HF 1419

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxes; amending exemptions and 
  1.3             subtractions for income tax; adjusting rates for 
  1.4             income tax; modifying gasoline and fuel excise tax 
  1.5             rates; imposing the sales tax on certain services; 
  1.6             reducing the rates of the sales tax and sales tax on 
  1.7             motor vehicles; abolishing certain sales tax 
  1.8             exemptions; increasing cigarette and tobacco tax 
  1.9             rates; amending Minnesota Statutes 2002, sections 
  1.10            290.01, subdivisions 19b, 19d; 290.05, subdivision 1; 
  1.11            290.06, subdivisions 2c, 2d; 290.091, subdivisions 1, 
  1.12            2, 6; 296A.07, subdivision 3; 296A.08, subdivision 2; 
  1.13            297A.61, subdivision 3; 297A.62, subdivision 1; 
  1.14            297A.82, subdivision 4; 297F.05, subdivisions 1, 3, 4; 
  1.15            297F.08, subdivision 7; 297F.09, subdivision 2; 
  1.16            repealing Minnesota Statutes 2002, sections 290.01, 
  1.17            subdivision 19e; 290.068; 290.191, subdivision 4; 
  1.18            297A.68, subdivisions 11, 30; 297A.69, subdivision 6. 
  1.19  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.20     Section 1.  Minnesota Statutes 2002, section 290.01, 
  1.21  subdivision 19b, is amended to read: 
  1.22     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  1.23  individuals, estates, and trusts, there shall be subtracted from 
  1.24  federal taxable income: 
  1.25     (1) interest income on obligations of any authority, 
  1.26  commission, or instrumentality of the United States to the 
  1.27  extent includable in taxable income for federal income tax 
  1.28  purposes but exempt from state income tax under the laws of the 
  1.29  United States; 
  1.30     (2) if included in federal taxable income, the amount of 
  1.31  any overpayment of income tax to Minnesota or to any other 
  1.32  state, for any previous taxable year, whether the amount is 
  2.1   received as a refund or as a credit to another taxable year's 
  2.2   income tax liability; 
  2.3      (3) the amount paid to others, less the amount used to 
  2.4   claim the credit allowed under section 290.0674, not to exceed 
  2.5   $1,625 for each qualifying child in grades kindergarten to 6 and 
  2.6   $2,500 for each qualifying child in grades 7 to 12, for tuition, 
  2.7   textbooks, and transportation of each qualifying child in 
  2.8   attending an elementary or secondary school situated in 
  2.9   Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, 
  2.10  wherein a resident of this state may legally fulfill the state's 
  2.11  compulsory attendance laws, which is not operated for profit, 
  2.12  and which adheres to the provisions of the Civil Rights Act of 
  2.13  1964 and chapter 363.  For the purposes of this clause, 
  2.14  "tuition" includes fees or tuition as defined in section 
  2.15  290.0674, subdivision 1, clause (1).  As used in this clause, 
  2.16  "textbooks" includes books and other instructional materials and 
  2.17  equipment purchased or leased for use in elementary and 
  2.18  secondary schools in teaching only those subjects legally and 
  2.19  commonly taught in public elementary and secondary schools in 
  2.20  this state.  Equipment expenses qualifying for deduction 
  2.21  includes expenses as defined and limited in section 290.0674, 
  2.22  subdivision 1, clause (3).  "Textbooks" does not include 
  2.23  instructional books and materials used in the teaching of 
  2.24  religious tenets, doctrines, or worship, the purpose of which is 
  2.25  to instill such tenets, doctrines, or worship, nor does it 
  2.26  include books or materials for, or transportation to, 
  2.27  extracurricular activities including sporting events, musical or 
  2.28  dramatic events, speech activities, driver's education, or 
  2.29  similar programs.  For purposes of the subtraction provided by 
  2.30  this clause, "qualifying child" has the meaning given in section 
  2.31  32(c)(3) of the Internal Revenue Code; 
  2.32     (4) income as provided under section 290.0802; 
  2.33     (5) to the extent included in federal adjusted gross 
  2.34  income, income realized on disposition of property exempt from 
  2.35  tax under section 290.491; 
  2.36     (6) to the extent not deducted in determining federal 
  3.1   taxable income or used to claim the long-term care insurance 
  3.2   credit under section 290.0672, the amount paid for health 
  3.3   insurance of self-employed individuals as determined under 
  3.4   section 162(l) of the Internal Revenue Code, except that the 
  3.5   percent limit does not apply.  If the individual deducted 
  3.6   insurance payments under section 213 of the Internal Revenue 
  3.7   Code of 1986, the subtraction under this clause must be reduced 
  3.8   by the lesser of: 
  3.9      (i) the total itemized deductions allowed under section 
  3.10  63(d) of the Internal Revenue Code, less state, local, and 
  3.11  foreign income taxes deductible under section 164 of the 
  3.12  Internal Revenue Code and the standard deduction under section 
  3.13  63(c) of the Internal Revenue Code; or 
  3.14     (ii) the lesser of (A) the amount of insurance qualifying 
  3.15  as "medical care" under section 213(d) of the Internal Revenue 
  3.16  Code to the extent not deducted under section 162(1) of the 
  3.17  Internal Revenue Code or excluded from income or (B) the total 
  3.18  amount deductible for medical care under section 213(a); 
  3.19     (7) the exemption amount allowed under Laws 1995, chapter 
  3.20  255, article 3, section 2, subdivision 3; 
  3.21     (8) to the extent included in federal taxable income, 
  3.22  postservice benefits for youth community service under section 
  3.23  124D.42 for volunteer service under United States Code, title 
  3.24  42, sections 12601 to 12604; 
  3.25     (9) to the extent not deducted in determining federal 
  3.26  taxable income by an individual who does not itemize deductions 
  3.27  for federal income tax purposes for the taxable year, an amount 
  3.28  equal to 50 percent of the excess of charitable contributions 
  3.29  allowable as a deduction for the taxable year under section 
  3.30  170(a) of the Internal Revenue Code over $500; 
  3.31     (10) for taxable years beginning before January 1, 2008, 
  3.32  the amount of the federal small ethanol producer credit allowed 
  3.33  under section 40(a)(3) of the Internal Revenue Code which is 
  3.34  included in gross income under section 87 of the Internal 
  3.35  Revenue Code; and 
  3.36     (11) for individuals who are allowed a federal foreign tax 
  4.1   credit for taxes that do not qualify for a credit under section 
  4.2   290.06, subdivision 22, an amount equal to the carryover of 
  4.3   subnational foreign taxes for the taxable year, but not to 
  4.4   exceed the total subnational foreign taxes reported in claiming 
  4.5   the foreign tax credit.  For purposes of this clause, "federal 
  4.6   foreign tax credit" means the credit allowed under section 27 of 
  4.7   the Internal Revenue Code, and "carryover of subnational foreign 
  4.8   taxes" equals the carryover allowed under section 904(c) of the 
  4.9   Internal Revenue Code minus national level foreign taxes to the 
  4.10  extent they exceed the federal foreign tax credit; and 
  4.11     (12) in each of the five tax years immediately following 
  4.12  the tax year in which an addition is required under subdivision 
  4.13  19a, clause (7), an amount equal to one-fifth of the delayed 
  4.14  depreciation.  For purposes of this clause, "delayed 
  4.15  depreciation" means the amount of the addition made by the 
  4.16  taxpayer under subdivision 19a, clause (7), minus the positive 
  4.17  value of any net operating loss under section 172 of the 
  4.18  Internal Revenue Code generated for the tax year of the 
  4.19  addition.  The resulting delayed depreciation cannot be less 
  4.20  than zero. 
  4.21     [EFFECTIVE DATE.] This section is effective for taxable 
  4.22  years beginning after December 31, 2002. 
  4.23     Sec. 2.  Minnesota Statutes 2002, section 290.01, 
  4.24  subdivision 19d, is amended to read: 
  4.25     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
  4.26  TAXABLE INCOME.] For corporations, there shall be subtracted 
  4.27  from federal taxable income after the increases provided in 
  4.28  subdivision 19c:  
  4.29     (1) the amount of foreign dividend gross-up added to gross 
  4.30  income for federal income tax purposes under section 78 of the 
  4.31  Internal Revenue Code; 
  4.32     (2) the amount of salary expense not allowed for federal 
  4.33  income tax purposes due to claiming the federal jobs credit 
  4.34  under section 51 of the Internal Revenue Code; 
  4.35     (3) any dividend (not including any distribution in 
  4.36  liquidation) paid within the taxable year by a national or state 
  5.1   bank to the United States, or to any instrumentality of the 
  5.2   United States exempt from federal income taxes, on the preferred 
  5.3   stock of the bank owned by the United States or the 
  5.4   instrumentality; 
  5.5      (4) amounts disallowed for intangible drilling costs due to 
  5.6   differences between this chapter and the Internal Revenue Code 
  5.7   in taxable years beginning before January 1, 1987, as follows: 
  5.8      (i) to the extent the disallowed costs are represented by 
  5.9   physical property, an amount equal to the allowance for 
  5.10  depreciation under Minnesota Statutes 1986, section 290.09, 
  5.11  subdivision 7, subject to the modifications contained in 
  5.12  subdivision 19e; and 
  5.13     (ii) to the extent the disallowed costs are not represented
  5.14  by physical property, an amount equal to the allowance for cost 
  5.15  depletion under Minnesota Statutes 1986, section 290.09, 
  5.16  subdivision 8; 
  5.17     (5) the deduction for capital losses pursuant to sections 
  5.18  1211 and 1212 of the Internal Revenue Code, except that: 
  5.19     (i) for capital losses incurred in taxable years beginning 
  5.20  after December 31, 1986, capital loss carrybacks shall not be 
  5.21  allowed; 
  5.22     (ii) for capital losses incurred in taxable years beginning 
  5.23  after December 31, 1986, a capital loss carryover to each of the 
  5.24  15 taxable years succeeding the loss year shall be allowed; 
  5.25     (iii) for capital losses incurred in taxable years 
  5.26  beginning before January 1, 1987, a capital loss carryback to 
  5.27  each of the three taxable years preceding the loss year, subject 
  5.28  to the provisions of Minnesota Statutes 1986, section 290.16, 
  5.29  shall be allowed; and 
  5.30     (iv) for capital losses incurred in taxable years beginning 
  5.31  before January 1, 1987, a capital loss carryover to each of the 
  5.32  five taxable years succeeding the loss year to the extent such 
  5.33  loss was not used in a prior taxable year and subject to the 
  5.34  provisions of Minnesota Statutes 1986, section 290.16, shall be 
  5.35  allowed; 
  5.36     (6) an amount for interest and expenses relating to income 
  6.1   not taxable for federal income tax purposes, if (i) the income 
  6.2   is taxable under this chapter and (ii) the interest and expenses 
  6.3   were disallowed as deductions under the provisions of section 
  6.4   171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
  6.5   federal taxable income; 
  6.6      (7) in the case of mines, oil and gas wells, other natural 
  6.7   deposits, and timber for which percentage depletion was 
  6.8   disallowed pursuant to subdivision 19c, clause (11), a 
  6.9   reasonable allowance for depletion based on actual cost.  In the 
  6.10  case of leases the deduction must be apportioned between the 
  6.11  lessor and lessee in accordance with rules prescribed by the 
  6.12  commissioner.  In the case of property held in trust, the 
  6.13  allowable deduction must be apportioned between the income 
  6.14  beneficiaries and the trustee in accordance with the pertinent 
  6.15  provisions of the trust, or if there is no provision in the 
  6.16  instrument, on the basis of the trust's income allocable to 
  6.17  each; 
  6.18     (8) for certified pollution control facilities placed in 
  6.19  service in a taxable year beginning before December 31, 1986, 
  6.20  and for which amortization deductions were elected under section 
  6.21  169 of the Internal Revenue Code of 1954, as amended through 
  6.22  December 31, 1985, an amount equal to the allowance for 
  6.23  depreciation under Minnesota Statutes 1986, section 290.09, 
  6.24  subdivision 7; 
  6.25     (9) amounts included in federal taxable income that are due 
  6.26  to refunds of income, excise, or franchise taxes based on net 
  6.27  income or related minimum taxes paid by the corporation to 
  6.28  Minnesota, another state, a political subdivision of another 
  6.29  state, the District of Columbia, or a foreign country or 
  6.30  possession of the United States to the extent that the taxes 
  6.31  were added to federal taxable income under section 290.01, 
  6.32  subdivision 19c, clause (1), in a prior taxable year; 
  6.33     (10) 80 percent of royalties, fees, or other like income 
  6.34  accrued or received from a foreign operating corporation or a 
  6.35  foreign corporation which is part of the same unitary business 
  6.36  as the receiving corporation; 
  7.1      (11) income or gains from the business of mining as defined 
  7.2   in section 290.05, subdivision 1, clause (a), that are not 
  7.3   subject to Minnesota franchise tax; 
  7.4      (12) the amount of handicap access expenditures in the 
  7.5   taxable year which are not allowed to be deducted or capitalized 
  7.6   under section 44(d)(7) of the Internal Revenue Code; 
  7.7      (13) the amount of qualified research expenses not allowed 
  7.8   for federal income tax purposes under section 280C(c) of the 
  7.9   Internal Revenue Code, but only to the extent that the amount 
  7.10  exceeds the amount of the credit allowed under section 290.068; 
  7.11     (14) the amount of salary expenses not allowed for federal 
  7.12  income tax purposes due to claiming the Indian employment credit 
  7.13  under section 45A(a) of the Internal Revenue Code; 
  7.14     (15) the amount of any refund of environmental taxes paid 
  7.15  under section 59A of the Internal Revenue Code; 
  7.16     (16) for taxable years beginning before January 1, 2008, 
  7.17  the amount of the federal small ethanol producer credit allowed 
  7.18  under section 40(a)(3) of the Internal Revenue Code which is 
  7.19  included in gross income under section 87 of the Internal 
  7.20  Revenue Code; 
  7.21     (17) for a corporation whose foreign sales corporation, as 
  7.22  defined in section 922 of the Internal Revenue Code, constituted 
  7.23  a foreign operating corporation during any taxable year ending 
  7.24  before January 1, 1995, and a return was filed by August 15, 
  7.25  1996, claiming the deduction under this subdivision for income 
  7.26  received from the foreign operating corporation, an amount equal 
  7.27  to 1.23 multiplied by the amount of income excluded under 
  7.28  section 114 of the Internal Revenue Code, provided the income is 
  7.29  not income of a foreign operating company; and 
  7.30     (18) any decrease in subpart F income, as defined in 
  7.31  section 952(a) of the Internal Revenue Code, for the taxable 
  7.32  year when subpart F income is calculated without regard to the 
  7.33  provisions of section 614 of Public Law Number 107-147; and 
  7.34     (19) in each of the five tax years immediately following 
  7.35  the tax year in which an addition is required under subdivision 
  7.36  19c, clause (16), an amount equal to one-fifth of the delayed 
  8.1   depreciation.  For purposes of this clause, "delayed 
  8.2   depreciation" means the amount of the addition made by the 
  8.3   taxpayer under subdivision 19c, clause (16).  The resulting 
  8.4   delayed depreciation cannot be less than zero. 
  8.5      [EFFECTIVE DATE.] This section is effective for taxable 
  8.6   years beginning after December 31, 2002. 
  8.7      Sec. 3.  Minnesota Statutes 2002, section 290.05, 
  8.8   subdivision 1, is amended to read: 
  8.9      Subdivision 1.  [EXEMPT ENTITIES.] The following 
  8.10  corporations, individuals, estates, trusts, and organizations 
  8.11  shall be exempted from taxation under this chapter, provided 
  8.12  that every such person or corporation claiming exemption under 
  8.13  this chapter, in whole or in part, must establish to the 
  8.14  satisfaction of the commissioner the taxable status of any 
  8.15  income or activity: 
  8.16     (a) corporations, individuals, estates, and trusts engaged 
  8.17  in the business of mining or producing iron ore and other ores 
  8.18  the mining or production of which is subject to the occupation 
  8.19  tax imposed by section 298.01; but if any such corporation, 
  8.20  individual, estate, or trust engages in any other business or 
  8.21  activity or has income from any property not used in such 
  8.22  business it shall be subject to this tax computed on the net 
  8.23  income from such property or such other business or activity.  
  8.24  Royalty shall not be considered as income from the business of 
  8.25  mining or producing iron ore within the meaning of this section; 
  8.26  and 
  8.27     (b) the United States of America, the state of Minnesota or 
  8.28  any political subdivision of either agencies or 
  8.29  instrumentalities, whether engaged in the discharge of 
  8.30  governmental or proprietary functions; and 
  8.31     (c) any insurance company. 
  8.32     [EFFECTIVE DATE.] This section is effective for taxable 
  8.33  years beginning after December 31, 2002. 
  8.34     Sec. 4.  Minnesota Statutes 2002, section 290.06, 
  8.35  subdivision 2c, is amended to read: 
  8.36     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  9.1   AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  9.2   married individuals filing joint returns and surviving spouses 
  9.3   as defined in section 2(a) of the Internal Revenue Code must be 
  9.4   computed by applying to their taxable net income the following 
  9.5   schedule of rates: 
  9.6      (1) On the first $25,680 $27,780, 5.35 6 percent; 
  9.7      (2) On all over $25,680 $27,780, but not 
  9.8   over $102,030 $110,390, 7.05 8 percent; 
  9.9      (3) On all over $102,030 110,390, 7.85 8.5 percent. 
  9.10     Married individuals filing separate returns, estates, and 
  9.11  trusts must compute their income tax by applying the above rates 
  9.12  to their taxable income, except that the income brackets will be 
  9.13  one-half of the above amounts.  
  9.14     (b) The income taxes imposed by this chapter upon unmarried 
  9.15  individuals must be computed by applying to taxable net income 
  9.16  the following schedule of rates: 
  9.17     (1) On the first $17,570 $19,010, 5.35 6 percent; 
  9.18     (2) On all over $17,570 $19,010, but not 
  9.19  over $57,710 $62,440, 7.05 8 percent; 
  9.20     (3) On all over $57,710 $62,440, 7.85 8.5 percent. 
  9.21     (c) The income taxes imposed by this chapter upon unmarried 
  9.22  individuals qualifying as a head of household as defined in 
  9.23  section 2(b) of the Internal Revenue Code must be computed by 
  9.24  applying to taxable net income the following schedule of rates: 
  9.25     (1) On the first $21,630 $23,400, 5.35 6 percent; 
  9.26     (2) On all over $21,630 $23,400, but not 
  9.27  over $86,910 $94,030, 7.05 8 percent; 
  9.28     (3) On all over $86,910 $94,030, 7.85 8.5 percent. 
  9.29     (d) In lieu of a tax computed according to the rates set 
  9.30  forth in this subdivision, the tax of any individual taxpayer 
  9.31  whose taxable net income for the taxable year is less than an 
  9.32  amount determined by the commissioner must be computed in 
  9.33  accordance with tables prepared and issued by the commissioner 
  9.34  of revenue based on income brackets of not more than $100.  The 
  9.35  amount of tax for each bracket shall be computed at the rates 
  9.36  set forth in this subdivision, provided that the commissioner 
 10.1   may disregard a fractional part of a dollar unless it amounts to 
 10.2   50 cents or more, in which case it may be increased to $1. 
 10.3      (e) An individual who is not a Minnesota resident for the 
 10.4   entire year must compute the individual's Minnesota income tax 
 10.5   as provided in this subdivision.  After the application of the 
 10.6   nonrefundable credits provided in this chapter, the tax 
 10.7   liability must then be multiplied by a fraction in which:  
 10.8      (1) the numerator is the individual's Minnesota source 
 10.9   federal adjusted gross income as defined in section 62 of the 
 10.10  Internal Revenue Code and increased by the additions required 
 10.11  under section 290.01, subdivision 19a, clauses (1) and (6), and 
 10.12  reduced by the Minnesota assignable portion of the subtraction 
 10.13  for United States government interest under section 290.01, 
 10.14  subdivision 19b, clause (1), after applying the allocation and 
 10.15  assignability provisions of section 290.081, clause (a), or 
 10.16  290.17; and 
 10.17     (2) the denominator is the individual's federal adjusted 
 10.18  gross income as defined in section 62 of the Internal Revenue 
 10.19  Code of 1986, increased by the amounts specified in section 
 10.20  290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
 10.21  amounts specified in section 290.01, subdivision 19b, clause (1).
 10.22     [EFFECTIVE DATE.] This section is effective for taxable 
 10.23  years beginning after December 31, 2002.  
 10.24     Sec. 5.  Minnesota Statutes 2002, section 290.06, 
 10.25  subdivision 2d, is amended to read: 
 10.26     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
 10.27  taxable years beginning after December 31, 2000 2003, the 
 10.28  minimum and maximum dollar amounts for each rate bracket for 
 10.29  which a tax is imposed in subdivision 2c shall be adjusted for 
 10.30  inflation by the percentage determined under paragraph (b).  For 
 10.31  the purpose of making the adjustment as provided in this 
 10.32  subdivision all of the rate brackets provided in subdivision 2c 
 10.33  shall be the rate brackets as they existed for taxable years 
 10.34  beginning after December 31, 1999 2002, and before January 
 10.35  1, 2001 2004.  The rate applicable to any rate bracket must not 
 10.36  be changed.  The dollar amounts setting forth the tax shall be 
 11.1   adjusted to reflect the changes in the rate brackets.  The rate 
 11.2   brackets as adjusted must be rounded to the nearest $10 amount.  
 11.3   If the rate bracket ends in $5, it must be rounded up to the 
 11.4   nearest $10 amount.  
 11.5      (b) The commissioner shall adjust the rate brackets and by 
 11.6   the percentage determined pursuant to the provisions of section 
 11.7   1(f) of the Internal Revenue Code, except that in section 
 11.8   1(f)(3)(B) the word "1999" "2002" shall be substituted for the 
 11.9   word "1992."  For 2001 2004, the commissioner shall then 
 11.10  determine the percent change from the 12 months ending on August 
 11.11  31, 1999 2002, to the 12 months ending on August 31, 2000 2003, 
 11.12  and in each subsequent year, from the 12 months ending on August 
 11.13  31, 1999, to the 12 months ending on August 31 of the year 
 11.14  preceding the taxable year.  The determination of the 
 11.15  commissioner pursuant to this subdivision shall not be 
 11.16  considered a "rule" and shall not be subject to the 
 11.17  Administrative Procedure Act contained in chapter 14.  
 11.18     No later than December 15 of each year, the commissioner 
 11.19  shall announce the specific percentage that will be used to 
 11.20  adjust the tax rate brackets. 
 11.21     [EFFECTIVE DATE.] This section is effective for taxable 
 11.22  years beginning after December 31, 2002. 
 11.23     Sec. 6.  Minnesota Statutes 2002, section 290.091, 
 11.24  subdivision 1, is amended to read: 
 11.25     Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
 11.26  other taxes imposed by this chapter a tax is imposed on 
 11.27  individuals, estates, and trusts equal to the excess (if any) of 
 11.28     (a) an amount equal to 6.4 7 percent of alternative minimum 
 11.29  taxable income after subtracting the exemption amount, over 
 11.30     (b) the regular tax for the taxable year. 
 11.31     [EFFECTIVE DATE.] This section is effective for taxable 
 11.32  years beginning after December 31, 2002. 
 11.33     Sec. 7.  Minnesota Statutes 2002, section 290.091, 
 11.34  subdivision 2, is amended to read: 
 11.35     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 11.36  this section, the following terms have the meanings given: 
 12.1      (a) "Alternative minimum taxable income" means the sum of 
 12.2   the following for the taxable year: 
 12.3      (1) the taxpayer's federal alternative minimum taxable 
 12.4   income as defined in section 55(b)(2) of the Internal Revenue 
 12.5   Code; 
 12.6      (2) the taxpayer's itemized deductions allowed in computing 
 12.7   federal alternative minimum taxable income, but excluding: 
 12.8      (i) the charitable contribution deduction under section 170 
 12.9   of the Internal Revenue Code to the extent that the deduction 
 12.10  exceeds 1.3 percent of adjusted gross income, as defined in 
 12.11  section 62 of the Internal Revenue Code; 
 12.12     (ii) the medical expense deduction; 
 12.13     (iii) the casualty, theft, and disaster loss deduction; and 
 12.14     (iv) the impairment-related work expenses of a disabled 
 12.15  person; 
 12.16     (3) for depletion allowances computed under section 613A(c) 
 12.17  of the Internal Revenue Code, with respect to each property (as 
 12.18  defined in section 614 of the Internal Revenue Code), to the 
 12.19  extent not included in federal alternative minimum taxable 
 12.20  income, the excess of the deduction for depletion allowable 
 12.21  under section 611 of the Internal Revenue Code for the taxable 
 12.22  year over the adjusted basis of the property at the end of the 
 12.23  taxable year (determined without regard to the depletion 
 12.24  deduction for the taxable year); 
 12.25     (4) to the extent not included in federal alternative 
 12.26  minimum taxable income, the amount of the tax preference for 
 12.27  intangible drilling cost under section 57(a)(2) of the Internal 
 12.28  Revenue Code determined without regard to subparagraph (E); 
 12.29     (5) to the extent not included in federal alternative 
 12.30  minimum taxable income, the amount of interest income as 
 12.31  provided by section 290.01, subdivision 19a, clause (1); and 
 12.32     (6) the amount of addition required by section 290.01, 
 12.33  subdivision 19a, clause (7); 
 12.34     less the sum of the amounts determined under the following: 
 12.35     (1) interest income as defined in section 290.01, 
 12.36  subdivision 19b, clause (1); 
 13.1      (2) an overpayment of state income tax as provided by 
 13.2   section 290.01, subdivision 19b, clause (2), to the extent 
 13.3   included in federal alternative minimum taxable income; 
 13.4      (3) the amount of investment interest paid or accrued 
 13.5   within the taxable year on indebtedness to the extent that the 
 13.6   amount does not exceed net investment income, as defined in 
 13.7   section 163(d)(4) of the Internal Revenue Code.  Interest does 
 13.8   not include amounts deducted in computing federal adjusted gross 
 13.9   income; and 
 13.10     (4) amounts subtracted from federal taxable income as 
 13.11  provided by section 290.01, subdivision 19b, clause (12). 
 13.12     In the case of an estate or trust, alternative minimum 
 13.13  taxable income must be computed as provided in section 59(c) of 
 13.14  the Internal Revenue Code. 
 13.15     (b) "Investment interest" means investment interest as 
 13.16  defined in section 163(d)(3) of the Internal Revenue Code. 
 13.17     (c) "Tentative minimum tax" equals 6.4 7 percent of 
 13.18  alternative minimum taxable income after subtracting the 
 13.19  exemption amount determined under subdivision 3. 
 13.20     (d) "Regular tax" means the tax that would be imposed under 
 13.21  this chapter (without regard to this section and section 
 13.22  290.032), reduced by the sum of the nonrefundable credits 
 13.23  allowed under this chapter.  
 13.24     (e) "Net minimum tax" means the minimum tax imposed by this 
 13.25  section. 
 13.26     [EFFECTIVE DATE.] This section is effective for taxable 
 13.27  years beginning after December 31, 2002. 
 13.28     Sec. 8.  Minnesota Statutes 2002, section 290.091, 
 13.29  subdivision 6, is amended to read: 
 13.30     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
 13.31  is allowed against the tax imposed by this chapter on 
 13.32  individuals, trusts, and estates equal to the minimum tax credit 
 13.33  for the taxable year.  The minimum tax credit equals the 
 13.34  adjusted net minimum tax for taxable years beginning after 
 13.35  December 31, 1988, reduced by the minimum tax credits allowed in 
 13.36  a prior taxable year.  The credit may not exceed the excess (if 
 14.1   any) for the taxable year of 
 14.2      (1) the regular tax, over 
 14.3      (2) the greater of (i) the tentative alternative minimum 
 14.4   tax, or (ii) zero. 
 14.5      (b) The adjusted net minimum tax for a taxable year equals 
 14.6   the lesser of the net minimum tax or the excess (if any) of 
 14.7      (1) the tentative minimum tax, over 
 14.8      (2) 6.4 7 percent of the sum of 
 14.9      (i) adjusted gross income as defined in section 62 of the 
 14.10  Internal Revenue Code, 
 14.11     (ii) interest income as defined in section 290.01, 
 14.12  subdivision 19a, clause (1), 
 14.13     (iii) interest on specified private activity bonds, as 
 14.14  defined in section 57(a)(5) of the Internal Revenue Code, to the 
 14.15  extent not included under clause (ii), 
 14.16     (iv) depletion as defined in section 57(a)(1), determined 
 14.17  without regard to the last sentence of paragraph (1), of the 
 14.18  Internal Revenue Code, less 
 14.19     (v) the deductions allowed in computing alternative minimum 
 14.20  taxable income provided in subdivision 2, paragraph (a), clause 
 14.21  (2) of the first series of clauses and clauses (1), (2), and (3) 
 14.22  of the second series of clauses, and 
 14.23     (vi) the exemption amount determined under subdivision 3. 
 14.24     In the case of an individual who is not a Minnesota 
 14.25  resident for the entire year, adjusted net minimum tax must be 
 14.26  multiplied by the fraction defined in section 290.06, 
 14.27  subdivision 2c, paragraph (e).  In the case of a trust or 
 14.28  estate, adjusted net minimum tax must be multiplied by the 
 14.29  fraction defined under subdivision 4, paragraph (b). 
 14.30     [EFFECTIVE DATE.] This section is effective for taxable 
 14.31  years beginning after December 31, 2002. 
 14.32     Sec. 9.  Minnesota Statutes 2002, section 296A.07, 
 14.33  subdivision 3, is amended to read: 
 14.34     Subd. 3.  [RATE OF TAX.] The gasoline excise tax is imposed 
 14.35  at the following rates: 
 14.36     (1) E85 is taxed at the rate of 14.2 18.5 cents per gallon; 
 15.1      (2) M85 is taxed at the rate of 11.4 14.8 cents per gallon; 
 15.2   and 
 15.3      (3) all other gasoline is taxed at the rate of 20 26 cents 
 15.4   per gallon. 
 15.5      [EFFECTIVE DATE.] This section is effective July 1, 2003, 
 15.6   and applies to gasoline and distributor storage on and after 
 15.7   that date. 
 15.8      Sec. 10.  Minnesota Statutes 2002, section 296A.08, 
 15.9   subdivision 2, is amended to read: 
 15.10     Subd. 2.  [RATE OF TAX.] The special fuel excise tax is 
 15.11  imposed at the following rates: 
 15.12     (1) Liquefied petroleum gas or propane is taxed at the rate 
 15.13  of 15 19.5 cents per gallon. 
 15.14     (2) Liquefied natural gas is taxed at the rate of 12 15.6 
 15.15  cents per gallon. 
 15.16     (3) Compressed natural gas is taxed at the rate of $1.739 
 15.17  $2.261 per thousand cubic feet; or 20 26 cents per gasoline 
 15.18  equivalent, as defined by the National Conference on Weights and 
 15.19  Measures, which is 5.66 pounds of natural gas. 
 15.20     (4) All other special fuel is taxed at the same rate as the 
 15.21  gasoline excise tax as specified in section 296A.07, subdivision 
 15.22  2.  The tax is payable in the form and manner prescribed by the 
 15.23  commissioner. 
 15.24     [EFFECTIVE DATE.] This section is effective July 1, 2003, 
 15.25  and applies to gasoline and distributor storage on and after 
 15.26  that date. 
 15.27     Sec. 11.  Minnesota Statutes 2002, section 297A.61, 
 15.28  subdivision 3, is amended to read: 
 15.29     Subd. 3.  [SALE AND PURCHASE.] (a) "Sale" and "purchase" 
 15.30  include, but are not limited to, each of the transactions listed 
 15.31  in this subdivision. 
 15.32     (b) Sale and purchase include: 
 15.33     (1) any transfer of title or possession, or both, of 
 15.34  tangible personal property, whether absolutely or conditionally, 
 15.35  for a consideration in money or by exchange or barter; and 
 15.36     (2) the leasing of or the granting of a license to use or 
 16.1   consume, for a consideration in money or by exchange or barter, 
 16.2   tangible personal property, other than a manufactured home used 
 16.3   for residential purposes for a continuous period of 30 days or 
 16.4   more. 
 16.5      (c) Sale and purchase include the production, fabrication, 
 16.6   printing, or processing of tangible personal property for a 
 16.7   consideration for consumers who furnish either directly or 
 16.8   indirectly the materials used in the production, fabrication, 
 16.9   printing, or processing. 
 16.10     (d) Sale and purchase include the preparing for a 
 16.11  consideration of food.  Notwithstanding section 297A.67, 
 16.12  subdivision 2, taxable food includes, but is not limited to, the 
 16.13  following: 
 16.14     (1) prepared food sold by the retailer; 
 16.15     (2) soft drinks; 
 16.16     (3) candy; and 
 16.17     (4) all food sold through vending machines. 
 16.18     (e) A sale and a purchase includes the furnishing for a 
 16.19  consideration of electricity, gas, water, or steam for use or 
 16.20  consumption within this state. 
 16.21     (f) A sale and a purchase includes the transfer for a 
 16.22  consideration of computer software.  
 16.23     (g) A sale and a purchase includes the furnishing for a 
 16.24  consideration of the following services: 
 16.25     (1) the privilege of admission to places of amusement, 
 16.26  recreational areas, or athletic events, and the making available 
 16.27  of amusement devices, tanning facilities, reducing salons, steam 
 16.28  baths, turkish baths, health clubs, and spas or athletic 
 16.29  facilities; 
 16.30     (2) lodging and related services by a hotel, rooming house, 
 16.31  resort, campground, motel, or trailer camp and the granting of 
 16.32  any similar license to use real property other than the renting 
 16.33  or leasing of it for a continuous period of 30 days or more; 
 16.34     (3) parking services, whether on a contractual, hourly, or 
 16.35  other periodic basis, except for parking at a meter; 
 16.36     (4) the granting of membership in a club, association, or 
 17.1   other organization if: 
 17.2      (i) the club, association, or other organization makes 
 17.3   available for the use of its members sports and athletic 
 17.4   facilities, without regard to whether a separate charge is 
 17.5   assessed for use of the facilities; and 
 17.6      (ii) use of the sports and athletic facility is not made 
 17.7   available to the general public on the same basis as it is made 
 17.8   available to members.  
 17.9   Granting of membership means both onetime initiation fees and 
 17.10  periodic membership dues.  Sports and athletic facilities 
 17.11  include golf courses; tennis, racquetball, handball, and squash 
 17.12  courts; basketball and volleyball facilities; running tracks; 
 17.13  exercise equipment; swimming pools; and other similar athletic 
 17.14  or sports facilities; 
 17.15     (5) delivery of aggregate materials and concrete block by a 
 17.16  third party if the delivery would be subject to the sales tax if 
 17.17  provided by the seller of the aggregate material or concrete 
 17.18  block; and 
 17.19     (6) services as provided in this clause: 
 17.20     (i) laundry and dry cleaning services including cleaning, 
 17.21  pressing, repairing, altering, and storing clothes, linen 
 17.22  services and supply, cleaning and blocking hats, and carpet, 
 17.23  drapery, upholstery, and industrial cleaning.  Laundry and dry 
 17.24  cleaning services do not include services provided by coin 
 17.25  operated facilities operated by the customer; 
 17.26     (ii) motor vehicle washing, waxing, and cleaning services, 
 17.27  including services provided by coin operated facilities operated 
 17.28  by the customer, and rustproofing, undercoating, and towing of 
 17.29  motor vehicles; 
 17.30     (iii) building and residential cleaning, maintenance, and 
 17.31  disinfecting and exterminating services; 
 17.32     (iv) detective, security, burglar, fire alarm, and armored 
 17.33  car services; but not including services performed within the 
 17.34  jurisdiction they serve by off-duty licensed peace officers as 
 17.35  defined in section 626.84, subdivision 1, or services provided 
 17.36  by a nonprofit organization for monitoring and electronic 
 18.1   surveillance of persons placed on in-home detention pursuant to 
 18.2   court order or under the direction of the Minnesota department 
 18.3   of corrections; 
 18.4      (v) pet grooming services; 
 18.5      (vi) lawn care, fertilizing, mowing, spraying and sprigging 
 18.6   services; garden planting and maintenance; tree, bush, and shrub 
 18.7   pruning, bracing, spraying, and surgery; indoor plant care; 
 18.8   tree, bush, shrub, and stump removal; and tree trimming for 
 18.9   public utility lines.  Services performed under a construction 
 18.10  contract for the installation of shrubbery, plants, sod, trees, 
 18.11  bushes, and similar items are not taxable; 
 18.12     (vii) massages, except when provided by a licensed health 
 18.13  care facility or professional or upon written referral from a 
 18.14  licensed health care facility or professional for treatment of 
 18.15  illness, injury, or disease; and 
 18.16     (viii) the furnishing of lodging, board, and care services 
 18.17  for animals in kennels and other similar arrangements, but 
 18.18  excluding veterinary and horse boarding services. 
 18.19     In applying the provisions of this chapter, the terms 
 18.20  "tangible personal property" and "sales at retail" include 
 18.21  taxable services and the provision of taxable services, unless 
 18.22  specifically provided otherwise.  Services performed by an 
 18.23  employee for an employer are not taxable.  Services performed by 
 18.24  a partnership or association for another partnership or 
 18.25  association are not taxable if one of the entities owns or 
 18.26  controls more than 80 percent of the voting power of the equity 
 18.27  interest in the other entity.  Services performed between 
 18.28  members of an affiliated group of corporations are not taxable.  
 18.29  For purposes of this section, "affiliated group of corporations" 
 18.30  includes those entities that would be classified as members of 
 18.31  an affiliated group under United States Code, title 26, section 
 18.32  1504, and that are eligible to file a consolidated tax return 
 18.33  for federal income tax purposes. 
 18.34     (h) A sale and a purchase includes the furnishing for a 
 18.35  consideration of tangible personal property or taxable services 
 18.36  by the United States or any of its agencies or 
 19.1   instrumentalities, or the state of Minnesota, its agencies, 
 19.2   instrumentalities, or political subdivisions. 
 19.3      (i) A sale and a purchase includes the furnishing for a 
 19.4   consideration of telecommunications services, including cable 
 19.5   television services and direct satellite services.  
 19.6   Telecommunications services are taxed to the extent allowed 
 19.7   under federal law if those services: 
 19.8      (1) either (i) originate and terminate in this state; or 
 19.9   (ii) originate in this state and terminate outside the state and 
 19.10  the service is charged to a telephone number customer located in 
 19.11  this state or to the account of any transmission instrument in 
 19.12  this state; or (iii) originate outside this state and terminate 
 19.13  in this state and the service is charged to a telephone number 
 19.14  customer located in this state or to the account of any 
 19.15  transmission instrument in this state; or 
 19.16     (2) are rendered by providing a private communications 
 19.17  service for which the customer has one or more locations within 
 19.18  Minnesota connected to the service and the service is charged to 
 19.19  a telephone number customer located in this state or to the 
 19.20  account of any transmission instrument in this state. 
 19.21     All charges for mobile telecommunications services, as 
 19.22  defined in United States Code, title 4, section 124, are deemed 
 19.23  to be provided by the customer's home service provider and 
 19.24  sourced to the customer's place of primary use and are subject 
 19.25  to tax based upon the customer's place of primary use in 
 19.26  accordance with the Mobile Telecommunications Sourcing Act, 
 19.27  United States Code, title 4, sections 116 to 126.  All other 
 19.28  definitions and provisions of the Mobile Telecommunications 
 19.29  Sourcing Act as provided in United States Code, title 4, are 
 19.30  hereby adopted. 
 19.31     (j) A sale and a purchase includes the furnishing for a 
 19.32  consideration of installation if the installation charges would 
 19.33  be subject to the sales tax if the installation were provided by 
 19.34  the seller of the item being installed. 
 19.35     (k) A sale and a purchase includes the furnishing for a 
 19.36  consideration of the following services:  tax preparation 
 20.1   services; advertising and public relations services; consumer 
 20.2   credit and mercantile reporting services; collection agency 
 20.3   services; office administrative services; legal services; 
 20.4   engineering, architectural, and drafting services; accounting, 
 20.5   bookkeeping, and payroll services; commercial testing services; 
 20.6   computer system design and related services; management, 
 20.7   scientific, and technical consulting services; scientific 
 20.8   research and development services; surveying and mapping 
 20.9   services; and professional, scientific, and technical services. 
 20.10     [EFFECTIVE DATE.] This section is effective for sales and 
 20.11  purchases made after June 30, 2003. 
 20.12     Sec. 12.  Minnesota Statutes 2002, section 297A.62, 
 20.13  subdivision 1, is amended to read: 
 20.14     Subdivision 1.  [GENERALLY.] Except as otherwise provided 
 20.15  in subdivision 2 or 3 or in this chapter, a sales tax of 6.5 six 
 20.16  percent is imposed on the gross receipts from retail sales as 
 20.17  defined in section 297A.61, subdivision 4, made in this state or 
 20.18  to a destination in this state by a person who is required to 
 20.19  have or voluntarily obtains a permit under section 297A.83, 
 20.20  subdivision 1.  
 20.21     [EFFECTIVE DATE.] This section is effective for sales and 
 20.22  purchases made after June 30, 2003. 
 20.23     Sec. 13.  Minnesota Statutes 2002, section 297A.82, 
 20.24  subdivision 4, is amended to read: 
 20.25     Subd. 4.  [EXEMPTIONS.] (a) The following transactions are 
 20.26  exempt from the tax imposed in this chapter to the extent 
 20.27  provided. 
 20.28     (b) The purchase or use of aircraft previously registered 
 20.29  in Minnesota by a corporation or partnership is exempt if the 
 20.30  transfer constitutes a transfer within the meaning of section 
 20.31  351 or 721 of the Internal Revenue Code. 
 20.32     (c) The sale to or purchase, storage, use, or consumption 
 20.33  by a licensed aircraft dealer of an aircraft for which a 
 20.34  commercial use permit has been issued pursuant to section 
 20.35  360.654 is exempt, if the aircraft is resold while the permit is 
 20.36  in effect. 
 21.1      (d) Airflight equipment when sold to, or purchased, stored, 
 21.2   used, or consumed by airline companies, as defined in section 
 21.3   270.071, subdivision 4, is exempt.  For purposes of this 
 21.4   subdivision, "airflight equipment" includes airplanes and parts 
 21.5   necessary for the repair and maintenance of such airflight 
 21.6   equipment, and flight simulators, but does not include airplanes 
 21.7   with a gross weight of less than 30,000 pounds that are used on 
 21.8   intermittent or irregularly timed flights. 
 21.9      (e) Sales of, and the storage, distribution, use, or 
 21.10  consumption of aircraft, as defined in section 360.511 and 
 21.11  approved by the Federal Aviation Administration, and which the 
 21.12  seller delivers to a purchaser outside Minnesota or which, 
 21.13  without intermediate use, is shipped or transported outside 
 21.14  Minnesota by the purchaser are exempt, but only if the purchaser 
 21.15  is not a resident of Minnesota and provided that the aircraft is 
 21.16  not thereafter returned to a point within Minnesota, except in 
 21.17  the course of interstate commerce or isolated and occasional 
 21.18  use, and will be registered in another state or country upon its 
 21.19  removal from Minnesota.  This exemption applies even if the 
 21.20  purchaser takes possession of the aircraft in Minnesota and uses 
 21.21  the aircraft in the state exclusively for training purposes for 
 21.22  a period not to exceed ten days prior to removing the aircraft 
 21.23  from this state. 
 21.24     [EFFECTIVE DATE.] This section is effective for sales and 
 21.25  purchases made after June 30, 2003. 
 21.26     Sec. 14.  Minnesota Statutes 2002, section 297F.05, 
 21.27  subdivision 1, is amended to read: 
 21.28     Subdivision 1.  [RATES; CIGARETTES.] A tax is imposed upon 
 21.29  the sale of cigarettes in this state, upon having cigarettes in 
 21.30  possession in this state with intent to sell, upon any person 
 21.31  engaged in business as a distributor, and upon the use or 
 21.32  storage by consumers, at the following rates, subject to the 
 21.33  discount provided in this chapter: 
 21.34     (1) on cigarettes weighing not more than three pounds per 
 21.35  thousand, 24 38.5 mills on each such cigarette; and 
 21.36     (2) on cigarettes weighing more than three pounds per 
 22.1   thousand, 48 77 mills on each such cigarette. 
 22.2      [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 22.3      Sec. 15.  Minnesota Statutes 2002, section 297F.05, 
 22.4   subdivision 3, is amended to read: 
 22.5      Subd. 3.  [RATES; TOBACCO PRODUCTS.] A tax is imposed upon 
 22.6   all tobacco products in this state and upon any person engaged 
 22.7   in business as a distributor, at the rate of 35 49 percent of 
 22.8   the wholesale sales price of the tobacco products.  The tax is 
 22.9   imposed at the time the distributor: 
 22.10     (1) brings, or causes to be brought, into this state from 
 22.11  outside the state tobacco products for sale; 
 22.12     (2) makes, manufactures, or fabricates tobacco products in 
 22.13  this state for sale in this state; or 
 22.14     (3) ships or transports tobacco products to retailers in 
 22.15  this state, to be sold by those retailers. 
 22.16     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 22.17     Sec. 16.  Minnesota Statutes 2002, section 297F.05, 
 22.18  subdivision 4, is amended to read: 
 22.19     Subd. 4.  [USE TAX; TOBACCO PRODUCTS.] A tax is imposed 
 22.20  upon the use or storage by consumers of tobacco products in this 
 22.21  state, and upon such consumers, at the rate of 35 49 percent of 
 22.22  the cost to the consumer of the tobacco products. 
 22.23     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 22.24     Sec. 17.  Minnesota Statutes 2002, section 297F.08, 
 22.25  subdivision 7, is amended to read: 
 22.26     Subd. 7.  [PRICE OF STAMPS.] The commissioner shall sell 
 22.27  stamps to any person licensed as a distributor at a discount 
 22.28  of 1.0 0.65 percent from the face amount of the stamps for the 
 22.29  first $1,500,000 $2,400,000 of such stamps purchased in any 
 22.30  fiscal year; and at a discount of 0.6 0.4 percent on the 
 22.31  remainder of such stamps purchased in any fiscal year.  The 
 22.32  commissioner shall not sell stamps to any other person.  The 
 22.33  commissioner may prescribe the method of shipment of the stamps 
 22.34  to the distributor as well as the quantities of stamps purchased.
 22.35     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 22.36     Sec. 18.  Minnesota Statutes 2002, section 297F.09, 
 23.1   subdivision 2, is amended to read: 
 23.2      Subd. 2.  [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.] 
 23.3   On or before the 18th day of each calendar month, a distributor 
 23.4   with a place of business in this state shall file a return with 
 23.5   the commissioner showing the quantity and wholesale sales price 
 23.6   of each tobacco product: 
 23.7      (1) brought, or caused to be brought, into this state for 
 23.8   sale; and 
 23.9      (2) made, manufactured, or fabricated in this state for 
 23.10  sale in this state, during the preceding calendar month.  
 23.11  Every licensed distributor outside this state shall in like 
 23.12  manner file a return showing the quantity and wholesale sales 
 23.13  price of each tobacco product shipped or transported to 
 23.14  retailers in this state to be sold by those retailers, during 
 23.15  the preceding calendar month.  Returns must be made in the form 
 23.16  and manner prescribed by the commissioner and must contain any 
 23.17  other information required by the commissioner.  The return must 
 23.18  be accompanied by a remittance for the full tax liability shown, 
 23.19  less 1.5 1.00 percent of the liability as compensation to 
 23.20  reimburse the distributor for expenses incurred in the 
 23.21  administration of this chapter.  
 23.22     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 23.23     Sec. 19.  [FLOOR STOCKS TAX.] 
 23.24     Subdivision 1.  [CIGARETTES.] (a) A floor stocks tax is 
 23.25  imposed on every person engaged in business in this state as a 
 23.26  distributor, retailer, subjobber, vendor, manufacturer, or 
 23.27  manufacturer's representative of cigarettes, on the stamped 
 23.28  cigarettes and unaffixed stamps in the person's possession or 
 23.29  under the person's control at 12:01 a.m. on July 1, 2003.  The 
 23.30  tax is imposed at the following rates, subject to the discounts 
 23.31  in Minnesota Statutes, section 297F.08, subdivision 7: 
 23.32     (1) on cigarettes weighing not more than three pounds per 
 23.33  thousand, 14.5 mills on each cigarette; and 
 23.34     (2) on cigarettes weighing more than three pounds per 
 23.35  thousand, 29 mills on each cigarette. 
 23.36     (b) Each distributor, by July 8, 2003, shall file a report 
 24.1   with the commissioner of revenue, in the form the commissioner 
 24.2   prescribes, showing the stamped cigarettes and unaffixed stamps 
 24.3   on hand at 12:01 a.m. on July 1, 2003, and the amount of tax due 
 24.4   on the cigarettes and unaffixed stamps.  The tax imposed by this 
 24.5   section is due and payable by August 1, 2003, and after that 
 24.6   date bears interest as provided in Minnesota Statutes, section 
 24.7   270.75.  Each retailer, subjobber, vendor, manufacturer, or 
 24.8   manufacturer's representative shall file a return with the 
 24.9   commissioner, in the form the commissioner prescribes, showing 
 24.10  the cigarettes on hand at 12:01 a.m. on July 1, 2003, and pay 
 24.11  the tax due on them by August 1, 2003.  Tax not paid by the due 
 24.12  date bears interest as provided in Minnesota Statutes, section 
 24.13  270.75. 
 24.14     Subd. 2.  [TOBACCO PRODUCTS.] A floor stocks tax is imposed 
 24.15  on every person engaged in business in this state as a 
 24.16  distributor of tobacco products, at the rate of 14 percent of 
 24.17  the wholesale sales price of each tobacco product in the 
 24.18  person's possession or under the person's control at 12:01 a.m. 
 24.19  on July 1, 2003.  Each distributor, by July 8, 2003, shall file 
 24.20  a report with the commissioner of revenue, in the form the 
 24.21  commissioner prescribes, showing the tobacco products on hand at 
 24.22  12:01 a.m. on July 1, 2003, and the amount of tax due on them.  
 24.23  The tax imposed by this section, less the discount provided in 
 24.24  Minnesota Statutes, section 297F.09, subdivision 2, is due and 
 24.25  payable by August 1, 2003, and thereafter bears interest as 
 24.26  provided in Minnesota Statutes, section 270.75. 
 24.27     Subd. 3.  [AUDIT AND ENFORCEMENT.] The tax imposed by this 
 24.28  section is subject to the audit, assessment, and collection 
 24.29  provisions applicable to the taxes imposed under Minnesota 
 24.30  Statutes, chapter 297F.  The commissioner of revenue shall 
 24.31  deposit the revenue from the tax imposed under this section in 
 24.32  the health care access fund in the state treasury. 
 24.33     [EFFECTIVE DATE.] This section is effective July 1, 2003. 
 24.34     Sec. 20.  [REPEALER.] 
 24.35     (a) Minnesota Statutes 2002, sections 290.01, subdivision 
 24.36  19e; 290.068; 290.191, subdivision 4, are repealed. 
 25.1      (b) Minnesota Statutes 2002, sections 297A.68, subdivisions 
 25.2   11 and 30; and 297A.69, subdivision 6, are repealed. 
 25.3      [EFFECTIVE DATE.] Paragraph (a) of this section is 
 25.4   effective for taxable years beginning after December 31, 2002.  
 25.5   Paragraph (b) of this section is effective for sales and 
 25.6   purchases made after June 30, 2003.