1.1                          A bill for an act 
  1.2             relating to taxation; imposing a sales and use tax 
  1.3             within the tax relief area; providing for deposit of 
  1.4             the proceeds; amending Minnesota Statutes 1996, 
  1.5             sections 298.293; 298.294; and 298.296, subdivision 2. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1996, section 298.293, is 
  1.8   amended to read: 
  1.9      298.293 [EXPENDING FUNDS.] 
  1.10     The funds provided by section 298.28, subdivision 11, 
  1.11  relating to the northeast Minnesota economic protection trust 
  1.12  fund, except money expended pursuant to Laws 1982, Second 
  1.13  Special Session, chapter 2, sections 8 to 14, shall be expended 
  1.14  only in an amount that does not exceed the sum of the net 
  1.15  interest, dividends, and earnings arising from the investment of 
  1.16  the trust for the preceding 12 calendar months from the date of 
  1.17  the authorization plus, for fiscal year 1983, $10,000,000 from 
  1.18  the corpus of the fund the amount of tax proceeds deposited in 
  1.19  the fund under section 4.  The funds may be spent only in or for 
  1.20  the benefit of those areas that are tax relief areas as defined 
  1.21  in section 273.134.  If during any year the taconite property 
  1.22  tax account under sections 273.134 to 273.136 does not contain 
  1.23  sufficient funds to pay the property tax relief specified in 
  1.24  Laws 1977, chapter 423, article X, section 4, there is 
  1.25  appropriated from this trust fund to the relief account 
  2.1   sufficient funds to pay the relief specified in Laws 1977, 
  2.2   chapter 423, article X, section 4. 
  2.3      Sec. 2.  Minnesota Statutes 1996, section 298.294, is 
  2.4   amended to read: 
  2.5      298.294 [INVESTMENT OF FUND.] 
  2.6      The trust fund established by section 298.292 shall be 
  2.7   invested pursuant to law by the state board of investment and 
  2.8   the net interest, dividends, and other earnings arising from the 
  2.9   investments shall be transferred on the first day of each month 
  2.10  to the trust and shall be included and become part of the trust 
  2.11  fund.  The amounts transferred, including the interest, 
  2.12  dividends, and other earnings earned prior to July 13, 1982, 
  2.13  together with the additional amount of $10,000,000 for fiscal 
  2.14  year 1983, which is appropriated April 21, 1983, and together 
  2.15  with the proceeds of the tax imposed under section 4 are 
  2.16  appropriated from the trust fund to the commissioner of iron 
  2.17  range resources and rehabilitation for deposit in a separate 
  2.18  account for expenditure for the purposes set forth in section 
  2.19  298.292.  Amounts appropriated pursuant to this section shall 
  2.20  not cancel but shall remain available unless expended.  
  2.21     Sec. 3.  Minnesota Statutes 1996, section 298.296, 
  2.22  subdivision 2, is amended to read: 
  2.23     Subd. 2.  [EXPENDITURE OF FUNDS.] Before January 1, 2002, 
  2.24  funds may be expended on projects and for administration of the 
  2.25  trust fund only from the proceeds of the tax imposed under 
  2.26  section 4 and from the net interest, earnings, and dividends 
  2.27  arising from the investment of the trust at any time, including 
  2.28  net interest, earnings, and dividends that have arisen prior to 
  2.29  July 13, 1982, plus $10,000,000 made available for use in fiscal 
  2.30  year 1983, except that any amount required to be paid out of the 
  2.31  trust fund to provide the property tax relief specified in Laws 
  2.32  1977, chapter 423, article X, section 4, and to make school bond 
  2.33  payments and payments to recipients of taconite production tax 
  2.34  proceeds pursuant to section 298.225, may be taken from the 
  2.35  corpus of the trust.  Additionally, upon recommendation by the 
  2.36  board, up to $13,000,000 from the corpus of the trust may be 
  3.1   made available for use as provided in subdivision 4, and up to 
  3.2   $10,000,000 from the corpus of the trust may be made available 
  3.3   for use as provided in section 298.2961.  On and after January 
  3.4   1, 2002, funds may be expended on projects and for 
  3.5   administration from any assets of the trust.  Annual 
  3.6   administrative costs, not including detailed engineering 
  3.7   expenses for the projects, shall not exceed five percent of the 
  3.8   net interest, dividends, and earnings arising from the trust in 
  3.9   the preceding fiscal year.  
  3.10     Principal and interest received in repayment of loans made 
  3.11  pursuant to this section, and earnings on other investments made 
  3.12  under section 298.292, subdivision 2, clause (4), shall be 
  3.13  deposited in the state treasury and credited to the trust.  
  3.14  These receipts are appropriated to the board for the purposes of 
  3.15  sections 298.291 to 298.298. 
  3.16     Sec. 4.  [TAX RELIEF AREA SALES AND USE TAX.] 
  3.17     Subdivision 1.  [TAX IMPOSED.] An additional sales tax at a 
  3.18  rate of one-half of one percent is imposed on all sales taxable 
  3.19  under Minnesota Statutes, chapter 297A, that occur in the tax 
  3.20  relief area and an additional compensating use tax at a rate of 
  3.21  one-half of one percent is imposed on uses of property within 
  3.22  the tax relief area, the sale of which would be subject to the 
  3.23  additional sales tax but for the fact the property was sold 
  3.24  outside the tax relief area.  The tax is not imposed on the 
  3.25  purchase or acquisition of motor vehicles. 
  3.26     Subd. 2.  [DEFINITION.] For purposes of this section, "tax 
  3.27  relief area" means the tax relief area as defined in Minnesota 
  3.28  Statutes, section 273.134. 
  3.29     Subd. 3.  [ENFORCEMENT, COLLECTION, AND ADMINISTRATION OF 
  3.30  TAXES.] The commissioner of revenue shall administer and collect 
  3.31  the tax imposed under this section in the manner provided by 
  3.32  Minnesota Statutes, chapters 289A and 297A, and the same 
  3.33  penalties, interest, and enforcement provisions apply.  The 
  3.34  proceeds of the taxes, less refunds and a proportionate share of 
  3.35  the cost of collection, shall be deposited at least quarterly in 
  3.36  the northeast Minnesota economic protection trust fund under 
  4.1   Minnesota Statutes, section 298.292.  The commissioner shall 
  4.2   deduct from the proceeds collected an amount that equals the 
  4.3   indirect statewide cost as well as the direct and indirect 
  4.4   department costs necessary to administer, audit, and collect the 
  4.5   tax.  The amount deducted shall be deposited in the state 
  4.6   general fund. 
  4.7      Subd. 4.  [EXEMPTION.] For purposes of this section, the 
  4.8   following sales that occur within the tax relief area are not 
  4.9   subject to the tax: 
  4.10     (1) the gross receipts from the sale of items that are 
  4.11  mailed, shipped, delivered, or removed from the tax relief area 
  4.12  and that are not returned except in the course of interstate or 
  4.13  intrastate commerce are exempt to the same extent that those 
  4.14  items would be exempt from the state sales tax if they were 
  4.15  mailed, shipped, delivered, or removed from the state and are 
  4.16  not returned to the state except in the course of interstate 
  4.17  commerce; 
  4.18     (2) all mobile transportation equipment and parts and 
  4.19  accessories attached to or to be attached to the equipment would 
  4.20  be exempt if purchased by a person using a motor carrier direct 
  4.21  pay permit issued under Minnesota Statutes, section 297A.211; 
  4.22  and 
  4.23     (3) all items or services exempt from the state sales and 
  4.24  use tax. 
  4.25     Subd. 5.  [CREDIT FOR OTHER LOCAL TAXES.] If taxable items 
  4.26  or services have been subjected to another local or area sales 
  4.27  tax, and the items or services are used, stored, or consumed in 
  4.28  the tax relief area, a credit shall be given by the commissioner 
  4.29  for all legally imposed sales taxes paid by the purchaser with 
  4.30  respect to those items or services. 
  4.31     Subd. 6.  [ITEMS TAXED AT REGULAR RATE.] Any items of 
  4.32  tangible personal property or services that are taxed at a rate 
  4.33  less than the general sales and use tax rate under Minnesota 
  4.34  Statutes, chapter 297A, are subject to tax at the full rate of 
  4.35  tax imposed by this section. 
  4.36     Subd. 7.  [REFUNDS.] All requests for refunds of state 
  5.1   sales taxes paid in excess of the amount of tax legally due 
  5.2   apply to taxes paid on those items or services under this 
  5.3   section.  The full amount of the tax paid under this section on 
  5.4   items exempt from the state sales and use tax must be refunded 
  5.5   to the taxpayer. 
  5.6      Subd. 8.  [SERVICES.] Services that are taxable under the 
  5.7   general state sales tax under Minnesota Statutes, chapter 297A, 
  5.8   are subject to the tax imposed under this section if they are 
  5.9   performed wholly within the boundaries of the tax relief area 
  5.10  or, if performed partly within and partly without the tax relief 
  5.11  area, and the greater proportion of the service is performed 
  5.12  within the tax relief area, based upon the cost of performance. 
  5.13     Sec. 5.  [EFFECTIVE DATE.] 
  5.14     Section 4 is effective for sales after June 30, 1997.  
  5.15  Sections 1 to 3 are effective July 1, 1997.