Engrossments
Introduction		Posted on 02/26/2009

A bill for an act
relating to taxation; reducing corporate income tax rate; providing green job
incentives; establishing small business investment company credit and job
growth investment credit; abolishing political contribution refund; changing rent
percentage for purposes of property tax refund; modifying capital equipment
sales tax exemption; modifying incentive payment for sustainable forest resource
management program; providing a federal update; providing for green job
opportunity building zones; providing tax credits; allowing tax benefits; making
changes to local government aid, the market value homestead credit, income,
franchise, property, sales and use, minerals, and other taxes and tax-related
provisions; appropriating money; amending Minnesota Statutes 2008, sections
268.19, subdivision 1; 270A.03, subdivision 7; 270B.14, subdivision 3;
270B.15; 272.02, by adding a subdivision; 272.029, subdivision 7; 273.1384,
subdivision 4; 289A.02, subdivision 7; 289A.12, by adding a subdivision;
289A.50, subdivision 1; 290.01, subdivisions 6, 19, 19a, 19b, 19c, 19d, 29, 31;
290.06, subdivisions 1, 2c, by adding subdivisions; 290.067, subdivisions 1, 2a;
290.0671, subdivision 1; 290.091, subdivision 2; 290.0921, subdivisions 1, 3;
290.0922, subdivisions 2, 3; 290.095, subdivisions 2, 11; 290A.03, subdivisions
3, 11, 13, 15; 290C.07; 291.005, subdivision 1; 297A.68, subdivision 5, by
adding a subdivision; 297A.75, subdivision 1; 298.285; 477A.0124, by adding
a subdivision; 477A.013, subdivision 9, by adding a subdivision; 477A.03,
subdivisions 2a, 2b; 477A.12, subdivision 1; 477A.14, subdivision 1; proposing
coding for new law in Minnesota Statutes, chapters 116J; 297I; 469; 477A;
repealing Minnesota Statutes 2008, sections 10A.322, subdivision 4; 290.06,
subdivision 23; 477A.03, subdivision 5.

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

ARTICLE 1

JOB INCENTIVES AND ECONOMIC STIMULUS

Section 1.

Minnesota Statutes 2008, section 270A.03, subdivision 7, is amended to
read:

Subd. 7.

Refund.

"Refund" means an individual income tax refund deleted text begin or political
contribution refund,deleted text end pursuant to chapter 290, deleted text begin ordeleted text end a property tax credit or refunddeleted text begin ,deleted text end pursuant to
chapter 290A, or a sustainable forest tax payment to a claimant under chapter 290C.

For purposes of this chapter, lottery prizes, as set forth in section 349A.08,
subdivision 8, and amounts granted to persons by the legislature on the recommendation
of the joint senate-house of representatives Subcommittee on Claims shall be treated
as refunds.

In the case of a joint property tax refund payable to spouses under chapter 290A,
the refund shall be considered as belonging to each spouse in the proportion of the total
refund that equals each spouse's proportion of the total income determined under section
290A.03, subdivision 3. In the case of a joint income tax refund under chapter 289A, the
refund shall be considered as belonging to each spouse in the proportion of the total
refund that equals each spouse's proportion of the total taxable income determined under
section 290.01, subdivision 29. The commissioner shall remit the entire refund to the
claimant agency, which shall, upon the request of the spouse who does not owe the debt,
determine the amount of the refund belonging to that spouse and refund the amount to
that spouse. For court fines, fees, and surcharges and court-ordered restitution under
section 611A.04, subdivision 2, the notice provided by the commissioner of revenue under
section 270A.07, subdivision 2, paragraph (b), serves as the appropriate legal notice
to the spouse who does not owe the debt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for political contribution refund
claims based on contributions made after June 30, 2009.
new text end

Sec. 2.

Minnesota Statutes 2008, section 289A.50, subdivision 1, is amended to read:

Subdivision 1.

General right to refund.

(a) Subject to the requirements of this
section and section 289A.40, a taxpayer who has paid a tax in excess of the taxes lawfully
due and who files a written claim for refund will be refunded or credited the overpayment
of the tax determined by the commissioner to be erroneously paid.

(b) The claim must specify the name of the taxpayer, the date when and the period
for which the tax was paid, the kind of tax paid, the amount of the tax that the taxpayer
claims was erroneously paid, the grounds on which a refund is claimed, and other
information relative to the payment and in the form required by the commissioner. An
income tax, estate tax, or corporate franchise tax return, or amended return claiming an
overpayment constitutes a claim for refund.

(c) When, in the course of an examination, and within the time for requesting a
refund, the commissioner determines that there has been an overpayment of tax, the
commissioner shall refund or credit the overpayment to the taxpayer and no demand
is necessary. If the overpayment exceeds $1, the amount of the overpayment must
be refunded to the taxpayer. If the amount of the overpayment is less than $1, the
commissioner is not required to refund. In these situations, the commissioner does not
have to make written findings or serve notice by mail to the taxpayer.

(d) If the amount allowable as a credit for withholding, estimated taxes, or dependent
care exceeds the tax against which the credit is allowable, the amount of the excess is
considered an overpayment. deleted text begin The refund allowed by section 290.06, subdivision 23, is also
considered an overpayment.deleted text end The requirements of section 270C.33 do not apply to the
refunding of such an overpayment shown on the original return filed by a taxpayer.

(e) If the entertainment tax withheld at the source exceeds by $1 or more the taxes,
penalties, and interest reported in the return of the entertainment entity or imposed by
section 290.9201, the excess must be refunded to the entertainment entity. If the excess is
less than $1, the commissioner need not refund that amount.

(f) If the surety deposit required for a construction contract exceeds the liability of
the out-of-state contractor, the commissioner shall refund the difference to the contractor.

(g) An action of the commissioner in refunding the amount of the overpayment does
not constitute a determination of the correctness of the return of the taxpayer.

(h) There is appropriated from the general fund to the commissioner of revenue the
amount necessary to pay refunds allowed under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for political contribution refund
claims based on contributions made after June 30, 2009.
new text end

Sec. 3.

Minnesota Statutes 2008, section 290.01, subdivision 6, is amended to read:

Subd. 6.

Taxpayer.

deleted text begin The termdeleted text end "Taxpayer" means any person or corporation subject
to a tax imposed by this chapter. deleted text begin For purposes of section 290.06, subdivision 23, the term
"taxpayer" means an individual eligible to vote in Minnesota under section 201.014.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for political contribution refund
claims based on contributions made after June 30, 2009.
new text end

Sec. 4.

Minnesota Statutes 2008, section 290.01, subdivision 19a, is amended to read:

Subd. 19a.

Additions to federal taxable income.

For individuals, estates, and
trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends that are paid by the regulated
investment company as defined in section 851(a) of the Internal Revenue Code, or the
fund of the regulated investment company as defined in section 851(g) of the Internal
Revenue Code, making the payment; and

(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;

(2) the amount of income or sales and use taxes paid or accrued within the taxable
year under this chapter and the amount of taxes based on net income paid or sales and use
taxes paid to any other state or to any province or territory of Canada, to the extent allowed
as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not
be more than the amount by which the itemized deductions as allowed under section 63(d)
of the Internal Revenue Code exceeds the amount of the standard deduction as defined
in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the
disallowance of itemized deductions under section 68 of the Internal Revenue Code of
1986, income or sales and use tax is the last itemized deduction disallowed;

(3) the capital gain amount of a lump-sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;

(5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);

(6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;

(8) new text begin for property placed in service before January 1, 2009, new text end 80 percent of the amount
by which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
through December 31, 2003;

(9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(10) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans;

(11) the amount of expenses disallowed under section 290.10, subdivision 2;

(12) for taxable years beginning after December 31, 2006, and before January 1,
2008, the amount deducted for qualified tuition and related expenses under section 222 of
the Internal Revenue Code, to the extent deducted from gross income; and

(13) for taxable years beginning after December 31, 2006, and before January 1,
2008, the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
from gross income.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 5.

Minnesota Statutes 2008, section 290.01, subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
under the provisions of Public Law 109-1;

(7) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(8) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(9) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

(10) job opportunity building zone income as provided under section 469.316;

(11) to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service performed in Minnesota, excluding compensation
for services performed under the Active Guard Reserve (AGR) program. For purposes of
this clause, "active service" means (i) state active service as defined in section 190.05,
subdivision 5a, clause (1); (ii) federally funded state active service as defined in section
190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05,
subdivision 5c, but "active service" excludes service performed in accordance with section
190.08, subdivision 3;

(12) to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States or
United Nations for active duty performed outside Minnesota under United States Code,
title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
the United Nations;

(13) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(14) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (16), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

(15) to the extent included in federal taxable income, compensation paid to a service
member as defined in United States Code, title 10, section 101(a)(5), for military service
as defined in the Servicemembers Civil Relief Act, Public Law 108-189, section 101(2);

(16) international economic development zone income as provided under section
469.325; deleted text begin and
deleted text end

(17) to the extent included in federal taxable income, the amount of national service
educational awards received from the National Service Trust under United States Code,
title 42, sections 12601 to 12604, for service in an approved Americorps National Service
programdeleted text begin .deleted text end new text begin ; and
new text end

new text begin (18) 50 percent of the amount of gain under section 1221 of the Internal Revenue
Code on the sale of small business stock assigned to Minnesota pursuant to section 290.17,
subdivision 2, paragraph (c). "Small business stock" means an equity interest purchased
for money or property, not including stock or payment for services, held directly or
indirectly, of less than 100 percent in a corporation or limited liability company or less
than 50 percent in a partnership that:
new text end

new text begin (i) at the time of purchase, has fewer than 100 employees employed by the unitary
business and has not issued stock listed on the New York Stock Exchange, American Stock
Exchange, or National Association of Securities Dealers automated quotation system;
new text end

new text begin (ii) in the year of purchase, has more than 50 percent of its property and payroll,
as determined under section 290.191 or 290.20, within this state and derived less than
$25,000 in gross receipts from rents, interest, dividends, and the sale of intangible
investment assets;
new text end

new text begin (iii) is not a trade or business involving the performance of services in the fields of
health, law, engineering, architecture, accounting, actuarial science, performing arts,
consulting, athletics, financial services, brokerage services, or any trade or business where
the principal asset of the trade or business is the reputation or skill of one or more of
its employees;
new text end

new text begin (iv) is not a trade or business involving banking, insurance, financing, leasing,
investing, or similar business;
new text end

new text begin (v) is not a regulated investment company, real estate investment trust, or real estate
mortgage investment conduit;
new text end

new text begin (vi) is not a cooperative; and
new text end

new text begin (vii) did not liquidate its assets in whole or in part for the purpose of fulfilling the
requirements of this clause.
new text end

new text begin The small business stock must be held for more than five years to qualify for this
subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases of small business
stock that take place after June 30, 2009.
new text end

Sec. 6.

Minnesota Statutes 2008, section 290.01, subdivision 19c, is amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(1) the amount of any deduction taken for federal income tax purposes for income,
excise, or franchise taxes based on net income or related minimum taxes, including but not
limited to the tax imposed under section 290.0922, paid by the corporation to Minnesota,
another state, a political subdivision of another state, the District of Columbia, or any
foreign country or possession of the United States;

(2) interest not subject to federal tax upon obligations of: the United States, its
possessions, its agencies, or its instrumentalities; the state of Minnesota or any other
state, any of its political or governmental subdivisions, any of its municipalities, or any
of its governmental agencies or instrumentalities; the District of Columbia; or Indian
tribal governments;

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(4) the amount of any net operating loss deduction taken for federal income tax
purposes under section 172 or 832(c)(10) of the Internal Revenue Code or operations loss
deduction under section 810 of the Internal Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes under
sections 1211 and 1212 of the Internal Revenue Code;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(10) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, the amount of the amortization deduction allowed in computing federal taxable
income for those facilities;

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (20), (21),
(22), and (23);

(12) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(15) 80 percent of the depreciation deduction allowed under section 168(k)(1)(A)
and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if the taxpayer
has an activity that in the taxable year generates a deduction for depreciation under
section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable year
that the taxpayer is not allowed to claim for the taxable year, "the depreciation allowed
under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess of the
depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) new text begin for property placed in service before January 1, 2009, new text end 80 percent of the amount
by which the deduction allowed by section 179 of the Internal Revenue Code exceeds the
deduction allowable by section 179 of the Internal Revenue Code of 1986, as amended
through December 31, 2003;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(18) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans;

(19) the amount of expenses disallowed under section 290.10, subdivision 2;

(20) an amount equal to the interest and intangible expenses, losses, and costs paid,
accrued, or incurred by any member of the taxpayer's unitary group to or for the benefit
of a corporation that is a member of the taxpayer's unitary business group that qualifies
as a foreign operating corporation. For purposes of this clause, intangible expenses and
costs include:

(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;

(ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar expenses and costs.

For purposes of this clause, "intangible property" includes stocks, bonds, patents, patent
applications, trade names, trademarks, service marks, copyrights, mask works, trade
secrets, and similar types of intangible assets.

This clause does not apply to any item of interest or intangible expenses or costs paid,
accrued, or incurred, directly or indirectly, to a foreign operating corporation with respect
to such item of income to the extent that the income to the foreign operating corporation
is income from sources without the United States as defined in subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code;

(21) except as already included in the taxpayer's taxable income pursuant to clause
(20), any interest income and income generated from intangible property received or
accrued by a foreign operating corporation that is a member of the taxpayer's unitary
group. For purposes of this clause, income generated from intangible property includes:

(i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;

(ii) income from factoring transactions or discounting transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar income.

This clause does not apply to any item of interest or intangible income received or accrued
by a foreign operating corporation with respect to such item of income to the extent that
the income is income from sources without the United States as defined in subtitle A,
chapter 1, subchapter N, part 1, of the Internal Revenue Code;

(22) the dividends attributable to the income of a foreign operating corporation that
is a member of the taxpayer's unitary group in an amount that is equal to the dividends
paid deduction of a real estate investment trust under section 561(a) of the Internal
Revenue Code for amounts paid or accrued by the real estate investment trust to the
foreign operating corporation;

(23) the income of a foreign operating corporation that is a member of the taxpayer's
unitary group in an amount that is equal to gains derived from the sale of real or personal
property located in the United States; and

(24) for taxable years beginning after December 31, 2006, and before January 1,
2008, the additional amount allowed as a deduction for donation of computer technology
and equipment under section 170(e)(6) of the Internal Revenue Code, to the extent
deducted from taxable income.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2008.
new text end

Sec. 7.

Minnesota Statutes 2008, section 290.01, subdivision 19d, is amended to read:

Subd. 19d.

Corporations; modifications decreasing federal taxable income.

For
corporations, there shall be subtracted from federal taxable income after the increases
provided in subdivision 19c:

(1) the amount of foreign dividend gross-up added to gross income for federal
income tax purposes under section 78 of the Internal Revenue Code;

(2) the amount of salary expense not allowed for federal income tax purposes due to
claiming the work opportunity credit under section 51 of the Internal Revenue Code;

(3) any dividend (not including any distribution in liquidation) paid within the
taxable year by a national or state bank to the United States, or to any instrumentality of
the United States exempt from federal income taxes, on the preferred stock of the bank
owned by the United States or the instrumentality;

(4) amounts disallowed for intangible drilling costs due to differences between
this chapter and the Internal Revenue Code in taxable years beginning before January
1, 1987, as follows:

(i) to the extent the disallowed costs are represented by physical property, an amount
equal to the allowance for depreciation under Minnesota Statutes 1986, section 290.09,
subdivision 7, subject to the modifications contained in subdivision 19e; and

(ii) to the extent the disallowed costs are not represented by physical property, an
amount equal to the allowance for cost depletion under Minnesota Statutes 1986, section
290.09, subdivision 8;

(5) the deduction for capital losses pursuant to sections 1211 and 1212 of the
Internal Revenue Code, except that:

(i) for capital losses incurred in taxable years beginning after December 31, 1986,
capital loss carrybacks shall not be allowed;

(ii) for capital losses incurred in taxable years beginning after December 31, 1986,
a capital loss carryover to each of the 15 taxable years succeeding the loss year shall be
allowed;

(iii) for capital losses incurred in taxable years beginning before January 1, 1987, a
capital loss carryback to each of the three taxable years preceding the loss year, subject to
the provisions of Minnesota Statutes 1986, section 290.16, shall be allowed; and

(iv) for capital losses incurred in taxable years beginning before January 1, 1987,
a capital loss carryover to each of the five taxable years succeeding the loss year to the
extent such loss was not used in a prior taxable year and subject to the provisions of
Minnesota Statutes 1986, section 290.16, shall be allowed;

(6) an amount for interest and expenses relating to income not taxable for federal
income tax purposes, if (i) the income is taxable under this chapter and (ii) the interest and
expenses were disallowed as deductions under the provisions of section 171(a)(2), 265 or
291 of the Internal Revenue Code in computing federal taxable income;

(7) in the case of mines, oil and gas wells, other natural deposits, and timber for
which percentage depletion was disallowed pursuant to subdivision 19c, clause (9), a
reasonable allowance for depletion based on actual cost. In the case of leases the deduction
must be apportioned between the lessor and lessee in accordance with rules prescribed
by the commissioner. In the case of property held in trust, the allowable deduction must
be apportioned between the income beneficiaries and the trustee in accordance with the
pertinent provisions of the trust, or if there is no provision in the instrument, on the basis
of the trust's income allocable to each;

(8) for certified pollution control facilities placed in service in a taxable year
beginning before December 31, 1986, and for which amortization deductions were elected
under section 169 of the Internal Revenue Code of 1954, as amended through December
31, 1985, an amount equal to the allowance for depreciation under Minnesota Statutes
1986, section 290.09, subdivision 7;

(9) amounts included in federal taxable income that are due to refunds of income,
excise, or franchise taxes based on net income or related minimum taxes paid by the
corporation to Minnesota, another state, a political subdivision of another state, the
District of Columbia, or a foreign country or possession of the United States to the extent
that the taxes were added to federal taxable income under section 290.01, subdivision 19c,
clause (1), in a prior taxable year;

(10) 80 percent of royalties, fees, or other like income accrued or received from a
foreign operating corporation or a foreign corporation which is part of the same unitary
business as the receiving corporation, unless the income resulting from such payments or
accruals is income from sources within the United States as defined in subtitle A, chapter
1, subchapter N, part 1, of the Internal Revenue Code;

(11) income or gains from the business of mining as defined in section 290.05,
subdivision 1, clause (a), that are not subject to Minnesota franchise tax;

(12) the amount of disability access expenditures in the taxable year which are not
allowed to be deducted or capitalized under section 44(d)(7) of the Internal Revenue Code;

(13) the amount of qualified research expenses not allowed for federal income tax
purposes under section 280C(c) of the Internal Revenue Code, but only to the extent that
the amount exceeds the amount of the credit allowed under section 290.068;

(14) the amount of salary expenses not allowed for federal income tax purposes due
to claiming the Indian employment credit under section 45A(a) of the Internal Revenue
Code;

(15) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(16) for a corporation whose foreign sales corporation, as defined in section 922
of the Internal Revenue Code, constituted a foreign operating corporation during any
taxable year ending before January 1, 1995, and a return was filed by August 15, 1996,
claiming the deduction under section 290.21, subdivision 4, for income received from
the foreign operating corporation, an amount equal to 1.23 multiplied by the amount of
income excluded under section 114 of the Internal Revenue Code, provided the income is
not income of a foreign operating company;

(18) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (15), an amount equal to one-fifth of
the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
amount of the addition made by the taxpayer under subdivision 19c, clause (15). The
resulting delayed depreciation cannot be less than zero; deleted text begin and
deleted text end

(19) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (16), an amount equal to one-fifth of
the amount of the additiondeleted text begin .deleted text end new text begin ; and
new text end

new text begin (20) 50 percent of the amount of gain under section 1221 of the Internal Revenue
Code on the sale of small business stock assigned to or apportioned to Minnesota. "Small
business stock" means an equity interest purchased for money or property, not including
stock or payment for services, held directly or indirectly, of less than 100 percent in a
corporation or limited liability company or less than 50 percent in a partnership that:
new text end

new text begin (i) is not part of the unitary business;
new text end

new text begin (ii) at the time of purchase has fewer than 100 employees employed by the unitary
business and has not issued stock listed on the New York Stock Exchange, American Stock
Exchange, or National Association of Securities Dealers automated quotation system;
new text end

new text begin (iii) in the year of purchase, has more than 50 percent of its property and payroll,
as determined under section 290.191 or 290.20, within this state and derived less than
$25,000 in gross receipts from rents, interest, dividends, and the sale of intangible
investment assets;
new text end

new text begin (iv) is not a trade or business involving the performance of services in the fields of
health, law, engineering, architecture, accounting, actuarial science, performing arts,
consulting, athletics, financial services, brokerage services, or any trade or business where
the principal asset of the trade or business is the reputation or skill of one or more of
its employees;
new text end

new text begin (v) is not a trade or business involving banking, insurance, financing, leasing,
investing, or similar business;
new text end

new text begin (vi) is not a regulated investment company, real estate investment trust, or real
estate mortgage investment conduit;
new text end

new text begin (vii) is not a cooperative; and
new text end

new text begin (viii) did not liquidate its assets in whole or in part for the purpose of fulfilling
the requirements of this clause.
new text end

new text begin The small business stock must be held for more than five years to qualify for this
subtraction.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for purchases of small business
stock that take place after June 30, 2009.
new text end

Sec. 8.

Minnesota Statutes 2008, section 290.06, subdivision 1, is amended to read:

Subdivision 1.

Computation, corporations.

new text begin For taxable years beginning before
January 1, 2010, new text end the franchise tax imposed upon corporations shall be computed by
applying to their taxable income the rate of 9.8 percent.

new text begin For taxable years beginning after December 31, 2009, but before January 1, 2011,
the corporate franchise tax rate shall be 8.8 percent of taxable income.
new text end

new text begin For taxable years beginning after December 31, 2010, but before January 1, 2012,
the corporate franchise tax rate shall be 7.8 percent of taxable income.
new text end

new text begin For taxable years beginning after December 31, 2011, but before January 1, 2013,
the corporate franchise tax rate shall be 7.3 percent of taxable income.
new text end

new text begin For taxable years beginning after December 31, 2012, but before January 1, 2014,
the corporate franchise tax rate shall be 6.8 percent of taxable income.
new text end

new text begin For taxable years beginning after December 31, 2013, but before January 1, 2015,
the corporate franchise tax rate shall be 5.8 percent of taxable income.
new text end

new text begin For taxable years beginning after December 31, 2014, the corporate franchise tax
rate shall be 4.8 percent of taxable income.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 36. new text end

new text begin Refund of qualified purchases by small businesses. new text end

new text begin (a) A qualified
taxpayer who purchased qualified property between July 1, 2009, and September 30,
2009, may claim a refund equal to:
new text end

new text begin (1) the lesser of $5,000 or 25 percent of the cost of such property for businesses with
100 employees or less employed by the unitary business;
new text end

new text begin (2) the lesser of $5,000 or 20 percent of the cost of such property for businesses with
101 to 110 employees employed by the unitary business;
new text end

new text begin (3) the lesser of $5,000 or 15 percent of the cost of such property for businesses with
111 to 120 employees employed by the unitary business;
new text end

new text begin (4) the lesser of $5,000 or ten percent of the cost of such property for businesses
with 121 to 130 employees employed by the unitary business; or
new text end

new text begin (5) the lesser of $5,000 or five percent of the cost of such property for businesses
with 131 to 140 employees employed by the unitary business.
new text end

new text begin (b) For purposes of this subdivision, a qualified taxpayer is a business that for tax
year 2008 had fewer than 140 employees employed by the unitary business and more than
50 percent of its property and payroll, as determined under section 290.191 or 290.20,
within this state. A pass-through entity that purchases qualified property is considered the
taxpayer for purposes of claiming the refund provided under this subdivision.
new text end

new text begin (c) For purposes of this subdivision, "qualified property" means (1) property located
in Minnesota and described under section 179(d) of the Internal Revenue Code, or (2)
tangible real property improvements located in Minnesota and described under section
1250(c) of the Internal Revenue Code.
new text end

new text begin (d) The refund provided under this subdivision must be claimed in a manner
prescribed by the commissioner. The commissioner may require refunds claimed under
this subdivision to be filed by electronic means and may require information necessary
for payment by electronic means.
new text end

new text begin (e) Claims for refunds provided under this subdivision must be filed before
November 1, 2009.
new text end

new text begin (f) If the actual amount claimed under this subdivision exceeds $50,000,000, the
commissioner shall adjust the percentages under paragraph (a) to the nearest one-half
percent so that refunds paid under this subdivision will most closely equal but not exceed
$50,000,000.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

Minnesota Statutes 2008, section 290.0921, subdivision 1, is amended to read:

Subdivision 1.

Tax imposed.

new text begin (a) For taxable years beginning before January 1,
2010, new text end in addition to the taxes computed under this chapter without regard to this section,
the franchise tax imposed on corporations includes a tax equal to the excess, if any, for
the taxable year of:

(1) 5.8 percent of Minnesota alternative minimum taxable income; over

(2) the tax imposed under section 290.06, subdivision 1, without regard to this
section.

new text begin (b) For taxable years beginning after December 31, 2009, and before January 1,
2011, in addition to the taxes computed under this chapter without regard to this section,
the franchise tax imposed on corporations includes a tax equal to the excess, if any, for
the taxable year of:
new text end

new text begin (1) 5.3 percent of Minnesota alternative minimum taxable income; over
new text end

new text begin (2) the tax imposed under section 290.06, subdivision 1, without regard to this
section.
new text end

new text begin (c) For taxable years beginning after December 31, 2010, and before January 1,
2012, in addition to the taxes computed under this chapter without regard to this section,
the franchise tax imposed on corporations includes a tax equal to the excess, if any, for
the taxable year of:
new text end

new text begin (1) 4.7 percent of Minnesota alternative minimum taxable income; over
new text end

new text begin (2) the tax imposed under section 290.06, subdivision 1, without regard to this
section.
new text end

new text begin (d) For taxable years beginning after December 31, 2011, and before January 1,
2013, in addition to the taxes computed under this chapter without regard to this section,
the franchise tax imposed on corporations includes a tax equal to the excess, if any, for
the taxable year of:
new text end

new text begin (1) 4.4 percent of Minnesota alternative minimum taxable income; over
new text end

new text begin (2) the tax imposed under section 290.06, subdivision 1, without regard to this
section.
new text end

new text begin (e) For taxable years beginning after December 31, 2012, and before January 1,
2014, in addition to the taxes computed under this chapter without regard to this section,
the franchise tax imposed on corporations includes a tax equal to the excess, if any, for
the taxable year of:
new text end

new text begin (1) 4.1 percent of Minnesota alternative minimum taxable income; over
new text end

new text begin (2) the tax imposed under section 290.06, subdivision 1, without regard to this
section.
new text end

new text begin (f) For taxable years beginning after December 31, 2013, and before January 1,
2015, in addition to the taxes computed under this chapter without regard to this section,
the franchise tax imposed on corporations includes a tax equal to the excess, if any, for
the taxable year of:
new text end

new text begin (1) 3.5 percent of Minnesota alternative minimum taxable income; over
new text end

new text begin (2) the tax imposed under section 290.06, subdivision 1, without regard to this
section.
new text end

new text begin (g) For taxable years beginning after December 31, 2014, and thereafter, in addition
to the taxes computed under this chapter without regard to this section, the franchise tax
imposed on corporations includes a tax equal to the excess, if any, for the taxable year of:
new text end

new text begin (1) 2.9 percent of Minnesota alternative minimum taxable income; over
new text end

new text begin (2) the tax imposed under section 290.06, subdivision 1, without regard to this
section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2008, section 290A.03, subdivision 11, is amended to read:

Subd. 11.

Rent constituting property taxes.

"Rent constituting property taxes"
means deleted text begin 19deleted text end new text begin 15new text end percent of the gross rent actually paid in cash, or its equivalent, or the portion
of rent paid in lieu of property taxes, in any calendar year by a claimant for the right
of occupancy of the claimant's Minnesota homestead in the calendar year, and which
rent constitutes the basis, in the succeeding calendar year of a claim for relief under this
chapter by the claimant.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on
rent paid after December 31, 2008.
new text end

Sec. 12.

Minnesota Statutes 2008, 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. 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 deleted text begin 19deleted text end new text begin 15new text end 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for property tax refunds based on
rent paid after December 31, 2008.
new text end

Sec. 13.

Minnesota Statutes 2008, section 290C.07, is amended to read:

290C.07 CALCULATION OF INCENTIVE PAYMENT.

An approved claimant under the sustainable forest incentive program is eligible to
receive an annual payment. The payment shall equal the greater of:

(1) the difference between the property tax that would be paid on the land using the
previous year's statewide average total township tax rate and the class rate for class 2b
timberland under section 273.13, subdivision 23, paragraph (b), if the land were valued
at (i) the average statewide timberland market value per acre calculated under section
290C.06, and (ii) the average statewide timberland current use value per acre calculated
under section 290C.02, subdivision 5; or

(2) two-thirds of the property tax amount determined by using the previous year's
statewide average total township tax rate, the estimated market value per acre as calculated
in section 290C.06, and the class rate for 2b timberland under section 273.13, subdivision
23, paragraph (b), provided that the payment shall be no less than $7 per acre for each
acre enrolled in the sustainable forest incentive programnew text begin and the maximum payment per
each Social Security number or state or federal business tax identification number shall
not exceed $100,000new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for payments made after June 30,
2010, based on certifications due on or after August 15, 2010.
new text end

Sec. 14.

Minnesota Statutes 2008, section 297A.68, subdivision 5, is amended to read:

Subd. 5.

Capital equipment.

(a) Capital equipment is exempt. new text begin For purchases prior
to January 1, 2010, new text end 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.

"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.

(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 35, and does not apply to wire, cable, fiber, poles, or conduit
for telecommunications services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases after
December 31, 2009.
new text end

Sec. 15.

Minnesota Statutes 2008, 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) capital equipment exempt under section 297A.68, subdivision 5new text begin , and purchased
prior to January 1, 2010new text end ;

(2) building materials for an agricultural processing facility exempt under section
297A.71, subdivision 13;

(3) building materials for mineral production facilities exempt under section
297A.71, subdivision 14;

(4) building materials for correctional facilities under section 297A.71, subdivision
3;

(5) building materials used in a residence for disabled veterans exempt under section
297A.71, subdivision 11;

(6) elevators and building materials exempt under section 297A.71, subdivision 12;

(7) building materials for the Long Lake Conservation Center exempt under section
297A.71, subdivision 17;

(8) materials, supplies, fixtures, furnishings, and equipment for a county law
enforcement and family service center under section 297A.71, subdivision 26;

(9) materials and supplies for qualified low-income housing under section 297A.71,
subdivision 23;

(10) materials, supplies, and equipment for municipal electric utility facilities under
section 297A.71, subdivision 35;

(11) 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;

(12) tangible personal property and taxable services and construction materials,
supplies, and equipment exempt under section 297A.68, subdivision 41;

(13) commuter rail vehicle and repair parts under section 297A.70, subdivision
3, clause (11); and

(14) materials, supplies, and equipment for construction or improvement of projects
and facilities under section 297A.71, subdivision 40.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 16.

Minnesota Statutes 2008, section 298.285, is amended to read:

298.285 STATE AID AMOUNT; APPROPRIATION.

The commissioner of revenue shall determine a state aid amount equal to a tax of deleted text begin 33
cents per taxable ton of iron ore concentrates for production year 2001 and 22deleted text end new text begin sevennew text end cents
per taxable ton of iron ore concentrates for production years deleted text begin 2002deleted text end new text begin 2008new text end and thereafter.
There is appropriated from the general fund to the commissioner an amount equal to the
state aid determined under this section. It must be distributed under section 298.28, as
if the aid were production tax revenues.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for distributions under Minnesota
Statutes, section 298.28, in calendar year 2009 and thereafter.
new text end

Sec. 17. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2008, section 10A.322, subdivision 4, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2008, section 290.06, subdivision 23, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective June 30, 2009. Paragraph (b) is
effective for refund claims based on contributions made after June 30, 2009.
new text end

ARTICLE 2

GREEN JOB OPPORTUNITY BUILDING ZONES

Section 1.

Minnesota Statutes 2008, section 268.19, subdivision 1, is amended to read:

Subdivision 1.

Use of data.

(a) Except as provided by this section, data gathered
from any person under the administration of the Minnesota Unemployment Insurance Law
are private data on individuals or nonpublic data not on individuals as defined in section
13.02, subdivisions 9 and 12, and may not be disclosed except according to a district court
order or section 13.05. A subpoena is not considered a district court order. These data
may be disseminated to and used by the following agencies without the consent of the
subject of the data:

(1) state and federal agencies specifically authorized access to the data by state
or federal law;

(2) any agency of any other state or any federal agency charged with the
administration of an unemployment insurance program;

(3) any agency responsible for the maintenance of a system of public employment
offices for the purpose of assisting individuals in obtaining employment;

(4) the public authority responsible for child support in Minnesota or any other
state in accordance with section 256.978;

(5) human rights agencies within Minnesota that have enforcement powers;

(6) the Department of Revenue to the extent necessary for its duties under Minnesota
laws;

(7) public and private agencies responsible for administering publicly financed
assistance programs for the purpose of monitoring the eligibility of the program's
recipients;

(8) the Department of Labor and Industry and the Division of Insurance Fraud
Prevention in the Department of Commerce for uses consistent with the administration of
their duties under Minnesota law;

(9) local and state welfare agencies for monitoring the eligibility of the data subject
for assistance programs, or for any employment or training program administered by those
agencies, whether alone, in combination with another welfare agency, or in conjunction
with the department or to monitor and evaluate the statewide Minnesota family investment
program by providing data on recipients and former recipients of food stamps or food
support, cash assistance under chapter 256, 256D, 256J, or 256K, child care assistance
under chapter 119B, or medical programs under chapter 256B, 256D, or 256L;

(10) local and state welfare agencies for the purpose of identifying employment,
wages, and other information to assist in the collection of an overpayment debt in an
assistance program;

(11) local, state, and federal law enforcement agencies for the purpose of ascertaining
the last known address and employment location of an individual who is the subject of
a criminal investigation;

(12) the United States Citizenship and Immigration Services has access to data on
specific individuals and specific employers provided the specific individual or specific
employer is the subject of an investigation by that agency;

(13) the Department of Health for the purposes of epidemiologic investigations;

(14) the Department of Corrections for the purpose of preconfinement and
postconfinement employment tracking of committed offenders for the purpose of case
planning; deleted text begin and
deleted text end

(15) the state auditor to the extent necessary to conduct audits of job opportunity
building zones new text begin and green job opportunity building zones new text end as required under deleted text begin sectiondeleted text end new text begin sectionsnew text end
469.3201deleted text begin .deleted text end new text begin and 469.3701; and
new text end

new text begin (16) any agency responsible for monitoring compliance with job opportunity
building zones or green job opportunity building zones business subsidy agreements.
new text end

(b) Data on individuals and employers that are collected, maintained, or used by
the department in an investigation under section 268.182 are confidential as to data
on individuals and protected nonpublic data not on individuals as defined in section
13.02, subdivisions 3 and 13, and must not be disclosed except under statute or district
court order or to a party named in a criminal proceeding, administrative or judicial, for
preparation of a defense.

(c) Data gathered by the department in the administration of the Minnesota
unemployment insurance program must not be made the subject or the basis for any
suit in any civil proceedings, administrative or judicial, unless the action is initiated by
the department.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2008, section 270B.14, subdivision 3, is amended to read:

Subd. 3.

Administration of enterprise, job opportunity, deleted text begin anddeleted text end biotechnology and
health sciences industry zonenew text begin , and green job opportunity building zone new text end programs.

The commissioner may disclose return information relating to the taxes imposed by
chapters 290 and 297A to the Department of Employment and Economic Development or
a municipality receiving an enterprise zone designation under section 469.169 but only as
necessary to administer the funding limitations under section 469.169, subdivision 7, or
to the Department of Employment and Economic Development and appropriate officials
from the local government units in which a qualified business is located but only as
necessary to enforce the job opportunity building zone benefits under section 469.315, deleted text begin ordeleted text end
biotechnology and health sciences industry zone benefits under section 469.336new text begin , or green
job opportunity building zone benefits under section 469.365new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2008, section 270B.15, is amended to read:

270B.15 DISCLOSURE TO LEGISLATIVE AUDITOR AND STATE
AUDITOR.

(a) Returns and return information must be disclosed to the legislative auditor to the
extent necessary for the legislative auditor to carry out sections 3.97 to 3.979.

(b) The commissioner must disclose return information, including the report
required under section 289A.12, subdivision 15, to the state auditor to the extent necessary
to conduct audits of job opportunity building zones as required under section 469.3201new text begin ,
and audits of green job opportunity building zones and business subsidy agreements
under section 469.3701new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2008, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 90. new text end

new text begin Green job opportunity building zone property. new text end

new text begin (a) Improvements to
real property and personal property classified under section 273.13, subdivision 24, and
located within a green job opportunity building zone, as defined under section 469.360,
are exempt from ad valorem taxes levied under chapter 275.
new text end

new text begin (b) For property to qualify for exemption under paragraph (a), the occupant must be
a qualified business as defined in section 469.360, subdivision 9.
new text end

new text begin (c) The exemption applies beginning for the first assessment year after designation
of the green job opportunity building zone by the commissioner of employment and
economic development. The exemption applies to each assessment year that begins during
the duration of the green job opportunity building zone. To be exempt, the property must
be occupied by July 1 of the assessment year by a qualified business that has signed the
business subsidy by July 1 of the assessment year.
new text end

new text begin (d) A business must notify the county assessor in writing of eligibility under this
subdivision by July 1 in order to begin receiving the exemption under this subdivision
for taxes payable in the following year. The business need not annually notify the county
assessor of its continued exemption under this subdivision, but must notify the county
assessor immediately if the exemption no longer applies.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 5.

Minnesota Statutes 2008, section 272.029, subdivision 7, is amended to read:

Subd. 7.

Exemption.

The tax imposed under this section does not apply to
electricity produced by wind energy conversion systems new text begin owned or operated by a qualified
business new text end located in a job opportunity building zone, designated under section 469.314, new text begin or
a green job opportunity building zone as defined under section 469.360 new text end for the duration of
the zone. The exemption applies beginning for the first calendar year after designation of
the zone and applies to each calendar year that begins during the designation of the zone.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 6.

Minnesota Statutes 2008, section 289A.12, is amended by adding a subdivision
to read:

new text begin Subd. 16. new text end

new text begin Report of green job opportunity building zone benefits; penalty
for failure to file report. new text end

new text begin (a) By October 15 of each year, every qualified business, as
defined under section 469.360, subdivision 9, must file with the commissioner, on a form
prescribed by the commissioner, a report listing the tax benefits under section 469.365
received by the business for the previous year.
new text end

new text begin (b) The commissioner shall send notice to each business that fails to timely submit
the report required under paragraph (a). The notice shall demand that the business
submit the report within 60 days. Where good cause exists, the commissioner may
extend the period for submitting the report as long as a request for extension is filed by
the business before the expiration of the 60-day period. The commissioner shall notify
the commissioner of employment and economic development and the appropriate green
job opportunity building zone local administrator whenever notice is sent to a business
under this paragraph.
new text end

new text begin (c) A business that fails to submit the report as required under paragraph (b) is no
longer a qualified business under section 469.360, subdivision 9, and is subject to the
repayment provisions of section 469.369.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 7.

Minnesota Statutes 2008, section 290.01, subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(10) job opportunity building zone income as provided under section 469.316;

(16) international economic development zone income as provided under section
469.325; deleted text begin and
deleted text end

new text begin (18) green job opportunity building zone income as provided under section 469.366.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 8.

Minnesota Statutes 2008, section 290.01, subdivision 29, is amended to read:

Subd. 29.

Taxable income.

The term "taxable income" means:

(1) for individuals, estates, and trusts, the same as taxable net income;

(2) for corporations, the taxable net income less

(i) the net operating loss deduction under section 290.095;

(ii) the dividends received deduction under section 290.21, subdivision 4;

(iii) the exemption for operating in a job opportunity building zone under section
469.317;

(iv) the exemption for operating in a biotechnology and health sciences industry
zone under section 469.337; deleted text begin and
deleted text end

(v) the exemption for operating in an international economic development zone
under section 469.326deleted text begin .deleted text end new text begin ; and
new text end

new text begin (vi) the exemption for operating in a green job opportunity building zone under
section 469.367.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 9.

Minnesota Statutes 2008, section 290.06, subdivision 2c, is amended to read:

Subd. 2c.

Schedules of rates for individuals, estates, and trusts.

(a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:

(1) On the first $25,680, 5.35 percent;

(2) On all over $25,680, but not over $102,030, 7.05 percent;

(3) On all over $102,030, 7.85 percent.

Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.

(b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $17,570, 5.35 percent;

(2) On all over $17,570, but not over $57,710, 7.05 percent;

(3) On all over $57,710, 7.85 percent.

(c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:

(1) On the first $21,630, 5.35 percent;

(2) On all over $21,630, but not over $86,910, 7.05 percent;

(3) On all over $86,910, 7.85 percent.

(d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.

(e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:

(1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12),
and (13) and reduced by the Minnesota assignable portion of the subtraction for United
States government interest under section 290.01, subdivision 19b, clause (1), and the
subtractions under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), deleted text begin anddeleted text end (16),
new text begin and (18), new text end after applying the allocation and assignability provisions of section 290.081,
clause (a), or 290.17; and

(2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (12), and (13) and
reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (9),
(10), (14), (15), deleted text begin anddeleted text end (16)new text begin , and (18)new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 10.

Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Green job opportunity building zone jobs credit. new text end

new text begin A taxpayer that is
a qualified business, as defined in section 469.360, subdivision 9, is allowed a credit as
determined under section 469.368 against the tax imposed by this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 11.

Minnesota Statutes 2008, 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.

(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.

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
290.01, subdivision 19b, clause (10) deleted text begin ordeleted text end new text begin ,new text end (16), new text begin or (18), new text end 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.

For residents of Minnesota, the subtractions for military pay under section 290.01,
subdivision 19b, clauses (11) and (12), are not considered "earned income not subject to
tax under this chapter."

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."

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 12.

Minnesota Statutes 2008, section 290.0671, subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

(a) An individual 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.

(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
case is the credit less than zero.

(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
whichever is greater, in excess of $15,080, but in no case is the credit less than zero.

(d) For individuals with two or more qualifying children, the credit equals ten
percent of the first $9,720 of earned income and 20 percent of earned income over
$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income
or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is
the credit less than zero.

(e) For a nonresident or 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 290.01,
subdivision 19b, clause (10) deleted text begin ordeleted text end new text begin ,new text end (16), new text begin or (18), new text end 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
subtractions for military pay under section 290.01, subdivision 19b, clauses (11) and (12),
are not considered "earned income not subject to tax under this chapter."

For the purposes of this paragraph, 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."

(g) For tax years beginning after December 31, 2001, and before December 31,
2004, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
$1,000 for married taxpayers filing joint returns.

(h) For tax years beginning after December 31, 2004, and before December 31,
2007, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in
paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by
$2,000 for married taxpayers filing joint returns.

(i) For tax years beginning after December 31, 2007, and before December 31, 2010,
the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
(d), after being adjusted for inflation under subdivision 7, are each increased by $3,000 for
married taxpayers filing joint returns. For tax years beginning after December 31, 2008,
the $3,000 is adjusted annually for inflation under subdivision 7.

(j) 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 13.

Minnesota Statutes 2008, section 290.091, subdivision 2, 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 290.01, subdivision 19a, clause (1); and

(6) the amount of addition required by section 290.01, subdivision 19a, clauses
(7) to (9), (12), and (13);

less the sum of the amounts determined under the following:

(1) interest income as defined in section 290.01, subdivision 19b, clause (1);

(2) an overpayment of state income tax as provided by section 290.01, subdivision
19b, clause (2), to the extent included in federal alternative minimum taxable income;

(3) 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; and

(4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b, clauses (6) deleted text begin anddeleted text end new text begin ,new text end (9) to (16)new text begin , and (18)new text end .

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) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 14.

Minnesota Statutes 2008, section 290.0921, subdivision 3, is amended to read:

Subd. 3.

Alternative minimum taxable income.

"Alternative minimum taxable
income" is Minnesota net income as defined in section 290.01, subdivision 19, and
includes the adjustments and tax preference items in sections 56, 57, 58, and 59(d), (e),
(f), and (h) of the Internal Revenue Code. If a corporation files a separate company
Minnesota tax return, the minimum tax must be computed on a separate company basis.
If a corporation is part of a tax group filing a unitary return, the minimum tax must be
computed on a unitary basis. The following adjustments must be made.

(1) For purposes of the depreciation adjustments under section 56(a)(1) and
56(g)(4)(A) of the Internal Revenue Code, the basis for depreciable property placed in
service in a taxable year beginning before January 1, 1990, is the adjusted basis for federal
income tax purposes, including any modification made in a taxable year under section
290.01, subdivision 19e, or Minnesota Statutes 1986, section 290.09, subdivision 7,
paragraph (c).

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, or Minnesota Statutes 1986,
section 290.09, subdivision 7, paragraph (c), not previously deducted is a depreciation
allowance in the first taxable year after December 31, 2000.

(2) The portion of the depreciation deduction allowed for federal income tax
purposes under section 168(k) of the Internal Revenue Code that is required as an
addition under section 290.01, subdivision 19c, clause (15), is disallowed in determining
alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision 19d,
clause (18), is allowed as a depreciation deduction in determining alternative minimum
taxable income.

(4) The alternative tax net operating loss deduction under sections 56(a)(4) and 56(d)
of the Internal Revenue Code does not apply.

(5) The special rule for certain dividends under section 56(g)(4)(C)(ii) of the Internal
Revenue Code does not apply.

(6) The special rule for dividends from section 936 companies under section
56(g)(4)(C)(iii) does not apply.

(7) The tax preference for depletion under section 57(a)(1) of the Internal Revenue
Code does not apply.

(8) The tax preference for intangible drilling costs under section 57(a)(2) of the
Internal Revenue Code must be calculated without regard to subparagraph (E) and the
subtraction under section 290.01, subdivision 19d, clause (4).

(9) The tax preference for tax exempt interest under section 57(a)(5) of the Internal
Revenue Code does not apply.

(10) The tax preference for charitable contributions of appreciated property under
section 57(a)(6) of the Internal Revenue Code does not apply.

(11) For purposes of calculating the tax preference for accelerated depreciation or
amortization on certain property placed in service before January 1, 1987, under section
57(a)(7) of the Internal Revenue Code, the deduction allowable for the taxable year is the
deduction allowed under section 290.01, subdivision 19e.

For taxable years beginning after December 31, 2000, the amount of any remaining
modification made under section 290.01, subdivision 19e, not previously deducted is a
depreciation or amortization allowance in the first taxable year after December 31, 2004.

(12) For purposes of calculating the adjustment for adjusted current earnings in
section 56(g) of the Internal Revenue Code, the term "alternative minimum taxable
income" as it is used in section 56(g) of the Internal Revenue Code, means alternative
minimum taxable income as defined in this subdivision, determined without regard to the
adjustment for adjusted current earnings in section 56(g) of the Internal Revenue Code.

(13) For purposes of determining the amount of adjusted current earnings under
section 56(g)(3) of the Internal Revenue Code, no adjustment shall be made under section
56(g)(4) of the Internal Revenue Code with respect to (i) the amount of foreign dividend
gross-up subtracted as provided in section 290.01, subdivision 19d, clause (1), (ii) the
amount of refunds of income, excise, or franchise taxes subtracted as provided in section
290.01, subdivision 19d, clause (9), or (iii) the amount of royalties, fees or other like
income subtracted as provided in section 290.01, subdivision 19d, clause (10).

(14) Alternative minimum taxable income excludes the income from operating in a
job opportunity building zone as provided under section 469.317.

(15) Alternative minimum taxable income excludes the income from operating in a
biotechnology and health sciences industry zone as provided under section 469.337.

(16) Alternative minimum taxable income excludes the income from operating in an
international economic development zone as provided under section 469.326.

new text begin (17) Alternative minimum taxable income excludes the income from operating in a
green job opportunity building zone as provided under section 469.367.
new text end

Items of tax preference must not be reduced below zero as a result of the
modifications in this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 15.

Minnesota Statutes 2008, section 290.0922, subdivision 2, is amended to read:

Subd. 2.

Exemptions.

The following entities are exempt from the tax imposed
by this section:

(1) corporations exempt from tax under section 290.05;

(2) real estate investment trusts;

(3) regulated investment companies or a fund thereof; and

(4) entities having a valid election in effect under section 860D(b) of the Internal
Revenue Code;

(5) town and farmers' mutual insurance companies;

(6) cooperatives organized under chapter 308A or 308B that provide housing
exclusively to persons age 55 and over and are classified as homesteads under section
273.124, subdivision 3;

(7) an entity, if for the taxable year all of its property is located in a job opportunity
building zone designated under section 469.314 and all of its payroll is a job opportunity
building zone payroll under section 469.310; deleted text begin and
deleted text end

(8) an entity, if for the taxable year all of its property is located in an international
economic development zone designated under section 469.322, and all of its payroll is
international economic development zone payroll under section 469.321. The exemption
under this clause applies to taxable years beginning during the duration of the international
economic development zonedeleted text begin .deleted text end new text begin ; and
new text end

new text begin (9) an entity, if for the taxable year all of its property is located in a green job
opportunity building zone under section 469.360, subdivision 4, and all of its payroll is
green job opportunity building zone payroll under section 469.360, subdivision 5.
new text end

Entities not specifically exempted by this subdivision are subject to tax under this
section, notwithstanding section 290.05.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 16.

Minnesota Statutes 2008, section 290.0922, subdivision 3, is amended to read:

Subd. 3.

Definitions.

(a) "Minnesota sales or receipts" means the total sales
apportioned to Minnesota pursuant to section 290.191, subdivision 5, the total receipts
attributed to Minnesota pursuant to section 290.191, subdivisions 6 to 8, and/or the
total sales or receipts apportioned or attributed to Minnesota pursuant to any other
apportionment formula applicable to the taxpayer.

(b) "Minnesota property" means total Minnesota tangible property as provided in
section 290.191, subdivisions 9 to 11, any other tangible property located in Minnesota,
but does not include: (1) property located in a job opportunity building zone designated
under section 469.314, (2) property of a qualified business located in a biotechnology
and health sciences industry zone designated under section 469.334, deleted text begin ordeleted text end (3) for taxable
years beginning during the duration of the zone, property of a qualified business located
in the international economic development zone designated under section 469.322new text begin , or
(4) property of a qualified business located in a green job opportunity building zone as
defined under section 469.360new text end . Intangible property shall not be included in Minnesota
property for purposes of this section. Taxpayers who do not utilize tangible property to
apportion income shall nevertheless include Minnesota property for purposes of this
section. On a return for a short taxable year, the amount of Minnesota property owned,
as determined under section 290.191, shall be included in Minnesota property based on
a fraction in which the numerator is the number of days in the short taxable year and
the denominator is 365.

(c) "Minnesota payrolls" means total Minnesota payrolls as provided in section
290.191, subdivision 12, but does not include: (1) job opportunity building zone payrolls
under section 469.310, subdivision 8, (2) biotechnology and health sciences industry zone
payrolls under section 469.330, subdivision 8, deleted text begin ordeleted text end (3) for taxable years beginning during
the duration of the zone, international economic development zone payrolls under section
469.321, subdivision 9new text begin , (4) green job opportunity building zone payroll under section
469.360, subdivision 5new text end . Taxpayers who do not utilize payrolls to apportion income shall
nevertheless include Minnesota payrolls for purposes of this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 17.

Minnesota Statutes 2008, section 297A.68, is amended by adding a
subdivision to read:

new text begin Subd. 42. new text end

new text begin Green job opportunity building zones. new text end

new text begin (a) Purchases of tangible
personal property or taxable services by a qualified business, as defined in section 469.360,
are exempt if the property or services are primarily used or consumed in a green job
opportunity building zone as defined in section 469.360.
new text end

new text begin (b) Purchase and use of construction materials and supplies used or consumed in,
and equipment incorporated into, the construction of improvements to real property in a
green job opportunity building zone are exempt if the improvements after completion of
construction are to be used in the conduct of a qualified business, as defined in section
469.360. This exemption applies regardless of whether the purchases are made by the
business or a contractor.
new text end

new text begin (c) The exemptions under this subdivision apply to a local sales and use tax
regardless of whether the local sales tax is imposed on the sales taxable as defined under
this chapter.
new text end

new text begin (d) This subdivision applies to sales, if the purchase was made and delivery received
during the duration of the zone.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 18.

new text begin [469.360] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of sections new text end new text begin to new text end new text begin , the following
terms have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Applicant. new text end

new text begin "Applicant" means a local government unit or units applying
for designation of an area as a green job opportunity building zone or a joint powers board,
established under section new text end new text begin , acting on behalf of two or more local government units.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of employment
and economic development.
new text end

new text begin Subd. 4. new text end

new text begin Green job opportunity building zone, green JOBZ, or zone. new text end

new text begin "Green
job opportunity building zone," "green JOBZ," or "zone" means a zone designated by
the commissioner under section new text end new text begin .
new text end

new text begin Subd. 5. new text end

new text begin Green job opportunity building zone payroll factor. new text end

new text begin "Green job
opportunity building zone payroll factor" or "green job opportunity building zone payroll"
is that portion of the payroll factor under section new text end new text begin that represents:
new text end

new text begin (1) wages or salaries paid to an individual for services performed in a green job
opportunity building zone; or
new text end

new text begin (2) wages or salaries paid to individuals working from offices within a green job
opportunity building zone if their employment requires them to work outside the zone
and the work is incidental to the work performed by the individual within the zone.
However, in no case does zone payroll include wages paid for work performed outside
the zone of an employee who performs more than ten percent of total services for the
employer outside the zone.
new text end

new text begin Subd. 6. new text end

new text begin Green job opportunity building zone percentage or zone percentage.
new text end

new text begin "Green job opportunity building zone percentage" or "zone percentage" means the
following fraction reduced to a percentage:
new text end

new text begin (1) the numerator of the fraction is:
new text end

new text begin (i) the ratio of the taxpayer's property factor under section 290.191 located in the
zone for the taxable year over the property factor numerator determined under section
290.191, plus
new text end

new text begin (ii) the ratio of the taxpayer's green job opportunity building zone payroll factor
under subdivision 5 over the payroll factor numerator determined under section 290.191;
and
new text end

new text begin (2) the denominator of the fraction is two.
new text end

new text begin When calculating the zone percentage for a business that is part of a unitary business
as defined under section 290.17, subdivision 4, the denominator of the payroll and
property factors is the Minnesota payroll and property of the unitary business as reported
on the combined report under section 290.17, subdivision 4, paragraph (j).
new text end

new text begin Subd. 7. new text end

new text begin Local government unit. new text end

new text begin "Local government unit" means a statutory or
home rule charter city, county, town, Iron Range resources and rehabilitation agency,
regional development commission, or a federally designated economic development
district.
new text end

new text begin Subd. 8. new text end

new text begin Person. new text end

new text begin "Person" includes an individual, corporation, partnership, limited
liability company, association, or any other entity.
new text end

new text begin Subd. 9. new text end

new text begin Qualified business. new text end

new text begin (a) A person carrying on a trade or business at a place
of business located within a green job opportunity building zone is a qualified business
for the purposes of sections 469.360 to 469.3693 according to the criteria in paragraphs
(b) to (f).
new text end

new text begin (b) A person is a qualified business only on those parcels of land for which the
person has entered into a business subsidy agreement approved by the commissioner, as
required under section 469.363, with the appropriate local government unit in which the
parcels are located.
new text end

new text begin (c) A person is not a qualified business unless the business meets all of the
requirements of paragraph (b) and either meets the green economy definition specified in
section 116J.437 or:
new text end

new text begin (1) is predominantly engaged in one or more of the following industry sectors:
new text end

new text begin (i) green products: businesses related to the manufacture of products, used by
the building, transport, consumer products and industrial products sectors, that reduce
environmental impact and increase the efficiency of the use of resources such as energy,
water, and materials;
new text end

new text begin (ii) renewable energy: businesses related to the production of energy from natural
resources such as solar, wind, hydropower, geothermal, biomass (including but not limited
to animal waste and crop waste) and biofuels (including but not limited to ethanol and
biodiesel), as well as from waste heat recovery and from the use of biomass for energy
production including cogeneration;
new text end

new text begin (iii) green services: businesses that provide services that help other businesses or
consumers utilize green products and technologies, build energy infrastructure, recycle,
and manage waste; or
new text end

new text begin (iv) environmental conservation: businesses related to the conservation of energy,
air, water, and land, including air emissions control, environmental monitoring and
compliance, water conservation, wastewater treatment, land management (including but
not limited to prairie), natural pesticides, aquaculture, and organic farming;
new text end

new text begin (2) is a new facility in Minnesota, not a relocation of an existing Minnesota facility;
and
new text end

new text begin (3) enters a business subsidy agreement that:
new text end

new text begin (i) provides for repayment of all tax benefits enumerated under section 469.365
to the business under the procedures in section 469.369, if the requirements of this
subdivision are not met for the taxable year or for taxes payable during the year in which
the requirements were not met; and
new text end

new text begin (ii) contains any other terms the commissioner determines appropriate.
new text end

new text begin (d) A business is not a qualified business if, at its location or locations in the zone,
the business is primarily engaged in making retail sales to purchasers who are physically
present at the business's zone location.
new text end

new text begin (e) A qualifying business must pay each employee compensation, including benefits
not mandated by law, that on an annualized basis is equal to at least 110 percent of the
federal poverty level for a family of four.
new text end

new text begin (f) A qualifying business must pay prevailing wage for construction, installation,
remodeling, and repair as required by section 116J.871.
new text end

new text begin Subd. 10. new text end

new text begin Relocation. new text end

new text begin (a) "Relocation" means that the trade or business:
new text end

new text begin (1) ceases one or more operations or functions at another location in Minnesota
and begins performing substantially the same operations or functions at a location in a
green job opportunity building zone; or
new text end

new text begin (2) reduces employment at another location in Minnesota during a period starting
one year before and ending one year after it begins operations in a green job opportunity
building zone and its employees in the zone are engaged in the same line of business as
the employees at the location where it reduced employment.
new text end

new text begin (b) "Relocation" does not include establishing a new facility by a business that does
not replace or supplant an existing operation or employment, in whole or in part.
new text end

new text begin (c) "Trade or business" means any business entity that is substantially similar in
operation or ownership to the business entity seeking to be a qualified business under
this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 19.

new text begin [469.361] GREEN JOB OPPORTUNITY BUILDING ZONES;
LIMITATIONS.
new text end

new text begin Subdivision. 1. new text end

new text begin Zones. new text end

new text begin The area of a green job opportunity building zone must
consist of defined property boundaries specified in the business subsidy agreement.
new text end

new text begin Subd. 2. new text end

new text begin Location. new text end

new text begin A green job opportunity building zone may be located anywhere
in Minnesota.
new text end

new text begin Subd. 3. new text end

new text begin Border city development zones. new text end

new text begin (a) The area of a green job opportunity
building zone must not include the area of a border city development zone designated
under section new text end new text begin . The city must remove property from a border city development
zone contingent upon the area being designated as a green job opportunity building zone.
Before removing a parcel of property from a border city development zone, the city must
obtain the written consent to the removal from each recipient that is located on the parcel
and receives incentives under the border city development zone. Consent of any other
property owner or taxpayer in the border city development zone is not required.
new text end

new text begin (b) A city must not provide tax incentives under section new text end new text begin to individuals or
businesses for operations or activity in a green job opportunity building zone.
new text end

new text begin Subd. 4. new text end

new text begin Duration limit. new text end

new text begin (a) The maximum duration of a zone is 12 years. The
local government unit may request a shorter duration. The commissioner may specify a
shorter duration, regardless of the requested duration, in order to ensure that benefits
to the state outweigh the costs.
new text end

new text begin (b) The commissioner may not approve any business subsidy agreements after
December 31, 2015.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 20.

new text begin [469.362] APPLICATION FOR DESIGNATION.
new text end

new text begin Subdivision 1. new text end

new text begin Eligibility. new text end

new text begin One or more local government units, or a joint powers
board under section 471.59, acting on behalf of two or more units, may apply for
designation of an area as a green job opportunity building zone. All or part of the area
proposed for designation as a zone must be located within the boundaries of each of
the governmental units.
new text end

new text begin Subd. 2. new text end

new text begin Application. new text end

new text begin In order to receive designation for a green job opportunity
building zone, a local government unit must submit an application to the commissioner
in the form and manner designated by the commissioner.
new text end

new text begin Subd. 3. new text end

new text begin State review criteria. new text end

new text begin (a) The commissioner may only approve an
application after considering:
new text end

new text begin (1) whether the business has local or Minnesota competitors that will be significantly
and adversely effected by the business subsidy agreement;
new text end

new text begin (2) whether the proposed job creation, job retention, and capital investment is
commensurate with the estimated tax benefits provided to the business by participating
in green JOBZ; and
new text end

new text begin (3) whether other financial assistance is available.
new text end

new text begin (b) Additionally, the commissioner may only approve a business subsidy agreement
after considering if without the estimated tax benefits, the business:
new text end

new text begin (1) would not have begun operations within Minnesota;
new text end

new text begin (2) would not have relocated from outside the state to Minnesota;
new text end

new text begin (3) would have moved to another state or expanded in another state rather than
remaining or expanding in Minnesota; or
new text end

new text begin (4) would not have opened a new facility in Minnesota.
new text end

new text begin (c) The local government unit and the qualified business must provide the
commissioner with the information that the commissioner needs to review a business
subsidy agreement under paragraphs (a) and (b). The information must be in the form
and manner required by the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 21.

new text begin [469.363] BUSINESS SUBSIDY AGREEMENTS; REPORTS.
new text end

new text begin Subdivision 1. new text end

new text begin Green JOBZ business subsidy agreement. new text end

new text begin A business subsidy
agreement required under section 469.360, subdivision 9, paragraph (c), clause (3), must
comply with this section.
new text end

new text begin Subd. 2. new text end

new text begin Business subsidy agreement requirements. new text end

new text begin A business subsidy
agreement is not effective until the commissioner has approved the agreement in writing.
The commissioner may not approve an agreement that violates sections 116J.993 to
116J.995 or 469.360 to 469.3701. The commissioner may not approve an agreement
unless:
new text end

new text begin (1) the qualified business is required to create or retain a minimum number of jobs;
new text end

new text begin (2) the agreement defines "jobs" for purposes of determining compliance with wage
and job goals as all jobs that constitute "employment" for purposes of state unemployment
insurance;
new text end

new text begin (3) the qualified business is required to report all jobs created or retained because of
green JOBZ as a separate business location for purposes of section 268.044; and
new text end

new text begin (4) the qualified business agrees to provide the appropriate data practices release so
that the commissioner of revenue and the commissioner of employment and economic
development can monitor compliance with the terms of the agreement.
new text end

new text begin Subd. 3. new text end

new text begin Standard agreement. new text end

new text begin The commissioner must develop and require the
use of a standard business subsidy agreement that imposes definitive and enforceable
obligations on the qualified business.
new text end

new text begin Subd. 4. new text end

new text begin Business subsidy reports. new text end

new text begin (a) A local government unit must report to the
commissioner on the two-year anniversary date of the business subsidy agreement on the
progress of the qualified business in meeting the goals listed in the business subsidy
agreement.
new text end

new text begin (b) A local government unit must annually report to the commissioner on the
progress of the qualified business in meeting the goals listed in the business subsidy
agreement as required under section 116J.994, subdivisions 7 and 8.
new text end

new text begin (c) The commissioner must hold a qualified business out of compliance or remove
the business from the program if the qualified business fails to provide the information
requested by the local government unit for the report under paragraph (a) within 30 days
of written notice that the information is overdue.
new text end

new text begin Subd. 5. new text end

new text begin Public notice and hearing. new text end

new text begin A local government unit must provide public
notice and hearing as required under section 116J.994, subdivision 5, before approving a
business subsidy agreement. Public notice of a proposed business subsidy agreement must
be published in a local newspaper of general circulation. The public hearing must be held
in a location specified by the local government unit. Notwithstanding the requirements of
section 116J.994, subdivision 5, the commissioner is not required to provide an additional
public notice and hearing when entering into a business subsidy agreement with a local
government unit and a qualified business.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 22.

new text begin [469.364] DESIGNATION OF GREEN JOB OPPORTUNITY
BUILDING ZONES.
new text end

new text begin Subdivision 1. new text end

new text begin Designation schedule. new text end

new text begin Green job opportunity building zones are
designated continuously upon approval of an application by the commissioner. The
duration of the zone, as defined in section 469.361, subdivision 4, starts from the date the
commissioner approves the business subsidy agreement.
new text end

new text begin Subd. 2. new text end

new text begin Geographic distribution. new text end

new text begin The commissioner shall have as a goal the
geographic distribution of zones around the state.
new text end

new text begin Subd. 3. new text end

new text begin Rulemaking exemption. new text end

new text begin The commissioner's actions in establishing
procedures, requirements, and making determinations to administer sections new text end new text begin to
469.3693 are not a rule for purposes of chapter 14 and are not subject to the Administrative
Procedure Act contained in chapter 14 and are not subject to section new text end new text begin .
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 23.

new text begin [469.365] TAX INCENTIVES AVAILABLE IN ZONES.
new text end

new text begin Qualified businesses that operate in a green job opportunity building zone,
individuals who invest in a qualified business that operates in a green job opportunity
building zone, and property located in a green job opportunity building zone qualify for:
new text end

new text begin (1) exemption from individual income taxes as provided under section 469.366;
new text end

new text begin (2) exemption from corporate franchise taxes as provided under section 469.367;
new text end

new text begin (3) exemption from the state sales and use tax and any local sales and use taxes on
qualifying purchases as provided in section new text end new text begin 297A.68, subdivision 42 new text end new text begin ;
new text end

new text begin (4) exemption from the property tax as provided in section new text end new text begin 272.02, subdivision 90 new text end new text begin ;
new text end

new text begin (5) exemption from the wind energy production tax under section new text end new text begin 272.029,
subdivision 7 new text end new text begin ; and
new text end

new text begin (6) the jobs credit allowed under section new text end new text begin .
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 24.

new text begin [469.366] INDIVIDUAL INCOME TAX EXEMPTION.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin An individual, estate, or trust operating a trade or
business in a green job opportunity building zone, and an individual, estate, or trust
making a qualifying investment in a qualified business operating in a green job opportunity
building zone qualifies for the exemptions from taxes imposed under chapter 290, as
provided in this section. The exemptions provided under this section apply only to the
extent that the income otherwise would be taxable under chapter 290. Subtractions under
this section from federal taxable income, alternative minimum taxable income, or any
other base subject to tax are limited to the amount that otherwise would be included in
the tax base absent the exemption under this section. This section applies only to taxable
years beginning during the duration of the green job opportunity building zone.
new text end

new text begin Subd. 2. new text end

new text begin Rents. new text end

new text begin An individual, estate, or trust is exempt from the taxes imposed
under chapter 290 on net rents derived from real or tangible personal property used
by a qualified business and located in a zone for a taxable year in which the zone was
designated a green job opportunity building zone. If tangible personal property was used
both within and outside of the zone by the qualified business, the exemption amount for
the net rental income must be multiplied by a fraction, the numerator of which is the
number of days the property was used in the zone and the denominator of which is the
total days the property is rented by the qualified business.
new text end

new text begin Subd. 3. new text end

new text begin Business income. new text end

new text begin An individual, estate, or trust is exempt from the taxes
imposed under chapter 290 on net income from the operation of a qualified business in
a green job opportunity building zone. If the trade or business is carried on within and
without the zone and the individual is not a resident of Minnesota, or the taxpayer is an
estate or trust, the exemption must be apportioned based on the zone percentage and the
relocation payroll percentage for the taxable year. If the trade or business is carried on
within and without the zone and the individual is a resident of Minnesota, the exemption
must be apportioned based on the zone percentage and the relocation payroll percentage
for the taxable year, except the ratios under section new text end new text begin 469.360, new text end new text begin subdivision 6 new text end new text begin , clause (1),
items (i) and (ii), must use the denominators of the property and payroll factors determined
under section new text end new text begin . No subtraction is allowed under this subdivision in excess of 20
percent of the sum of the green job opportunity building zone payroll and the adjusted
basis of the property at the time that the property is first used in the green job opportunity
building zone by the business.
new text end

new text begin Subd. 4. new text end

new text begin Capital gains. new text end

new text begin (a) An individual, estate, or trust is exempt from the taxes
imposed under chapter 290 on:
new text end

new text begin (1) net gain derived on a sale or exchange of real property located in the zone and
used by a qualified business. If the property was held by the individual, estate, or trust
during a period when the zone was not designated, the gain must be prorated based on
the percentage of time, measured in calendar days, that the real property was held by the
individual, estate, or trust during the period the zone designation was in effect to the total
period of time the real property was held by the individual;
new text end

new text begin (2) net gain derived on a sale or exchange of tangible personal property used by a
qualified business in the zone. If the property was held by the individual, estate, or trust
during a period when the zone was not designated, the gain must be prorated based on
the percentage of time, measured in calendar days, that the property was held by the
individual, estate, or trust during the period the zone designation was in effect to the total
period of time the property was held by the individual. If the tangible personal property
was used outside of the zone during the period of the zone's designation, the exemption
must be multiplied by a fraction, the numerator of which is the number of days the
property was used in the zone during the time of the designation and the denominator of
which is the total days the property was held during the time of the designation; and
new text end

new text begin (3) net gain derived on a sale of an ownership interest in a qualified business
operating in the green job opportunity building zone, meeting the requirements of
paragraph (b). The exemption on the gain must be multiplied by the zone percentage of
the business for the taxable year prior to the sale.
new text end

new text begin (b) A qualified business meets the requirements of paragraph (a), clause (3), if it is
a corporation, an S corporation, or a partnership, and for the taxable year its green job
opportunity building zone percentage exceeds 25 percent. For purposes of paragraph
(a), clause (3), the zone percentage must be calculated by modifying the ratios under
section new text end new text begin 469.360, subdivision new text end new text begin 6 new text end new text begin , clause (1), items (i) and (ii), to use the denominators of
the property and payroll factors determined under section new text end new text begin . Upon the request of
an individual, estate, or trust holding an ownership interest in the entity, the entity must
certify to the owner, in writing, the green job opportunity building zone percentage needed
to determine the exemption.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 25.

new text begin [469.367] CORPORATE FRANCHISE TAX EXEMPTION.
new text end

new text begin (a) A qualified business is exempt from taxation under section new text end new text begin , the alternative
minimum tax under section new text end new text begin , and the minimum fee under section new text end new text begin ,
on the portion of its income attributable to operations within the zone. This exemption
is determined as follows:
new text end

new text begin (1) for purposes of the tax imposed under section new text end new text begin , by multiplying its taxable
net income by its zone percentage and by its relocation payroll percentage and subtracting
the result in determining taxable income;
new text end

new text begin (2) for purposes of the alternative minimum tax under section new text end new text begin , by
multiplying its alternative minimum taxable income by its zone percentage and by its
relocation payroll percentage and reducing alternative minimum taxable income by this
amount; and
new text end

new text begin (3) for purposes of the minimum fee under section new text end new text begin , by excluding property
and payroll in the zone from the computations of the fee or by exempting the entity under
section new text end new text begin 290.0922, subdivision 2 new text end new text begin , clause (9).
new text end

new text begin (b) No subtraction is allowed under paragraph (a), clauses (1) and (2), in excess of
20 percent of the sum of the corporation's green job opportunity building zone payroll and
the adjusted basis of the property at the time that the property is first used in the green job
opportunity building zone by the corporation.
new text end

new text begin (c) This section applies only to taxable years beginning during the duration of the
green job opportunity building zone.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 26.

new text begin [469.368] GREEN JOBS CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin A qualified business is allowed a credit against the
taxes imposed under chapter 290. The credit equals seven percent of the:
new text end

new text begin (1) zone payroll for the taxable year; minus
new text end

new text begin (2) the job opportunity zone wage threshold for the taxable year determined under
section 469.318, subdivision 1, clause (2), and subdivision 3, multiplied by the number
of full-time equivalent employees that the qualified business employs in the green job
opportunity building zone for the taxable year.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

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

new text begin (b) "Full-time equivalent employees" means the equivalent of annualized expected
hours of work equal to 2,080 hours.
new text end

new text begin (c) "Zone payroll" means wages or salaries used to determine the zone payroll factor
for the qualified business, less the amount of compensation attributable to any employee
that exceeds the ceiling calculated for the taxable year under section 469.318, subdivisions
2, paragraph (e), and 3.
new text end

new text begin Subd. 3. new text end

new text begin Refundable. new text end

new text begin If the amount of the credit exceeds the liability for tax under
chapter 290, the commissioner of revenue shall refund the excess to the qualified business.
new text end

new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds authorized by this
section is appropriated to the commissioner of revenue from the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 27.

new text begin [469.369] REPAYMENT OF TAX BENEFITS BY BUSINESSES THAT
NO LONGER OPERATE IN A ZONE.
new text end

new text begin Subdivision 1. new text end

new text begin Repayment obligation. new text end

new text begin A business must repay the total tax benefits
listed in section new text end new text begin received during the two years immediately before it (1) ceased to
perform a substantial level of activities described in the business subsidy agreement, or (2)
otherwise ceased to be a qualified business, other than those subject to the provisions of
section new text end new text begin .
new text end

new text begin Subd. 1a. new text end

new text begin Repayment obligation of businesses not operating in zone. new text end

new text begin Persons
that receive benefits without operating a business in a zone are subject to repayment
under this section if the business for which those benefits relate is subject to repayment
under this section. Such persons are deemed to have ceased performing in the zone on
the same day that the qualified business for which the benefits relate becomes subject to
repayment under subdivision 1.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

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

new text begin (b) "Business" means any person that received tax benefits enumerated in section
new text end new text begin .
new text end

new text begin (c) "Commissioner" means the commissioner of revenue.
new text end

new text begin (d) "Persons that receive benefits without operating a business in a zone" means
persons that claim benefits under section new text end new text begin 469.366, subdivision 2 new text end new text begin or 4, as well as persons
that own property leased by a qualified business and are eligible for benefits under section
new text end new text begin 272.02, subdivision 90 new text end new text begin , or new text end new text begin 297A.68, subdivision 42 new text end new text begin , paragraph (b).
new text end

new text begin Subd. 3. new text end

new text begin Disposition of repayment. new text end

new text begin The repayment must be paid to the state to
the extent it represents a state tax reduction and to the county to the extent it represents a
property tax reduction. Any amount repaid to the state must be deposited in the general
fund. Any amount repaid to the county for the property tax exemption must be distributed
to the taxing authorities with authority to levy taxes in the zone in the same manner
provided for distribution of payment of delinquent property taxes. Any repayment of
local sales taxes must be repaid to the commissioner for distribution to the city or county
imposing the local sales tax.
new text end

new text begin Subd. 4. new text end

new text begin Repayment procedures. new text end

new text begin (a) For the repayment of taxes imposed under
chapter 290 or 297A or local taxes collected pursuant to section new text end new text begin , a business must
file an amended return with the commissioner of revenue and pay any taxes required
to be repaid within 30 days after becoming subject to repayment under this section.
The amount required to be repaid is determined by calculating the tax for the period or
periods for which repayment is required without regard to the exemptions and credits
allowed under section new text end new text begin .
new text end

new text begin (b) For the repayment of property taxes, the county auditor shall prepare a tax
statement for the business, applying the applicable tax extension rates for each payable
year and provide a copy to the business and to the taxpayer of record. The business must
pay the taxes to the county treasurer within 30 days after receipt of the tax statement. The
business or the taxpayer of record may appeal the valuation and determination of the
property tax to the Tax Court within 30 days after receipt of the tax statement.
new text end

new text begin (c) The provisions of chapters 270C and 289A relating to the commissioner's
authority to audit, assess, and collect the tax and to hear appeals are applicable to the
repayment required under paragraph (a). The commissioner may impose civil penalties as
provided in chapter 289A, and the additional tax and penalties are subject to interest at the
rate provided in section new text end new text begin , from 30 days after becoming subject to repayment under
this section until the date the tax is paid.
new text end

new text begin (d) If a property tax is not repaid under paragraph (b), the county treasurer shall
add the amount required to be repaid to the property taxes assessed against the property
for payment in the year following the year in which the auditor provided the statement
under paragraph (b).
new text end

new text begin (e) For determining the tax required to be repaid, a reduction of a state or local
sales or use tax is deemed to have been received on the date that the good or service was
purchased or first put to a taxable use. In the case of an income tax or franchise tax,
including the credit payable under section new text end new text begin , a reduction of tax is deemed to have
been received for the two most recent tax years that have ended prior to the date that the
business became subject to repayment under this section. In the case of a property tax, a
reduction of tax is deemed to have been received for the taxes payable in the year that
the business became subject to repayment under this section and for the taxes payable in
the prior year.
new text end

new text begin (f) The commissioner may assess the repayment of taxes under paragraph (c) any
time within two years after the business becomes subject to repayment under subdivision
1, or within any period of limitations for the assessment of tax under section new text end new text begin ,
whichever period is later. The county auditor may send the statement under paragraph
(b) any time within three years after the business becomes subject to repayment under
subdivision 1.
new text end

new text begin (g) A business is not entitled to any income tax or franchise tax benefits, including
refundable credits, for any part of the year in which the business becomes subject to
repayment under this section nor for any year thereafter. Property is not exempt from tax
under section new text end new text begin 272.02, new text end new text begin subdivision 90 new text end new text begin , for any taxes payable in the year following the year
in which the property became subject to repayment under this section nor for any year
thereafter. A business is not eligible for any sales tax benefits beginning with goods
or services purchased or first put to a taxable use on the day that the business becomes
subject to repayment under this section.
new text end

new text begin Subd. 5. new text end

new text begin Waiver authority. new text end

new text begin (a) The commissioner may waive all or part of a
repayment required under subdivision 1, if the commissioner, in consultation with
the commissioner of employment and economic development and appropriate officials
from the local government units in which the qualified business is located, determines
that requiring repayment of the tax is not in the best interest of the state or the local
government units and the business ceased operating as a result of circumstances beyond
its control including, but not limited to:
new text end

new text begin (1) a natural disaster;
new text end

new text begin (2) unforeseen industry trends; or
new text end

new text begin (3) loss of a major supplier or customer.
new text end

new text begin (b)(1) The commissioner shall waive repayment required under subdivision 1a if
the commissioner has waived repayment by the operating business under subdivision 1,
unless the person that received benefits without having to operate a business in the zone
was a contributing factor in the qualified business becoming subject to repayment under
subdivision 1;
new text end

new text begin (2) the commissioner shall waive the repayment required under subdivision 1a, even
if the repayment has not been waived for the operating business if:
new text end

new text begin (i) the person that received benefits without having to operate a business in the zone
and the business that operated in the zone are not related parties as defined in section
267(b) of the Internal Revenue Code of 1986, as amended through December 31, 2007; and
new text end

new text begin (ii) actions of the person were not a contributing factor in the qualified business
becoming subject to repayment under subdivision 1.
new text end

new text begin Subd. 6. new text end

new text begin Reconciliation. new text end

new text begin Where this section is inconsistent with section new text end new text begin 116J.994,
new text end new text begin subdivision 3 new text end new text begin , paragraph (e), or 6, or any other provisions of sections new text end new text begin to
new text end new text begin , this section prevails.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 28.

new text begin [469.3691] BREACH OF AGREEMENTS BY BUSINESSES THAT
CONTINUE TO OPERATE IN ZONE.
new text end

new text begin (a) A "business in violation of its business subsidy agreement but not subject to
section new text end new text begin " means a business that is operating in violation of the business subsidy
agreement but maintains a level of operations in the zone that does not subject it to the
repayment provisions of section new text end new text begin 469.369, subdivision 1 new text end new text begin .
new text end

new text begin (b) A business described in paragraph (a) that does not sign a new or amended
business subsidy agreement, as authorized under paragraph (h), is subject to repayment
of benefits under section new text end new text begin from the day that it ceases to perform in the zone a
substantial level of activities described in the business subsidy agreement.
new text end

new text begin (c) A business described in paragraph (a) ceases being a qualified business after the
last day that it has to meet the goals stated in the agreement. The commissioner may
extend for up to one year the period for meeting any goals provided in an agreement.
new text end

new text begin (d) A business is not entitled to any income tax or franchise tax benefits, including
refundable credits, for any part of the year in which the business is no longer a qualified
business under paragraph (c), and thereafter. A business is not eligible for sales tax
benefits beginning with goods or services purchased or put to a taxable use on the day that
it is no longer a qualified business under paragraph (c). Property is not exempt from tax
under section new text end new text begin 272.02, subdivision 90 new text end new text begin , for any taxes payable in the year following the year
in which the business is no longer a qualified business under paragraph (c), and thereafter.
new text end

new text begin (e) A business described in paragraph (a) that wants to resume eligibility for benefits
under section new text end new text begin must request that the commissioner of employment and economic
development determine the length of time that the business is ineligible for benefits. The
commissioner shall determine the length of ineligibility by applying the proportionate
level of performance under the agreement to the total duration of the zone as measured
from the date that the business subsidy agreement was executed. The length of time
must not be less than one full year for each tax benefit listed in section new text end new text begin . The
commissioner of employment and economic development and the appropriate local
government officials shall consult with the commissioner of revenue to ensure that the
period of ineligibility includes at least one full year of benefits for each tax.
new text end

new text begin (f) The length of ineligibility determined under paragraph (e) must be applied by
reducing the zone duration for the property by the duration of the ineligibility.
new text end

new text begin (g) The zone duration of property that has been adjusted under paragraph (f) must
not be altered again to permit the business additional benefits under section new text end new text begin .
new text end

new text begin (h) A business described in paragraph (a) becomes eligible for benefits available
under new text end new text begin section new text end new text begin by entering into a new or amended business subsidy agreement, to
be approved by the commissioner, with the appropriate local government unit. The new or
amended agreement must cover a period beginning from the date of ineligibility under
the original business subsidy agreement, through the zone duration determined by the
commissioner under paragraph (f). No exemption of property taxes under section new text end new text begin 272.02,
subdivision 90 new text end new text begin , is available under the new or amended agreement for property taxes due or
paid before the date of the final execution of the new or amended agreement, but unpaid
taxes due after that date need not be paid.
new text end

new text begin (i) A business that violates the terms of an agreement authorized under paragraph
(h) is permanently barred from seeking benefits under section new text end new text begin and is subject to
the repayment provisions under section new text end new text begin effective from the day that the business
ceases to operate as a qualified business in the zone under the second agreement.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 29.

new text begin [469.3692] PROHIBITION AGAINST AMENDMENTS TO BUSINESS
SUBSIDY AGREEMENT.
new text end

new text begin Except as authorized under section new text end new text begin , under no circumstance shall terms
of any agreement required as a condition for eligibility for benefits listed under section
new text end new text begin be amended to change job creation, job retention, or wage goals included in
the agreement.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 30.

new text begin [469.3693] CERTIFICATION OF CONTINUING ELIGIBILITY FOR
GREEN JOBZ BENEFITS.
new text end

new text begin (a) By October 15 of each year, every qualified business must certify to the
commissioner of revenue, on a form prescribed by the commissioner of revenue, whether
it is in compliance with any agreement required as a condition for eligibility for benefits
listed under section new text end new text begin . A business that fails to submit the certification, or any
business, including those still operating in the zone, that submits a certification that
the commissioner of revenue later determines materially misrepresents the business's
compliance with the agreement, is subject to the repayment provisions under section
new text end new text begin from January 1 of the year in which the report is due or the date that the business
became subject to section new text end new text begin , whichever is earlier. Any such business is permanently
barred from obtaining benefits under section new text end new text begin . For purposes of this section, the bar
applies to an entity and also applies to any individuals or entities that have an ownership
interest of at least 20 percent of the entity.
new text end

new text begin (b) Before the sanctions under paragraph (a) apply to a business that fails to
submit the certification, the commissioner of revenue shall send notice to the business,
demanding that the certification be submitted within 30 days and advising the business
of the consequences for failing to do so. The commissioner of revenue shall notify the
commissioner of employment and economic development and the appropriate green
job opportunity subzone administrator whenever notice is sent to a business under this
paragraph.
new text end

new text begin (c) The certification required under this section is public.
new text end

new text begin (d) The commissioner of revenue shall promptly notify the commissioner of
employment and economic development of all businesses that certify that they are not
in compliance with the terms of their business subsidy agreement and all businesses
that fail to file the certification.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 31.

new text begin [469.3701] STATE AUDITOR; AUDITS OF GREEN JOB
OPPORTUNITY BUILDING ZONES AND BUSINESS SUBSIDY AGREEMENTS.
new text end

new text begin The Office of the State Auditor may annually audit the creation and operation of all
green job opportunity building zones and business subsidy agreements entered into under
Minnesota Statutes, sections new text end new text begin to new text end new text begin . To the extent necessary to perform
this audit, the state auditor may request from the commissioner of revenue tax return
information of taxpayers who are eligible to receive tax benefits authorized under section
new text end new text begin . To the extent necessary to perform this audit, the state auditor may request
from the commissioner of employment and economic development wage detail report
information required under section new text end new text begin of taxpayers eligible to receive tax benefits
authorized under section new text end new text begin .
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

ARTICLE 3

MINNESOTA SMALL BUSINESS INVESTMENT COMPANY CREDIT

Section 1.

new text begin [116J.8735] MINNESOTA SMALL BUSINESS INVESTMENT
COMPANY CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Affiliate" means:
new text end

new text begin (1) a person who, directly or indirectly, beneficially owns, controls, or holds power
to vote 15 percent or more of the outstanding voting securities or other voting ownership
interests of a Minnesota small business investment company or insurance company;
new text end

new text begin (2) a person, 15 percent or more of whose outstanding voting securities or other
voting ownership interests are directly or indirectly beneficially owned, controlled, or held
with power to vote by a Minnesota small business investment company or insurance
company;
new text end

new text begin (3) a person who, directly or indirectly, controls, is controlled by, or is under common
control with a Minnesota small business investment company or insurance company;
new text end

new text begin (4) a partnership or limited liability company in which a Minnesota small business
investment company or insurance company is a general partner, member, or managing
member; or
new text end

new text begin (5) a person who is an officer, director, employee, or agent of a Minnesota small
business investment company or insurance company, or an immediate family member
of an officer, director, employee, or agent.
new text end

new text begin Notwithstanding this subdivision, an investment by a certified investor in a
Minnesota small business investment company pursuant to an allocation of premium
tax credits under this section does not cause that Minnesota small business investment
company to become an affiliate of that certified investor.
new text end

new text begin (c) "Allocation date" means the date on which credits under section 297I.23 are
allocated to the investors of a Minnesota small business investment company under this
section.
new text end

new text begin (d) "Designated capital" means an amount of money that:
new text end

new text begin (1) is invested by a certified investor in a Minnesota small business investment
company; and
new text end

new text begin (2) fully funds the purchase price of either or both certified investor's equity interest
in a Minnesota small business investment company or a qualified debt instrument issued
by a Minnesota small business investment company.
new text end

new text begin (e) "Minnesota small business investment company" means a partnership,
corporation, trust, or limited liability company, organized on a for-profit basis, that:
new text end

new text begin (1) has its principal office located or is headquartered in Minnesota;
new text end

new text begin (2) has as its primary business activity the investment of cash in qualified businesses
and qualified green businesses; and
new text end

new text begin (3) is certified by the Department of Employment and Economic Development as
meeting the criteria in this section.
new text end

new text begin (f) "Certified investor" means any insurer as defined in section 60A.02, subdivision
4, that contributes designated capital pursuant to this section.
new text end

new text begin (g) "Person" means a natural person or entity, including, but not limited to, a
corporation, general or limited partnership, trust, or limited liability company.
new text end

new text begin (h) (1) "Qualified business" means a business that is independently owned and
operated and the business:
new text end

new text begin (i) is headquartered in this state, its principal business operations are located in this
state, and at least 51 percent of its employees are employed in this state;
new text end

new text begin (ii) has no more than 100 employees;
new text end

new text begin (iii) is not a subsidiary or an affiliate of a business which employs more than 100
employees computed by aggregating all of the employees of the business entities affiliated
with the business;
new text end

new text begin (iv) is predominantly engaged in biotechnology, technology, manufacturing,
processing or assembling products, conducting research and development, or developing a
new product or business process;
new text end

new text begin (v) is not predominantly engaged in:
new text end

new text begin (A) professional services provided by accountants, doctors, or lawyers;
new text end

new text begin (B) banking or lending;
new text end

new text begin (C) real estate development;
new text end

new text begin (D) insurance;
new text end

new text begin (E) oil and gas exploration;
new text end

new text begin (F) political consulting or lobbying;
new text end

new text begin (G) direct gambling activities; or
new text end

new text begin (H) making loans to or investments in Minnesota small business investment
companies or affiliates;
new text end

new text begin (vi) is not a franchise of and has not been organized by a Minnesota small business
investment company or an affiliate of a Minnesota small business investment company,
and has no financial relationship with a Minnesota small business investment company
or any affiliate of a Minnesota small business investment company prior to a Minnesota
small business investment company's first qualified investment in the business and will not
have any relationship after the initial qualified investment other than as created by that
investment and any subsequent investments in the business made by a Minnesota small
business investment company or its affiliates; and
new text end

new text begin (vii) if the business has five or more employees, measured on a full-time equivalent
basis, provides:
new text end

new text begin (A) wages and benefits to 75 percent or more of its employees in excess of the
first five employees, equal to or greater than 175 percent of the federal poverty level
for a family of four; and
new text end

new text begin (B) wages and benefits to the remaining 25 percent or fewer of its employees in
excess of the first five employees, equal to or greater than 110 percent of the federal
poverty level for a family of four.
new text end

new text begin (2) "Qualified green business" means a business that satisfies all of the requirements
of clause (1), with the exception of item (iv), and is predominantly engaged in one or more
of the following industry sectors:
new text end

new text begin (i) green products: businesses related to the manufacture of products used by
the building, transport, consumer products, and industrial products sectors, that reduce
environmental impact and increase the efficiency of the use of resources such as energy,
water, and materials;
new text end

new text begin (ii) renewable energy: businesses related to the production of energy from natural
resources such as solar, wind, hydropower, geothermal, biomass (including but not limited
to animal waste and crop waste), and biofuels (including but not limited to ethanol and
biodiesel), as well as from waste heat recovery and from the use of biomass for energy
production, including cogeneration;
new text end

new text begin (3) A business classified as a qualified business or a qualified green business at the
time of the first qualified investment in the business will remain classified as a qualified
business or a qualified green business and may receive continuing qualified investments
from any Minnesota small business investment company.
new text end

new text begin Continuing investments must be qualified investments even though the business may
not meet the definition of a qualified business or a qualified green business at the time of
such continuing investments, except the business shall not be eligible to receive further
qualified investments, if it has:
new text end

new text begin (i) relocated its headquarters or principal business operations outside of this state; or
new text end

new text begin (ii) not expended substantially all of its prior qualified investments to establish and
support its Minnesota operations, except for advertising, promotions, and sales purposes,
which may be conducted outside of Minnesota.
new text end

new text begin (i) "Qualified debt instrument" means a debt instrument issued by a Minnesota small
business investment company, at par value or a premium, with an original maturity date of
at least three years from the date of issuance, a repayment schedule which is not faster
than a level principal amortization over four years, provided that the payments, whether
of principal, interest, or a combination of principal and interest, must not exceed, in any
one year, one-fourth of Minnesota small business capital invested by the debt holder in a
Minnesota small business investment company, on the debt instrument unless the qualified
debt instrument or the issuer of the qualified debt instrument is in default with respect to
the terms of the investment and must be rated within the top three rating categories of a
rating agency that has been designated as a nationally recognized statistical rating agency
by the United States Securities and Exchange Commission.
new text end

new text begin (j) "Qualified distribution" means any distribution or payment not made to a certified
investor or affiliate of a certified investor by a Minnesota small business investment
company in connection with the following:
new text end

new text begin (1) reasonable costs and expenses of forming, syndicating, and organizing the
Minnesota small business investment company, including reasonable and necessary fees
paid for professional services, including, but not limited to, legal and accounting services
related to the formation of a Minnesota small business investment company, and the
costs of financing and insuring the obligations of a Minnesota small business investment
company;
new text end

new text begin (2) reasonable costs and expenses of managing and operating a Minnesota small
business investment company, including any management fee, which in the aggregate
must not exceed two percent of designated capital;
new text end

new text begin (3) reasonable and necessary fees in accordance with industry custom for
professional services, including, but not limited to, legal and accounting services related
to the operation of a Minnesota small business investment company, not including any
lobbying or governmental relations;
new text end

new text begin (4) any increase or projected increase in federal or state taxes, including penalties and
related interest of the equity owners of a Minnesota small business investment company
resulting from the earnings or other tax liability of a Minnesota small business investment
company to the extent that the increase is related to the ownership, management, or
operation of a Minnesota small business investment company; or
new text end

new text begin (5) payments to debt holders of a Minnesota small business investment company
may be made without restriction with respect to repayments of principal and interest on
indebtedness owed to them by a Minnesota small business investment company, including
indebtedness of the Minnesota small business investment company on which certified
investors earned tax credits. A debt holder that is also a certified investor or equity holder
of a Minnesota small business investment company may receive payments with respect to
the debt without any restriction whatsoever.
new text end

new text begin (k) "Qualified investment" means the investment of money by a Minnesota small
business investment company in qualified businesses or qualified green businesses, with
at least 50 percent of the investments to be made in qualified green businesses, subject
to determination by the department made pursuant to subdivision 5, paragraph (b). The
investment must be for the purchase of any debt, debt participation, equity, or hybrid
security, of any nature and description whatsoever, including a debt instrument or security
that has the characteristics of debt but which provides for conversion into equity or equity
participation instruments such as options or warrants. Any qualified investment in the
form of a debt instrument, including those owned through debt participations, must have
a final stated maturity of at least two years from the date of issuance and a repayment
schedule that is no faster than level principal amortization over two years, however, this
does not prohibit the qualified business or the qualified green business from voluntarily
prepaying a qualified investment at any time, or a Minnesota small business investment
company from exercising any of its rights as a creditor, including the acceleration of
the debt owned upon a default by the qualified business or the qualified green business
under the terms of the debt instrument or upon the acquisition, merger, or sale of all or
substantially all of the assets of the qualified business.
new text end

new text begin (l) "Qualified underserved area business" means a business that otherwise would
meet the criteria of a qualified business or a qualified green business, but is located:
new text end

new text begin (1) outside the metropolitan area, as defined by section 473.121, subdivision 2; or
new text end

new text begin (2) in a low-income community of Minnesota as defined in section 45D(e) of the
Internal Revenue Code.
new text end

new text begin (m) "State premium tax liability" means liability incurred by an insurance company
under the provisions of section 297I.05.
new text end

new text begin (n) "Qualified seed fund" means a qualifying regional investment fund certified by
the department under section 116J.8737, a regional investment fund designated by the
department, or a business incubator program established at the University of Minnesota.
new text end

new text begin Subd. 2. new text end

new text begin Certification. new text end

new text begin (a) The commissioner must provide a standardized format
for applying for the small business investment credit under section 297I.23.
new text end

new text begin (b) An applicant is required to:
new text end

new text begin (1) file an application with the department;
new text end

new text begin (2) pay a nonrefundable application fee of $7,500 to the department at the time
of filing the application. Fees are appropriated to the commissioner for personnel and
administrative expenses related to administering the program;
new text end

new text begin (3) submit as part of its application an audited balance sheet that contains an
unqualified opinion of an independent certified public accountant issued not more than
35 days before the application date that states whether the applicant has an equity
capitalization of $500,000 or more in the form of unencumbered cash, marketable
securities, or other liquid assets; and
new text end

new text begin (4) have at least two principals or persons, at least one of whom is located in and a
resident of Minnesota, employed to manage the funds each of whom have a minimum
of five years of money management experience in the venture capital or small business
investment industry.
new text end

new text begin (c) The department may certify partnerships, corporations, trusts, or limited liability
companies, organized on a for-profit basis, which submit an application to be designated as
a Minnesota small business investment company if the applicant is located, headquartered,
and licensed or registered to conduct business in Minnesota, has as its primary business
activity the investment of cash in qualified businesses and qualified green businesses, and
meets the other criteria set forth in this section.
new text end

new text begin (d) The department must review the organizational documents of each applicant for
certification and the business history of each applicant, determine whether the applicant
has satisfied the requirements of this section, and determine whether the officers and the
board of directors, general partners, trustees, managers, or members are trustworthy and
are thoroughly acquainted with the requirements of this section.
new text end

new text begin (e) Within 60 days after the receipt of an application, the department must issue the
certification or refuse the certification and communicate in detail to the applicant the
grounds for refusal, including suggestions for the removal of the grounds.
new text end

new text begin (f) The department must begin accepting applications to become a Minnesota
small business investment company as defined under section 116J.8735, subdivision
1, paragraph (e) by September 30, 2009.
new text end

new text begin Subd. 3. new text end

new text begin Requirements. new text end

new text begin (a) An insurance company or affiliate of an insurance
company must not, directly or indirectly:
new text end

new text begin (1) beneficially own, whether through rights, options, convertible interest, or
otherwise, 15 percent or more of the voting securities or other voting ownership interest of
a Minnesota small business investment company;
new text end

new text begin (2) manage a Minnesota small business investment company; or
new text end

new text begin (3) control the direction of investments for a Minnesota small business investment
company.
new text end

new text begin (b) A Minnesota small business investment company may obtain one or more
guaranties, indemnities, bonds, insurance policies, or other payment undertakings for the
benefit of its certified investors from any entity, except that in no case can more than one
certified investor of a Minnesota small business investment company on an aggregate basis
with all affiliates of the certified investor be entitled to provide the guaranties, indemnities,
bonds, insurance policies, or other payment undertakings in favor of the certified investors
of a Minnesota small business investment company and its affiliates in this state.
new text end

new text begin (c) This subdivision does not preclude a certified investor, insurance company, or
other party from exercising its legal rights and remedies, including, without limitation,
interim management of a Minnesota small business investment company, in the event that
a Minnesota small business investment company is in default of its statutory obligations
or its contractual obligations to the certified investor, insurance company, or other party,
or from monitoring a Minnesota small business investment company to ensure its
compliance with this section or disallowing any investments that have not been approved
by the department.
new text end

new text begin (d) The department may contract with an independent third party to review,
investigate, and certify that the applications comply with the provisions of this section.
new text end

new text begin Subd. 4. new text end

new text begin Aggregate limitations on investment credits; allocation. new text end

new text begin (a) The
aggregate amount of investment tax credits to be allocated to all participating investors
of Minnesota small business investment companies under this section shall not exceed
$38,000,000. No Minnesota small business investment company, on an aggregate basis
with its affiliates, may file credit allocation claims that exceed 25 percent of the total
credits to be allocated.
new text end

new text begin (b) Credits must be allocated to certified investors in the order that the credit
allocation claims are filed with the department. All credit allocation claims filed with the
department on the same day must be treated as having been filed contemporaneously. Any
credit allocation claims filed with the department prior to the credit allocation claim filing
date will be deemed to have been filed on the initial credit allocation claim filing date. The
department will set the initial credit allocation claim filing date to be within 150 days after
the department begins to accept applications.
new text end

new text begin (c) In the event that two or more Minnesota small business investment companies
file credit allocation claims with the department on behalf of their respective certified
investors on the same day, and the aggregate amount of credit allocation claims exceeds
the aggregate limit of credits under this section or the lesser amount of credits that remain
unallocated on that day, then the credits shall be allocated among the certified investors
who filed on that day on a pro rata basis with respect to the amounts claimed. The pro rata
allocation for any one certified investor is the product obtained by multiplying a fraction,
the numerator of which is the amount of the credit allocation claim filed on behalf of a
certified investor and the denominator of which is the total of all credit allocation claims
filed on behalf of all certified investors on that day, by the aggregate limit of credits under
this section or the lesser amount of credits that remain unallocated on that day.
new text end

new text begin (d) Within 20 business days after the department receives a credit allocation claim
filed by a Minnesota small business investment company on behalf of one or more of its
certified investors, the department must notify the Minnesota small business investment
company of the amount of credits allocated to each of the certified investors of that
Minnesota small business investment company. In the event a Minnesota small business
investment company does not receive aggregate investments of designated capital equaling
the amount of credits allocated to its certified investors within ten business days of the
Minnesota small business investment company's receipt of notice of allocation, it shall
notify the department on or before the next business day and that portion of the credits
allocated to the certified investors of the Minnesota small business investment company
in excess of the amount of designated capital invested in the Minnesota small business
investment company by that date shall be forfeited. The department may then reallocate
those forfeited credits among the certified investors of the other Minnesota small business
investment companies on a pro rata basis with respect to the credit allocation claims
filed on behalf of the certified investors. The commissioner is authorized to levy a fine
of not more than $50,000 on any certified investor that does not invest the full amount
of designated capital allocated by the department to the investor in accordance with the
credit allocation claim filed on its behalf.
new text end

new text begin (e) No participating investor, on an aggregate basis, may file an allocation claim for
more than 25 percent of the maximum amount of investment tax credits authorized under
this subdivision, regardless of whether the claim is made in connection with one or more
Minnesota small business investment companies.
new text end

new text begin Subd. 5. new text end

new text begin Requirements for continuance of certification. new text end

new text begin (a) To continue to be
eligible for certification, a Minnesota small business investment company must make
qualified investments as follows:
new text end

new text begin (1) within two years after the allocation date, an amount equal to at least 35 percent
of the designated capital allocable to a Minnesota small business investment company
must be placed in qualified investments; and
new text end

new text begin (2) within three years after the allocation date, an amount equal to at least 50 percent
of the designated capital allocable to a Minnesota small business investment company
must be placed in qualified investments;
new text end

new text begin (3) within five years after the allocation date, an amount equal to at least 65 percent
of the designated capital allocable to a Minnesota small business investment company
must be placed in qualified investments; and
new text end

new text begin (4) within ten years after the allocation date, an amount equal to at least 100 percent
of the designated capital allocable to a Minnesota small business investment company
must be placed in qualified investments.
new text end

new text begin The aggregate cumulative amount of all qualified investments made by a Minnesota
small business investment company from an allocation date must be considered in the
calculation of these percentage requirements.
new text end

new text begin (b) Prior to making a proposed qualified investment in a specific business, a
Minnesota small business investment company must request from the department a written
determination that the proposed investment will qualify as a qualified investment in a
qualified business. The department shall notify a Minnesota small business investment
company within 20 business days from the receipt of a request of its determination and
an explanation of the determination. If the department determines that the proposed
investment does not meet the definition of a qualified investment, a qualified business,
or a qualified green business, the department may nevertheless consider the proposed
investment a qualified investment, or the business a qualified business or qualified green
business, if the department determines that the proposed investment will further state
economic development.
new text end

new text begin (c) All designated capital not placed in qualified investments by the Minnesota
small business investment company may be held or invested in the manner the Minnesota
small business investment company, in its discretion, deems appropriate. The proceeds
of all designated capital returned to a Minnesota small business investment company
after being originally placed in qualified investments may be placed again in qualified
investments and counts toward any requirement of this section with respect to placing
designated capital in qualified investments.
new text end

new text begin (d) If, within four years after its allocation date, a Minnesota small business
investment company has not placed at least 60 percent of the designated capital allocable
to it in qualified investments, the Minnesota small business investment company is no
longer permitted to receive management fees.
new text end

new text begin (e) If, within six years after its allocation date, a Minnesota small business
investment company has not placed at least 100 percent of the designated capital allocable
to it in qualified investments, the Minnesota small business investment company is no
longer permitted to receive management fees.
new text end

new text begin (f) A Minnesota small business investment company must not make a qualified
investment without the specific approval of the department if after the Minnesota small
business investment company's qualified investment, on an aggregate basis with its
affiliates, would own more than 49 percent of the common equity or voting interests of
the qualified business. Nothing in this subdivision precludes a Minnesota small business
investment company from exercising any right or remedy upon a default by the qualified
business pursuant to an investment contract or antidilution or preemptive rights it may
have been granted in connection with an initial qualified investment that can be exercised
upon an investment in the business by a party other than the Minnesota small business
investment company or an affiliate of the Minnesota small business investment company.
new text end

new text begin (g) A Minnesota small business investment company must not invest where
investment would cause the company's total qualified investment outstanding with
respect to the qualified business receiving the investment to exceed 15 percent of the
total designated capital of the Minnesota small business investment company at the time
of the investment.
new text end

new text begin (h) The aggregate cumulative amount of all qualified investments made by a
Minnesota small business investment company will be considered in the calculation of the
percentage requirements under this section. The following must not be considered in any
percentage calculations under this section:
new text end

new text begin (1) commitment fees, closing fees, or other similar fees, excluding reimbursement
of out-of-pocket expenses including legal fees and accounting fees, in excess of one
percent of the Minnesota small business investment company's investment in the qualified
business; or
new text end

new text begin (2) license fees, royalties, or similar charges.
new text end

new text begin Subd. 6. new text end

new text begin Minnesota small business investment company reporting requirements.
new text end

new text begin (a) Each Minnesota small business investment company must report the following to
the department:
new text end

new text begin (1) within ten business days after the receipt of designated capital:
new text end

new text begin (i) the name of each certified investor from which the designated capital was
received, including the certified investor's insurance tax identification number;
new text end

new text begin (ii) the amount of each certified investor's investment of designated capital; and
new text end

new text begin (iii) the date on which the designated capital was received;
new text end

new text begin (2) on an annual basis, on or before January 31 of each year:
new text end

new text begin (i) the amount of the Minnesota small business investment company's designated
capital at the end of the immediately preceding taxable year;
new text end

new text begin (ii) whether or not the Minnesota small business investment company has invested
more than 15 percent of its total designated capital in any one business;
new text end

new text begin (iii) all qualified investments that the Minnesota small business investment company
has made in the previous taxable year, including the number of employees and the average
annual wage per employee of each qualified business or qualified green business in
which it has made investments at the time of the investment and as of December 1 of
the preceding taxable year; and
new text end

new text begin (iv) for any qualified business or qualified green business where the Minnesota small
business investment company no longer has an investment, the Minnesota small business
investment company must provide employment and wage figures for that company as of
the last day before the investment was terminated;
new text end

new text begin (3) other information that the department may reasonably request that will help the
department ascertain the impact of the Minnesota small business investment companies
both directly and indirectly on the economy of the state of Minnesota, including, but not
limited to, the number of jobs created, average annual wages paid by qualified businesses,
or qualified green businesses that have received qualified investments;
new text end

new text begin (4) annual audited financial statements, which must include the opinion of an
independent certified public accountant, within 90 days of the close of its fiscal year; and
new text end

new text begin (5) an "agreed upon procedures report" or equivalent regarding the operations of the
Minnesota small business investment company.
new text end

new text begin (b) A Minnesota small business investment company must pay to the department an
annual, nonrefundable certification fee of $5,000 on or before April 1, or $10,000 if later.
Fees are appropriated to the commissioner for personnel and administrative expenses
related to administering the program. No fee is required within six months of the date a
Minnesota small business investment company is first certified by the department.
new text end

new text begin (c) Upon receiving notification and documentation by a Minnesota small business
investment company that it has satisfied the requirements of subdivision 5, paragraph
(a), clauses (1), (2), (3), or (4), and that it has invested the percentage of its designated
capital as delineated by subdivision 5, paragraph (a), the department shall notify a
Minnesota small business investment company that it has or has not met the requirement
of subdivision 5, paragraph (a), within 60 business days.
new text end

new text begin Subd. 7. new text end

new text begin Distributions. new text end

new text begin (a) A Minnesota small business investment company
may make qualified distributions at any time. In order for a Minnesota small business
investment company to make a distribution other than a qualified distribution to its equity
holders, the aggregate cumulative amount of all qualified investments of the Minnesota
small business investment company must equal or exceed 100 percent of its designated
capital, and of those investments, an amount equal to or exceeding 25 percent must have
been invested in qualified underserved area businesses.
new text end

new text begin (b) A business is deemed to have relocated its principal business operations outside
Minnesota, unless it maintains its headquarters or the primary workplace of more than 50
percent of the employees within the state. In the event that a business in which a qualified
investment is made relocates its principal business operations to another state, either during
an investment or within four years of the time of any investment, whichever is greater,
the cumulative amount of qualified investments made by a Minnesota small business
investment company must be reduced by the amount of the qualified investment, unless:
new text end

new text begin (1) the Minnesota small business investment company invests an amount at least
equal to the investment of designated capital in the relocated business in a qualified
business or a qualified green business located in Minnesota within six months of the
relocation; or
new text end

new text begin (2) the business demonstrates that it has returned its principal business operations to
Minnesota within three months of the relocation.
new text end

new text begin (c) A Minnesota small business investment company must pay to a qualified
seed fund an amount equal to five percent of all distributions to the equity holders of a
Minnesota small business investment company, other than qualified distributions and
distributions of all equity contributed to a Minnesota small business investment company
by the equity holders. A Minnesota small business investment company must make all
payments required under this paragraph concurrently with distributions to its equity
owners. Nothing contained in this paragraph affects qualified distributions.
new text end

new text begin Subd. 8. new text end

new text begin Audit; state participation. new text end

new text begin (a) Cumulative distributions from a Minnesota
small business investment company to its certified investors and equity holders, other than
qualified distributions, in excess of the Minnesota small business investment company's
original certified capital and any additional capital contributions to the Minnesota small
business investment company may be audited by a nationally recognized certified public
accounting firm, at the expense of the Minnesota small business investment company, if the
department directs such audit be conducted. The audit shall determine whether aggregate
cumulative distributions from the Minnesota small business investment company to all
certified investors and equity holders, other than qualified distributions, have equaled the
sum of the Minnesota small business investment company's original certified capital and
any additional capital contributions to the Minnesota small business investment company.
new text end

new text begin (b) If at the time of any distribution made by the Minnesota small business
investment company, the distribution taken together with all other distributions made by
the Minnesota small business investment company, other than qualified distributions,
exceeds in aggregate the sum of the Minnesota small business investment company's
original certified capital and any other capital contributions to the Minnesota small
business investment company, as determined by the audit, the Minnesota small business
investment company shall pay to the department ten percent of the portion of such
distribution in excess of such amount. Payments are appropriated to the commissioner
for personnel and administrative expenses related to administering the program and other
programs related to encouraging investments in small emerging businesses in the state.
Payments to the department by a Minnesota small business investment company under
this paragraph shall not exceed the aggregate amount of tax credits used by all certified
investors in the Minnesota small business investment company.
new text end

new text begin Subd. 9. new text end

new text begin Decertification. new text end

new text begin (a) The department shall conduct an annual review of
each Minnesota small business investment company to determine if a Minnesota small
business investment company is abiding by the requirements of certification, to advise the
Minnesota small business investment company as to the eligibility status of its qualified
investments, and to ensure that no investment has been made in violation of this section.
The cost of the annual review must be paid by each Minnesota small business investment
company according to a reasonable fee schedule adopted by the department.
new text end

new text begin (b) Any material violation of this section is grounds for decertification of a
Minnesota small business investment company and the recapture of tax credits previously
taken and the forfeiture of future tax credits to be claimed under section 297I.23.
new text end

new text begin (c) Once a Minnesota small business investment company has invested an amount
cumulatively equal to 100 percent of its designated capital in qualified investments and
has met all other requirements under this section, the Minnesota small business investment
company is no longer subject to regulation by the department or the reporting requirements
under subdivision 5. Upon receiving documented certification by a Minnesota small
business investment company that it has invested an amount equal to 100 percent of its
designated capital, the department shall notify a Minnesota small business investment
company within 60 business days that it has or has not met the requirements with a reason
for the determination if it has not.
new text end

new text begin (d) The department must send written notice of a decertification to the commissioner
of revenue and to the address of each certified investor whose tax credit has been subject
to recapture or forfeiture, using the address shown on the last filing submitted to the
department.
new text end

new text begin Subd. 10. new text end

new text begin Revocation of certification. new text end

new text begin The department may revoke the certification
of a Minnesota small business investment company if any material representation to the
department in connection with the application process proves to have been falsely made,
if the application materially violates any requirements established by the department
under this section, the small business investment company fails to file an annual report,
or the small business investment company files an annual report that contains material
misrepresentations.
new text end

new text begin Subd. 11. new text end

new text begin Registration requirements. new text end

new text begin All investments for which tax credits are
allowable under this section must be registered or specifically exempt from registration.
new text end

new text begin Subd. 12. new text end

new text begin Reporting. new text end

new text begin The department shall prepare an annual report which includes:
new text end

new text begin (1) the number of Minnesota small business investment companies holding
designated capital;
new text end

new text begin (2) the amount of designated capital invested in each Minnesota small business
investment company;
new text end

new text begin (3) the cumulative amount that each Minnesota small business investment company
has invested as of January 1, 2010, and the cumulative total each year thereafter;
new text end

new text begin (4) the cumulative amount that the investments of each Minnesota small business
investment company have leveraged in terms of capital invested by other sources of
capital in qualified businesses at the same time or subsequent to investments made by a
Minnesota small business investment company in those businesses;
new text end

new text begin (5) the total amount of credits granted under this section for each year the credits
have been awarded;
new text end

new text begin (6) the performance of each Minnesota small business investment company with
regard to the requirements for continued certification;
new text end

new text begin (7) the classification of the companies in which each Minnesota small business
investment company has invested according to industrial sector and size of company;
new text end

new text begin (8) the total gross number of jobs and their average wage created by investments
made by each Minnesota small business investment company using designated capital
and the number of jobs retained;
new text end

new text begin (9) the location of the companies in which each Minnesota small business investment
company has invested;
new text end

new text begin (10) the total amount invested in qualified seed funds, the number of small
businesses that received financial assistance from these organizations, and the number of
jobs created and retained by those businesses;
new text end

new text begin (11) those Minnesota small business investment companies that have been
decertified, or have had their certification revoked, including the reasons for decertification
or revocation; and
new text end

new text begin (12) other related information necessary to evaluate the effect of this section on
economic development.
new text end

new text begin Subd. 13. new text end

new text begin Rules. new text end

new text begin The commissioner's actions in establishing procedures and
requirements and in making determinations and certifications to administer this section are
not a rule for purposes of chapter 14, are not subject to the Administrative Procedure Act
contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [297I.23] MINNESOTA SMALL BUSINESS INVESTMENT COMPANY
CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin (a) A certified investor as defined under section
116J.8735, subdivision 1, is allowed a credit against the tax imposed in section 297I.05
equal to 60 percent of the certified investor's qualified investment of designated capital.
Twenty-five percent of the total credit must be claimed in each consecutive year beginning
with the third year after the qualified investment.
new text end

new text begin (b) The credit for the taxable year must not exceed the liability for tax under section
297I.05. If the amount of the credit determined under this section for any taxable year
exceeds the liability for tax under section 297I.05 for that year, the excess shall be an
investment credit carryover to each of the succeeding taxable years and must be carried
forward to each succeeding taxable year until the entire carryforward credit has been
credited against the insurance company's liability for tax under section 297I.05.
new text end

new text begin (c) A certified investor claiming a credit under this section is not required to pay any
additional retaliatory tax levied as a result of claiming the credit.
new text end

new text begin Subd. 2. new text end

new text begin Repayment of tax benefits received. new text end

new text begin (a) Decertification of a Minnesota
small business investment company or revocation of certification under section 116J.8735
will result in the disallowance to certified investors of any credits for that tax year or
future tax years and the certified investor will be required to repay any credits claimed
for the previous year. Repayment must be made within 60 days of the decertification or
of the revocation of certification.
new text end

new text begin (b) The provisions of chapters 270C and 297I relating to audit, assessment, refund,
collection, and appeals are applicable to credits claimed and repayments required under
this section. The commissioner may impose civil penalties as provided in section 297I.85,
and additional tax and penalties are subject to interest at the rate provided in section
270C.40 from the date payment was due.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2009.
new text end

ARTICLE 4

JOB GROWTH INVESTMENT TAX CREDIT

Section 1.

new text begin [116J.8737] JOB GROWTH INVESTMENT TAX CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Qualifying small business" means a business that:
new text end

new text begin (1) is engaged in, or is committed to engage in, biotechnology, technology,
manufacturing, agriculture, processing or assembling products, conducting research and
development, or developing a new product or business process;
new text end

new text begin (2) is not engaged in real estate development, insurance, banking, lobbying, political
consulting, wholesale or retail trade, leisure, hospitality, construction, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;
new text end

new text begin (3) has its headquarters in Minnesota;
new text end

new text begin (4) employs at least 51 percent of the business's employees in Minnesota;
new text end

new text begin (5) has less than 100 employees;
new text end

new text begin (6) has less than $2,000,000 in annual gross sales receipts for the previous year;
new text end

new text begin (7) is not a subsidiary or an affiliate of a business which employs more than 100
employees or has total gross sales receipts for the previous year of more than $2,000,000,
computed by aggregating all of the employees and gross sales receipts of the business
entities affiliated with the business;
new text end

new text begin (8) has not previously received more than $2,000,000 in private equity investments;
new text end

new text begin (9) has not previously received more than $500,000 in investments that have
qualified for and received tax credits under this section; and
new text end

new text begin (10) for a business with five or more employees, measured on a full-time equivalent
basis:
new text end

new text begin (i) provides wages and benefits to at least 75 percent of its employees in excess of
the first five employees, equal to or greater than 175 percent of the federal poverty level
for a family of four; and
new text end

new text begin (ii) provides wages and benefits to its employees in excess of the first five employees,
equal to or greater than 110 percent of the federal poverty level for a family of four.
new text end

new text begin (c) "Qualifying green job small business" means a business that satisfies all of the
requirements of paragraph (b), except clause (1), and is predominantly engaged in one
or more of the following industry sectors:
new text end

new text begin (1) green products: businesses related to the manufacture of products used by
the building, transport, consumer products, and industrial products sectors, that reduce
environmental impact and increase the efficiency of the use of resources such as energy,
water, and materials;
new text end

new text begin (2) renewable energy: businesses related to the production of energy from natural
resources such as solar, wind, hydropower, geothermal, biomass (including but not limited
to animal waste and crop waste), and biofuels (including but not limited to ethanol and
biodiesel), as well as from waste heat recovery and from the use of biomass for energy
production including cogeneration;
new text end

new text begin (3) green services: businesses that provide services that help other businesses or
consumers utilize green products and technologies, build energy infrastructure, recycle,
and manage waste; or
new text end

new text begin (4) environmental conservation: businesses related to the conservation of energy,
air, water, and land, including air emissions control, environmental monitoring and
compliance, water conservation, wastewater treatment, land management (including but
not limited to prairie), natural pesticides, aquaculture, and organic farming.
new text end

new text begin (d) "Regional investment fund" means a pooled investment fund that:
new text end

new text begin (1) invests in qualifying small businesses;
new text end

new text begin (2) invests in qualifying green job small businesses;
new text end

new text begin (3) is organized as a limited liability company or other pass-through entity; and
new text end

new text begin (4) has no fewer than five separate investors, each of whom is a qualified taxpayer, as
defined in paragraph (e), and owns no more than 20 percent of the outstanding ownership
interests in the fund.
new text end

new text begin For purposes of determining the number of investors and the ownership interests of
an investor under this clause, the ownership interests of an investor include those of the
investor's spouse, children, or siblings, and any corporation, limited liability company,
partnership, or trust in which the investor has a controlling equity interest or in which the
investor exercises management control.
new text end

new text begin (e) "Qualified taxpayer" means:
new text end

new text begin (1) an accredited investor, within the meaning of Regulation D of the Securities and
Exchange Commission, Code of Federal Regulations, title 17, section 230.501(a), whether
part of a pass-through entity or not, who:
new text end

new text begin (i) does not own, control, or hold power to vote 20 percent or more of the outstanding
securities of the qualifying small business or the qualifying green job small business in
which the eligible investment is proposed; or
new text end

new text begin (ii) does not receive more than 50 percent of the gross annual income from the
qualifying small business or the qualifying green job small business in which the eligible
investment is proposed.
new text end

new text begin (2) A member of the immediate family of a taxpayer disqualified by this subdivision
is not eligible for a credit under this section. For purposes of this subdivision, "immediate
family" means the taxpayer's spouse, parent, sibling, or child, or the spouse of any person
listed in this paragraph.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed, holding period, limitations, and carryover. new text end

new text begin (a) A
qualified taxpayer is allowed a credit against the tax imposed under chapter 290 for
investments made in a qualified regional investment fund, a qualifying small business,
or a qualifying green job small business. The credit equals 25 percent of the qualified
taxpayer's investment in the business, but not to exceed the lesser of:
new text end

new text begin (1) the liability for tax under chapter 290, including the applicable alternative
minimum tax, but excluding the minimum fee under section 290.0922, and:
new text end

new text begin (2)(i) the amount of the certificate provided to the taxpayer under subdivision
4, paragraph (c); or
new text end

new text begin (ii) the amount of the certificate provided to the qualified individual investor under
subdivision 6, paragraph (d).
new text end

new text begin (b) No taxpayer may receive more than $100,000 in provisional credits under this
section in any one year.
new text end

new text begin (c) A qualified taxpayer must claim the credit in the third tax year after which the
investment in the qualified regional investment fund, the qualifying small business, or the
qualifying green job small business was made. The credit is allowed only for investments
made in:
new text end

new text begin (1) a qualified regional investment fund that remains invested for at least three
years and that are made after the fund has been certified by the commissioner under
subdivision 4;
new text end

new text begin (2) a qualifying small business that remains invested for at least three years and that
are made after the qualified individual investor has been certified by the commissioner
under subdivision 6; or
new text end

new text begin (3) a qualifying green job small business that remains invested for at least three
years and that are made after the qualified individual investor has been certified by the
commissioner under subdivision 6.
new text end

new text begin (d) The three-year investment holding period required by paragraph (c) does not
apply if:
new text end

new text begin (1) the investment by the qualified regional investment fund or the qualified
individual investor becomes worthless before the end of the three-year period; or
new text end

new text begin (2) the qualifying small business or qualifying green job small business is sold
before the end of the three-year period.
new text end

new text begin (e) If the amount of the credit under this subdivision for any taxable year exceeds
the limitations under paragraph (a), the excess is a credit carryover to each of the ten
succeeding taxable years. The entire amount of the excess unused credit for the taxable
year must be carried first to the earliest of the taxable years to which the credit may be
carried. The amount of the unused credit that may be added under this paragraph may not
exceed the taxpayer's liability for tax less the credit for the taxable year.
new text end

new text begin Subd. 3. new text end

new text begin Qualified regional investment fund; requirements. new text end

new text begin (a) To be certified as
a qualified regional investment fund for the purposes of this section, a regional investment
fund must:
new text end

new text begin (1) have a minimum of two-thirds of the regional investment fund's members,
shareholders, or partners be residents of the region that is the focus of the fund;
new text end

new text begin (2) allocate at least 60 percent of the funds it invests to qualifying small businesses
or to qualifying green job small businesses within its region of focus; and
new text end

new text begin (3) allocate at least 50 percent of the funds it invests to qualifying green job small
businesses.
new text end

new text begin (b) The allocations in paragraph (a), clauses (2) and (3), need not be exclusive.
new text end

new text begin (c) Investments from other qualified regional investment funds into the qualifying
small businesses or qualifying green job small businesses that are the recipients of the
qualified regional investment fund's investment shall count toward the allocations in
paragraph (a), clauses (2) and (3).
new text end

new text begin (d) Investments in the fund may consist of equity investments or notes that pay
interest or other fixed amounts, or any combination of both, as the fund's governing body
determines appropriate.
new text end

new text begin Subd. 4. new text end

new text begin Certification of funds. new text end

new text begin (a) Regional investment funds may apply to the
commissioner for certification as a qualified regional investment fund. The application
must be in the form and be made under the procedures specified by the commissioner,
accompanied by an application fee of $1,250. Fees are appropriated to the commissioner
for personnel and administrative expenses related to administering the program.
new text end

new text begin (b) The commissioner may certify up to 20 regional investment funds per year.
Certifications shall be awarded in the order of the qualifying applications received, subject
to the following limitations:
new text end

new text begin (1) the commissioner may certify no more than three regional investment funds per
year that seek business investment opportunities that may qualify for and receive tax
credits under this section in more than 15 Minnesota counties; and
new text end

new text begin (2) the commissioner may certify no more than five regional investment funds
per year that seek business investment opportunities that may qualify for and receive
tax credits under this section in the metropolitan area, as defined in section 473.121,
subdivision 2.
new text end

new text begin (c) The commissioner shall provide provisional credit certificates to investors in a
qualified regional fund to credits under this section, in proportion to the investment of
the investor in the fund and upon a showing by the fund of an investment in a qualifying
small business or qualifying green job small business, of no more than $500,000 per fund
per year. The commissioner may not issue a total of more than $2,000,000 per year in
provisional credit certificates to fund investors in fiscal years 2010, 2011, 2012, and 2013.
new text end

new text begin (d) The commissioner shall provide a final credit certificate to investors in the fund
upon a showing by the fund that the holding requirements of subdivision 2, paragraph (b),
have been met and that the investors in the fund are otherwise eligible for the credit.
new text end

new text begin Subd. 5. new text end

new text begin Fund requirements. new text end

new text begin The commissioner shall enter into an agreement
with each of the qualified regional investment funds certified under subdivision 4. Each
agreement must include a provision requiring the qualified regional investment fund to
annually report on the employment figures and wages and benefits paid by the businesses
in which investments are made and a provision stating the specific manner in which
the qualified regional investment fund will comply or is complying with the allocation
requirements under subdivision 3, paragraph (a), clauses (2) and (3).
new text end

new text begin Subd. 6. new text end

new text begin Certification of individual investors. new text end

new text begin (a) Qualified taxpayers may apply
to the commissioner of employment and economic development for certification as a
qualified individual investor. The application must be in the form and be made under the
procedures specified by the commissioner, accompanied by an application fee of $250.
Fees are appropriated to the commissioner for personnel and administrative expenses
related to administering the program.
new text end

new text begin (b) The commissioner may certify up to 40 qualified individual investors per year.
Certifications shall be awarded in the order of qualifying applications received, however
the commissioner may certify no more than ten qualified individual investors per year that
seek business investment opportunities that may qualify for and receive tax credits under
this section in the metropolitan area, as defined in section 473.121, subdivision 2.
new text end

new text begin (c) The commissioner shall provide provisional credit certificates to qualified
individual investors, upon a showing by the qualified individual investor of investments of
at least $25,000 in qualifying small businesses or qualifying green job small businesses; at
least one-half of the investments made by the investor must be in qualifying green job
businesses. The commissioner may not issue more than $100,000 in provisional credit
certificates per qualified individual investor per year. The commissioner may not issue
a total of more than $1,000,000 per year in provisional credit certificates to qualified
individual investors in fiscal years 2010, 2011, 2012, and 2013.
new text end

new text begin (d) The commissioner shall provide a final credit certificate to the qualified individual
investor upon a showing by the investor that the holding requirements of subdivision 2,
paragraph (c), have been met and that the investor is otherwise eligible for the credit.
new text end

new text begin Subd. 7. new text end

new text begin Qualified individual investor requirements. new text end

new text begin The commissioner shall
enter into an agreement with each qualified individual investor certified under subdivision
6. Each agreement must include a provision requiring the qualified individual investor to
annually report on the employment figures and wages and benefits paid by the businesses
in which investments are made and a provision stating the specific manner in which the
qualified individual investor will comply or is complying with the allocation requirements
under subdivision 6, paragraph (c).
new text end

new text begin Subd. 8. new text end

new text begin Rulemaking. new text end

new text begin The commissioner's actions in establishing procedures and
requirements and in making determinations and certifications to administer this section are
not a rule for purposes of chapter 14, are not subject to the Administrative Procedures Act
contained in chapter 14, and are not subject to section 14.386.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009, for taxable years
beginning after December 31, 2008, and only applies to investments made after the
qualified regional investment fund or qualified individual investor has been certified by
the commissioner of economic development.
new text end

Sec. 2.

Minnesota Statutes 2008, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 36. new text end

new text begin Job growth investment tax credit. new text end

new text begin A taxpayer is allowed a credit
as determined under section 116J.8737 against the tax imposed by this chapter.
Notwithstanding the certification eligibility issued by the commissioner of the Department
of Employment and Economic Development under section 116J.8737, the commissioner
may utilize any audit and examination powers under chapters 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.
new text end

new text begin EFFECTIVE DATE. new text end

ARTICLE 5

AIDS TO LOCAL GOVERNMENTS

Section 1.

Minnesota Statutes 2008, section 273.1384, subdivision 4, is amended to
read:

Subd. 4.

Payment.

(a) The commissioner of revenue shall reimburse each local
taxing jurisdiction, other than school districts, for the tax reductions granted under this
section in two equal installments on October 31 and December 26 of the taxes payable
year for which the reductions are granted, including in each payment the prior year
adjustments certified on the abstracts for that taxes payable year. The reimbursements
related to tax increments shall be issued in one installment each year on December 26.

(b) 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 the Department of Education and the commissioner of education shall
pay the reimbursement amounts to each school district as provided in section 273.1392.

new text begin (c) The market value credit reimbursements payable to a town under this section
in 2009, 2010, 2011, and 2012 are zero.
new text end

new text begin (d) The market value credit reimbursements payable in 2011 and 2012 for each
city and each county under this section are reduced by the dollar amount of the 2010
reduction in market value credit reimbursements for that city under section 477A.013,
subdivision 11, and for that county under section 477A.0124, subdivision 6. The payable
2011 or 2012 market value credit reimbursement for a city or county is not reduced to
less than zero by this paragraph.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2008, section 477A.0124, is amended by adding a
subdivision to read:

new text begin Subd. 6. new text end

new text begin Aid adjustments. new text end

new text begin (a) For aid payable in 2010 only, each county's total
distribution amount under this section is equal to its distribution amount under this
section for aid payable in 2009 prior to the reductions under section 477A.0133, minus
an aid reduction amount equal to 2.8 percent of the county's 2009 levy plus aid revenue
base determined under section 477A.0133, subdivision 2. If, by June 15, 2010, the
commissioner of human services does not certify to the commissioner of revenue, as
required under section 402A.20, that a county is in compliance with section 402A.10,
subdivision 5, clause (2), of the Regional Human Service Authority Act, the commissioner
of revenue must recompute the aid reduction for that county as equal to 3.98 percent of the
county's 2009 levy plus aid revenue base.
new text end

new text begin Each county's reduction amount is limited to the sum of the county's payable 2010
distributions under this section and section 273.1384 before the reductions under this
paragraph.
new text end

new text begin The aid reduction is applied first to the county's distributions under this section, and
then, if necessary, to reduce the county's reimbursements under section 273.1384.
new text end

new text begin (b) For aid payable in 2011 and thereafter, each county's distribution amount under
the remainder of this section is reduced by an amount equal to 1.17 percent of the county's
2009 levy plus aid revenue base determined under section 477A.0133, subdivision 2, if
by June 15 of the aid payment year the commissioner of human services has not certified
to the commissioner of revenue, as required by section 402A.20, that the county is in
compliance with section 402A.10, subdivision 5, clause (3) or (4), of the Regional Human
Service Authority Act.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2008, section 477A.013, subdivision 9, is amended to read:

Subd. 9.

City aid distribution.

(a) In calendar year 2009 deleted text begin and thereafterdeleted text end , each
city shall receive an aid distribution equal to the sum of (1) the city formula aid under
subdivision 8, and (2) its city aid base. new text begin In calendar year 2010, each city receives an aid
distribution under this section, before the reductions under subdivision 11, equal to the
amount of aid under this section that it was certified to receive in 2009. In calendar year
2011 and thereafter, each city receives an aid distribution under this section equal to the
sum of (1) the city formula aid under subdivision 8, and (2) its city aid base.
new text end

(b) For aids payable in 2009 only, the total aid for any city shall not exceed the sum
of (1) 35 percent of the city's net levy for the year prior to the aid distribution, plus (2)
its total aid in the previous year.

(c) For aids payable in 2010 and thereafter, the total aid for any city shall not exceed
the sum of (1) ten percent of the city's net levy for the year prior to the aid distribution
plus (2) its total aid in the previous year. For aids payable in 2009 and thereafter, the total
aid for any city with a population of 2,500 or more may not be less than its total aid under
this section in the previous year minus the lesser of $10 multiplied by its population, or ten
percent of its net levy in the year prior to the aid distribution.

(d) For aids payable in 2010 and thereafter, the total aid for a city with a population
less than 2,500 must not be less than 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
2003 certified aid amount. For aids payable in 2009 only, the total aid for a city with a
population less than 2,500 must not be less than what it received under this section in the
previous year unless its total aid in calendar year 2008 was aid under section 477A.011,
subdivision 36, paragraph (s), in which case its minimum aid is zero.

(e) A city's aid loss under this section may not exceed $300,000 in any year in
which the total city aid appropriation under section 477A.03, subdivision 2a, is equal or
greater than the appropriation under that subdivision in the previous year, unless the
city has an adjustment in its city net tax capacity under the process described in section
469.174, subdivision 28.

(f) If a city's net tax capacity used in calculating aid under this section has decreased
in any year by more than 25 percent from its net tax capacity in the previous year due to
property becoming tax-exempt Indian land, the city's maximum allowed aid increase
under paragraph (c) shall be increased by an amount equal to (1) the city's tax rate in the
year of the aid calculation, multiplied by (2) the amount of its net tax capacity decrease
resulting from the property becoming tax exempt.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2008, section 477A.013, is amended by adding a
subdivision to read:

new text begin Subd. 11. new text end

new text begin 2010 city aid. new text end

new text begin For aid payable in 2010 only, each city's distribution
amount under subdivision 9 is reduced by an amount equal to 10.55 percent of the city's
2009 levy plus aid revenue base determined under section 477A.0133.
new text end

new text begin The reduction is limited to the sum of the city's payable 2010 distribution under
this section and the city's payable 2010 reimbursement under section 273.1384 before
the reductions in this subdivision.
new text end

new text begin The reduction is applied first to the city's distribution under this section, and then, if
necessary, to the city's reimbursements under section 273.1384.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

new text begin [477A.0133] 2009 CITY AND COUNTY AID REDUCTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin City aid. new text end

new text begin The commissioner of revenue shall compute an aid
reduction amount for each city for aid payable in 2009 equal to 5.05 percent of the city's
2009 levy plus aid revenue base.
new text end

new text begin The "2009 levy plus aid revenue base" for a city is the sum of that city's certified
property tax levy for taxes payable in 2009, plus the sum of the amounts the city was
certified to receive in 2009 as:
new text end

new text begin (1) local government aid under section 477A.013; and
new text end

new text begin (2) taconite aids under sections 298.28 and 298.282, including any aid which was
required to be placed in a special fund for expenditure in the next succeeding year.
new text end

new text begin The reduction is limited to the sum of the city's payable 2009 distributions, prior to
the reductions under this subdivision, under sections 273.1384 and 477A.013.
new text end

new text begin The reduction is applied first to the city's distribution under section 477A.013, and
then, if necessary, to the city's reimbursements under section 273.1384.
new text end

new text begin To the extent that sufficient information is available on each successive payment date
within the year, the commissioner of revenue shall pay any remaining 2009 distribution or
reimbursement amount that is reduced under this subdivision in equal installments on the
payment dates provided by law.
new text end

new text begin Subd. 2. new text end

new text begin County aid. new text end

new text begin The commissioner of revenue shall compute an aid reduction
amount for each county for aid payable in 2009 equal to 1.53 percent of the county's
2009 levy plus aid revenue base. If, by November 15, 2009, the commissioner of human
services does not certify to the commissioner of revenue, as required under section
402A.20, that a county is in compliance with section 402A.10, subdivision 5, clause
(1), of the Regional Human Service Authority Act, the commissioner of revenue must
recompute the aid reduction for that county as equal to 2.41 percent of the county's 2009
levy plus aid revenue base.
new text end

new text begin The "2009 levy plus aid revenue base" for a county is the sum of that county's
certified property tax levy for taxes payable in 2009, plus the sum of the amounts the
county was certified to receive in 2009 as:
new text end

new text begin (1) county program aid under section 477A.0124; and
new text end

new text begin (2) taconite aids under sections 298.28 and 298.282, including any aid which was
required to be placed in a special fund for expenditure in the next succeeding year.
new text end

new text begin The reduction is limited to the sum of the county's payable 2009 distributions under
sections 273.1384 and 477A.0124.
new text end

new text begin The aid reduction is applied first to the county's distributions under section
477A.0124, and then, if necessary, to reduce the county's reimbursements under section
273.1384.
new text end

new text begin To the extent that sufficient information is available on each payment date in 2009,
the commissioner of revenue shall pay any remaining 2009 distribution or reimbursement
amount that is reduced under this section in equal installments on the payment dates
provided by law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2008, section 477A.03, subdivision 2a, is amended to read:

Subd. 2a.

Cities.

For aids payable in 2009 deleted text begin and thereafterdeleted text end , the total aid paid under
section 477A.013, subdivision 9, is $526,148,487deleted text begin , subject to adjustment in subdivision
5deleted text end . new text begin For aid payable in 2010, the total aid paid under section 477A.013, subdivision 9,
prior to the reductions under section 477A.013, subdivision 11, is $526,148,487. For aid
payable in 2011 and thereafter, the total aid paid under section 477A.013, subdivision
9, is $428,638,315.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid paid in 2010 and thereafter.
new text end

Sec. 7.

Minnesota Statutes 2008, section 477A.03, subdivision 2b, is amended to read:

Subd. 2b.

Counties.

(a) For aids payable in 2009 deleted text begin and thereafterdeleted text end , the total aid
payable under section 477A.0124, subdivision 3, is $111,500,000 minus one-half of the
total aid amount determined under section 477A.0124, subdivision 5, paragraph (b),
subject to adjustment in subdivision 5. new text begin For aid payable in 2010, the total aid payable
under section 477A.0124, subdivision 3, prior to the reductions under section 477A.0124,
subdivision 6, is $111,500,000. For aid payable in 2011 and thereafter, the total aid
payable under section 477A.0124, subdivision 3, prior to the reductions under section
477A.0124, subdivision 6, is $85,329,200. new text end Each calendar year, $500,000 shall be
retained by the commissioner of revenue to make reimbursements to the commissioner
of finance for payments made under section 611.27. For calendar year 2004, the amount
shall be in addition to the payments authorized under section 477A.0124, subdivision 1.
For calendar year 2005 and subsequent years, the amount shall be deducted from the
appropriation under this paragraph. 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 2009 deleted text begin and thereafterdeleted text end , the total aid under section 477A.0124,
subdivision 4, is $116,132,923 minus one-half of the total aid amount determined under
section 477A.0124, subdivision 5, paragraph (b)deleted text begin , subject to adjustment in subdivision 5deleted text end .new text begin
For aid payable in 2010, the total aid payable under section 477A.0124, subdivision 4,
prior to the reductions under section 477A.0124, subdivision 6, is $116,132,923. For aid
payable in 2011 and thereafter, the total aid payable under section 477A.0124, subdivision
4, prior to the reductions under section 477A.0124, subdivision 6, is $90,243,804.new text end The
commissioner of finance shall bill the commissioner of revenue for the cost of preparation
of local impact notes as required by section 3.987, not to exceed $207,000 in fiscal year
2004 and thereafter. The commissioner of education shall bill the commissioner of
revenue for the cost of preparation of local impact notes for school districts as required by
section 3.987, not to exceed $7,000 in fiscal year 2004 and thereafter. The commissioner
of revenue shall deduct the amounts billed under this paragraph from the appropriation
under this paragraphnew text begin , or in the case of aid payable in 2010, from the appropriation under
this subdivisionnew text end . The amounts deducted are appropriated to the commissioner of finance
and the commissioner of education for the preparation of local impact notes.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid paid in 2010 and thereafter.
new text end

Sec. 8.

Minnesota Statutes 2008, section 477A.12, subdivision 1, is amended to read:

Subdivision 1.

Types of land; payments.

(a) As an offset for expenses incurred
by counties and towns in support of natural resources lands, new text begin beginning with the payment
made in 2009, new text end 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.145deleted text begin . The amounts aredeleted text end new text begin in amounts equal to 80 percent of the
following payment ratesnew text end :

(1) for acquired natural resources land, $3, as adjusted for inflation under section
477A.145, 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) 75 cents, as adjusted for inflation under section 477A.145, multiplied by the
number of acres of county-administered other natural resources land;

(3) 75 cents, as adjusted for inflation under section 477A.145, multiplied by the total
number of acres of land utilization project land; and

(4) 37.5 cents, as adjusted for inflation under section 477A.145, multiplied by the
number of acres of commissioner-administered other natural resources land located in
each county as of July 1 of each year prior to the payment year.

(b) The amount determined under paragraph (a), clause (1), is payable for land
that is acquired from a private owner and owned by the Department of Transportation
for the purpose of replacing wetland losses caused by transportation projects, but only
if the county contains more than 500 acres of such land at the time the certification is
made under subdivision 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2008, section 477A.14, subdivision 1, is amended to read:

Subdivision 1.

General distribution.

Except as provided in subdivision 2 or in
section 97A.061, subdivision 5, 40 percent of the total payment to the county shall be
deposited in the county general revenue fund to be used to provide property tax levy
reduction. new text begin Beginning with the payment made in 2009, new text end the remainder shall be distributed
by the county in the following prioritynew text begin and in amounts equal to 80 percent of the following
payment ratesnew text end :

(a) 37.5 cents, as adjusted for inflation under section 477A.145, for each acre
of county-administered other natural resources land shall be deposited in a resource
development fund to be created within the county treasury for use in resource
development, forest management, game and fish habitat improvement, and recreational
development and maintenance of county-administered other natural resources land. Any
county receiving less than $5,000 annually for the resource development fund may elect to
deposit that amount in the county general revenue fund;

(b) From the funds remaining, within 30 days of receipt of the payment to the county,
the county treasurer shall pay each organized township 30 cents, as adjusted for inflation
under section 477A.145, for each acre of acquired natural resources land and each acre of
land described in section 477A.12, subdivision 1, paragraph (b), and 7.5 cents, as adjusted
for inflation under section 477A.145, for each acre of other natural resources land and each
acre of land utilization project land located within its boundaries. Payments for natural
resources lands not located in an organized township shall be deposited in the county
general revenue fund. Payments to counties and townships pursuant to this paragraph shall
be used to provide property tax levy reduction, except that of the payments for natural
resources lands not located in an organized township, the county may allocate the amount
determined to be necessary for maintenance of roads in unorganized townships. Provided
that, if the total payment to the county pursuant to section 477A.12 is not sufficient to fully
fund the distribution provided for in this clause, the amount available shall be distributed
to each township and the county general revenue fund on a pro rata basis; and

(c) Any remaining funds shall be deposited in the county general revenue fund.
Provided that, if the distribution to the county general revenue fund exceeds $35,000, the
excess shall be used to provide property tax levy reduction.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, section 477A.03, subdivision 5, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for aid paid in 2010 and thereafter.
new text end

ARTICLE 6

FEDERAL UPDATE

Section 1.

Minnesota Statutes 2008, section 289A.02, subdivision 7, is amended to
read:

Subd. 7.

Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009. After the effective date
of this section, the changes incorporated by federal changes are effective at the same time
as the changes were effective for federal purposes.
new text end

Sec. 2.

Minnesota Statutes 2008, section 290.01, subdivision 19, is amended to read:

Subd. 19.

Net income.

The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through deleted text begin February 13, 2008deleted text end new text begin
December 31, 2008new text end , shall be in effect for taxable years beginning after December 31, 1996.

Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 3.

Minnesota Statutes 2008, section 290.01, subdivision 19a, is amended to read:

Subd. 19a.

Additions to federal taxable income.

For individuals, estates, and
trusts, there shall be added to federal taxable income:

(2) the amount of income or sales and use taxes paid or accrued within the taxable
year under this chapter and the amount of taxes based on net income paid or sales
and use taxes paid to any other state or to any province or territory of Canada, to the
extent allowed as a deduction under section 63(d) of the Internal Revenue Code, but the
addition may not be more than the amount by which the itemized deductions as allowed
under section 63(d) of the Internal Revenue Code exceeds the amount of the standard
deduction as defined in section 63(c) of the Internal Revenue Codenew text begin , disregarding the
amounts allowed under section 63(c)(1)(C) and (D) of the Internal Revenue Codenew text end . For
the purpose of this paragraph, the disallowance of itemized deductions under section 68
of the Internal Revenue Code of 1986, income or sales and use tax is the last itemized
deduction disallowed;

(3) the capital gain amount of a lump-sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;

(8) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(10) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans;

(11) the amount of expenses disallowed under section 290.10, subdivision 2;

(12) deleted text begin for taxable years beginning after December 31, 2006, and before January 1,
2008,deleted text end the amount deducted for qualified tuition and related expenses under section 222 of
the Internal Revenue Code, to the extent deducted from gross income; deleted text begin and
deleted text end

(13) deleted text begin for taxable years beginning after December 31, 2006, and before January 1,
2008,deleted text end the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code, to the extent deducted
from gross incomedeleted text begin .deleted text end new text begin ;
new text end

new text begin (14) the additional standard deduction for property taxes payable that is allowable
under section 63(c)(1)(C) of the Internal Revenue Code; and
new text end

new text begin (15) the amount by which losses from the sale or transfer of capital assets exceed
the maximum allowable loss allowed under section 1211 of the Internal Revenue Code.
For purposes of this clause, losses from the sale or transfer of certain preferred stock
treated by the taxpayer as ordinary losses pursuant to Title III, Division A, section 301
of Public Law 110-343, are capital losses.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009. Clause (15) applies to
taxable years beginning after July 30, 2007. The remaining amendments apply to taxable
years beginning after December 31, 2007.
new text end

Sec. 4.

Minnesota Statutes 2008, section 290.01, subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(10) job opportunity building zone income as provided under section 469.316;

(16) international economic development zone income as provided under section
469.325; deleted text begin and
deleted text end

new text begin (18) the unused portion of the addition required under subdivision 19a, clause (15).
The subtraction equals the difference between (i) the net income or loss determined under
sections 1211 and 1212 of the Internal Revenue Code and included in net income in the
taxable year and (ii) the net income or loss determined under sections 1211 and 1212 of
the Internal Revenue Code that would be included in net income if the unused portion of
the addition was considered a capital loss carryover under section 1212 of the Internal
Revenue Code. For purposes of this clause, "unused portion of the addition required
under subdivision 19a, clause (15)" is the aggregate amount of the additions required in
prior years under subdivision 19a, clause (15), minus any subtraction previously allowed
under this clause.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009, and applies to taxable
years beginning after December 31, 2007.
new text end

Sec. 5.

Minnesota Statutes 2008, section 290.01, subdivision 19c, is amended to read:

Subd. 19c.

Corporations; additions to federal taxable income.

For corporations,
there shall be added to federal taxable income:

(3) exempt-interest dividends received as defined in section 852(b)(5) of the Internal
Revenue Code;

(5) the amount of any special deductions taken for federal income tax purposes
under sections 241 to 247 and 965 of the Internal Revenue Code;

(6) losses from the business of mining, as defined in section 290.05, subdivision 1,
clause (a), that are not subject to Minnesota income tax;

(7) the amount of any capital losses deducted for federal income tax purposes
under sections 1211 and 1212 of the Internal Revenue Codenew text begin , including losses considered
ordinary losses pursuant to Title III, Division A, section 301 of Public Law 110-343new text end ;

(8) the exempt foreign trade income of a foreign sales corporation under sections
921(a) and 291 of the Internal Revenue Code;

(9) the amount of percentage depletion deducted under sections 611 through 614 and
291 of the Internal Revenue Code;

(13) the amount of net income excluded under section 114 of the Internal Revenue
Code;

(14) any increase in subpart F income, as defined in section 952(a) of the Internal
Revenue Code, for the taxable year when subpart F income is calculated without regard
to the provisions of deleted text begin section 103 of Public Law 109-222deleted text end new text begin Title III, Division C, section
303a(1)-(2) of Public Law 110-343new text end ;

(16) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

(17) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;

(18) the exclusion allowed under section 139A of the Internal Revenue Code for
federal subsidies for prescription drug plans;

(19) the amount of expenses disallowed under section 290.10, subdivision 2;

(i) expenses, losses, and costs for, or related to, the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition of
intangible property;

(ii) losses incurred, directly or indirectly, from factoring transactions or discounting
transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar expenses and costs.

(i) income related to the direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other disposition of intangible property;

(ii) income from factoring transactions or discounting transactions;

(iii) royalty, patent, technical, and copyright fees;

(iv) licensing fees; and

(v) other similar income.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009. The amendment to
clause (7) applies to taxable years beginning after July 30, 2007. The amendment to clause
(14) applies to taxable years beginning after December 31, 2007.
new text end