purposes relating to the
payment of taxes, assessments, fees, auditing costs, and utility payments;

(B) "property taxes" excludes the state general tax;

(C) a "nonprofit community service oriented organization" means any corporation,
society, association, foundation, or institution organized and operated exclusively for
charitable, religious, fraternal, civic, or educational purposes, and which is exempt from
federal income taxation pursuant to section 501(c)(3), (8), (10), or (19) of the Internal
Revenue Code; and

(D) "revenue-producing activities" shall include but not be limited to property or that
portion of the property that is used as an on-sale intoxicating liquor or 3.2 percent malt
liquor establishment licensed under chapter 340A, a restaurant open to the public, bowling
alley, a retail store, gambling conducted by organizations licensed under chapter 349, an
insurance business, or office or other space leased or rented to a lessee who conducts a
for-profit enterprise on the premises.

Any portion of the property not qualifying under either item (i) or (ii) is class 3a. The
use of the property for social events open exclusively to members and their guests for periods
of less than 24 hours, when an admission is not charged nor any revenues are received by
the organization shall not be considered a revenue-producing activity.

The organization shall maintain records of its charitable contributions and donations
and of public meetings and events held on the property and make them available upon
request any time to the assessor to ensure eligibility. An organization meeting the requirement
under item (ii) must file an application by May 1 with the assessor for eligibility for the
current year's assessment. The commissioner shall prescribe a uniform application form
and instructions;

(4) postsecondary student housing of not more than one acre of land that is owned by a
nonprofit corporation organized under chapter 317A and is used exclusively by a student
cooperative, sorority, or fraternity for on-campus housing or housing located within two
miles of the border of a college campus;

(5)(i) manufactured home parks as defined in section 327.14, subdivision 3, excluding
manufactured home parks described in section 273.124, subdivision 3a items (ii) and (iii),
and (ii) manufactured home parks as defined in section 327.14, subdivision 3, that are
described in section 273.124, subdivision 3a, and (iii) class I manufactured home parks as
defined in section 327C.01, subdivision 13
;

(6) real property that is actively and exclusively devoted to indoor fitness, health, social,
recreational, and related uses, is owned and operated by a not-for-profit corporation, and is
located within the metropolitan area as defined in section 473.121, subdivision 2;

(7) a leased or privately owned noncommercial aircraft storage hangar not exempt under
section 272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land is on an airport owned or operated by a city, town, county, Metropolitan
Airports Commission, or group thereof; and

(ii) the land lease, or any ordinance or signed agreement restricting the use of the leased
premise, prohibits commercial activity performed at the hangar.

If a hangar classified under this clause is sold after June 30, 2000, a bill of sale must be
filed by the new owner with the assessor of the county where the property is located within
60 days of the sale;

(8) a privately owned noncommercial aircraft storage hangar not exempt under section
272.01, subdivision 2, and the land on which it is located, provided that:

(i) the land abuts a public airport; and

(ii) the owner of the aircraft storage hangar provides the assessor with a signed agreement
restricting the use of the premises, prohibiting commercial use or activity performed at the
hangar; and

(9) residential real estate, a portion of which is used by the owner for homestead purposes,
and that is also a place of lodging, if all of the following criteria are met:

(i) rooms are provided for rent to transient guests that generally stay for periods of 14
or fewer days;

(ii) meals are provided to persons who rent rooms, the cost of which is incorporated in
the basic room rate;

(iii) meals are not provided to the general public except for special events on fewer than
seven days in the calendar year preceding the year of the assessment; and

(iv) the owner is the operator of the property.

The market value subject to the 4c classification under this clause is limited to five rental
units. Any rental units on the property in excess of five, must be valued and assessed as
class 3a. The portion of the property used for purposes of a homestead by the owner must
be classified as class 1a property under subdivision 22;

(10) real property up to a maximum of three acres and operated as a restaurant as defined
under section 157.15, subdivision 12, provided it: (i) is located on a lake as defined under
section 103G.005, subdivision 15, paragraph (a), clause (3); and (ii) is either devoted to
commercial purposes for not more than 250 consecutive days, or receives at least 60 percent
of its annual gross receipts from business conducted during four consecutive months. Gross
receipts from the sale of alcoholic beverages must be included in determining the property's
qualification under item (ii). The property's primary business must be as a restaurant and
not as a bar. Gross receipts from gift shop sales located on the premises must be excluded.
Owners of real property desiring 4c classification under this clause must submit an annual
declaration to the assessor by February 1 of the current assessment year, based on the
property's relevant information for the preceding assessment year;

(11) lakeshore and riparian property and adjacent land, not to exceed six acres, used as
a marina, as defined in section 86A.20, subdivision 5, which is made accessible to the public
and devoted to recreational use for marina services. The marina owner must annually provide
evidence to the assessor that it provides services, including lake or river access to the public
by means of an access ramp or other facility that is either located on the property of the
marina or at a publicly owned site that abuts the property of the marina. No more than 800
feet of lakeshore may be included in this classification. Buildings used in conjunction with
a marina for marina services, including but not limited to buildings used to provide food
and beverage services, fuel, boat repairs, or the sale of bait or fishing tackle, are classified
as class 3a property; and

(12) real and personal property devoted to noncommercial temporary and seasonal
residential occupancy for recreation purposes.

Class 4c property has a classification rate of 1.5 percent of market value, except that (i)
each parcel of noncommercial seasonal residential recreational property under clause (12)
has the same classification rates as class 4bb property, (ii) manufactured home parks assessed
under clause (5), item (i), have the same classification rate as class 4b property, and the
market value of manufactured home parks assessed under clause (5), item (ii), has have a
classification rate of 0.75 percent if more than 50 percent of the lots in the park are occupied
by shareholders in the cooperative corporation or association and a classification rate of
one percent if 50 percent or less of the lots are so occupied, and class I manufactured home
parks as defined in section 327C.01, subdivision 13, have a classification rate of 1.0 percent,

(iii) commercial-use seasonal residential recreational property and marina recreational land
as described in clause (11), has a classification rate of one percent for the first $500,000 of
market value, and 1.25 percent for the remaining market value, (iv) the market value of
property described in clause (4) has a classification rate of one percent, (v) the market value
of property described in clauses (2), (6), and (10) has a classification rate of 1.25 percent,
and (vi) that portion of the market value of property in clause (9) qualifying for class 4c
property has a classification rate of 1.25 percent, and (vii) property qualifying for
classification under clause (3) that is owned or operated by a congressionally chartered
veterans organization has a classification rate of one percent. The commissioner of veterans
affairs must provide a list of congressionally chartered veterans organizations to the
commissioner of revenue by June 30, 2017, and by January 1, 2018, and each year thereafter
.

(e) Class 4d property is qualifying low-income rental housing certified to the assessor
by the Housing Finance Agency under section 273.128, subdivision 3. If only a portion of
the units in the building qualify as low-income rental housing units as certified under section
273.128, subdivision 3, only the proportion of qualifying units to the total number of units
in the building qualify for class 4d. The remaining portion of the building shall be classified
by the assessor based upon its use. Class 4d also includes the same proportion of land as
the qualifying low-income rental housing units are to the total units in the building. For all
properties qualifying as class 4d, the market value determined by the assessor must be based
on the normal approach to value using normal unrestricted rents.

(f) The first tier of market value of class 4d property has a classification rate of 0.75
percent. The remaining value of class 4d property has a classification rate of 0.25 percent.
For the purposes of this paragraph, the "first tier of market value of class 4d property" means
the market value of each housing unit up to the first tier limit. For the purposes of this
paragraph, all class 4d property value must be assigned to individual housing units. The
first tier limit is $100,000 for assessment year 2014. For subsequent years, the limit is
adjusted each year by the average statewide change in estimated market value of property
classified as class 4a and 4d under this section for the previous assessment year, excluding
valuation change due to new construction, rounded to the nearest $1,000, provided, however,
that the limit may never be less than $100,000. Beginning with assessment year 2015, the
commissioner of revenue must certify the limit for each assessment year by November 1
of the previous year.

EFFECTIVE DATE.

(a) Except as provided in paragraphs (b) and (c), this section is
effective beginning with taxes assessed in 2017 and payable in 2018.

(b) The amendment to paragraph (d), clause (5), and the amendment to item (ii) of the
unlettered paragraph after paragraph (d), clause (12), are effective for taxes payable in 2019
and thereafter, but only become effective if the class I manufactured home park program
in chapter 327C is enacted during the 2017 legislative session.

(c) The amendment to paragraph (c), clause (3), is effective beginning with taxes payable
in 2019.

Sec. 13.

Minnesota Statutes 2016, section 273.13, subdivision 34, is amended to read:


Subd. 34.

Homestead of disabled veteran or family caregiver.

(a) All or a portion of
the market value of property owned by a veteran and serving as the veteran's homestead
under this section is excluded in determining the property's taxable market value if the
veteran has a service-connected disability of 70 percent or more as certified by the United
States Department of Veterans Affairs. To qualify for exclusion under this subdivision, the
veteran must have been honorably discharged from the United States armed forces, as
indicated by United States Government Form DD214 or other official military discharge
papers.

(b)(1) For a disability rating of 70 percent or more, $150,000 of market value is excluded,
except as provided in clause (2); and

(2) for a total (100 percent) and permanent disability, $300,000 of market value is
excluded.

(c) If a disabled veteran qualifying for a valuation exclusion under paragraph (b), clause
(2), predeceases the veteran's spouse, and if upon the death of the veteran the spouse holds
the legal or beneficial title to the homestead and permanently resides there, the exclusion
shall carry over to the benefit of the veteran's spouse for the current taxes payable year and
for eight additional taxes payable years or until such time as the spouse remarries, or sells,
transfers, or otherwise disposes of the property, whichever comes first. Qualification under
this paragraph requires an annual application under paragraph (h), and a spouse must notify
the assessor if there is a change in the spouse's marital status, ownership of the property, or
use of the property as a permanent residence
.

(d) If the spouse of a member of any branch or unit of the United States armed forces
who dies due to a service-connected cause while serving honorably in active service, as
indicated on United States Government Form DD1300 or DD2064, holds the legal or
beneficial title to a homestead and permanently resides there, the spouse is entitled to the
benefit described in paragraph (b), clause (2), for eight taxes payable years, or until such
time as the spouse remarries or sells, transfers, or otherwise disposes of the property,
whichever comes first.

(e) If a veteran meets the disability criteria of paragraph (a) but does not own property
classified as homestead in the state of Minnesota, then the homestead of the veteran's primary
family caregiver, if any, is eligible for the exclusion that the veteran would otherwise qualify
for under paragraph (b).

(f) In the case of an agricultural homestead, only the portion of the property consisting
of the house and garage and immediately surrounding one acre of land qualifies for the
valuation exclusion under this subdivision.

(g) A property qualifying for a valuation exclusion under this subdivision is not eligible
for the market value exclusion under subdivision 35, or classification under subdivision 22,
paragraph (b).

(h) To qualify for a valuation exclusion under this subdivision a property owner must
apply to the assessor by July 1 of each assessment year, except that an annual reapplication
is not required once a property has been accepted for a valuation exclusion under paragraph
(a) and qualifies for the benefit described in paragraph (b), clause (2), and the property
continues to qualify until there is a change in ownership
of the first assessment year for
which the exclusion is sought
. For an application received after July 1 of any calendar year,
the exclusion shall become effective for the following assessment year. Except as provided
in paragraph (c), the owner of a property that has been accepted for a valuation exclusion
must notify the assessor if there is a change in ownership of the property or in the use of
the property as a homestead.

(i) A first-time application by a qualifying spouse for the market value exclusion under
paragraph (d) must be made any time within two years of the death of the service member.

(j) For purposes of this subdivision:

(1) "active service" has the meaning given in section 190.05;

(2) "own" means that the person's name is present as an owner on the property deed;

(3) "primary family caregiver" means a person who is approved by the secretary of the
United States Department of Veterans Affairs for assistance as the primary provider of
personal care services for an eligible veteran under the Program of Comprehensive Assistance
for Family Caregivers, codified as United States Code, title 38, section 1720G; and

(4) "veteran" has the meaning given the term in section 197.447.

(k) If a veteran dying after December 31, 2011, did not apply for or receive the exclusion
under paragraph (b), clause (2), before dying, the veteran's spouse is entitled to the benefit
under paragraph (b), clause (2), for eight taxes payable years or until the spouse remarries
or sells, transfers, or otherwise disposes of the property if:

(1) the spouse files a first-time application within two years of the death of the service
member or by June 1, 2019, whichever is later;

(2) upon the death of the veteran, the spouse holds the legal or beneficial title to the
homestead and permanently resides there;

(3) the veteran met the honorable discharge requirements of paragraph (a); and

(4) the United States Department of Veterans Affairs certifies that:

(i) the veteran met the total (100 percent) and permanent disability requirement under
paragraph (b), clause (2); or

(ii) the spouse has been awarded dependency and indemnity compensation.

(l) The purpose of this provision of law providing a level of homestead property tax
relief for gravely disabled veterans, their primary family caregivers, and their surviving
spouses is to help ease the burdens of war for those among our state's citizens who bear
those burdens most heavily.

(m) By July 1, the county veterans service officer must certify the disability rating and
permanent address of each veteran receiving the benefit under paragraph (b) to the assessor.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018,
provided that, for taxes payable in 2018, the first-time application required under paragraph
(k) is due by August 1, 2017.

Sec. 14.

Minnesota Statutes 2016, section 275.025, subdivision 1, is amended to read:


Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined
in this section. The state general levy base amount is $592,000,000 for commercial-industrial
property is $784,590,000
for taxes payable in 2002 2018 and thereafter. For taxes payable
in subsequent years, the levy base amount is increased each year by multiplying the levy
base amount for the prior year by the sum of one plus the rate of increase, if any, in the
implicit price deflator for government consumption expenditures and gross investment for
state and local governments prepared by the Bureau of Economic Analysts of the United
States Department of Commerce for the 12-month period ending March 31 of the year prior
to the year the taxes are payable.
The state general levy for seasonal-recreational property
is $44,190,000 for taxes payable in 2018 and thereafter.
The tax under this section is not
treated as a local tax rate under section 469.177 and is not the levy of a governmental unit
under chapters 276A and 473F.

The commissioner shall increase or decrease the preliminary or final rate for a year as
necessary to account for errors and tax base changes that affected a preliminary or final rate
for either of the two preceding years. Adjustments are allowed to the extent that the necessary
information is available to the commissioner at the time the rates for a year must be certified,
and for the following reasons:

(1) an erroneous report of taxable value by a local official;

(2) an erroneous calculation by the commissioner; and

(3) an increase or decrease in taxable value for commercial-industrial or seasonal
residential recreational property reported on the abstracts of tax lists submitted under section
275.29 that was not reported on the abstracts of assessment submitted under section 270C.89
for the same year.

The commissioner may, but need not, make adjustments if the total difference in the tax
levied for the year would be less than $100,000.

EFFECTIVE DATE.

This section is effective for taxes payable in 2018 and thereafter.

Sec. 15.

Minnesota Statutes 2016, section 275.025, subdivision 2, is amended to read:


Subd. 2.

Commercial-industrial tax capacity.

For the purposes of this section,
"commercial-industrial tax capacity" means the tax capacity of all taxable property classified
as class 3 or class 5(1) under section 273.13, except for excluding:

(1) the tax capacity attributable to the first $100,000 of market value of each parcel of
commercial-industrial property as defined under section 273.13, subdivision 24, clauses (1)
and (2);

(2) electric generation attached machinery under class 3; and

(3) property described in section 473.625.

County commercial-industrial tax capacity amounts are not adjusted for the captured
net tax capacity of a tax increment financing district under section 469.177, subdivision 2,
the net tax capacity of transmission lines deducted from a local government's total net tax
capacity under section 273.425, or fiscal disparities contribution and distribution net tax
capacities under chapter 276A or 473F. For purposes of this subdivision, the procedures
for determining eligibility for tier 1 under section 273.13, subdivision 24, clauses (1) and
(2), shall apply in determining the portion of a property eligible to be considered within the
first $100,000 of market value.

EFFECTIVE DATE.

This section is effective for taxes payable in 2018 and thereafter.

Sec. 16.

Minnesota Statutes 2016, section 275.025, subdivision 4, is amended to read:


Subd. 4.

Apportionment and levy of state general tax.

Ninety-five percent of The
state general tax must be levied by applying a uniform rate to all commercial-industrial tax
capacity and five percent of the state general tax must be levied by applying a uniform rate
to all seasonal residential recreational tax capacity. On or before October 1 each year, the
commissioner of revenue shall certify the preliminary state general levy rates to each county
auditor that must be used to prepare the notices of proposed property taxes for taxes payable
in the following year. By January 1 of each year, the commissioner shall certify the final
state general levy rate rates to each county auditor that shall be used in spreading taxes.

EFFECTIVE DATE.

This section is effective for taxes payable in 2018 and thereafter.

Sec. 17.

Minnesota Statutes 2016, section 275.025, is amended by adding a subdivision
to read:


Subd. 5.

Underserved municipalities distribution.

(a) Any municipality that:

(1) lies wholly or partially within the metropolitan area as defined under section 473.121,
subdivision 2, but outside the transit taxing district as defined under section 473.446,
subdivision 2; and

(2) has a net fiscal disparities contribution equal to or greater than eight percent of its
total taxable net tax capacity,

is eligible for a distribution from the proceeds of the state general levy imposed on taxpayers
within the municipality.

(b) The distribution is equal to (1) the municipality's net tax capacity tax rate, times (2)
the municipality's net fiscal disparities contribution in excess of eight percent of its total
taxable net tax capacity; provided, however, that the distribution may not exceed the tax
under this section imposed on taxpayers within the municipality. The amount of the
distribution to each municipality must be determined by the commissioner of revenue and
certified to each affected municipality and county by September 1 of the year in which taxes
are payable.

(c) The distribution under this subdivision must be paid to the qualifying municipality
by the treasurer of the home county of the municipality by December 1 of the year the taxes
are payable. The amounts distributed under this subdivision must be deducted from the
settlement of the state general levy for the taxes payable year under section 276.112.

(d) For purposes of this subdivision, the following terms have the meanings given.

(1) "Municipality" means a home rule or statutory city, or a town, except that in the case
of a city that lies only partially within the metropolitan area, municipality means the portion
of the city lying within the metropolitan area.

(2) "Net fiscal disparities contribution" means a municipality's fiscal disparities
contribution tax capacity minus its distribution net tax capacity.

(3) "Total taxable net tax capacity" means the total net tax capacity of all properties in
the municipality under section 273.13 minus (i) the net fiscal disparities contribution, and
(ii) the municipality's tax increment captured net tax capacity.

EFFECTIVE DATE.

This section is effective for taxes payable in 2018 and thereafter.

Sec. 18.

Minnesota Statutes 2016, section 275.065, subdivision 1, is amended to read:


Subdivision 1.

Proposed levy.

(a) Notwithstanding any law or charter to the contrary,
on or before September 30, each county and each, home rule charter or statutory city, town,
and special taxing district, excluding the Metropolitan Council and the Metropolitan Mosquito
Control Commission,
shall certify to the county auditor the proposed property tax levy for
taxes payable in the following year. For towns, the final certified levy shall also be considered
the proposed levy
.

(b) Notwithstanding any law or charter to the contrary, on or before September 15, each
town and each special taxing district
the Metropolitan Council and the Metropolitan Mosquito
Control Commission
shall adopt and certify to the county auditor a proposed property tax
levy for taxes payable in the following year. For towns, the final certified levy shall also be
considered the proposed levy.

(c) On or before September 30, each school district that has not mutually agreed with
its home county to extend this date shall certify to the county auditor the proposed property
tax levy for taxes payable in the following year. Each school district that has agreed with
its home county to delay the certification of its proposed property tax levy must certify its
proposed property tax levy for the following year no later than October 7. The school district
shall certify the proposed levy as:

(1) a specific dollar amount by school district fund, broken down between voter-approved
and non-voter-approved levies and between referendum market value and tax capacity
levies; or

(2) the maximum levy limitation certified by the commissioner of education according
to section 126C.48, subdivision 1.

(d) If the board of estimate and taxation or any similar board that establishes maximum
tax levies for taxing jurisdictions within a first class city certifies the maximum property
tax levies for funds under its jurisdiction by charter to the county auditor by the date specified
in paragraph (a), the city shall be deemed to have certified its levies for those taxing
jurisdictions.

(e) For purposes of this section, "special taxing district" means a special taxing district
as defined in section 275.066. Intermediate school districts that levy a tax under chapter
124 or 136D, joint powers boards established under sections 123A.44 to 123A.446, and
Common School Districts No. 323, Franconia, and No. 815, Prinsburg, are also special
taxing districts for purposes of this section.

(f) At the meeting at which a taxing authority, other than a town, adopts its proposed
tax levy under this subdivision, the taxing authority shall announce the time and place of
its subsequent regularly scheduled meetings at which the budget and levy will be discussed
and at which the public will be allowed to speak. The time and place of those meetings must
be included in the proceedings or summary of proceedings published in the official newspaper
of the taxing authority under section 123B.09, 375.12, or 412.191.

EFFECTIVE DATE.

This section is effective beginning with proposed levy
certifications for taxes payable in 2018.

Sec. 19.

Minnesota Statutes 2016, section 275.07, subdivision 1, is amended to read:


Subdivision 1.

Certification of levy.

(a) Except as provided under paragraph (b), the
taxes voted by cities, counties, school districts, and special districts shall be certified by the
proper authorities to the county auditor on or before five working days after December 20
in each year. A town must certify the levy adopted by the town board to the county auditor
by September 15 30 each year. If the town board modifies the levy at a special town meeting
after September 15 30, the town board must recertify its levy to the county auditor on or
before five working days after December 20. If a city, town, county, school district, or
special district fails to certify its levy by that date, its levy shall be the amount levied by it
for the preceding year.

(b)(i) The taxes voted by counties under sections 103B.241, 103B.245, and 103B.251
shall be separately certified by the county to the county auditor on or before five working
days after December 20 in each year. The taxes certified shall not be reduced by the county
auditor by the aid received under section 273.1398, subdivision 3. If a county fails to certify
its levy by that date, its levy shall be the amount levied by it for the preceding year.

(ii) For purposes of the proposed property tax notice under section 275.065 and the
property tax statement under section 276.04, for the first year in which the county implements
the provisions of this paragraph, the county auditor shall reduce the county's levy for the
preceding year to reflect any amount levied for water management purposes under clause
(i) included in the county's levy.

EFFECTIVE DATE.

This section is effective beginning with proposed levy
certifications for taxes payable in 2018.

Sec. 20.

Minnesota Statutes 2016, section 276.017, subdivision 3, is amended to read:


Subd. 3.

United States Postal Service postmark Proof of timely payment.

The
postmark or registration mark of the United States Postal Service qualifies as proof of timely
mailing for this section. If the payment is sent by United States registered mail, the date of
registration is the postmark date. If the payment is sent by United States certified mail, the
date of the United States Postal Service postmark on the receipt given to the person presenting
the payment for delivery is the date of mailing.
Mailing, or the time of mailing, may also
be established by a delivery service's records or other available evidence except that. The
postmark of a private postage meter or an electronic stamp purchased online may not be
used as proof of a timely mailing made under this section.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 21.

Minnesota Statutes 2016, section 279.01, subdivision 1, is amended to read:


Subdivision 1.

Due dates; penalties.

Except as provided in subdivisions 3 to 5, on May
16 or 21 days after the postmark date on the envelope containing the property tax statement,
whichever is later, a penalty accrues and thereafter is charged upon all unpaid taxes on real
estate on the current lists in the hands of the county treasurer. The
(a) When the taxes against
any tract or lot exceed $100, one-half of the amount of tax due must be paid prior to May
16, and the remaining one-half must be paid prior to the following October 16. If either tax
amount is unpaid as of its due date, a
penalty is imposed at a rate of two percent on homestead
property until May 31 and four percent on nonhomestead property. If complete payment
has not been made by the first day of the month following either due date, an additional
penalty of two
percent on June 1. The penalty on nonhomestead property is at a rate of four
percent until May 31
homestead property and eight four percent on June 1. This penalty
does not accrue until June 1 of each year, or 21 days after the postmark date on the envelope
containing the property tax statements, whichever is later, on commercial use real property
used for seasonal residential recreational purposes and classified as class 1c or 4c, and on
other commercial use real property classified as class 3a, provided that over 60 percent of
the gross income earned by the enterprise on the class 3a property is earned during the
months of May, June, July, and August. In order for the first half of the tax due on class 3a
property to be paid after May 15 and before June 1, or 21 days after the postmark date on
the envelope containing the property tax statement, whichever is later, without penalty, the
owner of the property must attach an affidavit to the payment attesting to compliance with
the income provision of this subdivision
nonhomestead property is imposed. Thereafter,
for both homestead and nonhomestead property, on the first day of each subsequent month
beginning July 1, up to and including October 1 following through December, an additional
penalty of one percent for each month accrues and is charged on all such unpaid taxes
provided that if the due date was extended beyond May 15 as the result of any delay in
mailing property tax statements no additional penalty shall accrue if the tax is paid by the
extended due date. If the tax is not paid by the extended due date, then all penalties that
would have accrued if the due date had been May 15 shall be charged. When the taxes
against any tract or lot exceed $100, one-half thereof may be paid prior to May 16 or 21
days after the postmark date on the envelope containing the property tax statement, whichever
is later; and, if so paid, no penalty attaches; the remaining one-half may be paid at any time
prior to October 16 following, without penalty; but, if not so paid, then a penalty of two
percent accrues thereon for homestead property and a penalty of four percent on
nonhomestead property. Thereafter, for homestead property, on the first day of November
an additional penalty of four percent accrues and on the first day of December following,
an additional penalty of two percent accrues and is charged on all such unpaid taxes.
Thereafter, for nonhomestead property, on the first day of November and December
following, an additional penalty of four percent for each month accrues and is charged on
all such unpaid taxes. If one-half of such taxes are not paid prior to May 16 or 21 days after
the postmark date on the envelope containing the property tax statement, whichever is later,
the same may be paid at any time prior to October 16, with accrued penalties to the date of
payment added, and thereupon no penalty attaches to the remaining one-half until October
16 following
the penalty must not exceed eight percent in the case of homestead property,
or 12 percent in the case of nonhomestead property
.

(b) If the property tax statement was not postmarked prior to April 25, the first half
payment due date in paragraph (a) shall be 21 days from the postmark date of the property
tax statement, and all penalties referenced in paragraph (a) shall be determined with regard
to the later due date.

(c) In the case of a tract or lot with taxes of $100 or less, the due date and penalties as
specified in paragraph (a) or (b) for the first half payment shall apply to the entire amount
of the tax due.

(d) For commercial use real property used for seasonal residential recreational purposes
and classified as class 1c or 4c, and on other commercial use real property classified as class
3a, provided that over 60 percent of the gross income earned by the enterprise on the class
3a property is earned during the months of May, June, July, and August, the first half
payment is due prior to June 1. For a class 3a property to qualify for the later due date, the
owner of the property must attach an affidavit to the payment attesting to compliance with
the income requirements of this paragraph.

(e) This section applies to payment of personal property taxes assessed against
improvements to leased property, except as provided by section 277.01, subdivision 3.

(f) A county may provide by resolution that in the case of a property owner that has
multiple tracts or parcels with aggregate taxes exceeding $100, payments may be made in
installments as provided in this subdivision.

(g) The county treasurer may accept payments of more or less than the exact amount of
a tax installment due. Payments must be applied first to the oldest installment that is due
but which has not been fully paid. If the accepted payment is less than the amount due,
payments must be applied first to the penalty accrued for the year or the installment being
paid. Acceptance of partial payment of tax does not constitute a waiver of the minimum
payment required as a condition for filing an appeal under section 278.03 or any other law,
nor does it affect the order of payment of delinquent taxes under section 280.39.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 22.

Minnesota Statutes 2016, section 279.01, subdivision 2, is amended to read:


Subd. 2.

Abatement of penalty.

(a) The county board may, with the concurrence of the
county treasurer, delegate to the county treasurer the power to abate the penalty provided
for late payment of taxes in the current year. Notwithstanding section 270C.86, if any county
board so elects, the county treasurer may abate the penalty on finding that the imposition
of the penalty would be unjust and unreasonable.

(b) The county treasurer shall abate the penalty provided for late payment of taxes in
the current year if the property tax payment is delivered by mail to the county treasurer and
the envelope containing the payment is postmarked by the United States Postal Service
within one business day of the due date prescribed under this section, but only if the property
owner requesting the abatement has not previously received an abatement of penalty for
late payment of tax under this paragraph. If the envelope containing the payment does not
contain a postmark of the United States Postal Service, or the postmark is illegible, proof
of mailing within one business day of the due date may be provided by affidavit of the
property owner requesting the abatement.

EFFECTIVE DATE.

This section is effective for property taxes payable in 2018 and
thereafter.

Sec. 23.

Minnesota Statutes 2016, section 279.01, subdivision 3, is amended to read:


Subd. 3.

Agricultural property.

(a) In the case of class 1b agricultural homestead, class
2a agricultural homestead property, and class 2a agricultural nonhomestead property, and
class 2b rural vacant land that is part of an agricultural homestead,
no penalties shall attach
to the second one-half property tax payment as provided in this section if paid by November
15. Thereafter for class 1b agricultural homestead and class 2a homestead property, on
November 16 following, a penalty of six percent shall accrue and be charged on all such
unpaid taxes and on December 1 following, an additional two percent shall be charged on
all such unpaid taxes. Thereafter for class 2a agricultural nonhomestead property, on
November 16 following, a penalty of eight percent shall accrue and be charged on all such
unpaid taxes and on December 1 following, an additional four percent shall be charged on
all such unpaid taxes
, penalties shall attach as provided in subdivision 1.

If the owner of class 1b agricultural homestead or class 2a agricultural property receives
a consolidated property tax statement that shows only an aggregate of the taxes and special
assessments due on that property and on other property not classified as class 1b agricultural
homestead or class 2a agricultural property, the aggregate tax and special assessments shown
due on the property by the consolidated statement will be due on November 15.

(b) Notwithstanding paragraph (a), for taxes payable in 2010 and 2011, for any class 2b
property that was subject to a second-half due date of November 15 for taxes payable in
2009, the county shall not impose, or if imposed, shall abate penalty amounts in excess of
those that would apply as if the second-half due date were November 15.

EFFECTIVE DATE.

(a) Except as provided in paragraph (b), this section is effective
beginning with taxes payable in 2018.

(b) The provisions in this section applicable to class 2b rural vacant land are effective
beginning with taxes payable in 2019.

Sec. 24.

Minnesota Statutes 2016, section 279.37, is amended by adding a subdivision to
read:


Subd. 1b.

Conditions.

The county auditor may offer on a voluntary basis financial
literacy counseling as part of entering into a confession of judgment. The county auditor
may fund the financial literacy counseling using the fee in subdivision 8. The counseling
shall not be at taxpayer expense.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 25.

Minnesota Statutes 2016, section 281.17, is amended to read:


281.17 PERIOD FOR OF REDEMPTION.

(a) Except for properties described in paragraphs (b) and (c), or properties for which the
period of redemption has been limited under sections 281.173 and 281.174, the following
periods for
period of redemption apply.

The period of redemption for all lands sold to the state at a tax judgment sale shall be
three years from the date of sale to the state of Minnesota.

The period of redemption for homesteaded lands as defined in section 273.13, subdivision
22
, located in a targeted neighborhood as defined in Laws 1987, chapter 386, article 6,
section 4, and sold to the state at a tax judgment sale is three years from the date of sale.

(b) The period of redemption for all lands located in a targeted neighborhood community
as defined in Laws 1987, chapter 386, article 6, section 4 section 469.201, subdivision 10,
except homesteaded lands as defined in section 273.13, subdivision 22, is one year from
the date of sale.

(c) The period of redemption for all real property constituting a mixed municipal solid
waste disposal facility that is a qualified facility under section 115B.39, subdivision 1, is
one year from the date of the sale to the state of Minnesota.

(d) In determining the period of redemption, the county must use the property's
classification and homestead classification for the assessment year on which the tax judgment
is based. Any change in the property's classification or homestead classification after the
assessment year on which the tax judgment is based does not affect the period of redemption.

EFFECTIVE DATE.

This section is effective for tax judgment sales occurring after
January 1, 2018.

Sec. 26.

Minnesota Statutes 2016, section 281.173, subdivision 2, is amended to read:


Subd. 2.

Summons and complaint.

Any city, county, housing and redevelopment
authority, port authority, or economic development authority, in which the premises are
located may commence an action in district court to reduce the period otherwise allowed
for redemption under this chapter. The action must be commenced by the filing of a
complaint, naming as defendants the record fee owners or the owner's personal representative,
or the owner's heirs as determined by a court of competent jurisdiction, contract for deed
purchasers, mortgagees, assigns of any of the above, the taxpayers as shown on the records
of the county auditor, the Internal Revenue Service of the United States and the Revenue
Department of the state of Minnesota if tax liens against the owners or contract for deed
purchasers have been recorded or filed; and any other person the plaintiff determines should
be made a party. The action shall be filed in district court for the county in which the premises
are located. The complaint must identify the premises by legal description. The complaint
must allege (1) that the premises are abandoned, (2) that the tax judgment sale pursuant to
section 280.01 has been made, and (3) notice of expiration of the time for redemption has
not been given.

The complaint must request an order reducing the redemption period to five weeks.
When the complaint has been filed, the court shall issue a summons commanding the person
or persons named in the complaint to appear before the court on a day and at a place stated
in the summons. The appearance date shall be not less than 15 nor more than 25 days from
the date of the issuing of the summons. A copy of the filed complaint must be attached to
the summons.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 27.

Minnesota Statutes 2016, section 281.174, subdivision 3, is amended to read:


Subd. 3.

Summons and complaint.

Any city, county, housing and redevelopment
authority, port authority, or economic development authority in which the property is located
may commence an action in district court to reduce the period otherwise allowed for
redemption under this chapter from the date of the requested order. The action must be
commenced by the filing of a complaint, naming as defendants the record fee owners or the
owner's personal representative, or the owner's heirs as determined by a court of competent
jurisdiction, contract for deed purchasers, mortgagees, assigns of any of the above, the
taxpayers as shown on the records of the county auditor, the Internal Revenue Service of
the United States and the revenue department of the state of Minnesota if tax liens against
the owners or contract for deed purchasers have been recorded or filed, and any other person
the plaintiff determines should be made a party. The action shall be filed in district court
for the county in which the property is located. The complaint must identify the property
by legal description. The complaint must allege (1) that the property is vacant, (2) that the
tax judgment sale under section 280.01 has been made, and (3) notice of expiration of the
time for redemption has not been given.

The complaint must request an order reducing the redemption period to five weeks.
When the complaint has been filed, the court shall issue a summons commanding the person
or persons named in the complaint to appear before the court on a day and at a place stated
in the summons. The appearance date shall be not less than 15 nor more than 25 days from
the date of the issuing of the summons, except that, when the United States of America is
a party, the date shall be set in accordance with applicable federal law. A copy of the filed
complaint must be attached to the summons.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 28.

[281.231] MAINTENANCE; EXPENDITURE OF PUBLIC FUNDS.

If the county auditor provides notice as required by section 281.23, the state, agency,
political subdivision, or other entity that becomes the fee owner or manager of a property
as a result of forfeiture due to nonpayment of real property taxes is not required to expend
public funds to maintain any servitude, agreement, easement, or other encumbrance affecting
the property. The fee owner or manager of a property may, at its discretion, spend public
funds necessary for the maintenance, security, or management of the property.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 29.

[281.70] LIMITED RIGHT OF ENTRY.

Subdivision 1.

Limited right of entry.

If premises described in a real estate tax judgment
sale are vacant or unoccupied, the county auditor or a person acting on behalf of the county
auditor may, but is not obligated to, enter the premises to protect the premises from waste
or trespass until the county auditor is notified that the premises are occupied. An affidavit
of the sheriff, the county auditor, or a person acting on behalf of the county auditor describing
the premises and stating that the premises are vacant and unoccupied is prima facie evidence
of the facts stated in the affidavit. If the affidavit contains a legal description of the premises,
the affidavit may be recorded in the office of the county recorder or the registrar of titles in
the county where the premises are located.

Subd. 2.

Authorized actions.

(a) The county auditor may take one or more of the
following actions to protect the premises from waste or trespass:

(1) install or change locks on doors and windows;

(2) board windows; and

(3) other actions to prevent or minimize damage to the premises from the elements,
vandalism, trespass, or other illegal activities.

(b) If the county auditor installs or changes locks on premises under paragraph (a), the
county auditor must promptly deliver a key to the premises to the taxpayer or any person
lawfully claiming a right of occupancy upon request.

Subd. 3.

Costs.

Costs incurred by the county auditor in protecting the premises from
waste or trespass under this section may be added to the delinquent taxes due. The costs
may bear interest to the extent provided, and interest may be added to the delinquent taxes
due.

Subd. 4.

Scope.

The actions authorized under this section are in addition to, and do not
limit or replace, any other rights or remedies available to the county auditor under Minnesota
law.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 30.

Minnesota Statutes 2016, section 282.01, subdivision 4, is amended to read:


Subd. 4.

Sale:; method,; requirements,; effects.

(a) The sale authorized under
subdivision 3 must be conducted by the county auditor at the county seat of the county in
which the parcels lie, except that in St. Louis and Koochiching Counties, the sale may be
conducted in any county facility within the county. The sale must not be for less than the
appraised value except as provided in subdivision 7a. The parcels must be sold for cash
only, unless the county board of the county has adopted a resolution providing for their sale
on terms, in which event the resolution controls with respect to the sale. When the sale is
made on terms other than for cash only (1) a payment of at least ten percent of the purchase
price must be made at the time of purchase, and the balance must be paid in no more than
ten equal annual installments, or (2) the payments must be made in accordance with county
board policy, but in no event may the board require more than 12 installments annually,
and the contract term must not be for more than ten years. Standing timber or timber products
must not be removed from these lands until an amount equal to the appraised value of all
standing timber or timber products on the lands at the time of purchase has been paid by
the purchaser. If a parcel of land bearing standing timber or timber products is sold at public
auction for more than the appraised value, the amount bid in excess of the appraised value
must be allocated between the land and the timber in proportion to their respective appraised
values. In that case, standing timber or timber products must not be removed from the land
until the amount of the excess bid allocated to timber or timber products has been paid in
addition to the appraised value of the land. The purchaser is entitled to immediate possession,
subject to the provisions of any existing valid lease made in behalf of the state.

(b) For sales occurring on or after July 1, 1982, the unpaid balance of the purchase price
is subject to interest at the rate determined pursuant to section 549.09. The unpaid balance
of the purchase price for sales occurring after December 31, 1990, is subject to interest at
the rate determined in section 279.03, subdivision 1a. The interest rate is subject to change
each year on the unpaid balance in the manner provided for rate changes in section 549.09
or 279.03, subdivision 1a, whichever, is applicable. Interest on the unpaid contract balance
on sales occurring before July 1, 1982, is payable at the rate applicable to the sale at the
time that the sale occurred.

(c) Notwithstanding subdivision 7, a county board may by resolution provide for the
listing and sale of individual parcels by other means, including through a real estate broker.
However, if the buyer under this paragraph could have repurchased a parcel of property
under section 282.012 or 282.241, that buyer may not purchase that same parcel of property
at the sale under this subdivision for a purchase price less than the sum of all taxes,
assessments, penalties, interest, and costs due at the time of forfeiture computed under
section 282.251, and any special assessments for improvements certified as of the date of
sale. This subdivision shall be liberally construed to encourage the sale and utilization of
tax-forfeited land in order to eliminate nuisances and dangerous conditions and to increase
compliance with land use ordinances.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 31.

Minnesota Statutes 2016, section 282.01, is amended by adding a subdivision to
read:


Subd. 13.

Online auction.

A county board, or a county auditor if the auditor has been
delegated such authority under section 282.135, may sell tax-forfeited lands through an
online auction. When an online auction is used to sell tax-forfeited lands, the county auditor
shall post a physical notice of the online auction and shall publish a notice of the online
auction on its Web site not less than ten days before the online auction begins, in addition
to any other notice required.

EFFECTIVE DATE.

This section is effective for sales of tax-forfeited property that
occur on or after August 1, 2017.

Sec. 32.

Minnesota Statutes 2016, section 282.016, is amended to read:


282.016 PROHIBITED PURCHASERS.

(a) A county auditor, county treasurer, county attorney, court administrator of the district
court, county assessor, supervisor of assessments, deputy or clerk or an employee of such
officer, a commissioner for tax-forfeited lands or an assistant to such commissioner, must
not become a purchaser, either personally or as an agent or attorney for another person, of
the properties offered for sale under the provisions of this chapter in the county for which
the person performs duties. A person prohibited from purchasing property under this section
must not directly or indirectly have another person purchase it on behalf of the prohibited
purchaser for the prohibited purchaser's benefit or gain.

(b) Notwithstanding paragraph (a), such officer, deputy, clerk, or employee or
commissioner for tax-forfeited lands or assistant to such commissioner may (1) purchase
lands owned by that official at the time the state became the absolute owner thereof or (2)
bid upon and purchase forfeited property offered for sale under the alternate sale procedure
described in section 282.01, subdivision 7a.

(c) In addition to the persons identified in paragraph (a), a county auditor may prohibit
other persons and entities from becoming a purchaser, either personally or as an agent or
attorney for another person or entity, of the properties offered for sale under this chapter in
the following circumstances: (1) the person or entity owns another property within the
county for which there are delinquent taxes owing; (2) the person or entity has held a rental
license in the county and the license has been revoked within the last five years; or (3) the
person or entity has been the vendee of a contract for purchase of a property offered for sale
under this chapter, which contract has been canceled within the last five years.

(d) A person prohibited from purchasing property under this section must not directly
or indirectly have another person purchase it on behalf of the prohibited purchaser for the
prohibited purchaser's benefit or gain.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 33.

Minnesota Statutes 2016, section 282.018, subdivision 1, is amended to read:


Subdivision 1.

Land on or adjacent to public waters.

(a) All land which is the property
of the state as a result of forfeiture to the state for nonpayment of taxes, regardless of whether
the land is held in trust for taxing districts, and which borders on or is adjacent to meandered
lakes and other public waters and watercourses, and the live timber growing or being thereon,
is hereby withdrawn from sale except as hereinafter provided. The authority having
jurisdiction over the timber on any such lands may sell the timber as otherwise provided by
law for cutting and removal under such conditions as the authority may prescribe in
accordance with approved, sustained yield forestry practices. The authority having jurisdiction
over the timber shall reserve such timber and impose such conditions as the authority deems
necessary for the protection of watersheds, wildlife habitat, shorelines, and scenic features.
Within the area in Cook, Lake, and St. Louis counties described in the Act of Congress
approved July 10, 1930 (46 Stat. 1020), the timber on tax-forfeited lands shall be subject
to like restrictions as are now imposed by that act on federal lands.

(b) Of all tax-forfeited land bordering on or adjacent to meandered lakes and other public
waters and watercourses and so withdrawn from sale, a strip two rods in width, the ordinary
high-water mark being the waterside boundary thereof, and the land side boundary thereof
being a line drawn parallel to the ordinary high-water mark and two rods distant landward
therefrom, hereby is reserved for public travel thereon, and whatever the conformation of
the shore line or conditions require, the authority having jurisdiction over such lands shall
reserve a wider strip for such purposes.

(c) Any tract or parcel of land which has 150 feet or less of waterfront may be sold by
the authority having jurisdiction over the land, in the manner otherwise provided by law
for the sale of such lands, if the authority determines that it is in the public interest to do
so. If the authority having jurisdiction over the land is not the commissioner of natural
resources, the land may not be offered for sale without the prior approval of the commissioner
of natural resources.

(d) Where the authority having jurisdiction over lands withdrawn from sale under this
section is not the commissioner of natural resources, the authority may submit proposals
for disposition of the lands to the commissioner. The commissioner of natural resources
shall evaluate the lands and their public benefits and make recommendations on the proposed
dispositions to the committees of the legislature with jurisdiction over natural resources.
The commissioner shall include any recommendations of the commissioner for disposition
of lands withdrawn from sale under this section over which the commissioner has jurisdiction.
The commissioner's recommendations may include a public sale, sale to a private party,
acquisition by the Department of Natural Resources for public purposes, or a cooperative
management agreement with, or transfer to, another unit of government.

(e) Notwithstanding this subdivision, a county may sell property governed by this section
upon written authorization from the commissioner of natural resources. Prior to the sale or
conveyance of lands under this subdivision, the county board must give notice of its intent
to meet for that purpose as provided in section 282.01, subdivision 1.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 34.

Minnesota Statutes 2016, section 282.02, is amended to read:


282.02 LIST OF LANDS FOR SALE; NOTICE; ONLINE AUCTIONS
PERMITTED
.

(a) Immediately after classification and appraisal of the land, and after approval by the
commissioner of natural resources when required pursuant to section 282.01, subdivision
3
, the county board shall provide and file with the county auditor a list of parcels of land to
be offered for sale. This list shall contain a description of the parcels of land and the appraised
value thereof. The auditor shall publish a notice of the intended public sale of such parcels
of land and a copy of the resolution of the county board fixing the terms of the sale, if other
than for cash only, by publication once a week for two weeks in the official newspaper of
the county, the last publication to be not less than ten days previous to the commencement
of the sale.

(b) The notice shall include the parcel's description and appraised value. The notice shall
also indicate the amount of any special assessments which may be the subject of a
reassessment or new assessment or which may result in the imposition of a fee or charge
pursuant to sections 429.071, subdivision 4, 435.23, and 444.076. The county auditor shall
also mail notice to the owners of land adjoining the parcel to be sold. For purposes of this
section, "owner" means the taxpayer as listed in the records of the county auditor.

(c) If the county board of St. Louis or Koochiching Counties determines that the sale
shall take place in a county facility other than the courthouse, the notice shall specify the
facility and its location. If the county board determines that the sale shall take place as an
online auction under section 282.01, subdivision 13, the notice shall specify the auction
Web site and the date of the auction.

EFFECTIVE DATE.

This section is effective for sales of tax-forfeited property that
occur on or after August 1, 2017.

Sec. 35.

Minnesota Statutes 2016, section 282.04, subdivision 2, is amended to read:


Subd. 2.

Rights before sale; improvements, insurance, demolition.

(a) Before the
sale of a parcel of forfeited land the county auditor may, with the approval of the county
board of commissioners, provide for the repair and improvement of any building or structure
located upon the parcel, and may provide for maintenance of tax-forfeited lands, if it is
determined by the county board that such repairs, improvements, or maintenance are
necessary for the operation, use, preservation, and safety of the building or structure.

(b) If so authorized by the county board, the county auditor may insure the building or
structure against loss or damage resulting from fire or windstorm, may purchase workers'
compensation insurance to insure the county against claims for injury to the persons employed
in the building or structure by the county, and may insure the county, its officers and
employees against claims for injuries to persons or property because of the management,
use, or operation of the building or structure.

(c) The county auditor may, with the approval of the county board, provide:

(1) for the demolition of the building or structure, which has been determined by the
county board to be especially liable to fire or so situated as to endanger life or limb or other
buildings or property in the vicinity because of age, dilapidated condition, defective chimney,
defective electric wiring, any gas connection, heating apparatus, or other defect; and

(2) for the sale of salvaged materials from the building or structure.

(d) Notwithstanding any law to the contrary, the county auditor, with the approval of
the county board, may provide for the sale of abandoned personal property. The or disposal
of personal property remaining after the certificate under section 281.23, subdivision 9, has
been recorded. The county auditor must make reasonable efforts to provide at least 28 days'
notice of the sale or disposal to the former owner, taxpayer, and any occupants at the time
of forfeiture. A
sale may be made by the sheriff using the procedures for the sale of
abandoned property in section 345.15 or by the county auditor using the procedures for the
sale of abandoned property in section 504B.271
a sale procedure approved by the county
board. A county may contract with a third party to assist with removal, disposal, or sale of
personal property
. The net proceeds from any sale of the personal property, salvaged
materials, timber or other products, or leases made under this law must be deposited in the
forfeited tax sale fund and must be distributed in the same manner as if the parcel had been
sold.

(e) The county auditor, with the approval of the county board, may provide for the
demolition of any structure on tax-forfeited lands, if in the opinion of the county board, the
county auditor, and the land commissioner, if there is one, the sale of the land with the
structure on it, or the continued existence of the structure by reason of age, dilapidated
condition or excessive size as compared with nearby structures, will result in a material
lessening of net tax capacities of real estate in the vicinity of the tax-forfeited lands, or if
the demolition of the structure or structures will aid in disposing of the tax-forfeited property.

(f) Before the sale of a parcel of forfeited land located in an urban area, the county auditor
may with the approval of the county board provide for the grading of the land by filling or
the removal of any surplus material from it. If the physical condition of forfeited lands is
such that a reasonable grading of the lands is necessary for the protection and preservation
of the property of any adjoining owner, the adjoining property owner or owners may apply
to the county board to have the grading done. If, after considering the application, the county
board believes that the grading will enhance the value of the forfeited lands commensurate
with the cost involved, it may approve it, and the work must be performed under the
supervision of the county or city engineer, as the case may be, and the expense paid from
the forfeited tax sale fund.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 36.

Minnesota Statutes 2016, section 282.241, subdivision 1, is amended to read:


Subdivision 1.

Repurchase requirements.

The owner at the time of forfeiture, or the
owner's heirs, devisees, or representatives, or any person to whom the right to pay taxes
was given by statute, mortgage, or other agreement, may repurchase any parcel of land
claimed by the state to be forfeited to the state for taxes unless before the time repurchase
is made the parcel is sold under installment payments, or otherwise, by the state as provided
by law, or is under mineral prospecting permit or lease, or proceedings have been commenced
by the state or any of its political subdivisions or by the United States to condemn the parcel
of land. The parcel of land may be repurchased for the sum of all delinquent taxes and
assessments computed under section 282.251, together with penalties, interest, and costs,
that accrued or would have accrued if the parcel of land had not forfeited to the state. Except
for property which was homesteaded on the date of forfeiture, repurchase is permitted during
one year six months only from the date of forfeiture, and in any case only after the adoption
of a resolution by the board of county commissioners determining that by repurchase undue
hardship or injustice resulting from the forfeiture will be corrected, or that permitting the
repurchase will promote the use of the lands that will best serve the public interest. If the
county board has good cause to believe that a repurchase installment payment plan for a
particular parcel is unnecessary and not in the public interest, the county board may require
as a condition of repurchase that the entire repurchase price be paid at the time of repurchase.
A repurchase is subject to any easement, lease, or other encumbrance granted by the state
before the repurchase, and if the land is located within a restricted area established by any
county under Laws 1939, chapter 340, the repurchase must not be permitted unless the
resolution approving the repurchase is adopted by the unanimous vote of the board of county
commissioners.

The person seeking to repurchase under this section shall pay all maintenance costs
incurred by the county auditor during the time the property was tax-forfeited.

EFFECTIVE DATE.

This section is effective January 1, 2018.

Sec. 37.

Minnesota Statutes 2016, section 282.322, is amended to read:


282.322 FORFEITED LANDS LIST.

The county board of any county may file a list of forfeited lands with the county auditor,
if the board is of the opinion that such lands may be acquired by the state or any municipal
subdivision thereof of the state for public purposes. Upon the filing of such the list of
forfeited lands,
the county auditor shall withhold said lands from repurchase. If no proceeding
shall be is started to acquire such lands by the state or some municipal subdivision thereof
of the state
within one year after the filing of such the list of forfeited lands, the county
board shall withdraw said the list and thereafter, if the property was classified as
nonhomestead at the time of forfeiture,
the owner shall have one year not more than six
months
in which to repurchase.

EFFECTIVE DATE.

This section is effective January 1, 2018.

Sec. 38.

Minnesota Statutes 2016, section 473H.09, is amended to read:


473H.09 EARLY TERMINATION.

Subdivision 1.

Public emergency.

Termination of an agricultural preserve earlier than
a date derived through application of section 473H.08 may be permitted only in the event
of a public emergency upon petition from the owner or authority to the governor. The
determination of a public emergency shall be by the governor through executive order
pursuant to sections 4.035 and 12.01 to 12.46. The executive order shall identify the preserve,
the reasons requiring the action and the date of termination.

Subd. 2.

Death of owner.

(a) Within 365 days of the death of an owner, an owner's
spouse, or other qualifying person, the surviving owner may elect to terminate the agricultural
preserve and the covenant allowing the land to be enrolled as an agricultural preserve by
notifying the authority on a form provided by the commissioner of agriculture. Termination
of a covenant under this subdivision must be executed and acknowledged in the manner
required by law to execute and acknowledge a deed.

(b) For purposes of this subdivision, the following definitions apply:

(1) "qualifying person" includes a partner, shareholder, trustee for a trust that the decedent
was the settlor or a beneficiary of, or member of an entity permitted to own agricultural
land and engage in farming under section 500.24 that owned the agricultural preserve; and

(2) "surviving owner" includes the executor of the estate of the decedent, trustee for a
trust that the decedent was the settlor or a beneficiary of, or an entity permitted to own farm
land under section 500.24 of which the decedent was a partner, shareholder, or member.

(c) When an agricultural preserve is terminated under this subdivision, the property is
subject to additional taxes in an amount equal to 50 percent of the taxes actually levied
against the property for the current taxes payable year. The additional taxes are extended
against the property on the tax list for taxes payable in the current year. The additional taxes
must be distributed among the jurisdictions levying taxes on the property in proportion to
the current year's taxes.

EFFECTIVE DATE.

This section is effective July 1, 2017.

Sec. 39.

Minnesota Statutes 2016, section 473H.17, subdivision 1a, is amended to read:


Subd. 1a.

Allowed commercial and industrial operations.

(a) Commercial and industrial
operations are not allowed on land within an agricultural preserve except:

(1) small on-farm commercial or industrial operations normally associated with and
important to farming in the agricultural preserve area;

(2) storage use of existing farm buildings that does not disrupt the integrity of the
agricultural preserve; and

(3) small commercial use of existing farm buildings for trades not disruptive to the
integrity of the agricultural preserve such as a carpentry shop, small scale mechanics shop,
and similar activities that a farm operator might conduct.; and

(4) wireless communication installments and related equipment and structure capable
of providing technology potentially beneficial to farming activities. A property owner who
installs wireless communication equipment does not violate a covenant made prior to January
1, 2018, under section 473H.05, subdivision 1.

(b) For purposes of paragraph (a), clauses (2) and (3), "existing" in paragraph (a), clauses
(2) and (3),
means existing on August 1, 1987.

EFFECTIVE DATE.

This section is effective the day following enactment.

Sec. 40.

Minnesota Statutes 2016, section 504B.285, subdivision 1, is amended to read:


Subdivision 1.

Grounds.

(a) The person entitled to the premises may recover possession
by eviction when:

(1) any person holds over real property:

(i) after a sale of the property on an execution or judgment; or

(ii) after the expiration of the time for redemption on foreclosure of a mortgage, or after
termination of contract to convey the property; or

(iii) after the expiration of the time for redemption on a real estate tax judgment sale;

(2) any person holds over real property after termination of the time for which it is
demised or leased to that person or to the persons under whom that person holds possession,
contrary to the conditions or covenants of the lease or agreement under which that person
holds, or after any rent becomes due according to the terms of such lease or agreement; or

(3) any tenant at will holds over after the termination of the tenancy by notice to quit.

(b) A landlord may not commence an eviction action against a tenant or authorized
occupant solely on the basis that the tenant or authorized occupant has been the victim of
any of the acts listed in section 504B.206, subdivision 1, paragraph (a). Nothing in this
paragraph should be construed to prohibit an eviction action based on a breach of the lease.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 41.

Laws 1996, chapter 471, article 3, section 51, is amended to read:


Sec. 51. RECREATION LEVY FOR SAWYER BY CARLTON COUNTY.

Subdivision 1.

Levy authorized.

Notwithstanding other law to the contrary, the Carlton
county board of commissioners may levy in and for the unorganized township of Sawyer
an amount up to $1,500 annually for recreational purposes, beginning with taxes payable
in 1997 and ending with taxes payable in 2006
.

Subd. 2.

Effective date.

This section is effective June 1, 1996, without local approval.

EFFECTIVE DATE.

This section applies to taxes payable in 2018 and thereafter, and
is effective the day after the Carlton County Board of Commissioners and its chief clerical
officer timely complete their compliance with section 645.021, subdivisions 2 and 3.

Sec. 42. SOCCER STADIUM PROPERTY TAX EXEMPTION; SPECIAL
ASSESSMENT.

Any real or personal property acquired, owned, leased, controlled, used, or occupied by
the city of St. Paul for the primary purpose of providing a stadium for a Major League
Soccer team is declared to be acquired, owned, leased, controlled, used, and occupied for
public, governmental, and municipal purposes, and is exempt from ad valorem taxation by
the state or any political subdivision of the state, provided that the properties are subject to
special assessments levied by a political subdivision for a local improvement in amounts
proportionate to and not exceeding the special benefit received by the properties from the
improvement. In determining the special benefit received by the properties, no possible use
of any of the properties in any manner different from their intended use for providing a
Major League Soccer stadium at the time may be considered. Notwithstanding Minnesota
Statutes, section 272.01, subdivision 2, or 273.19, real or personal property subject to a
lease or use agreement between the city and another person for uses related to the purposes
of the operation of the stadium and related parking facilities is exempt from taxation
regardless of the length of the lease or use agreement. This section, insofar as it provides
an exemption or special treatment, does not apply to any real property that is leased for
residential, business, or commercial development or other purposes different from those
necessary to the provision and operation of the stadium.

EFFECTIVE DATE.

This section is effective upon approval by the St. Paul City
Council and compliance with Minnesota Statutes, section 645.021.

Sec. 43. REPEALER.

(a) Minnesota Statutes 2016, section 281.22, is repealed.

(b) Minnesota Statutes 2016, section 272.02, subdivision 23, is repealed.

EFFECTIVE DATE.

Paragraph (a) is effective the day following final enactment.
Paragraph (b) is effective beginning with taxes payable in 2016, provided that nothing in
paragraph (b) shall cause property that the assessor classified as exempt for property taxes
payable in 2016 or 2017 to lose its exempt status for taxes payable in those years.

ARTICLE 3

SALES AND USE TAXES

Section 1.

[88.068] VOLUNTEER FIRE ASSISTANCE GRANT ACCOUNT.

A volunteer fire assistance grant account is established in the special revenue fund. Sales
taxes allocated under section 297A.94, for making grants under section 88.067, must be
deposited in the special revenue fund and credited to the volunteer fire assistance grant
account. Money in the account, including interest, is appropriated to the commissioner for
making grants under that section.

EFFECTIVE DATE.

This section is effective beginning with deposits made in fiscal
year 2018.

Sec. 2.

Minnesota Statutes 2016, section 116J.8738, subdivision 3, is amended to read:


Subd. 3.

Certification of qualified business.

(a) A business may apply to the
commissioner for certification as a qualified business under this section. The commissioner
shall specify the form of the application, the manner and times for applying, and the
information required to be included in the application. The commissioner may impose an
application fee in an amount sufficient to defray the commissioner's cost of processing
certifications. Application fees are deposited in the greater Minnesota business expansion
administration account in the special revenue fund. A business must file a copy of its
application with the chief clerical officer of the city at the same time it applies to the
commissioner. For an agricultural processing facility located outside the boundaries of a
city, the business must file a copy of the application with the county auditor.

(b) The commissioner shall certify each business as a qualified business that:

(1) satisfies the requirements of subdivision 2;

(2) the commissioner determines would not expand its operations in greater Minnesota
without the tax incentives available under subdivision 4; and

(3) enters a business subsidy agreement with the commissioner that pledges to satisfy
the minimum expansion requirements of paragraph (c) within three years or less following
execution of the agreement.

The commissioner must act on an application within 90 days after its filing. Failure by
the commissioner to take action within the 90-day period is deemed approval of the
application.

(c) The business must increase the number of full-time equivalent employees in greater
Minnesota from the time the business subsidy agreement is executed by two employees or
ten percent, whichever is greater.

(d) The city, or a county for an agricultural processing facility located outside the
boundaries of a city, in which the business proposes to expand its operations may file
comments supporting or opposing the application with the commissioner. The comments
must be filed within 30 days after receipt by the city of the application and may include a
notice of any contribution the city or county intends to make to encourage or support the
business expansion, such as the use of tax increment financing, property tax abatement,
additional city or county services, or other financial assistance.

(e) Certification of a qualified business is effective for the seven-year period beginning
on the first day of the calendar month immediately following the date that the commissioner
informs the business of the award of the benefit unless the qualified business is investing
at least $200,000,000 over a ten-year period. Certification for a qualified business investing
at least $200,000,000 over a ten-year period is effective for the ten-year period beginning
on the first day of the calendar month immediately following the date that the commissioner
informs the business of the award of the benefit
.

EFFECTIVE DATE.

This section is effective July 1, 2017.

Sec. 3.

Minnesota Statutes 2016, section 116J.8738, subdivision 4, is amended to read:


Subd. 4.

Available tax incentives.

A qualified business is entitled to a sales tax
exemption, up to $2,000,000 $5,000,000 annually and $10,000,000 $40,000,000 during the
total period of the agreement, as provided in section 297A.68, subdivision 44, for purchases
made during the period the business was certified as a qualified business under this section.
The commissioner has discretion to set the maximum amounts of the annual and total sales
tax exemption allowed for each qualifying business as part of the business subsidy agreement.

EFFECTIVE DATE.

This section is effective July 1, 2017.

Sec. 4.

Minnesota Statutes 2016, section 128C.24, is amended to read:


128C.24 LEAGUE FUNDS TRANSFER.

Beginning July 1, 2007, the Minnesota State High School League shall annually determine
the sales tax savings attributable to section 297A.70, subdivision 11 11a, and annually
transfer that amount to a nonprofit charitable foundation created for the purpose of promoting
high school extracurricular activities. The funds must be used by the foundation to make
grants to fund, assist, recognize, or promote high school students' participation in
extracurricular activities. The first priority for funding will be grants for scholarships to
individuals to offset athletic fees. The foundation must equitably award grants based on
considerations of gender balance, school size, and geographic location, to the extent feasible.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017, and before July 1, 2027.

Sec. 5.

Minnesota Statutes 2016, section 297A.61, subdivision 3, is amended to read:


Subd. 3.

Sale and purchase.

(a) "Sale" and "purchase" include, but are not limited to,
each of the transactions listed in this subdivision. In applying the provisions of this chapter,
the terms "tangible personal property" and "retail sale" include the taxable services listed
in paragraph (g), clause (6), items (i) to (vi) and (viii), and the provision of these taxable
services, unless specifically provided otherwise. Services performed by an employee for
an employer are not taxable. Services performed by a partnership or association for another
partnership or association are not taxable if one of the entities owns or controls more than
80 percent of the voting power of the equity interest in the other entity. Services performed
between members of an affiliated group of corporations are not taxable. For purposes of
the preceding sentence, "affiliated group of corporations" means those entities that would
be classified as members of an affiliated group as defined under United States Code, title
26, section 1504, disregarding the exclusions in section 1504(b).

(b) Sale and purchase include:

(1) any transfer of title or possession, or both, of tangible personal property, whether
absolutely or conditionally, for a consideration in money or by exchange or barter; and

(2) the leasing of or the granting of a license to use or consume, for a consideration in
money or by exchange or barter, tangible personal property, other than a manufactured
home used for residential purposes for a continuous period of 30 days or more.

(c) Sale and purchase include the production, fabrication, printing, or processing of
tangible personal property for a consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication, printing, or processing.

(d) Sale and purchase include the preparing for a consideration of food. Notwithstanding
section 297A.67, subdivision 2, taxable food includes, but is not limited to, the following:

(1) prepared food sold by the retailer;

(2) soft drinks;

(3) candy; and

(4) dietary supplements; and.

(5) all food sold through vending machines.

(e) A sale and a purchase includes the furnishing for a consideration of electricity, gas,
water, or steam for use or consumption within this state.

(f) A sale and a purchase includes the transfer for a consideration of prewritten computer
software whether delivered electronically, by load and leave, or otherwise.

(g) A sale and a purchase includes the furnishing for a consideration of the following
services:

(1) the privilege of admission to places of amusement, recreational areas, or athletic
events, and the making available of amusement devices, tanning facilities, reducing salons,
steam baths, health clubs, and spas or athletic facilities;

(2) lodging and related services by a hotel, rooming house, resort, campground, motel,
or trailer camp, including furnishing the guest of the facility with access to telecommunication
services, and the granting of any similar license to use real property in a specific facility,
other than the renting or leasing of it for a continuous period of 30 days or more under an
enforceable written agreement that may not be terminated without prior notice and including
accommodations intermediary services provided in connection with other services provided
under this clause;

(3) nonresidential parking services, whether on a contractual, hourly, or other periodic
basis, except for parking at a meter;

(4) the granting of membership in a club, association, or other organization if:

(i) the club, association, or other organization makes available for the use of its members
sports and athletic facilities, without regard to whether a separate charge is assessed for use
of the facilities; and

(ii) use of the sports and athletic facility is not made available to the general public on
the same basis as it is made available to members.

Granting of membership means both onetime initiation fees and periodic membership dues.
Sports and athletic facilities include golf courses; tennis, racquetball, handball, and squash
courts; basketball and volleyball facilities; running tracks; exercise equipment; swimming
pools; and other similar athletic or sports facilities;

(5) delivery of aggregate materials by a third party, excluding delivery of aggregate
material used in road construction; and delivery of concrete block by a third party if the
delivery would be subject to the sales tax if provided by the seller of the concrete block.
For purposes of this clause, "road construction" means construction of:

(i) public roads;

(ii) cartways; and

(iii) private roads in townships located outside of the seven-county metropolitan area
up to the point of the emergency response location sign; and

(6) services as provided in this clause:

(i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
include services provided by coin operated facilities operated by the customer;

(ii) motor vehicle washing, waxing, and cleaning services, including services provided
by coin operated facilities operated by the customer, and rustproofing, undercoating, and
towing of motor vehicles;

(iii) building and residential cleaning, maintenance, and disinfecting services and pest
control and exterminating services;

(iv) detective, security, burglar, fire alarm, and armored car services; but not including
services performed within the jurisdiction they serve by off-duty licensed peace officers as
defined in section 626.84, subdivision 1, or services provided by a nonprofit organization
or any organization at the direction of a county for monitoring and electronic surveillance
of persons placed on in-home detention pursuant to court order or under the direction of the
Minnesota Department of Corrections;

(v) pet grooming services;

(vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor plant
care; tree, bush, shrub, and stump removal, except when performed as part of a land clearing
contract as defined in section 297A.68, subdivision 40; and tree trimming for public utility
lines. Services performed under a construction contract for the installation of shrubbery,
plants, sod, trees, bushes, and similar items are not taxable;

(vii) massages, except when provided by a licensed health care facility or professional
or upon written referral from a licensed health care facility or professional for treatment of
illness, injury, or disease; and

(viii) the furnishing of lodging, board, and care services for animals in kennels and other
similar arrangements, but excluding veterinary and horse boarding services.

(h) A sale and a purchase includes the furnishing for a consideration of tangible personal
property or taxable services by the United States or any of its agencies or instrumentalities,
or the state of Minnesota, its agencies, instrumentalities, or political subdivisions.

(i) A sale and a purchase includes the furnishing for a consideration of
telecommunications services, ancillary services associated with telecommunication services,
and pay television services. Telecommunication services include, but are not limited to, the
following services, as defined in section 297A.669: air-to-ground radiotelephone service,
mobile telecommunication service, postpaid calling service, prepaid calling service, prepaid
wireless calling service, and private communication services. The services in this paragraph
are taxed to the extent allowed under federal law.

(j) A sale and a purchase includes the furnishing for a consideration of installation if the
installation charges would be subject to the sales tax if the installation were provided by
the seller of the item being installed.

(k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer to a
customer when (1) the vehicle is rented by the customer for a consideration, or (2) the motor
vehicle dealer is reimbursed pursuant to a service contract as defined in section 59B.02,
subdivision
11.

(l) A sale and a purchase includes furnishing for a consideration of specified digital
products or other digital products or granting the right for a consideration to use specified
digital products or other digital products on a temporary or permanent basis and regardless
of whether the purchaser is required to make continued payments for such right. Wherever
the term "tangible personal property" is used in this chapter, other than in subdivisions 10
and 38, the provisions also apply to specified digital products, or other digital products,
unless specifically provided otherwise or the context indicates otherwise.

(m) The sale of the privilege of admission under section 297A.61, subdivision 3,
paragraph (g), clause (1), to a place of amusement, recreational area, or athletic event
includes all charges included in the privilege of admission's sales price, without deduction
for amenities that may be provided, unless the amenities are separately stated and the
purchaser of the privilege of admission is entitled to add or decline the amenities, and the
amenities are not otherwise taxable.

EFFECTIVE DATE.

The amendment to paragraph (d) is effective for sales and
purchases made after June 30, 2017. The amendment adding paragraph (m) is effective the
day following final enactment.

Sec. 6.

Minnesota Statutes 2016, section 297A.61, subdivision 10, is amended to read:


Subd. 10.

Tangible personal property.

(a) "Tangible personal property" means personal
property that can be seen, weighed, measured, felt, or touched, or that is in any other manner
perceptible to the senses. "Tangible personal property" includes, but is not limited to,
electricity, water, gas, steam, and prewritten computer software.

(b) Tangible personal property does not include:

(1) large ponderous machinery and equipment used in a business or production activity
which at common law would be considered to be real property;

(2) (1) property which is subject to an ad valorem property tax;

(3) (2) property described in section 272.02, subdivision 9, clauses (a) to (d);

(4) (3) property described in section 272.03, subdivision 2, clauses (3) and (5); and

(5) (4) specified digital products, or other digital products, transferred electronically.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2016, section 297A.61, subdivision 34, is amended to read:


Subd. 34.

Taxable food sold through vending machines.

"Taxable food sold through
vending machines" means taxable food under section 297A.61, subdivision 3, paragraph
(d),
dispensed from a machine or other device that accepts payment including honor
payments.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 8.

Minnesota Statutes 2016, section 297A.61, is amended by adding a subdivision to
read:


Subd. 58.

Real property.

(a) "Real property" includes:

(1) the land itself;

(2) buildings and structures constructed or erected on the land and intended to be
permanent; and

(3) improvements and fixtures if incorporated into and intended to be of a permanent
benefit to a building or structure given its present use, and that cannot be removed without
causing substantial damage to the building or structure.

(b) Real property does not include tools, implements, machinery, and equipment attached
or installed into real property for use in the business or production activity conducted thereon,
that qualify for exemption under section 297A.68, regardless of size, weight, or method of
incorporation into the real property.

(c) If the exclusion provided in paragraph (b) does not apply, then the definition in
paragraph (a) must be used to determine whether tools, implements, machinery, or equipment
are real property.

EFFECTIVE DATE.

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

Sec. 9.

Minnesota Statutes 2016, section 297A.66, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) To the extent allowed by the United States Constitution
and the laws of the United States, "retailer maintaining a place of business in this state," or
a similar term, means a retailer:

(1) having or maintaining within this state, directly or by a subsidiary or an affiliate, an
office, place of distribution, sales, storage, or sample room or place, warehouse, or other
place of business, including the employment of a resident of this state who works from a
home office in this state
; or

(2) having a representative, including, but not limited to, an affiliate, agent, salesperson,
canvasser, or marketplace provider, solicitor, or other third party operating in this state
under the authority of the retailer or its subsidiary, for any purpose, including the repairing,
selling, delivering, installing, facilitating sales, processing sales, or soliciting of orders for
the retailer's goods or services, or the leasing of tangible personal property located in this
state, whether the place of business or agent, representative, affiliate, salesperson, canvasser,
or solicitor is located in the state permanently or temporarily, or whether or not the retailer,
subsidiary, or affiliate is authorized to do business in this state. A retailer is represented by
a marketplace provider in this state if the retailer makes sales in this state facilitated by a
marketplace provider that maintains a place of business in this state.

(b) "Destination of a sale" means the location to which the retailer makes delivery of
the property sold, or causes the property to be delivered, to the purchaser of the property,
or to the agent or designee of the purchaser. The delivery may be made by any means,
including the United States Postal Service or a for-hire carrier.

(c) "Marketplace provider" means any person who facilitates a retail sale by a retailer
by:

(1) listing or advertising for sale by the retailer in any forum, tangible personal property,
services, or digital goods that are subject to tax under this chapter; and

(2) either directly or indirectly through agreements or arrangements with third parties
collecting payment from the customer and transmitting that payment to the retailer regardless
of whether the marketplace provider receives compensation or other consideration in
exchange for its services.

(d) "Total taxable retail sales" means the gross receipts from the sale of all tangible
goods, services, and digital goods subject to sales and use tax under this chapter.

Sec. 10.

Minnesota Statutes 2016, section 297A.66, subdivision 2, is amended to read:


Subd. 2.

Retailer maintaining place of business in this state.

(a) Except as provided
in paragraph (b),
a retailer maintaining a place of business in this state who makes retail
sales in Minnesota or to a destination in Minnesota shall collect sales and use taxes and
remit them to the commissioner under section 297A.77.

(b) A retailer with total taxable retail sales to customers in this state of less than $10,000
in the 12-month period ending on the last day of the most recently completed calendar
quarter is not required to collect and remit sales tax if it is determined to be a retailer
maintaining a place of business in the state solely because it made sales through one or more
marketplace providers. The provisions of this paragraph do not apply to a retailer that is or
was registered to collect sales and use tax in this state.

Sec. 11.

Minnesota Statutes 2016, section 297A.66, subdivision 4, is amended to read:


Subd. 4.

Affiliated entities.

(a) An entity is an "affiliate" of the retailer for purposes of
subdivision 1, paragraph (a), if the entity:

(1) the entity uses its facilities or employees in this state to advertise, promote, or facilitate
the establishment or maintenance of a market for sales of items by the retailer to purchasers
in this state or for the provision of services to the retailer's purchasers in this state, such as
accepting returns of purchases for the retailer, providing assistance in resolving customer
complaints of the retailer, or providing other services; and

(2) the retailer and the entity are related parties. has the same or a similar business name
to the retailer and sells, from a location or locations in this state, tangible personal property,
digital goods, or services, taxable under this chapter, that are similar to that sold by the
retailer;

(3) maintains an office, distribution facility, salesroom, warehouse, storage place, or
other similar place of business in this state to facilitate the delivery of tangible personal
property, digital goods, or services sold by the retailer to its customers in this state;

(4) maintains a place of business in this state and uses trademarks, service marks, or
trade names in this state that are the same or substantially similar to those used by the retailer,
and that use is done with the express or implied consent of the holder of the marks or names;

(5) delivers, installs, or assembles tangible personal property in this state, or performs
maintenance or repair services on tangible personal property in this state, for tangible
personal property sold by the retailer;

(6) facilitates the delivery of tangible personal property to customers of the retailer by
allowing the customers to pick up tangible personal property sold by the retailer at a place
of business the entity maintains in this state; or

(7) shares management, business systems, business practices, or employees with the
retailer, or engages in intercompany transactions with the retailer related to the activities
that establish or maintain the market in this state of the retailer.

(b) Two entities are related parties under this section if one of the entities meets at least
one of the following tests with respect to the other entity:

(1) one or both entities is a corporation, and one entity and any party related to that entity
in a manner that would require an attribution of stock from the corporation to the party or
from the party to the corporation under the attribution rules of section 318 of the Internal
Revenue Code owns directly, indirectly, beneficially, or constructively at least 50 percent
of the value of the corporation's outstanding stock;

(2) one or both entities is a partnership, estate, or trust and any partner or beneficiary,
and the partnership, estate, or trust and its partners or beneficiaries own directly, indirectly,
beneficially, or constructively, in the aggregate, at least 50 percent of the profits, capital,
stock, or value of the other entity or both entities; or

(3) an individual stockholder and the members of the stockholder's family (as defined
in section 318 of the Internal Revenue Code) owns directly, indirectly, beneficially, or
constructively, in the aggregate, at least 50 percent of the value of both entities' outstanding
stock.;

(4) the entities are related within the meaning of subsections (b) and (c) of section 267
or 707(b)(1) of the Internal Revenue Code; or

(5) the entities have one or more ownership relationships and the relationships were
designed with a principal purpose of avoiding the application of this section.

(c) An entity is an affiliate under the provisions of this subdivision if the requirements
of paragraphs (a) and (b) are met during any part of the 12-month period ending on the first
day of the month before the month in which the sale was made.

Sec. 12.

Minnesota Statutes 2016, section 297A.66, is amended by adding a subdivision
to read:


Subd. 4b.

Collection and remittance requirements for marketplace providers and
marketplace retailers.

(a) A marketplace provider shall collect sales and use taxes and
remit them to the commissioner under section 297A.77 for all facilitated sales for a retailer,
and is subject to audit on the retail sales it facilitates unless either:

(1) the retailer provides a copy of the retailer's registration to collect sales and use tax
in this state to the marketplace provider before the marketplace provider facilitates a sale;
or

(2) upon inquiry by the marketplace provider or its agent, the commissioner discloses
that the retailer is registered to collect sales and use taxes in this state.

(b) Nothing in this subdivision shall be construed to interfere with the ability of a
marketplace provider and a retailer to enter into an agreement regarding fulfillment of the
requirements of this chapter.

(c) A marketplace provider is not liable under this subdivision for failure to file and
collect and remit sales and use taxes if the marketplace provider demonstrates that the error
was due to incorrect or insufficient information given to the marketplace provider by the
retailer. This paragraph does not apply if the marketplace provider and the marketplace
retailer are related as defined in subdivision 4, paragraph (b).

Sec. 13.

Minnesota Statutes 2016, section 297A.67, subdivision 2, is amended to read:


Subd. 2.

Food and food ingredients.

Except as otherwise provided in this subdivision,
food and food ingredients are exempt. For purposes of this subdivision, "food" and "food
ingredients" mean substances, whether in liquid, concentrated, solid, frozen, dried, or
dehydrated form, that are sold for ingestion or chewing by humans and are consumed for
their taste or nutritional value. Food and food ingredients exempt under this subdivision do
not include candy, soft drinks, food sold through vending machines, dietary supplements,
and prepared foods. Food and food ingredients do not include alcoholic beverages and
tobacco. For purposes of this subdivision, "alcoholic beverages" means beverages that are
suitable for human consumption and contain one-half of one percent or more of alcohol by
volume. For purposes of this subdivision, "tobacco" means cigarettes, cigars, chewing or
pipe tobacco, or any other item that contains tobacco. For purposes of this subdivision,
"dietary supplements" means any product, other than tobacco, intended to supplement the
diet that:

(1) contains one or more of the following dietary ingredients:

(i) a vitamin;

(ii) a mineral;

(iii) an herb or other botanical;

(iv) an amino acid;

(v) a dietary substance for use by humans to supplement the diet by increasing the total
dietary intake; and

(vi) a concentrate, metabolite, constituent, extract, or combination of any ingredient
described in items (i) to (v);

(2) is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form,
or if not intended for ingestion in such form, is not represented as conventional food and is
not represented for use as a sole item of a meal or of the diet; and

(3) is required to be labeled as a dietary supplement, identifiable by the supplement facts
box found on the label and as required pursuant to Code of Federal Regulations, title 21,
section 101.36.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 14.

Minnesota Statutes 2016, section 297A.67, subdivision 4, is amended to read:


Subd. 4.

Exempt meals at residential facilities.

Prepared food, candy, and soft drinks
served to patients, inmates, or persons residing at hospitals, sanitariums, nursing homes,
senior citizen homes, and correctional, detention, and detoxification facilities are exempt.
Taxable food sold through vending machines is not exempt.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 15.

Minnesota Statutes 2016, section 297A.67, subdivision 5, is amended to read:


Subd. 5.

Exempt meals at schools.

Prepared food, candy, and soft drinks served at
public and private elementary, middle, or secondary schools as defined in section 120A.05
are exempt. Prepared food, candy, and soft drinks served to students at a college, university,
or private career school under a board contract are exempt. Taxable food sold through
vending machines is not exempt.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 16.

Minnesota Statutes 2016, section 297A.67, subdivision 6, is amended to read:


Subd. 6.

Other exempt meals.

(a) Prepared food, candy, and soft drinks purchased for
and served exclusively to individuals who are 60 years of age or over and their spouses or
to disabled persons and their spouses by governmental agencies, nonprofit organizations,
or churches, or pursuant to any program funded in whole or in part through United States
Code, title 42, sections 3001 through 3045, wherever delivered, prepared, or served, are
exempt. Taxable food sold through vending machines is not exempt.

(b) Prepared food, candy, and soft drinks purchased for and served exclusively to children
who are less than 14 years of age or disabled children who are less than 16 years of age and
who are attending a child care or early childhood education program, are exempt if they
are:

(1) purchased by a nonprofit child care facility that is exempt under section 297A.70,
subdivision 4
, and that primarily serves families with income of 250 percent or less of
federal poverty guidelines; and

(2) prepared at the site of the child care facility.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 17.

Minnesota Statutes 2016, section 297A.67, is amended by adding a subdivision
to read:


Subd. 34.

Precious metal bullion.

(a) Precious metal bullion is exempt. For purposes
of this subdivision, "precious metal bullion" means bars or rounds that consist of 99.9 percent
or more by weight of either gold, silver, platinum, or palladium and are marked with weight,
purity, and content.

(b) The exemption under this subdivision does not apply to sales and purchases of
jewelry, works of art, or scrap metal.

(c) The intent of this subdivision is to eliminate the difference in tax treatment between
the sale of precious metal bullion and the sale of stock, bullion ETFs, bonds, and other
investment instruments.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 18.

Minnesota Statutes 2016, section 297A.67, is amended by adding a subdivision
to read:


Subd. 35.

Suite licenses.

The sale of the privilege of admission under section 297A.61,
subdivision 3, paragraph (g), clause (1), to a place of amusement or athletic event does not
include consideration paid for a license to use a private suite, private skybox, or private box
seat, and the sale of the license is exempt provided that: (1) the lessee may use the private
suite, private skybox, or private box seat by mutual arrangement with the lessor on days
when there is no amusement or athletic event; and (2) the sales price for the privilege of
admission is separately stated and is equal to or greater than the highest priced general
admission ticket for the closest seat not in the private suite, private skybox, or private box
seat.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 19.

Minnesota Statutes 2016, section 297A.67, is amended by adding a subdivision
to read:


Subd. 36.

Stadium builder's licenses.

The sale of the privilege of admission under
section 297A.61, subdivision 3, paragraph (g), clause (1), does not include consideration
paid for a stadium builder's license authorized under section 473J.15, subdivision 14, and
the sale of the license is exempt.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 20.

Minnesota Statutes 2016, section 297A.68, subdivision 5, is amended to read:


Subd. 5.

Capital equipment.

(a) Capital equipment is exempt.

"Capital equipment" means machinery and equipment purchased or leased, and used in
this state by the purchaser or lessee primarily for manufacturing, fabricating, mining, or
refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment used primarily
to electronically transmit results retrieved by a customer of an online computerized data
retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality control,
and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare parts,
repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the production
process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed as part
of the delivery process regardless if mounted on a chassis, repair parts for ready-mixed
concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production of
computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6) and
(7);

(4) machinery or equipment used for nonproduction purposes, including, but not limited
to, the following: plant security, fire prevention, first aid, and hospital stations; support
operations or administration; pollution control; and plant cleaning, disposal of scrap and
waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section 297A.61,
subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) machinery and equipment used by restaurants in the furnishing, preparing, or serving
of prepared foods as defined in section 297A.61, subdivision 31;

(8) machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3
, paragraph (g), clause (6), items (i) to (vi) and (viii);

(9) machinery or equipment used in the transportation, transmission, or distribution of
petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines, tanks,
mains, or other means of transporting those products. This clause does not apply to machinery
or equipment used to blend petroleum or biodiesel fuel as defined in section 239.77; or

(10) any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For purposes
of this clause, (i) manufacturing begins with the removal of raw materials from inventory
and ends when the last process prior to loading for shipment has been completed; (ii)
fabricating begins with the removal from storage or inventory of the property to be assembled,
processed, altered, or modified and ends with the creation or production of the new or
changed product; (iii) mining begins with the removal of overburden from the site of the
ores, minerals, stone, peat deposit, or surface materials and ends when the last process before
stockpiling is completed; and (iv) refining begins with the removal from inventory or storage
of a natural resource and ends with the conversion of the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including computers
and computer software, that are purchased or constructed to be used for the activities set
forth in paragraph (a), beginning with the removal of raw materials from inventory through
completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials are
changed in form, composition, or condition by machinery and equipment and which results
in the production of a new article of tangible personal property. For purposes of this
subdivision, "manufacturing" includes the generation of electricity or steam to be sold at
retail.

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

(8) "Online data retrieval system" means a system whose cumulation of information is
equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time in
an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as provided in
subdivision 35a, and does not apply to wire, cable, fiber, or poles, or conduit for
telecommunications services.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 21.

Minnesota Statutes 2016, section 297A.68, subdivision 9, is amended to read:


Subd. 9.

Super Bowl admissions and related events.

(a) The granting of the privilege
of admission to a world championship football game sponsored by the National Football
League is and to related events sponsored by the National Football League or its affiliates,
or the Minnesota Super Bowl Host Committee, are
exempt.

(b) The sale of nonresidential parking by the National Football League for attendance
at a world championship football game sponsored by the National Football League and for
related events sponsored by the National Football League or its affiliates, or the Minnesota
Super Bowl Host Committee, is exempt. Purchases of nonresidential parking services by
the Super Bowl Host Committee are purchases made exempt for resale.

(c) For the purposes of this subdivision:

(1) "related events sponsored by the National Football League or its affiliates" includes
but is not limited to preparatory advance visits, NFL Experience, NFL Tailgate, NFL On
Location, and NFL House; and

(2) "affiliates" does not include National Football League teams.

EFFECTIVE DATE.

The amendments to this section are effective for sales and
purchases made after June 30, 2016, and before March 1, 2018.

Sec. 22.

Minnesota Statutes 2016, section 297A.68, subdivision 19, is amended to read:


Subd. 19.

Petroleum products.

The following petroleum products are exempt:

(1) products upon which a tax has been imposed and paid under chapter 296A, and for
which no refund has been or will be allowed because the buyer used the fuel for nonhighway
use;

(2) products that are used in the improvement of agricultural land by constructing,
maintaining, and repairing drainage ditches, tile drainage systems, grass waterways, water
impoundment, and other erosion control structures;

(3) products purchased by a transit system receiving financial assistance under section
174.24, 256B.0625, subdivision 17, or 473.384;

(4) products purchased by an ambulance service licensed under chapter 144E;

(5) products used in a passenger snowmobile, as defined in section 296A.01, subdivision
39
, for off-highway business use as part of the operations of a resort as provided under
section 296A.16, subdivision 2, clause (2);

(6) products purchased by a state or a political subdivision of a state for use in motor
vehicles exempt from registration under section 168.012, subdivision 1, paragraph (b);

(7) products purchased by providers of transportation to recipients of medical assistance
home and community-based services waivers enrolled in day programs, including adult day
care, family adult day care, day treatment and habilitation, prevocational services, and
structured day services; or

(8) products used in a motor vehicle used exclusively as a mobile medical unit for the
provision of medical or dental services by a federally qualified health center, as defined
under title 19 of the federal Social Security Act, as amended by Section 4161 of the Omnibus
Budget Reconciliation Act of 1990.; or

(9) special fuel used for one of the following purposes:

(i) to power a refrigeration unit mounted on a licensed motor vehicle, provided that the
unit has an engine separate from the one used to propel the vehicle and the fuel is used
exclusively for the unit;

(ii) to power an unlicensed motor vehicle that is used solely or primarily to move
semitrailers within a cargo yard, warehouse facility, or intermodal facility; or

(iii) to operate a power take-off unit or auxiliary engine in or on a licensed motor vehicle,
whether or not the unit or engine is fueled from the same or a different fuel tank as that
from which the motor vehicle is fueled.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 23.

Minnesota Statutes 2016, section 297A.68, subdivision 35a, is amended to read:


Subd. 35a.

Telecommunications or pay television services machinery and equipment.

(a) Telecommunications or pay television services machinery and equipment purchased or
leased for use directly by a telecommunications or pay television services provider primarily
in the provision of telecommunications or pay television services that are ultimately to be
sold at retail are exempt, regardless of whether purchased by the owner, a contractor, or a
subcontractor.

(b) For purposes of this subdivision, "telecommunications or pay television machinery
and equipment" includes, but is not limited to:

(1) machinery, equipment, and fixtures utilized in receiving, initiating, amplifying,
processing, transmitting, retransmitting, recording, switching, or monitoring
telecommunications or pay television services, such as computers, transformers, amplifiers,
routers, bridges, repeaters, multiplexers, and other items performing comparable functions;

(2) machinery, equipment, and fixtures used in the transportation of telecommunications
or pay television services, such as radio transmitters and receivers, satellite equipment,
microwave equipment, fiber, conduit, and other transporting media, but not wire, cable,
fiber, or poles, or conduit;

(3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or enable
the machinery in clauses (1) and (2) to accomplish its intended function, such as auxiliary
power supply, test equipment, towers, heating, ventilating, and air conditioning equipment
necessary to the operation of the telecommunications or pay television equipment; and
software necessary to the operation of the telecommunications or pay television equipment;
and

(4) repair and replacement parts, including accessories, whether purchased as spare parts,
repair parts, or as upgrades or modifications to qualified machinery or equipment.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 24.

Minnesota Statutes 2016, section 297A.68, is amended by adding a subdivision
to read:


Subd. 45.

Jukebox music.

The purchase of music, either as a digital audio work or in
tangible form such as a record or compact disc, by operators that provide the service of
making available jukeboxes as amusement devices, as provided in section 297A.61,
subdivision 3, paragraph (g), clause (1), is exempt if the music is used exclusively for the
jukebox.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 25.

Minnesota Statutes 2016, section 297A.70, subdivision 4, is amended to read:


Subd. 4.

Sales to nonprofit groups.

(a) All sales, except those listed in paragraph (b),
to the following "nonprofit organizations" are exempt:

(1) a corporation, society, association, foundation, or institution organized and operated
exclusively for charitable, religious, or educational purposes if the item purchased is used
in the performance of charitable, religious, or educational functions; and

(2) any senior citizen group or association of groups that:

(i) in general limits membership to persons who are either age 55 or older, or physically
disabled;

(ii) is organized and operated exclusively for pleasure, recreation, and other nonprofit
purposes, not including housing, no part of the net earnings of which inures to the benefit
of any private shareholders; and

(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.; and

(3) an organization that qualifies for an exemption for memberships under subdivision
12 if the item is purchased and used in the performance of the organization's mission.

For purposes of this subdivision, charitable purpose includes the maintenance of a cemetery
owned by a religious organization.

(b) This exemption does not apply to the following sales:

(1) building, construction, or reconstruction materials purchased by a contractor or a
subcontractor as a part of a lump-sum contract or similar type of contract with a guaranteed
maximum price covering both labor and materials for use in the construction, alteration, or
repair of a building or facility;

(2) construction materials purchased by tax-exempt entities or their contractors to be
used in constructing buildings or facilities that will not be used principally by the tax-exempt
entities;

(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause (2),
and prepared food, candy, soft drinks, and alcoholic beverages as defined in section 297A.67,
subdivision 2
, except wine purchased by an established religious organization for sacramental
purposes or as allowed under subdivision 9a; and

(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except as
provided in paragraph (c).

(c) This exemption applies to the leasing of a motor vehicle as defined in section 297B.01,
subdivision 11
, only if the vehicle is:

(1) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and used
for carrying more than nine persons including the driver; and

(2) intended to be used primarily to transport tangible personal property or individuals,
other than employees, to whom the organization provides service in performing its charitable,
religious, or educational purpose.

(d) A limited liability company also qualifies for exemption under this subdivision if
(1) it consists of a sole member that would qualify for the exemption, and (2) the items
purchased qualify for the exemption.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 26.

Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision
to read:


Subd. 11a.

Minnesota State High School League tickets and admissions.

Tickets and
admissions to games, events, and activities sponsored by the Minnesota State High School
League under chapter 128C are exempt.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017, and before July 1, 2027.

Sec. 27.

Minnesota Statutes 2016, section 297A.70, subdivision 12, is amended to read:


Subd. 12.

YMCA, YWCA, and JCC, and similar memberships.

(a) The sale of
memberships, meaning both onetime initiation fees and periodic membership dues, to an
association incorporated under section 315.44 or an organization defined under section
315.51, or a nonprofit organization offering similar services are exempt. However, all
separate charges made for the privilege of having access to and the use of the association's
sports and athletic facilities are taxable.

(b) For purposes of this subdivision, a "nonprofit organization offering similar services"
means an exempt organization under section 501(c)(3) of the Internal Revenue Code, whose
mission is to support youth and families through a variety of activities, including membership
allowing access to athletic facilities, and who provide free or reduced-price memberships
to seniors or low-income persons or families.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 28.

Minnesota Statutes 2016, section 297A.70, subdivision 14, is amended to read:


Subd. 14.

Fund-raising events sponsored by nonprofit groups.

(a) Sales of tangible
personal property or services at, and admission charges for fund-raising events sponsored
by, a nonprofit organization are exempt if:

(1) all gross receipts are recorded as such, in accordance with generally accepted
accounting practices, on the books of the nonprofit organization; and

(2) the entire proceeds, less the necessary expenses for the event, will be used solely
and exclusively for charitable, religious, or educational purposes. Exempt sales include the
sale of prepared food, candy, and soft drinks at the fund-raising event.

(b) This exemption is limited in the following manner:

(1) it does not apply to admission charges for events involving bingo or other gambling
activities or to charges for use of amusement devices involving bingo or other gambling
activities;

(2) all gross receipts are taxable if the profits are not used solely and exclusively for
charitable, religious, or educational purposes;

(3) it does not apply unless the organization keeps a separate accounting record, including
receipts and disbursements from each fund-raising event that documents all deductions from
gross receipts with receipts and other records;

(4) it does not apply to any sale made by or in the name of a nonprofit corporation as
the active or passive agent of a person that is not a nonprofit corporation;

(5) all gross receipts are taxable if fund-raising events exceed 24 days per year;

(6) it does not apply to fund-raising events conducted on premises leased for more than
five ten days but less than 30 days; and

(7) it does not apply if the risk of the event is not borne by the nonprofit organization
and the benefit to the nonprofit organization is less than the total amount of the state and
local tax revenues forgone by this exemption.

(c) For purposes of this subdivision, a "nonprofit organization" means any unit of
government, corporation, society, association, foundation, or institution organized and
operated for charitable, religious, educational, civic, fraternal, and senior citizens' or veterans'
purposes, no part of the net earnings of which inures to the benefit of a private individual.

(d) For purposes of this subdivision, "fund-raising events" means activities of limited
duration, not regularly carried out in the normal course of business, that attract patrons for
community, social, and entertainment purposes, such as auctions, bake sales, ice cream
socials, block parties, carnivals, competitions, concerts, concession stands, craft sales,
bazaars, dinners, dances, door-to-door sales of merchandise, fairs, fashion shows, festivals,
galas, special event workshops, sporting activities such as marathons and tournaments, and
similar events. Fund-raising events do not include the operation of a regular place of business
in which services are provided or sales are made during regular hours such as bookstores,
thrift stores, gift shops, restaurants, ongoing Internet sales, regularly scheduled classes, or
other activities carried out in the normal course of business.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 29.

Minnesota Statutes 2016, section 297A.70, is amended by adding a subdivision
to read:


Subd. 21.

Ice arenas and rinks.

Sales to organizations that exist primarily for the purpose
of operating ice arenas or rinks that are part of the Duluth Heritage Sports Center and are
used for youth and high school programs are exempt if the organization is a private, nonprofit
corporation exempt from federal income taxation under section 501(c)(3) of the Internal
Revenue Code.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2017.

Sec. 30.

Minnesota Statutes 2016, section 297A.71, subdivision 44, is amended to read:


Subd. 44.

Building materials, capital projects.

(a) Materials and supplies used or
consumed in and equipment incorporated into the construction or improvement of a capital
project funded partially or wholly under section 297A.9905 are exempt, provided that the
project has either:

(1) a total construction cost of at least $40,000,000 within a 24-month period.; or

(2) a total construction cost of at least $100,000,000 for a sports facility project, including
infrastructure costs, if construction contracts are signed, that begins after July 1, 2016, and
before December 31, 2017.

(b) Materials and supplies used or consumed in and equipment incorporated into the
construction, remodeling, expansion, or improvement of an ice arena or other buildings or
facilities owned and operated by the city of Plymouth are exempt. For purposes of this
paragraph, "facilities" include municipal streets and facilities associated with streets including
but not limited to lighting, curbs and gutters, and sidewalks. The total amount of refund on
all building materials, supplies, and equipment that the city may apply for under this
paragraph is $2,500,000.

(c) The tax on purchases exempt under this provision paragraph (a), clause (1), and
paragraph (b),
must be imposed and collected as if the rate under section 297A.62,
subdivision 1
, applied and then refunded in the manner provided in section 297A.75.
Notwithstanding section 289A.40, the city of Plymouth must file for refund by December
31, 2017, for sales tax paid on all eligible purchases under paragraph (b) made prior to
December 31, 2015.

(d) The exemption under paragraph (a), clause (2), expires one year after the date that
the first major sports game is played at the sports facility.

(e) For purposes of paragraph (a), clause (2), the term "infrastructure" means plazas,
parking structures, transit facilities, rights-of-way, sidewalks, pedestrian bridges, bicycle
paths, skyways, tunnels, lighting, landscaping, drainage improvements, utilities, sewer, and
other such facilities and improvements that are:

(1) on land controlled by the city of St. Paul, when construction is complete;

(2) located within the sports facility site within the boundary of Snelling Avenue to the
east, University Avenue to the north, marked Interstate Highway 94 to the south, and Pascal
Street to the west, in St. Paul, Minnesota; and

(3) designed to facilitate public access to or to serve only the sports facility, and not to
provide access to or serve any adjoining commercial or residential properties.

EFFECTIVE DATE.

(a) The amendment adding paragraph (b) and to paragraph (c) is
effective retroactively for sales and purchases made after January 1, 2013.

(b) The amendment adding paragraphs (d) and (e) and to paragraph (a) is effective the
day following final enactment.

Sec. 31.

Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision
to read:


Subd. 49.

Properties destroyed by fire.

Building materials and supplies used in, and
equipment incorporated into, the construction or replacement of real property that is located
in Madelia affected by the fire on February 3, 2016, are exempt. The tax must be imposed
and collected as if the rate under section 297A.62, subdivision 1, applied and then refunded
in the manner provided in section 297A.75.

EFFECTIVE DATE.

This section is effective retroactively for sales and purchases
made after December 31, 2015, and before July 1, 2018.

Sec. 32.

Minnesota Statutes 2016, section 297A.71, is amended by adding a subdivision
to read:


Subd. 50.

Properties destroyed by fire.

(a) Building materials and supplies used in,
and equipment incorporated into, the construction or replacement of real property that is
located in Melrose affected by the fire on September 8, 2016, are exempt.

(b) For sales and purchases made after September 30, 2016, and before July 1, 2017,
the tax must be imposed and collected as if the rate under section 297A.62, subdivision 1,
applied and then refunded in the manner provided in section 297A.75.

EFFECTIVE DATE.

Paragraph (a) is effective retroactively for sales and purchases
made after September 30, 2016, and before January 1, 2019. Paragraph (b) is effective for
sales and purchases made after September 30, 2016, and before July 1, 2017.

Sec. 33.

Minnesota Statutes 2016, section 297A.75, subdivision 1, is amended to read:


Subdivision 1.

Tax collected.

The tax on the gross receipts from the sale of the following
exempt items must be imposed and collected as if the sale were taxable and the rate under
section 297A.62, subdivision 1, applied. The exempt items include:

(1) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(2) building materials for mineral production facilities exempt under section 297A.71,
subdivision 14
;

(3) building materials for correctional facilities under section 297A.71, subdivision 3;

(4) building materials used in a residence for disabled veterans exempt under section
297A.71, subdivision 11;

(5) elevators and building materials exempt under section 297A.71, subdivision 12;

(6) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23
;

(7) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(8) equipment and materials used for the generation, transmission, and distribution of
electrical energy and an aerial camera package exempt under section 297A.68, subdivision
37;

(9) commuter rail vehicle and repair parts under section 297A.70, subdivision 3, paragraph
(a), clause (10);

(10) materials, supplies, and equipment for construction or improvement of projects and
facilities under section 297A.71, subdivision 40;

(11) materials, supplies, and equipment for construction, improvement, or expansion
of:

(i) an aerospace defense manufacturing facility exempt under Minnesota Statutes 2014,
section 297A.71, subdivision 42;

(ii) a biopharmaceutical manufacturing facility exempt under section 297A.71, subdivision
45
;

(iii) a research and development facility exempt under Minnesota Statutes 2014, section
297A.71, subdivision 46; and

(iv) an industrial measurement manufacturing and controls facility exempt under
Minnesota Statutes 2014, section 297A.71, subdivision 47;

(12) enterprise information technology equipment and computer software for use in a
qualified data center exempt under section 297A.68, subdivision 42;

(13) materials, supplies, and equipment for qualifying capital projects under section
297A.71, subdivision 44, paragraph (a), clause (1), and paragraph (b);

(14) items purchased for use in providing critical access dental services exempt under
section 297A.70, subdivision 7, paragraph (c); and

(15) items and services purchased under a business subsidy agreement for use or
consumption primarily in greater Minnesota exempt under section 297A.68, subdivision
44
.;

(16) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivision 49; and

(17) building materials, equipment, and supplies for constructing or replacing real
property exempt under section 297A.71, subdivision 50, paragraph (b).

EFFECTIVE DATE.

(a) The amendment to clause (13) is effective retroactively for
sales and purchases made after January 1, 2013.

(b) The amendment adding clause (16) is effective retroactively for sales and purchases
made after December 31, 2015.

(c) The amendment adding clause (17) is effective retroactively for sales and purchases
made after September 30, 2016.

Sec. 34.

Minnesota Statutes 2016, section 297A.75, subdivision 2, is amended to read:


Subd. 2.

Refund; eligible persons.

Upon application on forms prescribed by the
commissioner, a refund equal to the tax paid on the gross receipts of the exempt items must
be paid to the applicant. Only the following persons may apply for the refund:

(1) for subdivision 1, clauses (1), (2), and (14), the applicant must be the purchaser;

(2) for subdivision 1, clause (3), the applicant must be the governmental subdivision;

(3) for subdivision 1, clause (4), the applicant must be the recipient of the benefits
provided in United States Code, title 38, chapter 21;

(4) for subdivision 1, clause (5), the applicant must be the owner of the homestead
property;

(5) for subdivision 1, clause (6), the owner of the qualified low-income housing project;

(6) for subdivision 1, clause (7), the applicant must be a municipal electric utility or a
joint venture of municipal electric utilities;

(7) for subdivision 1, clauses (8), (11), (12), and (15), the owner of the qualifying
business; and

(8) for subdivision 1, clauses (9), (10), and (13), the applicant must be the governmental
entity that owns or contracts for the project or facility.;

(9) for subdivision 1, clause (16), the applicant must be the owner or developer of the
building or project; and

(10) for subdivision 1, clause (17), the applicant must be the owner or developer of the
building or project.

EFFECTIVE DATE.

(a) The amendment adding clause (9) is effective retroactively
for sales and purchases made after December 31, 2015.

(b) The amendment adding clause (10) is effective retroactively for sales and purchases
made after September 30, 2016.

Sec. 35.

Minnesota Statutes 2016, section 297A.75, subdivision 3, is amended to read:


Subd. 3.

Application.

(a) The application must include sufficient information to permit
the commissioner to verify the tax paid. If the tax was paid by a contractor, subcontractor,
or builder, under subdivision 1, clauses (3) to (13), or (15), to (17), the contractor,
subcontractor, or builder must furnish to the refund applicant a statement including the cost
of the exempt items and the taxes paid on the items unless otherwise specifically provided
by this subdivision. The provisions of sections 289A.40 and 289A.50 apply to refunds under
this section.

(b) An applicant may not file more than two applications per calendar year for refunds
for taxes paid on capital equipment exempt under section 297A.68, subdivision 5.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 36.

Minnesota Statutes 2016, section 297A.75, subdivision 5, is amended to read:


Subd. 5.

Appropriation.

(a) The amount required to make the refunds is annually
appropriated to the commissioner.

(b) For fiscal years 2018 and 2019 only, revenues dedicated under the Minnesota
Constitution, article XI, section 15, shall not be reduced for any portion of the refunds paid
for the following exemptions:

(1) the exemption under section 297A.71, subdivision 44, paragraph (b);

(2) the expansion of the exemption under section 297A.68, subdivision 44, due to sections
2 and 3; and

(3) the exemptions in section 297A.71, subdivisions 49 and 50.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 37.

Minnesota Statutes 2016, section 297A.94, is amended to read:


297A.94 DEPOSIT OF REVENUES.

(a) Except as provided in this section, the commissioner shall deposit the revenues,
including interest and penalties, derived from the taxes imposed by this chapter in the state
treasury and credit them to the general fund.

(b) The commissioner shall deposit taxes in the Minnesota agricultural and economic
account in the special revenue fund if:

(1) the taxes are derived from sales and use of property and services purchased for the
construction and operation of an agricultural resource project; and

(2) the purchase was made on or after the date on which a conditional commitment was
made for a loan guaranty for the project under section 41A.04, subdivision 3.

The commissioner of management and budget shall certify to the commissioner the date on
which the project received the conditional commitment. The amount deposited in the loan
guaranty account must be reduced by any refunds and by the costs incurred by the Department
of Revenue to administer and enforce the assessment and collection of the taxes.

(c) The commissioner shall deposit the revenues, including interest and penalties, derived
from the taxes imposed on sales and purchases included in section 297A.61, subdivision 3,
paragraph (g), clauses (1) and (4), in the state treasury, and credit them as follows:

(1) first to the general obligation special tax bond debt service account in each fiscal
year the amount required by section 16A.661, subdivision 3, paragraph (b); and

(2) after the requirements of clause (1) have been met, the balance to the general fund.

(d) The commissioner shall deposit the revenues, including interest and penalties,
collected under section 297A.64, subdivision 5, in the state treasury and credit them to the
general fund. By July 15 of each year the commissioner shall transfer to the highway user
tax distribution fund an amount equal to the excess fees collected under section 297A.64,
subdivision 5
, for the previous calendar year.

(e) 72.43 percent of the revenues, including interest and penalties, transmitted to the
commissioner under section 297A.65, must be deposited by the commissioner in the state
treasury as follows:

(1) 50 percent of the receipts must be deposited in the heritage enhancement account in
the game and fish fund, and may be spent only on activities that improve, enhance, or protect
fish and wildlife resources, including conservation, restoration, and enhancement of land,
water, and other natural resources of the state;

(2) 22.5 percent of the receipts must be deposited in the natural resources fund, and may
be spent only for state parks and trails;

(3) 22.5 percent of the receipts must be deposited in the natural resources fund, and may
be spent only on metropolitan park and trail grants;

(4) three percent of the receipts must be deposited in the natural resources fund, and
may be spent only on local trail grants; and

(5) two percent of the receipts must be deposited in the natural resources fund, and may
be spent only for the Minnesota Zoological Garden, the Como Park Zoo and Conservatory,
and the Duluth Zoo.

(f) The revenue dedicated under paragraph (e) may not be used as a substitute for
traditional sources of funding for the purposes specified, but the dedicated revenue shall
supplement traditional sources of funding for those purposes. Land acquired with money
deposited in the game and fish fund under paragraph (e) must be open to public hunting
and fishing during the open season, except that in aquatic management areas or on lands
where angling easements have been acquired, fishing may be prohibited during certain times
of the year and hunting may be prohibited. At least 87 percent of the money deposited in
the game and fish fund for improvement, enhancement, or protection of fish and wildlife
resources under paragraph (e) must be allocated for field operations.

(g) The commissioner must deposit the revenues, including interest and penalties minus
any refunds, derived from the sale of items regulated under section 624.20, subdivision 1,
that may be sold to persons 18 years old or older and that are not prohibited from use by
the general public under section 624.21, in the state treasury and credit:

(1) 25 percent to the volunteer fire assistance grant account established under section
88.068;

(2) 25 percent to the fire safety account established under section 297I.06, subdivision
3; and

(3) the remainder to the general fund.

For purposes of this paragraph, the percentage of total sales and use tax revenue derived
from the sale of items regulated under section 624.20, subdivision 1, that are allowed to be
sold to persons 18 years old or older and are not prohibited from use by the general public
under section 624.21, is a set percentage of the total sales and use tax revenues collected in
the state, with the percentage determined under section 39.

(g) (h) The revenues deposited under paragraphs (a) to (f) (g) do not include the revenues,
including interest and penalties, generated by the sales tax imposed under section 297A.62,
subdivision 1a
, which must be deposited as provided under the Minnesota Constitution,
article XI, section 15.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
December 31, 2017.

Sec. 38.

Minnesota Statutes 2016, section 297A.9905, is amended to read:


297A.9905 USE OF LOCAL TAX REVENUES BY CITIES OF THE FIRST CLASS.

(a) Notwithstanding section 297A.99, or other general or special law or charter provision,
if the revenues from any local tax imposed on retail sales under special law by a city of the
first class exceeds the amount needed to fund the uses authorized in the special law, the city
may expend the excess revenue from the tax to fund other capital projects of regional
significance.

(b) For purposes of this section:

(1) "city of the first class" has the meaning given in section 410.01; and

(2) "capital project of regional significance" means construction, expansion, or renovation
of a sports facility or convention or civic center, that has a construction cost of at least
$40,000,000
that meets the requirements of section 297A.71, subdivision 44, paragraph (a).

EFFECTIVE DATE.

This section is effective for sales and purchases made after the
day of final enactment.

Sec. 39. CALCULATION OF THE PERCENT OF SALES TAX REVENUE
ATTRIBUTABLE TO THE SALE OF CERTAIN FIREWORKS-RELATED ITEMS.

By December 1, 2017, the commissioner of revenue must estimate the percentage of
total sales tax revenues collected in calendar year 2016 that is attributable to the sales and
purchases of items regulated under Minnesota Statutes, section 624.20, subdivision 1, that
are allowed to be sold to persons 18 years old or older and that are not prohibited from use
by the general public under section 624.21. When making the determination, the
commissioner may consult with representatives from producers and retailers, industry trade
groups, and the most recently available national and state information. The commissioner's
decision is final. The commissioner's determination under this section is not a rule and is
not subject to Minnesota Statutes, chapter 14, including section 14.386.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 40. SALES TAX EXEMPTION FOR CONSTRUCTION MATERIALS USED
BY A NONPROFIT ECONOMIC DEVELOPMENT CORPORATION.

Subdivision 1.

Exemption; refund.

Materials and supplies used or consumed in and
equipment incorporated into the construction of a retail development consisting of retail
space for a grocery store, fueling center, and other retail space by a nonprofit economic
development corporation that is an exempt organization under section 501(c)(3) of the
Internal Revenue Code are exempt from sales and use tax under Minnesota Statutes, chapter
297A, provided that the development is located in a city with no grocery store and the city
is at least 20 miles from another city with a grocery store. The exemption applies to materials,
supplies, and equipment purchased after January 1, 2013, and before January 1, 2017. The
tax must be imposed and collected as if the rate in Minnesota Statutes, section 297A.62,
applied and the nonprofit economic development corporation must apply for the refund of
the tax in the same manner as provided under Minnesota Statutes, section 297A.75,
subdivision 1, clause (11). Notwithstanding Minnesota Statutes, section 289A.40, the
economic development corporation must file for refund by December 31, 2017, for the sales
and use tax paid on all eligible purchases under this section.

Subd. 2.

Appropriation.

The amount required to pay the refunds under subdivision 1,
including refunds that would otherwise reduce the revenues transferred from the general
fund as required under the Minnesota Constitution, article XI, section 15, is appropriated
from the general fund to the commissioner of revenue.

EFFECTIVE DATE.

This section is effective the day following final enactment and
applies retroactively to sales and purchases made after January 1, 2013, and before January
1, 2017.

Sec. 41. CERTAIN REIMBURSEMENT AUTHORIZED; CONSIDERED
OPERATING OR CAPITAL EXPENSES.

Subdivision 1.

Reimbursement authorized.

(a) An amount equivalent to the taxes paid
under Minnesota Statutes, chapter 297A, and any local taxes administered by the Department
of Revenue, on purchases of tangible personal property, nonresidential parking services,
and lodging, as these terms are defined in Minnesota Statutes, chapter 297A, used and
consumed in connection with Super Bowl LII or related events sponsored by the National
Football League or its affiliates, will be reimbursed by the Minnesota Sports Facilities
Authority up to $1,600,000, if made after June 30, 2016, and before March 1, 2018. Only
purchases made by the Minnesota Super Bowl Host Committee, the National Football
League or its affiliates, or their employees or independent contractors, qualify to be
reimbursed under this section.

(b) For purposes of this subdivision:

(1) "employee or independent contractor" means only those employees or independent
contractors that make qualifying purchases that are reimbursed by the Minnesota Super
Bowl Host Committee or the National Football League or its affiliates; and

(2) "related events sponsored by the National Football League or its affiliates" includes
but is not limited to preparatory advance visits, NFL Experience, NFL Tailgate, NFL Honors,
and NFL House.

Subd. 2.

Operating reserve and capital reserve fund.

Notwithstanding the requirements
of Minnesota Statutes, section 473J.13, subdivisions 2 and 4, up to $1,600,000 of the balance
in the operating reserve or capital reserve fund may be used for the purposes of paying
reimbursements authorized under subdivision 1.

EFFECTIVE DATE.

This section is effective for sales and purchases made after June
30, 2016, and before March 1, 2018.

Sec. 42. REIMBURSEMENTS TO CERTAIN CONSTITUTIONALLY DEDICATED
FUNDS FOR EXPANDED SALES TAX EXEMPTIONS.

The commissioner of management and budget, by June 15 in fiscal years 2018 and 2019
only, shall increase the revenues transferred from the general fund as required under the
Minnesota Constitution, article XI, section 15, by an amount equal to the estimated amount
of reduction to these revenues for that fiscal year due to the enactment of new sales tax
exemptions or the expansion of existing sales tax exemptions provided in sections 5 to 8,
13 to 21, 23 to 29, and 33, the amendments to paragraph (a) and adding paragraph (d) to
Minnesota Statutes, section 297A.71, subdivision 44, in section 30, and changes in tobacco
taxes under Minnesota Statutes, chapter 297F, in article 9. The commissioner of revenue
shall make the estimate of this revenue reduction by June 1 of each fiscal year and inform
the commissioner of management and budget. In addition, the commissioner must increase
the revenues transferred from the general fund as required under the Minnesota Constitution,
article XI, section 15, by $30,000 in fiscal year 2017 to reflect the reduction in those funds
in that year due to sections 6 and 8. The appropriations under this section are onetime and
not added to the base budget.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 43. SEVERABILITY.

If any provision of sections 9 to 12 or the application thereof is held invalid, such
invalidity shall not affect the provisions or applications of the sections that can be given
effect without the invalid provisions or applications.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 44. EFFECTIVE DATE.

(a) The provisions of sections 9 to 12 are effective at the earlier of:

(1) a decision by the United States Supreme Court modifying its decision in Quill Corp.
v. North Dakota, 504 U.S. 298 (1992) so that a state may require retailers without a physical
presence in the state to collect and remit sales tax; or

(2) July 1, 2019.

(b) Notwithstanding paragraph (a) or the provisions of sections 9 to 12, if a federal law
is enacted authorizing a state to impose a requirement to collect and remit sales tax on
retailers without a physical presence in the state, the commissioner must enforce the
provisions of this section and sections 9 to 12 to the extent allowed under federal law.

(c) The commissioner of revenue shall notify the revisor of statutes when either of the
provisions in paragraph (a) or (b) apply.

ARTICLE 4

AIDS AND CREDITS

Section 1.

Minnesota Statutes 2016, section 273.1384, subdivision 2, is amended to read:


Subd. 2.

Agricultural homestead market value credit.

Property classified as agricultural
homestead under section 273.13, subdivision 23, paragraph (a), is eligible for an agricultural
credit. The credit is computed using the property's agricultural credit market value, defined
for this purpose as the property's market value excluding the market value of the house,
garage, and immediately surrounding one acre of land. The credit is equal to 0.3 percent of
the first $115,000 of the property's agricultural credit market value plus 0.1 percent of the
property's agricultural credit market value in excess of $115,000, subject to a maximum
credit of $490. In the case of property that is classified as part homestead and part
nonhomestead solely because not all the owners occupy or farm the property, not all the
owners have qualifying relatives occupying or farming the property, or solely because not
all the spouses of owners occupy the property, the credit must be initially is computed as
if that nonhomestead agricultural land was also classified as agricultural homestead and
then prorated
on the amount of agricultural credit market value corresponding to the
owner-occupant's percentage of ownership homestead. The percentage of homestead is
equal to 100 divided by the number of owners of the property, or, in the case of a trust, the
number of grantors of the trust that owns the property.

EFFECTIVE DATE.

This section is effective for taxes payable in 2019 and thereafter.

Sec. 2.

[273.1387] SCHOOL BUILDING BOND AGRICULTURAL CREDIT.

Subdivision 1.

Eligibility.

All class 2a, 2b, and 2c property under section 273.13,
subdivision 23, other than property consisting of the house, garage, and immediately
surrounding one acre of land of an agricultural homestead, is eligible to receive the credit
under this section.

Subd. 2.

Credit amount.

For each qualifying property, the school building bond
agricultural credit is equal to 40 percent of the property's eligible net tax capacity multiplied
by the school debt tax rate determined under section 275.08, subdivision 1b.

Subd. 3.

Credit reimbursements.

The county auditor shall determine the tax reductions
allowed under this section within the county for each taxes payable year and shall certify
that amount to the commissioner of revenue as a part of the abstracts of tax lists submitted
under section 275.29. Any prior year adjustments shall also be certified on the abstracts of
tax lists. The commissioner shall review the certifications for accuracy, and may make such
changes as are deemed necessary, or return the certification to the county auditor for
correction. The credit under this section must be used to reduce the school district net tax
capacity-based property tax as provided in section 273.1393.

Subd. 4.

Payment.

The commissioner of revenue shall certify the total of the tax
reductions granted under this section for each taxes payable year within each school district
to the commissioner of education, who shall pay the reimbursement amounts to each school
district as provided in section 273.1392.

Subd. 5.

Appropriation.

An amount sufficient to make the payments required by this
section is annually appropriated from the general fund to the commissioner of education.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 3.

Minnesota Statutes 2016, section 273.1392, as amended by Laws 2017, chapter
40, article 1, section 93, is amended to read:


273.1392 PAYMENT; SCHOOL DISTRICTS.

The amounts of bovine tuberculosis credit reimbursements under section 273.113;
conservation tax credits under section 273.119; disaster or emergency reimbursement under
sections 273.1231 to 273.1235; agricultural credits under section sections 273.1384 and
273.1387
; aids and credits under section 273.1398; enterprise zone property credit payments
under section 469.171; and metropolitan agricultural preserve reduction under section
473H.10 for school districts, shall be certified to the Department of Education by the
Department of Revenue. The amounts so certified shall be paid according to section 127A.45,
subdivisions 9
, 10, and 13.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 4.

Minnesota Statutes 2016, section 273.1393, is amended to read:


273.1393 COMPUTATION OF NET PROPERTY TAXES.

Notwithstanding any other provisions to the contrary, "net" property taxes are determined
by subtracting the credits in the order listed from the gross tax:

(1) disaster credit as provided in sections 273.1231 to 273.1235;

(2) powerline credit as provided in section 273.42;

(3) agricultural preserves credit as provided in section 473H.10;

(4) enterprise zone credit as provided in section 469.171;

(5) disparity reduction credit;

(6) conservation tax credit as provided in section 273.119;

(7) the school bond credit as provided in section 273.1387;

(8) agricultural credit as provided in section 273.1384;

(8) (9) taconite homestead credit as provided in section 273.135;

(9) (10) supplemental homestead credit as provided in section 273.1391; and

(10) (11) the bovine tuberculosis zone credit, as provided in section 273.113.

The combination of all property tax credits must not exceed the gross tax amount.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 5.

Minnesota Statutes 2016, section 275.065, subdivision 3, is amended to read:


Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare and
the county treasurer shall deliver after November 10 and on or before November 24 each
year, by first class mail to each taxpayer at the address listed on the county's current year's
assessment roll, a notice of proposed property taxes. Upon written request by the taxpayer,
the treasurer may send the notice in electronic form or by electronic mail instead of on paper
or by ordinary mail.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes each
taxing authority proposes to collect for taxes payable the following year. In the case of a
town, or in the case of the state general tax, the final tax amount will be its proposed tax.
The notice must clearly state for each city that has a population over 500, county, school
district, regional library authority established under section 134.201, and metropolitan taxing
districts as defined in paragraph (i), the time and place of a meeting for each taxing authority
in which the budget and levy will be discussed and public input allowed, prior to the final
budget and levy determination. The taxing authorities must provide the county auditor with
the information to be included in the notice on or before the time it certifies its proposed
levy under subdivision 1. The public must be allowed to speak at that meeting, which must
occur after November 24 and must not be held before 6:00 p.m. It must provide a telephone
number for the taxing authority that taxpayers may call if they have questions related to the
notice and an address where comments will be received by mail, except that no notice
required under this section shall be interpreted as requiring the printing of a personal
telephone number or address as the contact information for a taxing authority. If a taxing
authority does not maintain public offices where telephone calls can be received by the
authority, the authority may inform the county of the lack of a public telephone number and
the county shall not list a telephone number for that taxing authority.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used for
computing property taxes payable in the following year and for taxes payable in the current
year as each appears in the records of the county assessor on November 1 of the current
year; and, in the case of residential property, whether the property is classified as homestead
or nonhomestead. The notice must clearly inform taxpayers of the years to which the market
values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state general
tax, agricultural homestead credit under section 273.1384, school building bond agricultural
credit under section 273.1387,
voter approved school levy, other local school levy, and the
sum of the special taxing districts, and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement district
as defined under sections 103B.501 to 103B.581, the amount attributable for that purpose
must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed tax
unless the town changes its levy at a special town meeting under section 365.52. If a school
district has certified under section 126C.17, subdivision 9, that a referendum will be held
in the school district at the November general election, the county auditor must note next
to the school district's proposed amount that a referendum is pending and that, if approved
by the voters, the tax amount may be higher than shown on the notice. In the case of the
city of Minneapolis, the levy for Minneapolis Park and Recreation shall be listed separately
from the remaining amount of the city's levy. In the case of the city of St. Paul, the levy for
the St. Paul Library Agency must be listed separately from the remaining amount of the
city's levy. In the case of Ramsey County, any amount levied under section 134.07 may be
listed separately from the remaining amount of the county's levy. In the case of a parcel
where tax increment or the fiscal disparities areawide tax under chapter 276A or 473F
applies, the proposed tax levy on the captured value or the proposed tax levy on the tax
capacity subject to the areawide tax must each be stated separately and not included in the
sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and the
total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under the
senior citizens' property tax deferral program under chapter 290B is the total amount of
property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include the
following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified, including
bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first Monday
in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster occurring
after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value reductions
for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or the
county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant, renter,
or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within three
days of receipt of the notice, whichever is later. A taxpayer may notify the county treasurer
of the address of the taxpayer, agent, caretaker, or manager of the premises to which the
notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing
districts" means the following taxing districts in the seven-county metropolitan area that
levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325, 473.446,
473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672; and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the county
of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 398A
shall be included with the appropriate county's levy.

(j) The governing body of a county, city, or school district may, with the consent of the
county board, include supplemental information with the statement of proposed property
taxes about the impact of state aid increases or decreases on property tax increases or
decreases and on the level of services provided in the affected jurisdiction. This supplemental
information may include information for the following year, the current year, and for as
many consecutive preceding years as deemed appropriate by the governing body of the
county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and local
government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 6.

Minnesota Statutes 2016, section 275.07, subdivision 2, is amended to read:


Subd. 2.

School district in more than one county levies; special requirements.

(a) In
school districts lying in more than one county, the clerk shall certify the tax levied to the
auditor of the county in which the administrative offices of the school district are located.

(b) The district must identify the portion of the school district levy that is levied for debt
service at the time the levy is certified under this section. For the purposes of this paragraph,
"levied for debt service" means levies authorized under sections 123B.53, 123B.535, and
123B.55, as adjusted by sections 126C.46 and 126C.48, net of any debt excess levy reductions
under section 475.61, subdivision 4, excluding debt service amounts necessary for repayment
of other postemployment benefits under section 475.52, subdivision 6.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 7.

Minnesota Statutes 2016, section 275.08, subdivision 1b, is amended to read:


Subd. 1b.

Computation of tax rates.

(a) The amounts certified to be levied against net
tax capacity under section 275.07 by an individual local government unit shall be divided
by the total net tax capacity of all taxable properties within the local government unit's
taxing jurisdiction. The resulting ratio, the local government's local tax rate, multiplied by
each property's net tax capacity shall be each property's net tax capacity tax for that local
government unit before reduction by any credits.

(b) The auditor must also determine the school debt tax rate for each school district equal
to (1) the school debt service levy certified under section 275.07, subdivision 2, divided by
(2) the total net tax capacity of all taxable property within the district.

(c) Any amount certified to the county auditor to be levied against market value shall
be divided by the total referendum market value of all taxable properties within the taxing
district. The resulting ratio, the taxing district's new referendum tax rate, multiplied by each
property's referendum market value shall be each property's new referendum tax before
reduction by any credits. For the purposes of this subdivision, "referendum market value"
means the market value as defined in section 126C.01, subdivision 3.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 8.

Minnesota Statutes 2016, section 276.04, subdivision 2, is amended to read:


Subd. 2.

Contents of tax statements.

(a) The treasurer shall provide for the printing of
the tax statements. The commissioner of revenue shall prescribe the form of the property
tax statement and its contents. The tax statement must not state or imply that property tax
credits are paid by the state of Minnesota. The statement must contain a tabulated statement
of the dollar amount due to each taxing authority and the amount of the state tax from the
parcel of real property for which a particular tax statement is prepared. The dollar amounts
attributable to the county, the state tax, the voter approved school tax, the other local school
tax, the township or municipality, and the total of the metropolitan special taxing districts
as defined in section 275.065, subdivision 3, paragraph (i), must be separately stated. The
amounts due all other special taxing districts, if any, may be aggregated except that any
levies made by the regional rail authorities in the county of Anoka, Carver, Dakota, Hennepin,
Ramsey, Scott, or Washington under chapter 398A shall be listed on a separate line directly
under the appropriate county's levy. If the county levy under this paragraph includes an
amount for a lake improvement district as defined under sections 103B.501 to 103B.581,
the amount attributable for that purpose must be separately stated from the remaining county
levy amount. In the case of Ramsey County, if the county levy under this paragraph includes
an amount for public library service under section 134.07, the amount attributable for that
purpose may be separated from the remaining county levy amount. The amount of the tax
on homesteads qualifying under the senior citizens' property tax deferral program under
chapter 290B is the total amount of property tax before subtraction of the deferred property
tax amount. The amount of the tax on contamination value imposed under sections 270.91
to 270.98, if any, must also be separately stated. The dollar amounts, including the dollar
amount of any special assessments, may be rounded to the nearest even whole dollar. For
purposes of this section whole odd-numbered dollars may be adjusted to the next higher
even-numbered dollar. The amount of market value excluded under section 273.11,
subdivision 16
, if any, must also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures taxed
as personal property shall contain the same information that is required on the tax statements
for real property.

(c) Real and personal property tax statements must contain the following information
in the order given in this paragraph. The information must contain the current year tax
information in the right column with the corresponding information for the previous year
in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's homestead market value exclusion under section 273.13, subdivision
35;

(3) the property's taxable market value under section 272.03, subdivision 15;

(4) the property's gross tax, before credits;

(5) for homestead agricultural properties, the credit credits under section sections
273.1384 and 273.1387;

(6) any credits received under sections 273.119; 273.1234 or 273.1235; 273.135;
273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of credit
received under section 273.135 must be separately stated and identified as "taconite tax
relief"; and

(7) the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county
agrees, a taxing district may include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget deliberations for the current year,
and encouraging taxpayers to attend the hearings. If the county allows notices to be included
in the envelope containing the property tax statement, and if more than one taxing district
relative to a given property decides to include a notice with the tax statement, the county
treasurer or auditor must coordinate the process and may combine the information on a
single announcement.

EFFECTIVE DATE.

This section is effective beginning with taxes payable in 2018.

Sec. 9.

Minnesota Statutes 2016, section 469.169, is amended by adding a subdivision to
read:


Subd. 20.

Additional border city allocations.

(a) In addition to the tax reductions
authorized in subdivisions 12 to 19, the commissioner shall allocate $3,000,000 for tax
reductions to border city enterprise zones in cities located on the western border of the state.
The commissioner shall allocate this amount among cities on a per capita basis. Allocations
under this subdivision may be used for tax reductions under sections 469.171, 469.1732,
and 469.1734, or for other offsets of taxes imposed on or remitted by businesses located in
the enterprise zone, but only if the municipality determines that the granting of the tax
reduction or offset is necessary to retain a business within or attract a business to the zone.

(b) The allocations under this subdivision do not cancel or expire, but remain available
until used by the city.

EFFECTIVE DATE.

This section is effective July 1, 2017.

Sec. 10.

Minnesota Statutes 2016, section 477A.011, subdivision 34, is amended to read:


Subd. 34.

City revenue need.

(a) For a city with a population equal to or greater than
10,000, "city revenue need" is 1.15 times the sum of (1) 4.59 times the pre-1940 housing
percentage; plus (2) 0.622 times the percent of housing built between 1940 and 1970; plus
(3) 169.415 times the jobs per capita; plus (4) the sparsity adjustment; plus (5) 307.664.

(b) For a city with a population equal to or greater than 2,500 and less than 10,000, "city
revenue need" is 1.15 times the sum of (1) 572.62; plus (2) 5.026 times the pre-1940 housing
percentage; minus (3) 53.768 times household size; plus (4) 14.022 times peak population
decline; plus (5) the sparsity adjustment.

(c) For a city with a population less than 2,500, "city revenue need" is the sum of (1)
410 plus; (2) 0.367 times the city's population over 100; plus (3) the sparsity adjustment.
The city revenue need for a city under this paragraph shall not exceed 630 plus the city's
sparsity adjustment
.

(d) For a city with a population of at least 2,500 but less than 3,000, the "city revenue
need" equals (1) the transition factor times the city's revenue need calculated in paragraph
(b); plus (2) 630 times the difference between one and the transition factor. For a city with
a population of at least 10,000 but less than 10,500 11,000, the "city revenue need" equals
(1) the transition factor times the city's revenue need calculated in paragraph (a); plus (2)
the city's revenue need calculated under the formula in paragraph (b) times the difference
between one and the transition factor. For purposes of the first sentence of this paragraph
"transition factor" is 0.2 percent times the amount that the city's population exceeds the
minimum threshold in either of the first two sentences. For purposes of the second sentence
of this paragraph, "transition factor" is 0.1 percent times the amount that the city's population
exceeds the minimum threshold.

(e) The city revenue need cannot be less than zero.

(f) For calendar year 2015 and subsequent years, the city revenue need for a city, as
determined in paragraphs (a) to (e), is multiplied by the ratio of the annual implicit price
deflator for government consumption expenditures and gross investment for state and local
governments as prepared by the United States Department of Commerce, for the most
recently available year to the 2013 implicit price deflator for state and local government
purchases.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year 2018
and thereafter.

Sec. 11.

Minnesota Statutes 2016, section 477A.011, subdivision 45, is amended to read:


Subd. 45.

Sparsity adjustment.

For a city with a population of 10,000 or more, the
sparsity adjustment is 100 for any city with an average population density less than 150 per
square mile, according to the most recent federal census, and. For a city with a population
less than 10,000, the sparsity adjustment is 200 for any city with an average population
density less than 30 per square mile, according to the most recent federal census.
The sparsity
adjustment is zero for all other cities.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year 2018
and thereafter.

Sec. 12.

Minnesota Statutes 2016, section 477A.0124, subdivision 4, is amended to read:


Subd. 4.

County tax-base equalization aid.

(a) For 2006 and subsequent years, the
money appropriated to county tax-base equalization aid each calendar year, after the payment
under paragraph (f), shall be apportioned among the counties according to each county's
tax-base equalization aid factor.

(b) A county's tax-base equalization aid factor is equal to the amount by which (i) $185
$190
times the county's population, exceeds (ii) 9.45 nine percent of the county's net tax
capacity.

(c) In the case of a county with a population less than 10,000, the factor determined in
paragraph (b) shall be multiplied by a factor of three.

(d) In the case of a county with a population greater than or equal to 10,000, but less
than 12,500, the factor determined in paragraph (b) shall be multiplied by a factor of two.

(e) In the case of a county with a population greater than 500,000, the factor determined
in paragraph (b) shall be multiplied by a factor of 0.25.

(f) Before the money appropriated to county base equalization aid is apportioned among
the counties as provided in paragraph (a), an amount up to $73,259 is allocated annually to
Anoka County and up to $59,664 is annually allocated to Washington County for the county
to pay postretirement costs of health insurance premiums for court employees. The allocation
under this paragraph is in addition to the allocations under paragraphs (a) to (e).
Beginning
with aid payable in 2019, the amount under paragraph (b), item (i), shall be increased by
the ratio of the statewide net tax capacity per capita to the statewide net tax capacity per
capita in the 2016 assessment year, provided that in no case shall the ratio be less than one
or the ratio in the prior year, whichever is greater. The amount shall be rounded to the nearest
$10. The statewide net tax capacity per capita shall be calculated using the most recent
population available for the relevant assessment year at the time of the calculation of the
aid by the commissioner under section 477A.014.

(g) For distributions in 2018 and subsequent years, the allocation to a county under
paragraphs (a) to (e) shall not be less than:

(1) an amount equal to 0.27 percent of the total appropriation available for that year
under section 477A.03, subdivision 2b, paragraph (b); or

(2) 95 percent of the tax base equalization aid for the county in the prior year, whichever
is greater.

If the sum of aids payable to counties under this subdivision exceeds the limit under section
477A.03, subdivision 2b, paragraph (b), the distribution for those counties whose aid amounts
exceed their minimum aid must be proportionately reduced so that the amount of aid
distributed under this subdivision does not exceed the limit in section 477A.03, subdivision
2b, paragraph (b).

EFFECTIVE DATE.

This section is effective for aids payable in 2018 and thereafter.

Sec. 13.

Minnesota Statutes 2016, section 477A.0124, is amended by adding a subdivision
to read:


Subd. 7.

County aid calculations.

Data used in calculating aids to counties under this
section shall be the most recently available data as of January 1 in the year in which the aid
is calculated.

EFFECTIVE DATE.

This section is effective beginning with aid payable in 2018.

Sec. 14.

[477A.0126] REIMBURSEMENT TO COUNTIES AND TRIBES FOR
CERTAIN OUT-OF-HOME PLACEMENTS.

Subdivision 1.

Definition.

For purposes of this section, "out-of-home placement" means
24-hour substitute care for an Indian child as defined by section 260C.007, subdivision 21,
away from the child's parent or guardian and for whom the county or tribal social services
agency has been assigned responsibility for the child's placement and care, which includes
placement in foster care under section 260C.007, subdivision 18.

Subd. 2.

Determination of nonfederal share of costs.

(a) By July 1, 2017, and each
June 1 thereafter, each county shall report the following information to the commissioner
of human services:

(1) the amount paid out of the county's social service agency budget for out-of-home
placement of Indian children in the calendar year immediately preceding the year in which
the report was made; and

(2) the number of days foster care maintenance payments were made for each Indian
child the calendar year immediately preceding the year in which the report was made.

(b) The commissioner of human services shall prescribe the format of the report. By
July 15, 2017, and each July 1 thereafter, the commissioner of human services shall certify
to the commissioner of revenue and to the legislative committees with jurisdiction over
local government aids and out-of-home placement funding the data reported under this
subdivision and whether it accurately reflects total expenditures by counties for out-of-home
placement costs of Indian children. The commissioner of human services shall also certify
to the commissioner of revenue the reimbursement amounts received from the federal
government for out-of-home placement costs for the previous calendar year received by
each initiative tribe under section 256.01, subdivision 14b.

(c) Until the commissioner of human services develops another mechanism for collecting
and verifying data on out-of-home placements of Indian children, the data collected under
this subdivision must be used to calculate payments under subdivision 3.

Subd. 3.

Aid for counties.

(a) For aids payable in calendar year 2018 and thereafter, the
Department of Revenue shall reimburse each county the county's proportionate share of the
appropriation in subdivision 7 that remains after the aid for tribes in subdivision 4 has been
paid.

(b) Each county's proportionate share is based on the county's nonfederal share of the
cost for out-of-home placement of Indian children for the calendar year that was certified
by the commissioner of human services under subdivision 2, paragraph (b), provided that:

(1) the commissioner of human services certifies to the commissioner of revenue that
accurate data are available to make the aid determination under this section; and

(2) the commissioner of human services certifies to the commissioner of revenue that
the county is in substantial compliance with the compliance review system developed in
accordance with subdivision 6.

(c) If the commissioner of human services determines that a county is substantially out
of compliance with the Indian Child Welfare Act or the Minnesota Indian Family Preservation
Act, as determined under subdivision 6, the commissioner of human services shall provide
written notice to the county of its noncompliance, and what actions are necessary by the
county to improve and maintain compliance.

(d) If the county remains substantially out of compliance with the Indian Child Welfare
Act or the Minnesota Indian Family Preservation Act as determined by the commissioner
of human services under subdivision 6 for a second consecutive year, the county shall be
eligible for 50 percent of the aid under this section beginning with the next certification and
until the commissioner of human services certifies to the commissioner of revenue that the
county is in substantial compliance and is eligible for the aid payment. The commissioner
of human services shall certify to the commissioner of revenue by July 1 of each year which
counties are eligible for an aid reduction in the following year.

Subd. 4.

Aid for tribes.

For aids payable in 2018 and thereafter, the amount of
reimbursement to each initiative tribe under section 256.01, subdivision 14b, shall be the
greater of:

(1) five percent of the reimbursement amount received from the federal government for
out-of-home placement costs for the previous calendar year that was certified under
subdivision 2, paragraph (b); or

(2) $200,000.

Subd. 5.

Payments.

The commissioner of revenue must compute the amount of the
reimbursement aid payable to each county and tribe under this section. On or before August
1 of each year, the commissioner shall certify the amount to be paid to each county and
tribe in the following year. The commissioner shall pay reimbursement aid annually at the
times provided in section 477A.015.

Subd. 6.

Indian Child Welfare Act compliance system review.

(a) By January 1, 2018,
the commissioner of human services, in consultation with counties and tribes, shall develop
a system to review county compliance with the Indian Child Welfare Act and the Minnesota
Indian Family Preservation Act. The system may include, but is not limited to, the cases to
be reviewed, the criteria to be reviewed to demonstrate compliance, the rate of noncompliance
and the coordinating penalty, the program improvement plan, and training.

(b) The commissioner of human services shall provide continuous review of cases
reported by counties for aid payments under this section for compliance with the Indian
Child Welfare Act and the Minnesota Indian Family Preservation Act.

(c) The determination made by the commissioner of human services regarding a county's
compliance or noncompliance with the Indian Child Welfare Act and the Minnesota Indian
Family Preservation Act shall be final.

Subd. 7.

Appropriation.

(a) $5,000,000 is annually appropriated to the commissioner
of revenue from the general fund to pay aid under this section.

(b) $390,000 is appropriated annually from the general fund to the commissioner of
human services to implement subdivision 6.

EFFECTIVE DATE.

This section is effective beginning with aids payable in 2018,
except the appropriation in subdivision 7, paragraph (b), is effective beginning with fiscal
year 2019.

Sec. 15.

Minnesota Statutes 2016, section 477A.013, subdivision 8, is amended to read:


Subd. 8.

City formula aid.

(a) For aids payable in 2015 2018 and thereafter, the formula
aid for a city is equal to the sum of (1) its formula aid in the previous year and (2) the product
of (i) (1) the difference between its unmet need and its formula certified aid in the previous
year and before any aid adjustment under subdivision 13, and (ii) (2) the aid gap percentage.

(b) For aids payable in 2015 and thereafter, if a city's certified aid from the previous
year is greater than the sum of its unmet need plus its aid adjustment under subdivision 13,
its formula aid is adjusted to equal its unmet need.

(c) No city may have a formula aid amount less than zero. The aid gap percentage must
be the same for all cities subject to paragraph (a).

(d) (b) The applicable aid gap percentage must be calculated by the Department of
Revenue so that the total of the aid under subdivision 9 equals the total amount available
for aid under section 477A.03. The aid gap percentage must be the same for all cities subject
to paragraph (a).
Data used in calculating aids to cities under sections 477A.011 to 477A.013
shall be the most recently available data as of January 1 in the year in which the aid is
calculated.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year 2018
and thereafter.

Sec. 16.

Minnesota Statutes 2016, section 477A.013, subdivision 9, is amended to read:


Subd. 9.

City aid distribution.

(a) In calendar year 2014 2018 and thereafter, each city
if a city's certified aid before any aid adjustment under subdivision 13 for the previous year
is less than its current unmet need, the city
shall receive an aid distribution equal to the sum
of (1) its certified aid in the previous year before any aid adjustment under subdivision 13,
(2)
the city formula aid under subdivision 8, and (2) (3) its aid adjustment under subdivision
13.

(b) For aids payable in 2015 2018 and thereafter, if a city's certified aid before any aid
adjustment under subdivision 13 for the previous year is equal to or greater than its current
unmet need,
the total aid for a city must not be less than is equal to the greater of (1) its
unmet need plus any aid adjustment under subdivision 13, or (2)
the amount it was certified
to receive in the previous year minus the lesser of $10 multiplied by its population, or five
percent of its net levy in the year prior to the aid distribution. No city may have a total aid
amount less than $0.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year 2018
and thereafter.

Sec. 17.

Minnesota Statutes 2016, section 477A.015, is amended to read:


477A.015 PAYMENT DATES.

(a) The commissioner of revenue shall make the payments of local government aid to
affected taxing authorities in two installments on July 20 and December 26 annually.

(b) Notwithstanding paragraph (a), for aids payable in 2019 only, the commissioner of
revenue shall make payments of the aid payable under section 477A.013, subdivision 9, in
three installments as follows: (1) 14.6 percent of the aid shall be paid on June 15, 2019; (2)
35.4 percent of the aid shall be paid on July 20, 2019; and (3) 50 percent of the aid shall be
paid on December 26, 2019.

(c) When the commissioner of public safety determines that a local government has
suffered financial hardship due to a natural disaster, the commissioner of public safety shall
notify the commissioner of revenue, who shall make payments of aids under sections
477A.011 to 477A.014, which are otherwise due on December 26, as soon as is practical
after the determination is made but not before July 20.

(d) The commissioner may pay all or part of the payments of aids under sections
477A.011 to 477A.014, which are due on December 26 at any time after August 15 if a
local government requests such payment as being necessary for meeting its cash flow needs.

EFFECTIVE DATE.

This section is effective beginning with aids payable in 2019.

Sec. 18.

[477A.0175] AID REDUCTIONS FOR OPERATING AN UNAUTHORIZED
DIVERSION PROGRAM.

Subdivision 1.

Penalty for operating an unauthorized diversion program.

Notwithstanding any other law to the contrary, a county or city that operated a pretrial
diversion program that a court determines was not authorized under section 169.999 or
another statute or law must have its aid under sections 477A.011 to 477A.03 reduced by
the amount of fees paid by participants into the program for the years in which the program
operated. A court shall report any order that enjoins a county or city from operating a pretrial
diversion program to the state auditor as required under subdivision 2. The state auditor
shall determine the amount of fees collected under the diversion program and notify the
commissioner of the amount. The commissioner shall reduce the county program aid paid
to a county or the local government aid paid to a city by this amount beginning with the
first aid payment made after receiving notice of the reduction amount. No aid payment may
be less than zero but the amount of the reduction that cannot be made out of that payment
shall be applied to future payments until the total amount has been deducted.

Subd. 2.

Court challenge to authority to operate a pretrial diversion program.

Any
taxpayer may challenge a city or county operation of a pretrial diversion program by filing
a declaratory judgment action or seeking other appropriate relief in the district court for the
county where the city is located or in any other court of competent jurisdiction. If the court
finds that the county or city has exceeded its authority under law in operating the pretrial
diversion program, the court must transmit a copy of the court order to the state auditor.

EFFECTIVE DATE.

This section is effective the day following final enactment and
applies beginning with aid payments under Minnesota Statutes, section 477A.015 in calendar
year 2018.

Sec. 19.

Minnesota Statutes 2016, section 477A.03, subdivision 2a, is amended to read:


Subd. 2a.

Cities.

The total aid paid under section 477A.013, subdivision 9, is
$516,898,012 for aids payable in 2015.
For aids payable in 2016 and thereafter 2017, the
total aid paid under section 477A.013, subdivision 9, is $519,398,012. For aids payable in
2018 and thereafter, the total aid paid under section 477A.013, subdivision 9, is
$534,398,012
.

EFFECTIVE DATE.

This section is effective for aids payable in calendar year 2018
and thereafter.

Sec. 20.

Minnesota Statutes 2016, section 477A.03, subdivision 2b, is amended to read:


Subd. 2b.

Counties.

(a) For aids payable in 2014 and thereafter 2018 through 2024, the
total aid payable under section 477A.0124, subdivision 3, is $103,795,000, of which
$3,000,000 shall be allocated as required under Laws 2014, chapter 150, article 4, section
6. For aids payable in 2025 and thereafter, the total aid payable under section 477A.0124,
subdivision 3, is
$100,795,000. Each calendar year, $500,000 of this appropriation shall be
retained by the commissioner of revenue to make reimbursements to the commissioner of
management and budget for payments made under section 611.27. The reimbursements
shall be to defray the additional costs associated with court-ordered counsel under section
611.27. Any retained amounts not used for reimbursement in a year shall be included in the
next distribution of county need aid that is certified to the county auditors for the purpose
of property tax reduction for the next taxes payable year.

(b) For aids payable in 2014 2018 and thereafter, the total aid under section 477A.0124,
subdivision 4
, is $104,909,575 $130,873,444. The commissioner of revenue shall transfer
to the commissioner of management and budget $207,000 annually for the cost of preparation
of local impact notes as required by section 3.987, and other local government activities.
The commissioner of revenue shall transfer to the commissioner of education $7,000 annually
for the cost of preparation of local impact notes for school districts as required by section
3.987. The commissioner of revenue shall deduct the amounts transferred under this
paragraph from the appropriation under this paragraph. The amounts transferred are
appropriated to the commissioner of management and budget and the commissioner of
education respectively.

EFFECTIVE DATE.

This section is effective for aids payable in 2018 and thereafter.

Sec. 21.

[477A.09] MAXIMUM EFFORT LOAN AID.

(a) For fiscal years 2018 to 2022, each school district with a maximum effort loan under
sections 126C.61 to 126C.72, outstanding as of June 30, 2016, is eligible for an aid payment
equal to one-fifth of the amount of interest that was paid on the loan between December 1,
1990, and June 30, 2016. A school district with a maximum effort capital loan outstanding
as of June 30, 2017, is eligible for an annual aid payment equal to one-fifth of the estimated
amount of interest that will be paid by the district on the loan between June 30, 2017, and
June 30, 2021. Aid payments under this section must be used to reduce current year property
taxes levied on net tax capacity within the district or to reduce future years' tax levies by:

(1) retaining payments made under this section in the district's debt redemption fund for
up to 20 years, notwithstanding the two-year limit under section 475.61, subdivision 3; or

(2) financing a defeasance of any future payments on outstanding bonded debt.

(b) Aid under this section must be paid in fiscal years 2018 to 2022. An amount sufficient
to make aid payments under this section is annually appropriated from the general fund to
the commissioner of education.

EFFECTIVE DATE.

This section is effective for fiscal years 2018 to 2022.

Sec. 22.

Minnesota Statutes 2016, section 477A.12, subdivision 1, is amended to read:


Subdivision 1.

Types of land; payments.

The following amounts are annually
appropriated to the commissioner of natural resources from the general fund for transfer to
the commissioner of revenue. The commissioner of revenue shall pay the transferred funds
to counties as required by sections 477A.11 to 477A.14. The amounts, based on the acreage
as of July 1 of each year prior to the payment year, are:

(1) $5.133 multiplied by the total number of acres of acquired natural resources land or,
at the county's option three-fourths of one percent of the appraised value of all acquired
natural resources land in the county, whichever is greater;

(2) $5.133, multiplied by the total number of acres of transportation wetland or, at the
county's option, three-fourths of one percent of the appraised value of all transportation
wetland in the county, whichever is greater;

(3) $5.133, multiplied by the total number of acres of wildlife management land, or, at
the county's option, three-fourths of one percent of the appraised value of all wildlife
management land in the county, whichever is greater;

(4) 50 percent of the dollar amount as determined under clause (1), multiplied by the
number of acres of military refuge land in the county;

(5) $1.50 $2, multiplied by the number of acres of county-administered other natural
resources land in the county;

(6) $5.133, multiplied by the total number of acres of land utilization project land in the
county;

(7) $1.50 $2, multiplied by the number of acres of commissioner-administered other
natural resources land in the county; and

(8) without regard to acreage, and notwithstanding the rules adopted under section
84A.55, $300,000 for local assessments under section 84A.55, subdivision 9, that shall be
divided and distributed to the counties containing state-owned lands within a conservation
area in proportion to each county's percentage of the total annual ditch assessments.

EFFECTIVE DATE.

This section is effective for payments made in calendar year 2018
and thereafter.

Sec. 23.

Minnesota Statutes 2016, section 477A.17, is amended to read:


477A.17 LAKE VERMILION-SOUDAN UNDERGROUND MINE STATE PARK;
ANNUAL PAYMENTS.

(a) In lieu of the payment amount provided under section 477A.12, subdivision 1, clause
(1), the county shall receive an annual payment for state-owned land within the boundary
of Lake Vermilion-Soudan Underground Mine State Park, established in section 85.012,
subdivision 38a, equal to 1.5 percent of the appraised value of the state-owned land.

(b) For the purposes of this section, the appraised value of the land acquired for Lake
Vermilion-Soudan Underground Mine State Park for the first five years after acquisition
shall be the purchase price of the land, plus the value of any portion of the land that is
acquired by donation. Thereafter, the appraised value of the state-owned land shall be as
determined under section 477A.12, subdivision 3, except that the appraised value of the
state-owned land within the park shall not be reduced below the 2010 appraised value of
the land
.

(c) The annual payments under this section shall be distributed to the taxing jurisdictions
containing the property as follows: one-third to the school districts; one-third to the town;
and one-third to the county. The payment to school districts is not a county apportionment
under section 127A.34 and is not subject to aid recapture. Each of those taxing jurisdictions
may use the payments for their general purposes.

(d) Except as provided in this section, the payments shall be made as provided in sections
477A.11 to 477A.13.

EFFECTIVE DATE.

This section is effective beginning with aids payable in 2017.
For aids payable in 2017, the commissioner of natural resources must recertify the amounts
under this section to the commissioner of revenue by June 15, 2017.

Sec. 24.

[477A.21] RIPARIAN PROTECTION AID.

Subdivision 1.

Definitions.

For purposes of this section, the following terms have the
meanings given:

(1) "buffer protection map" has the meaning given under section 103F.48, subdivision
1; and

(2) "public watercourses" means public waters and public drainage systems subject to
riparian protection requirements under section 103F.48.

Subd. 2.

Certifications to commissioner.

(a) The Board of Water and Soil Resources
must certify to the commissioner of revenue, on or before July 1 each year, which counties
and watershed districts have affirmed their jurisdiction under section 103F.48 and the
proportion of centerline miles of public watercourses, and miles of public drainage system
ditches on the buffer protection map, within each county and each watershed district within
the county with affirmed jurisdiction.

(b) On or before July 1 each year, the commissioner of natural resources shall certify to
the commissioner of revenue the statewide and countywide number of centerline miles of
public watercourses and miles of public drainage system ditches on the buffer protection
map.

Subd. 3.

Distribution.

(a) A county that is certified under subdivision 2, or that portion
of a county containing a watershed district certified under subdivision 2, is eligible to receive
aid under this section to enforce and implement the riparian protection and water quality
practices under section 103F.48. Each county's preliminary aid amount is equal to the
proportion calculated under paragraph (b) multiplied by the appropriation received each
year by the commissioner for purposes of payments under this section.

(b) The commissioner must compute each county's proportion. A county's proportion is
equal to the ratio of the sum in clause (1) to the sum in clause (2):

(1) the sum of the total number of acres in the county classified as class 2a under section
273.13, subdivision 23, the countywide number of centerline miles of public watercourses
on the buffer protection map, and the countywide number of miles of public drainage system
ditches on the buffer protection map; and

(2) the sum of the statewide total number of acres classified as class 2a under section
273.13, subdivision 23, the statewide total number of centerline miles of public watercourses
on the buffer protection map, and the statewide total number of public drainage system
miles on the buffer protection map.

(c) Aid to a county must not be greater than $200,000 or less than $50,000. If the sum
of the preliminary aids payable to counties under paragraph (a) is greater or less than the
appropriation received by the commissioner, the commissioner of revenue must calculate
the percentage of adjustment necessary so that the total of the aid under paragraph (a) equals
the total amount received by the commissioner, subject to the minimum and maximum
amounts specified in this paragraph. The minimum and maximum amounts under this
paragraph must be adjusted by the ratio of the actual amount appropriated to $10,000,000.

(d) If only a portion of a county is certified as eligible to receive aid under subdivision
2, the aid otherwise payable to that county under this section must be multiplied by a fraction,
the numerator of which is the buffer protection map miles of the certified watershed districts
contained within the county and the denominator of which is the total buffer protection map
miles of the county.

(e) Any aid that would otherwise be paid to a county or portion of a county that is not
certified under subdivision 2 shall be paid to the Board of Water and Soil Resources for
enforcing and implementing the riparian protection and water quality practices under section
103F.48.

Subd. 4.

Payments.

The commissioner of revenue must compute the amount of riparian
protection aid payable to each eligible county and to the Board of Water and Soil Resources
under this section. On or before August 1 each year, the commissioner must certify the
amount to be paid to each county and the Board of Water and Soil Resources in the following
year, except that the payments for 2017 must be certified by July 15, 2017. The commissioner
must pay riparian protection aid to counties and to the Board of Water and Soil Resources
in the same manner and at the same time as aid payments under section 477A.015.

EFFECTIVE DATE.

This section is effective the day following final enactment and
applies to aids payable in 2017 and thereafter.

Sec. 25.

[477A.22] APPROPRIATION; RIPARIAN PROTECTION AID.

$6,000,000 in fiscal year 2018 and $8,000,000 in each fiscal year thereafter is
appropriated from the general fund to the commissioner of revenue for riparian protection
aid payments under Minnesota Statutes, section 477A.21. These amounts may be in addition
to other appropriations for the same purpose. Notwithstanding Minnesota Statutes, section
477A.21, subdivisions 3 and 4, the fiscal year 2018 appropriation may be paid only to
counties. Unexpended funds from fiscal year 2018 are available in fiscal year 2019.

EFFECTIVE DATE.

This section is effective for aids payable in 2017 and thereafter.

Sec. 26. BASE YEAR FORMULA AID FOR NEWLY INCORPORATED CITY.

For a city that incorporated on October 13, 2015, and first qualifies for aid under
Minnesota Statutes, section 477A.013, subdivisions 8 and 9, in 2017, the city's certified aid
for 2017, used in calculating aid payable in 2018, shall be deemed to equal $95 multiplied
by its 2014 population.

EFFECTIVE DATE.

This section is effective for aids payable in 2018.

Sec. 27. 2013 CITY AID PENALTY FORGIVENESS; CITY OF OSLO.

Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the city of Oslo
shall receive the portion of its aid payment for calendar year 2013 under Minnesota Statutes,
section 477A.013, that was withheld under Minnesota Statutes, section 477A.017, subdivision
3, provided that the state auditor certifies to the commissioner of revenue that it received
audited financial statements from the city for calendar year 2012 by December 31, 2013.
The commissioner of revenue shall make a payment of $37,473.50 with the first payment
of aids under Minnesota Statutes, section 477A.015. $37,473.50 is appropriated from the
general fund to the commissioner of revenue in fiscal year 2018 to make this payment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 28. 2014 AID PENALTY FORGIVENESS.

(a) Notwithstanding Minnesota Statutes, section 477A.017, subdivision 3, the cities of
Dundee, Jeffers, and Woodstock shall receive all of their calendar year 2014 aid payment
that was withheld under Minnesota Statutes, section 477A.017, subdivision 3, provided that
the state auditor certifies to the commissioner of revenue that the city complied with all
reporting requirements under Minnesota Statutes, section 477A.017, subdivision 3, for
calendar years 2013 and 2014 by June 1, 2015.

(b) The commissioner of revenue shall make payment to each city no later than July 20,
2017. Up to $101,570 in fiscal year 2018 is appropriated from the general fund to the
commissioner of revenue to make the payments under this section.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 29. CITY OF TAYLORS FALLS; DEVELOPMENT ZONE.

Subdivision 1.

Authorization.

The governing body of the city of Taylors Falls may
designate all or any part of the city as a development zone under Minnesota Statutes, section
469.1731.

Subd. 2.

Application of general law.

(a) Minnesota Statutes, sections 469.1731 to
469.1735, apply to the development zones designated under this section. The governing
body of the city may exercise the powers granted under Minnesota Statutes, sections 469.1731
to 469.1735, including powers that apply outside of the zones.

(b) The allocation under subdivision 3 for purposes of Minnesota Statutes, section
469.1735, subdivision 2, is appropriated to the commissioner of revenue.

Subd. 3.

Allocation of state tax reductions.

(a) The cumulative total amount of the
state portion of the tax reductions for all years of the program under Minnesota Statutes,
sections 469.1731 to 469.1735, for the city of Taylors Falls, is limited to $50,000. To provide
the authority under this section, the amount of the allocation for border cities under Minnesota
Statutes, section 469.169, in this act is reduced by $50,000.

(b) This allocation may be used for tax reductions provided in Minnesota Statutes, section
469.1732 or 469.1734, or for reimbursements under Minnesota Statutes, section 469.1735,
subdivision 3, but only if the governing body of the city of Taylors Falls determines that
the tax reduction or offset is necessary to enable a business to expand within the city or to
attract a business to the city.

(c) The commissioner of revenue may waive the limit under this subdivision using the
same rules and standards provided in Minnesota Statutes, section 469.169, subdivision 12,
paragraph (b).

EFFECTIVE DATE.

This section is effective July 1, 2017, and does not require local
approval pursuant to Minnesota Statutes, section 645.023, subdivision 1, paragraph (a).

Sec. 30. REPORT ON RENT CONSTITUTING PROPERTY TAXES.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meaning given.

(b) "Commissioner" means the commissioner of revenue.

(c) "Renter property tax refund" means the refund for renters allowed under Minnesota
Statutes, chapter 290A.

Subd. 2.

Report required.

(a) By March 1, 2018, the commissioner must report to the
committees of the house of representatives and senate with jurisdiction over taxes on the
percentage of rent constituting property taxes used in determining the renter property tax
refund. The report must be in compliance with Minnesota Statutes, sections 3.195 and 3.197.

(b) The report must include estimates of rent constituting property tax for the following
geographic regions:

(1) the city of Minneapolis;

(2) the city of St. Paul;

(3) the counties of Anoka; Dakota; Hennepin, excluding the city of Minneapolis; and
Ramsey, excluding the city of St. Paul; and

(4) the remainder of the state.

The commissioner must prepare the estimates by determining the property taxes attributable
to rental units for which renters submitted claims for the renter property tax refund based
on rent paid in 2016. The commissioner must match the property ID number or parcel
number on form CRP filed with the claim to property tax data for taxes payable in 2016.
The commissioner must then calculate the percentage of rent constituting property taxes
using the rent amount reported on form CRP, adjusted by the total number of months the
unit was rented and the number of rental units on the property. The estimates for each
geographic region must be rounded to the nearest one-tenth of one percentage point.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 31. APPROPRIATION; FIRE REMEDIATION GRANTS.

$1,392,258 is appropriated in fiscal year 2018 from the general fund to the commissioner
of public safety for grants to remediate the effects of fires in the city of Melrose on September
8, 2016. The commissioner must allocate the grants as follows:

(1) $1,296,458 to the city of Melrose; and

(2) $95,800 to Stearns County.

A grant recipient must use the money appropriated under this section for remediation
costs, including disaster recovery, infrastructure, reimbursement for emergency personnel
costs, reimbursement for equipment costs, and reimbursements for property tax abatements,
incurred by public or private entities as a result of the fires. This is a onetime appropriation
and is available until June 30, 2018.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 32. APPROPRIATION.

$600,000 in fiscal year 2018 and $600,000 in fiscal year 2019 are appropriated from the
general fund to the commissioner of revenue for a grant to Wadena County that shall be
paid on July 20, 2017, and July 20, 2018. These are onetime appropriations.

EFFECTIVE DATE.

This section is effective July 1, 2017.

Sec. 33. REPEALER.

(a) Minnesota Statutes 2016, section 477A.0124, subdivision 5, is repealed.

(b) Minnesota Statutes 2016, section 477A.20, is repealed.

EFFECTIVE DATE.

Paragraph (a) is effective beginning with aids payable in 2018.
Paragraph (b) is effective the day following final enactment.

ARTICLE 5

LOCAL OPTION SALES AND USE TAXES

Section 1.

Laws 1980, chapter 511, section 1, subdivision 2, as amended by Laws 1991,
chapter 291, article 8, section 22, Laws 1998, chapter 389, article 8, section 25, Laws 2003,
First Special Session chapter 21, article 8, section 11, Laws 2008, chapter 154, article 5,
section 2, and Laws 2014, chapter 308, article 3, section 21, is amended to read:


Subd. 2.

(a) Notwithstanding Minnesota Statutes, section 477A.016, or any other law,
ordinance, or city charter provision to the contrary, the city of Duluth may, by ordinance,
impose an additional sales tax of up to one and three-quarter percent on sales transactions
which are described in Minnesota Statutes 2000, section 297A.01, subdivision 3, clause (c).
The imposition of this tax shall not be subject to voter referendum under either state law or
city charter provisions. When the city council determines that the taxes imposed under this
paragraph at a rate of three-quarters of one percent and other sources of revenue produce
revenue sufficient to pay debt service on bonds in the principal amount of $40,285,000 plus
issuance and discount costs, issued for capital improvements at the Duluth Entertainment
and Convention Center, which include a new arena, the rate of tax under this subdivision
must be reduced by three-quarters of one percent.

(b) In addition to the tax in paragraph (a) and notwithstanding Minnesota Statutes, section
477A.016, or any other law, ordinance, or city charter provision to the contrary, the city of
Duluth may, by ordinance, impose an additional sales tax of up to one-half of one percent
on sales transactions which are described in Minnesota Statutes 2000, section 297A.01,
subdivision 3, clause (c). This tax expires when the city council determines that the tax
imposed under this paragraph, along with the tax imposed under section 22, paragraph (b),
has produced revenues sufficient to pay the debt service on bonds in a principal amount of
no more than $18,000,000, plus issuance and discount costs, to finance capital improvements
to public facilities to support tourism and recreational activities in that portion of the city
west of 34th 14th Avenue West and the area south of and including Skyline Parkway.

(c) The city of Duluth may sell and issue up to $18,000,000 in general obligation bonds
under Minnesota Statutes, chapter 475, plus an additional amount to pay for the costs of
issuance and any premiums. The proceeds may be used to finance capital improvements to
public facilities that support tourism and recreational activities in the portion of the city
west of 34th 14th Avenue West and the area south of and including Skyline Parkway, as
described in paragraph (b). The issuance of the bonds is subject to the provisions of
Minnesota Statutes, chapter 475, except no election shall be required unless required by the
city charter. The bonds shall not be included in computing net debt. The revenues from the
taxes that the city of Duluth may impose under paragraph (b) and under section 22, paragraph
(b), may be pledged to pay principal of and interest on such bonds.

EFFECTIVE DATE.