HF 2095

1st Engrossment - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; making policy and administrative 
  1.3             changes to certain taxes and fees; amending Minnesota 
  1.4             Statutes 1994, sections 103E.611, subdivision 7; 
  1.5             165.08, subdivision 5; 270.067, subdivision 2; 
  1.6             270.102, subdivisions 1, 2, and 3; 270.70, subdivision 
  1.7             2; 273.13, subdivision 23; 275.61; 290.091, 
  1.8             subdivision 2; 295.51, subdivision 1, and by adding a 
  1.9             subdivision; 295.52, by adding a subdivision; 295.54, 
  1.10            subdivisions 1, 2, and by adding a subdivision; 
  1.11            296.141, subdivision 4; 297.04, subdivision 9; 
  1.12            297A.256, subdivision 1; and 458A.32, subdivision 4; 
  1.13            Minnesota Statutes 1995 Supplement, sections 115B.48, 
  1.14            by adding subdivisions; 115B.49, subdivisions 2 and 4; 
  1.15            273.13, subdivision 25; 275.08, subdivision 1b; 
  1.16            295.50, subdivisions 3 and 4; and 295.53, subdivisions 
  1.17            1 and 5; proposing coding for new law in Minnesota 
  1.18            Statutes, chapters 115B; 287; and 297A; repealing 
  1.19            Minnesota Statutes 1994, sections 273.1316; and 
  1.20            295.50, subdivisions 8, 9, 9a, 11, 12, and 12a. 
  1.21  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.22                             ARTICLE 1
  1.23                             INCOME TAX
  1.24     Section 1.  Minnesota Statutes 1994, section 165.08, 
  1.25  subdivision 5, is amended to read: 
  1.26     Subd. 5.  [EXEMPTIONS.] Notwithstanding any other provision 
  1.27  of law to the contrary, the properties, moneys, and other assets 
  1.28  of any joint and independent international authority or 
  1.29  commission created under subdivision 1, all revenues or other 
  1.30  income of any such authority or commission, and all bonds, 
  1.31  certificates of indebtedness, or other obligations issued by any 
  1.32  such authority or commission, and the interest thereon, shall be 
  1.33  exempt from all taxation, licenses, fees, or charges of any kind 
  2.1   imposed by the state or by any county, municipality, political 
  2.2   subdivision, taxing district, or other public agency or body of 
  2.3   the state. 
  2.4      Sec. 2.  Minnesota Statutes 1994, section 290.091, 
  2.5   subdivision 2, is amended to read: 
  2.6      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  2.7   this section, the following terms have the meanings given: 
  2.8      (a) "Alternative minimum taxable income" means the sum of 
  2.9   the following for the taxable year: 
  2.10     (1) the taxpayer's federal alternative minimum taxable 
  2.11  income as defined in section 55(b)(2) of the Internal Revenue 
  2.12  Code; 
  2.13     (2) the taxpayer's itemized deductions allowed in computing 
  2.14  federal alternative minimum taxable income, but excluding the 
  2.15  Minnesota charitable contribution deduction and the medical 
  2.16  expense deduction; 
  2.17     (3) for depletion allowances computed under section 613A(c) 
  2.18  of the Internal Revenue Code, with respect to each property (as 
  2.19  defined in section 614 of the Internal Revenue Code), to the 
  2.20  extent not included in federal alternative minimum taxable 
  2.21  income, the excess of the deduction for depletion allowable 
  2.22  under section 611 of the Internal Revenue Code for the taxable 
  2.23  year over the adjusted basis of the property at the end of the 
  2.24  taxable year (determined without regard to the depletion 
  2.25  deduction for the taxable year); 
  2.26     (4) to the extent not included in federal alternative 
  2.27  minimum taxable income, the amount of the tax preference for 
  2.28  intangible drilling cost under section 57(a)(2) of the Internal 
  2.29  Revenue Code determined without regard to subparagraph (E); 
  2.30     (5) to the extent not included in federal alternative 
  2.31  minimum taxable income, the amount of interest income as 
  2.32  provided by section 290.01, subdivision 19a, clause (1); 
  2.33     less the sum of the amounts determined under the following 
  2.34  clauses (1) to (3): 
  2.35     (1) interest income as defined in section 290.01, 
  2.36  subdivision 19b, clause (1); 
  3.1      (2) an overpayment of state income tax as provided by 
  3.2   section 290.01, subdivision 19b, clause (2), to the extent 
  3.3   included in federal alternative minimum taxable income; and 
  3.4      (3) the amount of investment interest paid or accrued 
  3.5   within the taxable year on indebtedness to the extent that the 
  3.6   amount does not exceed net investment income, as defined in 
  3.7   section 163(d)(4) of the Internal Revenue Code.  Interest does 
  3.8   not include amounts deducted in computing federal adjusted gross 
  3.9   income. 
  3.10     In the case of an estate or trust, alternative minimum 
  3.11  taxable income must be computed as provided in section 59(c) of 
  3.12  the Internal Revenue Code. 
  3.13     (b) "Investment interest" means investment interest as 
  3.14  defined in section 163(d)(3) of the Internal Revenue Code. 
  3.15     (c) "Tentative minimum tax" equals seven percent of 
  3.16  alternative minimum taxable income after subtracting the 
  3.17  exemption amount determined under subdivision 3. 
  3.18     (d) "Regular tax" means the tax that would be imposed under 
  3.19  this chapter (without regard to this section and section 
  3.20  290.032), reduced by the sum of the nonrefundable credits 
  3.21  allowed under this chapter.  
  3.22     (e) "Net minimum tax" means the minimum tax imposed by this 
  3.23  section. 
  3.24     (f) "Minnesota charitable contribution deduction" means a 
  3.25  charitable contribution deduction under section 170 of the 
  3.26  Internal Revenue Code to or for the use of an entity described 
  3.27  in section 290.21, subdivision 3, clauses (a) to (e).  When the 
  3.28  federal deduction for charitable contributions is limited under 
  3.29  section 170(b) of the Internal Revenue Code, the allowable 
  3.30  contributions in the year of contribution are deemed to be first 
  3.31  contributions to entities described in section 290.21, 
  3.32  subdivision 3, clauses (a) to (e). 
  3.33     Sec. 3.  Minnesota Statutes 1994, section 458A.32, 
  3.34  subdivision 4, is amended to read: 
  3.35     Subd. 4.  Revenue bonds of the authority shall be deemed 
  3.36  and treated as instrumentalities of a public government agency; 
  4.1   and as such, together with interest thereon, exempt from 
  4.2   taxation. 
  4.3      Sec. 4.  [EFFECTIVE DATE] 
  4.4      Sections 1 and 3 are effective for income earned after July 
  4.5   1, 1983, in taxable years beginning after December 31, 1982. 
  4.6   Section 2 is effective for taxable years beginning after 
  4.7   December 31, 1995. 
  4.8                              ARTICLE 2
  4.9                       SALES AND SPECIAL TAXES
  4.10     Section 1.  Minnesota Statutes 1995 Supplement, section 
  4.11  115B.48, is amended by adding a subdivision to read: 
  4.12     Subd. 7.  [FACILITY.] "Facility" means one or more 
  4.13  buildings or parts of a building and the equipment, 
  4.14  installations, and structures contained in the building, located 
  4.15  on a single site or on contiguous or adjacent sites.  Facility 
  4.16  includes any site or area where a hazardous substance, or a 
  4.17  pollutant or contaminant, has been deposited, stored, disposed 
  4.18  of, or placed, or otherwise comes to be located. 
  4.19     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
  4.20  115B.48, is amended by adding a subdivision to read: 
  4.21     Subd. 8.  [FULL-TIME EQUIVALENCE.] "Full-time equivalence" 
  4.22  means 2,000 hours worked by employees, owners, and others, at 
  4.23  duties related to the drycleaning operation in a drycleaning 
  4.24  facility during a 12-month period beginning July 1 of the 
  4.25  preceding year and running through June 30 of the year in which 
  4.26  the annual registration fee is due.  For those drycleaning 
  4.27  facilities that were in business less than the 12-month period, 
  4.28  full-time equivalence means the total of all of the hours worked 
  4.29  at duties related to the drycleaning operation in the 
  4.30  drycleaning facility, divided by 2,000 and multiplied by a 
  4.31  fraction, the numerator of which is 50 and the denominator of 
  4.32  which is the number of weeks in business during the reporting 
  4.33  period. 
  4.34     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
  4.35  115B.49, subdivision 2, is amended to read: 
  4.36     Subd. 2.  [REVENUE SOURCES.] Revenue from the following 
  5.1   sources must be deposited in the state treasury and credited to 
  5.2   the account: 
  5.3      (1) the proceeds of the fees imposed by subdivision 4; 
  5.4      (2) interest attributable to investment of money in the 
  5.5   account; 
  5.6      (3) penalties and interest collected under subdivision 4, 
  5.7   paragraphs (e) and (f) paragraph (d); and 
  5.8      (4) money received by the commissioner for deposit in the 
  5.9   account in the form of gifts, grants, and appropriations. 
  5.10     Sec. 4.  Minnesota Statutes 1995 Supplement, section 
  5.11  115B.49, subdivision 4, is amended to read: 
  5.12     Subd. 4.  [REGISTRATION; FEES.] (a) The owner or operator 
  5.13  of a drycleaning facility shall register on or before July 1 of 
  5.14  each year with the commissioner of revenue in a manner 
  5.15  prescribed by the commissioner of revenue and pay a registration 
  5.16  fee for the facility.  The amount of the fee is: 
  5.17     (1) $500, for facilities with a full-time equivalence of up 
  5.18  to four full-time equivalent employees fewer than five; 
  5.19     (2) $1,000, for facilities with a full-time equivalence of 
  5.20  five to ten full-time equivalent employees; and 
  5.21     (3) $1,500, for facilities with a full-time equivalence of 
  5.22  more than ten full-time equivalent employees. 
  5.23     (b) A person who sells drycleaning solvents for use by 
  5.24  drycleaning facilities in the state shall collect and remit to 
  5.25  the commissioner of revenue in a manner prescribed by the 
  5.26  commissioner of revenue, on or before the 20th day of the month 
  5.27  following the month in which the sales of drycleaning solvents 
  5.28  are made, a fee of: 
  5.29     (1) $3.50 for each gallon of perchloroethylene sold for use 
  5.30  by drycleaning facilities in the state; and 
  5.31     (2) 70 cents for each gallon of hydrocarbon-based 
  5.32  drycleaning solvent sold for use by drycleaning facilities in 
  5.33  the state. 
  5.34     (c) The commissioner of revenue shall provide each person 
  5.35  who pays a registration fee under paragraph (a) with a receipt.  
  5.36  The receipt or a copy of the receipt must be produced for 
  6.1   inspection at the request of any authorized representative of 
  6.2   the commissioner of revenue. 
  6.3      (d) The commissioner shall, after a public hearing but 
  6.4   notwithstanding section 16A.1285, subdivision 4, annually adjust 
  6.5   the fees in this subdivision as necessary to maintain an 
  6.6   unencumbered balance in the account of at least $1,000,000.  Any 
  6.7   adjustment under this paragraph must be prorated among all the 
  6.8   fees in this subdivision.  Fees adjusted under this paragraph 
  6.9   may not exceed 200 percent of the fees in this subdivision.  The 
  6.10  commissioner shall notify the commissioner of revenue of an 
  6.11  adjustment under this paragraph no later than March 1 of the 
  6.12  year in which the adjustment is to become effective.  The 
  6.13  adjustment is effective for sales of drycleaning solvents made, 
  6.14  and annual registration fees due, beginning on July 1 of the 
  6.15  same year. 
  6.16     (e) An owner of a drycleaning facility who fails to pay a 
  6.17  fee under paragraph (a) when due is subject to a penalty of $50 
  6.18  per facility for each day the fee is not paid. 
  6.19     (f) (d) To enforce this subdivision, the commissioner of 
  6.20  revenue may examine documents, assess and collect fees, conduct 
  6.21  investigations, issue subpoenas, grant extensions to file 
  6.22  returns and pay fees, impose sales and use tax penalties and 
  6.23  interest on the annual registration fee under paragraph (a) and 
  6.24  the monthly fee under paragraph (b), abate penalties and 
  6.25  interest, and administer appeals, in the manner provided in 
  6.26  chapters 270 and 289A.  The penalties and interest imposed on 
  6.27  taxes under chapter 297A apply to the fees imposed under this 
  6.28  subdivision.  Disclosure of data collected by the commissioner 
  6.29  of revenue under this subdivision is governed by chapter 270B. 
  6.30     Sec. 5.  [115B.491] [DRYCLEANING FACILITY USE FEE; 
  6.31  FACILITIES TO FILE RETURN.] 
  6.32     Subdivision 1.  [USE FEE.] A drycleaning facility that 
  6.33  purchases drycleaning solvents for use in Minnesota without 
  6.34  paying the seller of drycleaning solvents the fee under section 
  6.35  115B.49, subdivision 4, paragraph (b), is subject to an 
  6.36  equivalent fee.  Liability for the fee is incurred when 
  7.1   drycleaning solvents are received in Minnesota by the 
  7.2   drycleaning facility. 
  7.3      Subd. 2.  [RETURN REQUIRED.] On or before the 20th of each 
  7.4   calendar month, every drycleaning facility that has purchased 
  7.5   drycleaning solvents for use in this state during the preceding 
  7.6   calendar month, upon which the fee imposed by section 115B.49, 
  7.7   subdivision 4, paragraph (b), has not been paid to the seller of 
  7.8   the drycleaning solvents, shall file a return with the 
  7.9   commissioner of revenue showing the quantity of solvents 
  7.10  purchased and a computation of the fee under section 115B.49, 
  7.11  subdivision 4, paragraph (d).  The fee must accompany the 
  7.12  return.  The return must be made upon a form furnished and 
  7.13  prescribed by the commissioner of revenue and must contain such 
  7.14  other information as the commissioner of revenue may require. 
  7.15     Subd. 3.  [APPLICABILITY.] All of the provisions of section 
  7.16  115B.49, subdivision 4, paragraph (d), apply to this section. 
  7.17     Sec. 6.  [115B.492] [ALLOCATION OF PAYMENT.] 
  7.18     In the discretion of the commissioner of revenue, payments 
  7.19  received for fees may be credited first to the oldest liability 
  7.20  not secured by a judgment or lien.  For liabilities to which 
  7.21  payments are applied, the commissioner of revenue may credit 
  7.22  payments first to penalties, next to interest, and then to the 
  7.23  fee due. 
  7.24     Sec. 7.  Minnesota Statutes 1994, section 297.04, 
  7.25  subdivision 9, is amended to read: 
  7.26     Subd. 9.  [APPLICATION DENIAL; LICENSE SUSPENSION AND 
  7.27  REVOCATION.] (a) The commissioner may revoke, cancel, or suspend 
  7.28  the license or licenses of any distributor or subjobber for 
  7.29  violation of sections 297.01 to 297.13, or any other act 
  7.30  applicable to the sale of cigarettes, or any rule promulgated by 
  7.31  the commissioner, and may also revoke any such license or 
  7.32  licenses of any distributor or subjobber for the violation of 
  7.33  sections 297.31 to 297.39, or any other act applicable to the 
  7.34  sale of tobacco products, or any rule promulgated by the 
  7.35  commissioner in furtherance of sections 297.31 to 297.39.  The 
  7.36  commissioner may revoke, cancel, or suspend the license or 
  8.1   licenses of any distributor or subjobber for violation of 
  8.2   sections 325D.31 to 325D.42.  
  8.3      (b) The department must not issue or renew a license under 
  8.4   this chapter, and may revoke a license under this chapter, if 
  8.5   the applicant or licensee: 
  8.6      (1) owes $500 or more in delinquent taxes as defined in 
  8.7   section 270.72; 
  8.8      (2) after demand, has not filed tax returns required by the 
  8.9   commissioner of revenue; 
  8.10     (3) had a cigarette or tobacco license revoked by the 
  8.11  commissioner of revenue within the past two years; 
  8.12     (4) had a sales and use tax permit revoked by the 
  8.13  commissioner of revenue within the past two years; or 
  8.14     (5) has been convicted of a crime involving cigarettes, 
  8.15  including but not limited to:  selling stolen cigarettes or 
  8.16  tobacco items, receiving stolen cigarettes or tobacco items, or 
  8.17  involvement in the smuggling of cigarettes or tobacco items. 
  8.18     (c) No license shall be revoked, canceled, or suspended 
  8.19  under this chapter, and no application for a license shall be 
  8.20  denied under this chapter, except after 20 days' notice and 
  8.21  specifying the commissioner's allegations against the licensee 
  8.22  or applicant, and the right to request, in writing within 20 
  8.23  days, a contested case hearing by the commissioner as provided 
  8.24  in section 297.09 chapter 14.  If a written request for a 
  8.25  hearing is received by the department of revenue within 20 days 
  8.26  of the date of the initial notice, the hearing must be held 
  8.27  within 45 days after referral to the office of administrative 
  8.28  hearings, and no earlier than 20 days after notice to the 
  8.29  licensee or applicant of the hearing time and place.  A license 
  8.30  is revoked or suspended, and an application is denied, when the 
  8.31  commissioner serves notice of revocation, suspension, or denial 
  8.32  after 20 days have passed following the initial notice under 
  8.33  this paragraph without a request for hearing being made, or if a 
  8.34  hearing is held, after the commissioner serves an order of 
  8.35  revocation, suspension, or denial under section 14.62, 
  8.36  subdivision 1.  All notices under this paragraph may be served 
  9.1   personally or by mail.  
  9.2      Sec. 8.  [297A.023] [REMITTANCE OF AMOUNTS COLLECTED AS 
  9.3   TAXES.] 
  9.4      Any amounts collected, even if erroneously or illegally 
  9.5   collected, from a purchaser under a representation that they are 
  9.6   taxes imposed under chapter 297A are state funds from the time 
  9.7   of collection and must be reported on a return filed with the 
  9.8   commissioner and are not subject to refund without proof that 
  9.9   such amounts have been refunded or credited to the purchaser by 
  9.10  the seller. 
  9.11     Sec. 9.  Minnesota Statutes 1994, section 297A.256, 
  9.12  subdivision 1, is amended to read: 
  9.13     Subdivision 1.  [FUNDRAISING SALES BY NONPROFIT GROUPS.] 
  9.14  Notwithstanding the provisions of this chapter, the following 
  9.15  sales made by a "nonprofit organization" are exempt from the 
  9.16  sales and use tax. 
  9.17     (a)(1) All sales made by an organization for fundraising 
  9.18  purposes if that organization exists solely for the purpose of 
  9.19  providing educational or social activities for young people 
  9.20  primarily age 18 and under.  This exemption shall apply only if 
  9.21  the gross annual sales receipts of the organization from 
  9.22  fundraising do not exceed $10,000. 
  9.23     (2) A club, association, or other organization of 
  9.24  elementary or secondary school students organized for the 
  9.25  purpose of carrying on sports, educational, or other 
  9.26  extracurricular activities is a separate organization from the 
  9.27  school district or school for purposes of applying the $10,000 
  9.28  limit.  This paragraph does not apply if the sales are derived 
  9.29  from admission charges or from activities for which the money 
  9.30  must be deposited with the school district treasurer under 
  9.31  section 123.38, subdivision 2, or be recorded in the same manner 
  9.32  as other revenues or expenditures of the school district under 
  9.33  section 123.38, subdivision 2b. 
  9.34     (b) All sales made by an organization for fundraising 
  9.35  purposes if that organization is a senior citizen group or 
  9.36  association of groups that in general limits membership to 
 10.1   persons age 55 or older and is organized and operated 
 10.2   exclusively for pleasure, recreation and other nonprofit 
 10.3   purposes and no part of the net earnings inure to the benefit of 
 10.4   any private shareholders.  This exemption shall apply only if 
 10.5   the gross annual sales receipts of the organization from 
 10.6   fundraising do not exceed $10,000. 
 10.7      (c) The gross receipts from the sales of tangible personal 
 10.8   property at, admission charges for, and sales of food, meals, or 
 10.9   drinks at fundraising events sponsored by a nonprofit 
 10.10  organization when the entire proceeds, except for the necessary 
 10.11  expenses therewith, will be used solely and exclusively for 
 10.12  charitable, religious, or educational purposes.  This exemption 
 10.13  does not apply to admission charges for events involving bingo 
 10.14  or other gambling activities or to charges for use of amusement 
 10.15  devices involving bingo or other gambling activities.  For 
 10.16  purposes of this clause paragraph, a "nonprofit organization" 
 10.17  means any unit of government, corporation, society, association, 
 10.18  foundation, or institution organized and operated for 
 10.19  charitable, religious, educational, civic, fraternal, senior 
 10.20  citizens' or veterans' purposes, no part of the net earnings of 
 10.21  which enures to the benefit of a private individual. 
 10.22     If the profits are not used solely and exclusively for 
 10.23  charitable, religious, or educational purposes, the entire gross 
 10.24  receipts are subject to tax. 
 10.25     Each nonprofit organization shall keep a separate 
 10.26  accounting record, including receipts and disbursements from 
 10.27  each fundraising event.  All deductions from gross receipts must 
 10.28  be documented with receipts and other records.  If records are 
 10.29  not maintained as required, the entire gross receipts are 
 10.30  subject to tax. 
 10.31     The exemption provided by this section paragraph does not 
 10.32  apply to any sale made by or in the name of a nonprofit 
 10.33  corporation as the active or passive agent of a person that is 
 10.34  not a nonprofit corporation. 
 10.35     The exemption for fundraising events under this section 
 10.36  paragraph is limited to no more than 24 days a year.  
 11.1   Fundraising events conducted on premises leased or occupied for 
 11.2   more than four days but less than 30 days do not qualify for 
 11.3   this exemption. 
 11.4      (d) The gross receipts from the sale or use of tickets or 
 11.5   admissions to a golf tournament held in Minnesota are exempt if 
 11.6   the beneficiary of the tournament's net proceeds qualifies as a 
 11.7   tax-exempt organization under section 501(c)(3) of the Internal 
 11.8   Revenue Code, including a tournament conducted on premises 
 11.9   leased or occupied for more than four days. 
 11.10     Sec. 10.  [EFFECTIVE DATE.] 
 11.11     Sections 1 to 9 are effective the day following final 
 11.12  enactment. 
 11.13                             ARTICLE 3
 11.14                            PROPERTY TAX
 11.15     Section 1.  Minnesota Statutes 1994, section 103E.611, 
 11.16  subdivision 7, is amended to read: 
 11.17     Subd. 7.  [COLLECTION AND ENFORCEMENT OF DRAINAGE LIENS.] 
 11.18  The provisions of law that exist relating to the enforcement, 
 11.19  collection of, penalty, and interest provisions relating to real 
 11.20  estate taxes are adopted apply to enforce the payment of 
 11.21  drainage liens.  If there is a default, a penalty may not be 
 11.22  added to an installment of principal and interest, but each 
 11.23  defaulted payment, principal, and interest draws interest from 
 11.24  the date of default until paid at the rate determined by the 
 11.25  state court administrator for judgments under section 549.09.  
 11.26     Sec. 2.  Minnesota Statutes 1994, section 273.13, 
 11.27  subdivision 23, is amended to read: 
 11.28     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
 11.29  land including any improvements that is homesteaded.  The market 
 11.30  value of the house and garage and immediately surrounding one 
 11.31  acre of land has the same class rates as class 1a property under 
 11.32  subdivision 22.  The value of the remaining land including 
 11.33  improvements up to $115,000 has a net class rate of .45 percent 
 11.34  of market value and a gross class rate of 1.75 percent of market 
 11.35  value.  The remaining value of class 2a property over $115,000 
 11.36  of market value that does not exceed 320 acres has a net class 
 12.1   rate of one percent of market value, and a gross class rate of 
 12.2   2.25 percent of market value.  The remaining property over the 
 12.3   $115,000 market value in excess of 320 acres has a class rate of 
 12.4   1.5 percent of market value, and a gross class rate of 2.25 
 12.5   percent of market value.  
 12.6      (b) Class 2b property is (1) real estate, rural in 
 12.7   character and used exclusively for growing trees for timber, 
 12.8   lumber, and wood and wood products; (2) real estate that is not 
 12.9   improved with a structure and is used exclusively for growing 
 12.10  trees for timber, lumber, and wood and wood products, if the 
 12.11  owner has participated or is participating in a cost-sharing 
 12.12  program for afforestation, reforestation, or timber stand 
 12.13  improvement on that particular property, administered or 
 12.14  coordinated by the commissioner of natural resources; (3) real 
 12.15  estate that is nonhomestead agricultural land; or (4) a landing 
 12.16  area or public access area of a privately owned public use 
 12.17  airport.  Class 2b property has a net class rate of 1.5 percent 
 12.18  of market value, and a gross class rate of 2.25 percent of 
 12.19  market value.  
 12.20     (c) Agricultural land as used in this section means 
 12.21  contiguous acreage of ten acres or more, primarily used during 
 12.22  the preceding year for agricultural purposes.  Agricultural use 
 12.23  may include pasture, timber, waste, unusable wild land, and land 
 12.24  included in state or federal farm or conservation programs.  
 12.25  "Agricultural purposes" as used in this section means the 
 12.26  raising or cultivation of agricultural products.  Land enrolled 
 12.27  in the Reinvest in Minnesota program under sections 103F.505 to 
 12.28  103F.531 or the federal Conservation Reserve Program as 
 12.29  contained in Public Law Number 99-198, and consisting of a 
 12.30  minimum of ten contiguous acres, shall be classified as 
 12.31  agricultural. 
 12.32     (d) Real estate of less than ten acres used principally for 
 12.33  raising or cultivating agricultural products, shall be 
 12.34  considered as agricultural land, if it is not used primarily for 
 12.35  residential purposes.  
 12.36     (e) The term "agricultural products" as used in this 
 13.1   subdivision includes:  
 13.2      (1) livestock, dairy animals, dairy products, poultry and 
 13.3   poultry products, fur-bearing animals, horticultural and nursery 
 13.4   stock described in sections 18.44 to 18.61, fruit of all kinds, 
 13.5   vegetables, forage, grains, bees, and apiary products by the 
 13.6   owner; 
 13.7      (2) fish bred for sale and consumption if the fish breeding 
 13.8   occurs on land zoned for agricultural use; 
 13.9      (3) the commercial boarding of horses if the boarding is 
 13.10  done in conjunction with raising or cultivating agricultural 
 13.11  products as defined in clause (1); 
 13.12     (4) property which is owned and operated by nonprofit 
 13.13  organizations used for equestrian activities, excluding racing; 
 13.14  and 
 13.15     (5) game birds and waterfowl bred and raised for use on a 
 13.16  shooting preserve licensed under section 97A.115.  
 13.17     (f) If a parcel used for agricultural purposes is also used 
 13.18  for commercial or industrial purposes, including but not limited 
 13.19  to:  
 13.20     (1) wholesale and retail sales; 
 13.21     (2) processing of raw agricultural products or other goods; 
 13.22     (3) warehousing or storage of processed goods; and 
 13.23     (4) office facilities for the support of the activities 
 13.24  enumerated in clauses (1), (2), and (3), 
 13.25  the assessor shall classify the part of the parcel used for 
 13.26  agricultural purposes as class 1b, 2a, or 2b, whichever is 
 13.27  appropriate, and the remainder in the class appropriate to its 
 13.28  use.  The grading, sorting, and packaging of raw agricultural 
 13.29  products for first sale is considered an agricultural purpose.  
 13.30  A greenhouse or other building where horticultural or nursery 
 13.31  products are grown that is also used for the conduct of retail 
 13.32  sales must be classified as agricultural if it is primarily used 
 13.33  for the growing of horticultural or nursery products from seed, 
 13.34  cuttings, or roots and occasionally as a showroom for the retail 
 13.35  sale of those products.  Use of a greenhouse or building only 
 13.36  for the display of already grown horticultural or nursery 
 14.1   products does not qualify as an agricultural purpose.  
 14.2      The assessor shall determine and list separately on the 
 14.3   records the market value of the homestead dwelling and the one 
 14.4   acre of land on which that dwelling is located.  If any farm 
 14.5   buildings or structures are located on this homesteaded acre of 
 14.6   land, their market value shall not be included in this separate 
 14.7   determination.  
 14.8      (g) To qualify for classification under paragraph (b), 
 14.9   clause (4), a privately owned public use airport must be 
 14.10  licensed as a public airport under section 360.018.  For 
 14.11  purposes of paragraph (b), clause (4), "landing area" means that 
 14.12  part of a privately owned public use airport properly cleared, 
 14.13  regularly maintained, and made available to the public for use 
 14.14  by aircraft and includes runways, taxiways, aprons, and sites 
 14.15  upon which are situated landing or navigational aids.  A landing 
 14.16  area also includes land underlying both the primary surface and 
 14.17  the approach surfaces that comply with all of the following:  
 14.18     (i) the land is properly cleared and regularly maintained 
 14.19  for the primary purposes of the landing, taking off, and taxiing 
 14.20  of aircraft; but that portion of the land that contains 
 14.21  facilities for servicing, repair, or maintenance of aircraft is 
 14.22  not included as a landing area; 
 14.23     (ii) the land is part of the airport property; and 
 14.24     (iii) the land is not used for commercial or residential 
 14.25  purposes. 
 14.26  The land contained in a landing area under paragraph (b), clause 
 14.27  (4), must be described and certified by the commissioner of 
 14.28  transportation.  The certification is effective until it is 
 14.29  modified, or until the airport or landing area no longer meets 
 14.30  the requirements of paragraph (b), clause (4).  For purposes of 
 14.31  paragraph (b), clause (4), "public access area" means property 
 14.32  used as an aircraft parking ramp, apron, or storage hangar, or 
 14.33  an arrival and departure building in connection with the airport.
 14.34     Sec. 3.  Minnesota Statutes 1995 Supplement, section 
 14.35  273.13, subdivision 25, is amended to read: 
 14.36     Subd. 25.  [CLASS 4.] (a) Class 4a is residential real 
 15.1   estate containing four or more units and used or held for use by 
 15.2   the owner or by the tenants or lessees of the owner as a 
 15.3   residence for rental periods of 30 days or more.  Class 4a also 
 15.4   includes hospitals licensed under sections 144.50 to 144.56, 
 15.5   other than hospitals exempt under section 272.02, and contiguous 
 15.6   property used for hospital purposes, without regard to whether 
 15.7   the property has been platted or subdivided.  Class 4a property 
 15.8   in a city with a population of 5,000 or less, that is (1) 
 15.9   located outside of the metropolitan area, as defined in section 
 15.10  473.121, subdivision 2, or outside any county contiguous to the 
 15.11  metropolitan area, and (2) whose city boundary is at least 15 
 15.12  miles from the boundary of any city with a population greater 
 15.13  than 5,000 has a class rate of 2.3 percent of market value for 
 15.14  taxes payable in 1996 and thereafter.  All other class 4a 
 15.15  property has a class rate of 3.4 percent of market value for 
 15.16  taxes payable in 1996 and thereafter.  For purposes of this 
 15.17  paragraph, population has the same meaning given in section 
 15.18  477A.011, subdivision 3. 
 15.19     (b) Class 4b includes: 
 15.20     (1) residential real estate containing less than four 
 15.21  units, other than seasonal residential, and recreational; 
 15.22     (2) manufactured homes not classified under any other 
 15.23  provision; 
 15.24     (3) a dwelling, garage, and surrounding one acre of 
 15.25  property on a nonhomestead farm classified under subdivision 23, 
 15.26  paragraph (b).  
 15.27     Class 4b property has a class rate of 2.8 percent of market 
 15.28  value for taxes payable in 1992, 2.5 percent of market value for 
 15.29  taxes payable in 1993, and 2.3 percent of market value for taxes 
 15.30  payable in 1994 and thereafter. 
 15.31     (c) Class 4c property includes: 
 15.32     (1) a structure that is:  
 15.33     (i) situated on real property that is used for housing for 
 15.34  the elderly or for low- and moderate-income families as defined 
 15.35  in Title II, as amended through December 31, 1990, of the 
 15.36  National Housing Act or the Minnesota housing finance agency law 
 16.1   of 1971, as amended, or rules promulgated by the agency and 
 16.2   financed by a direct federal loan or federally insured loan made 
 16.3   pursuant to Title II of the Act; or 
 16.4      (ii) situated on real property that is used for housing the 
 16.5   elderly or for low- and moderate-income families as defined by 
 16.6   the Minnesota housing finance agency law of 1971, as amended, or 
 16.7   rules adopted by the agency pursuant thereto and financed by a 
 16.8   loan made by the Minnesota housing finance agency pursuant to 
 16.9   the provisions of the act.  
 16.10     This clause applies only to property of a nonprofit or 
 16.11  limited dividend entity.  Property is classified as class 4c 
 16.12  under this clause for 15 years from the date of the completion 
 16.13  of the original construction or substantial rehabilitation, or 
 16.14  for the original term of the loan.  
 16.15     (2) a structure that is: 
 16.16     (i) situated upon real property that is used for housing 
 16.17  lower income families or elderly or handicapped persons, as 
 16.18  defined in section 8 of the United States Housing Act of 1937, 
 16.19  as amended; and 
 16.20     (ii) owned by an entity which has entered into a housing 
 16.21  assistance payments contract under section 8 which provides 
 16.22  assistance for 100 percent of the dwelling units in the 
 16.23  structure, other than dwelling units intended for management or 
 16.24  maintenance personnel.  Property is classified as class 4c under 
 16.25  this clause for the term of the housing assistance payments 
 16.26  contract, including all renewals, or for the term of its 
 16.27  permanent financing, whichever is shorter; and 
 16.28     (3) a qualified low-income building as defined in section 
 16.29  42(c)(2) of the Internal Revenue Code of 1986, as amended 
 16.30  through December 31, 1990, that (i) receives a low-income 
 16.31  housing credit under section 42 of the Internal Revenue Code of 
 16.32  1986, as amended through December 31, 1990; or (ii) meets the 
 16.33  requirements of that section and receives public financing, 
 16.34  except financing provided under sections 469.174 to 469.179, 
 16.35  which contains terms restricting the rents; or (iii) meets the 
 16.36  requirements of section 273.1317.  Classification pursuant to 
 17.1   this clause is limited to a term of 15 years.  The public 
 17.2   financing received must be from at least one of the following 
 17.3   sources:  government issued bonds exempt from taxes under 
 17.4   section 103 of the Internal Revenue Code of 1986, as amended 
 17.5   through December 31, 1993, the proceeds of which are used for 
 17.6   the acquisition or rehabilitation of the building; programs 
 17.7   under section 221(d)(3), 202, or 236, of Title II of the 
 17.8   National Housing Act; rental housing program funds under Section 
 17.9   8 of the United States Housing Act of 1937 or the market rate 
 17.10  family graduated payment mortgage program funds administered by 
 17.11  the Minnesota housing finance agency that are used for the 
 17.12  acquisition or rehabilitation of the building; public financing 
 17.13  provided by a local government used for the acquisition or 
 17.14  rehabilitation of the building, including grants or loans from 
 17.15  federal community development block grants, HOME block grants, 
 17.16  or residential rental bonds issued under chapter 474A; or other 
 17.17  rental housing program funds provided by the Minnesota housing 
 17.18  finance agency for the acquisition or rehabilitation of the 
 17.19  building. 
 17.20     For all properties described in clauses (1), (2), and (3) 
 17.21  and in paragraph (d), the market value determined by the 
 17.22  assessor must be based on the normal approach to value using 
 17.23  normal unrestricted rents unless the owner of the property 
 17.24  elects to have the property assessed under Laws 1991, chapter 
 17.25  291, article 1, section 55.  If the owner of the property elects 
 17.26  to have the market value determined on the basis of the actual 
 17.27  restricted rents, as provided in Laws 1991, chapter 291, article 
 17.28  1, section 55, the property will be assessed at the rate 
 17.29  provided for class 4a or class 4b property, as appropriate.  
 17.30  Properties described in clauses (1)(ii), (3), and (4) may apply 
 17.31  to the assessor for valuation under Laws 1991, chapter 291, 
 17.32  article 1, section 55.  The land on which these structures are 
 17.33  situated has the class rate given in paragraph (b) if the 
 17.34  structure contains fewer than four units, and the class rate 
 17.35  given in paragraph (a) if the structure contains four or more 
 17.36  units.  This clause applies only to the property of a nonprofit 
 18.1   or limited dividend entity.  
 18.2      (4) a parcel of land, not to exceed one acre, and its 
 18.3   improvements or a parcel of unimproved land, not to exceed one 
 18.4   acre, if it is owned by a neighborhood real estate trust and at 
 18.5   least 60 percent of the dwelling units, if any, on all land 
 18.6   owned by the trust are leased to or occupied by lower income 
 18.7   families or individuals.  This clause does not apply to any 
 18.8   portion of the land or improvements used for nonresidential 
 18.9   purposes.  For purposes of this clause, a lower income family is 
 18.10  a family with an income that does not exceed 65 percent of the 
 18.11  median family income for the area, and a lower income individual 
 18.12  is an individual whose income does not exceed 65 percent of the 
 18.13  median individual income for the area, as determined by the 
 18.14  United States Secretary of Housing and Urban Development.  For 
 18.15  purposes of this clause, "neighborhood real estate trust" means 
 18.16  an entity which is certified by the governing body of the 
 18.17  municipality in which it is located to have the following 
 18.18  characteristics: 
 18.19     (a) it is a nonprofit corporation organized under chapter 
 18.20  317A; 
 18.21     (b) it has as its principal purpose providing housing for 
 18.22  lower income families in a specific geographic community 
 18.23  designated in its articles or bylaws; 
 18.24     (c) it limits membership with voting rights to residents of 
 18.25  the designated community; and 
 18.26     (d) it has a board of directors consisting of at least 
 18.27  seven directors, 60 percent of whom are members with voting 
 18.28  rights and, to the extent feasible, 25 percent of whom are 
 18.29  elected by resident members of buildings owned by the trust; and 
 18.30     (5) except as provided in subdivision 22, paragraph (c), 
 18.31  real property devoted to temporary and seasonal residential 
 18.32  occupancy for recreation purposes, including real property 
 18.33  devoted to temporary and seasonal residential occupancy for 
 18.34  recreation purposes and not devoted to commercial purposes for 
 18.35  more than 250 days in the year preceding the year of 
 18.36  assessment.  For purposes of this clause, property is devoted to 
 19.1   a commercial purpose on a specific day if any portion of the 
 19.2   property is used for residential occupancy, and a fee is charged 
 19.3   for residential occupancy.  Class 4c also includes commercial 
 19.4   use real property used exclusively for recreational purposes in 
 19.5   conjunction with class 4c property devoted to temporary and 
 19.6   seasonal residential occupancy for recreational purposes, up to 
 19.7   a total of two acres, provided the property is not devoted to 
 19.8   commercial recreational use for more than 250 days in the year 
 19.9   preceding the year of assessment and is located within two miles 
 19.10  of the class 4c property with which it is used.  Class 4c 
 19.11  property classified in this clause also includes the remainder 
 19.12  of class 1c resorts.  Owners of real property devoted to 
 19.13  temporary and seasonal residential occupancy for recreation 
 19.14  purposes and all or a portion of which was devoted to commercial 
 19.15  purposes for not more than 250 days in the year preceding the 
 19.16  year of assessment desiring classification as class 1c or 4c, 
 19.17  must submit a declaration to the assessor designating the cabins 
 19.18  or units occupied for 250 days or less in the year preceding the 
 19.19  year of assessment by January 15 of the assessment year.  Those 
 19.20  cabins or units and a proportionate share of the land on which 
 19.21  they are located will be designated class 1c or 4c as otherwise 
 19.22  provided.  The remainder of the cabins or units and a 
 19.23  proportionate share of the land on which they are located will 
 19.24  be designated as class 3a.  The first $100,000 of the market 
 19.25  value of the remainder of the cabins or units and a 
 19.26  proportionate share of the land on which they are located shall 
 19.27  have a class rate of three percent.  The owner of property 
 19.28  desiring designation as class 1c or 4c property must provide 
 19.29  guest registers or other records demonstrating that the units 
 19.30  for which class 1c or 4c designation is sought were not occupied 
 19.31  for more than 250 days in the year preceding the assessment if 
 19.32  so requested.  The portion of a property operated as a (1) 
 19.33  restaurant, (2) bar, (3) gift shop, and (4) other nonresidential 
 19.34  facility operated on a commercial basis not directly related to 
 19.35  temporary and seasonal residential occupancy for recreation 
 19.36  purposes shall not qualify for class 1c or 4c; 
 20.1      (6) real property up to a maximum of one acre of land owned 
 20.2   by a nonprofit community service oriented organization; provided 
 20.3   that the property is not used for a revenue-producing activity 
 20.4   for more than six days in the calendar year preceding the year 
 20.5   of assessment and the property is not used for residential 
 20.6   purposes on either a temporary or permanent basis.  For purposes 
 20.7   of this clause, a "nonprofit community service oriented 
 20.8   organization" means any corporation, society, association, 
 20.9   foundation, or institution organized and operated exclusively 
 20.10  for charitable, religious, fraternal, civic, or educational 
 20.11  purposes, and which is exempt from federal income taxation 
 20.12  pursuant to section 501(c)(3), (10), or (19) of the Internal 
 20.13  Revenue Code of 1986, as amended through December 31, 1990.  For 
 20.14  purposes of this clause, "revenue-producing activities" shall 
 20.15  include but not be limited to property or that portion of the 
 20.16  property that is used as an on-sale intoxicating liquor or 3.2 
 20.17  percent malt liquor establishment licensed under chapter 340A, a 
 20.18  restaurant open to the public, bowling alley, a retail store, 
 20.19  gambling conducted by organizations licensed under chapter 349, 
 20.20  an insurance business, or office or other space leased or rented 
 20.21  to a lessee who conducts a for-profit enterprise on the 
 20.22  premises.  Any portion of the property which is used for 
 20.23  revenue-producing activities for more than six days in the 
 20.24  calendar year preceding the year of assessment shall be assessed 
 20.25  as class 3a.  The use of the property for social events open 
 20.26  exclusively to members and their guests for periods of less than 
 20.27  24 hours, when an admission is not charged nor any revenues are 
 20.28  received by the organization shall not be considered a 
 20.29  revenue-producing activity; 
 20.30     (7) post-secondary student housing of not more than one 
 20.31  acre of land that is owned by a nonprofit corporation organized 
 20.32  under chapter 317A and is used exclusively by a student 
 20.33  cooperative, sorority, or fraternity for on-campus housing or 
 20.34  housing located within two miles of the border of a college 
 20.35  campus; and 
 20.36     (8) manufactured home parks as defined in section 327.14, 
 21.1   subdivision 3. 
 21.2      Class 4c property has a class rate of 2.3 percent of market 
 21.3   value, except that (i) for each parcel of seasonal residential 
 21.4   recreational property not used for commercial purposes under 
 21.5   clause (5) the first $72,000 of market value on each parcel has 
 21.6   a class rate of 1.9 percent for taxes payable in 1997 and 1.8 
 21.7   percent for taxes payable in 1998 and thereafter, and the market 
 21.8   value of each parcel that exceeds $72,000 has a class rate of 
 21.9   2.5 percent, and (ii) manufactured home parks assessed under 
 21.10  clause (8) have a class rate of two percent for taxes payable in 
 21.11  1996, and thereafter.  
 21.12     (d) Class 4d property includes: 
 21.13     (1) a structure that is: 
 21.14     (i) situated on real property that is used for housing for 
 21.15  the elderly or for low and moderate income families as defined 
 21.16  by the Farmers Home Administration; 
 21.17     (ii) located in a municipality of less than 10,000 
 21.18  population; and 
 21.19     (iii) financed by a direct loan or insured loan from the 
 21.20  Farmers Home Administration.  Property is classified under this 
 21.21  clause for 15 years from the date of the completion of the 
 21.22  original construction or for the original term of the loan.  
 21.23     The class rates in paragraph (c), clauses (1), (2), and (3) 
 21.24  and this clause apply to the properties described in them, only 
 21.25  in proportion to occupancy of the structure by elderly or 
 21.26  handicapped persons or low and moderate income families as 
 21.27  defined in the applicable laws unless construction of the 
 21.28  structure had been commenced prior to January 1, 1984; or the 
 21.29  project had been approved by the governing body of the 
 21.30  municipality in which it is located prior to June 30, 1983; or 
 21.31  financing of the project had been approved by a federal or state 
 21.32  agency prior to June 30, 1983.  For those properties, 4c or 4d 
 21.33  classification is available only for those units meeting the 
 21.34  requirements of section 273.1318. 
 21.35     Classification under this clause is only available to 
 21.36  property of a nonprofit or limited dividend entity. 
 22.1      In the case of a structure financed or refinanced under any 
 22.2   federal or state mortgage insurance or direct loan program 
 22.3   exclusively for housing for the elderly or for housing for the 
 22.4   handicapped, a unit shall be considered occupied so long as it 
 22.5   is actually occupied by an elderly or handicapped person or, if 
 22.6   vacant, is held for rental to an elderly or handicapped person. 
 22.7      (2) For taxes payable in 1992, 1993, and 1994, only, 
 22.8   buildings and appurtenances, together with the land upon which 
 22.9   they are located, leased by the occupant under the community 
 22.10  lending model lease-purchase mortgage loan program administered 
 22.11  by the Federal National Mortgage Association, provided the 
 22.12  occupant's income is no greater than 60 percent of the county or 
 22.13  area median income, adjusted for family size and the building 
 22.14  consists of existing single family or duplex housing.  The lease 
 22.15  agreement must provide for a portion of the lease payment to be 
 22.16  escrowed as a nonrefundable down payment on the housing.  To 
 22.17  qualify under this clause, the taxpayer must apply to the county 
 22.18  assessor by May 30 of each year.  The application must be 
 22.19  accompanied by an affidavit or other proof required by the 
 22.20  assessor to determine qualification under this clause. 
 22.21     (3) Qualifying buildings and appurtenances, together with 
 22.22  the land upon which they are located, leased for a period of up 
 22.23  to five years by the occupant under a lease-purchase program 
 22.24  administered by the Minnesota housing finance agency or a 
 22.25  housing and redevelopment authority authorized under sections 
 22.26  469.001 to 469.047, provided the occupant's income is no greater 
 22.27  than 80 percent of the county or area median income, adjusted 
 22.28  for family size, and the building consists of two or less 
 22.29  dwelling units.  The lease agreement must provide for a portion 
 22.30  of the lease payment to be escrowed as a nonrefundable down 
 22.31  payment on the housing.  The administering agency shall verify 
 22.32  the occupants income eligibility and certify to the county 
 22.33  assessor that the occupant meets the income criteria under this 
 22.34  paragraph.  To qualify under this clause, the taxpayer must 
 22.35  apply to the county assessor by May 30 of each year.  For 
 22.36  purposes of this section, "qualifying buildings and 
 23.1   appurtenances" shall be defined as one or two unit residential 
 23.2   buildings which are unoccupied and have been abandoned and 
 23.3   boarded for at least six months. 
 23.4      Class 4d property has a class rate of two percent of market 
 23.5   value except that property classified under clause (3), shall 
 23.6   have the same class rate as class 1a property. 
 23.7      (e) Residential rental property that would otherwise be 
 23.8   assessed as class 4 property under paragraph (a); paragraph (b), 
 23.9   clauses (1) and (3); paragraph (c), clause (1), (2), (3), or 
 23.10  (4), is assessed at the class rate applicable to it under 
 23.11  Minnesota Statutes 1988, section 273.13, if it is found to be a 
 23.12  substandard building under section 273.1316.  Residential rental 
 23.13  property that would otherwise be assessed as class 4 property 
 23.14  under paragraph (d) is assessed at 2.3 percent of market value 
 23.15  if it is found to be a substandard building under section 
 23.16  273.1316. 
 23.17     Sec. 4.  Minnesota Statutes 1995 Supplement, section 
 23.18  275.08, subdivision 1b, is amended to read: 
 23.19     Subd. 1b.  [COMPUTATION OF TAX RATES.] The amounts 
 23.20  certified to be levied against net tax capacity under section 
 23.21  275.07 by an individual local government unit, except for any 
 23.22  amounts certified under sections 124A.03, subdivision 2a, and 
 23.23  275.61, shall be divided by the total net tax capacity of all 
 23.24  taxable properties within the local government unit's taxing 
 23.25  jurisdiction.  The resulting ratio, the local government's local 
 23.26  tax rate, multiplied by each property's net tax capacity shall 
 23.27  be each property's net tax capacity tax for that local 
 23.28  government unit before reduction by any credits.  
 23.29     Any amount certified to the county auditor under section 
 23.30  124A.03, subdivision 2a, or 275.61, after the dates given in 
 23.31  those sections, to be levied against market value shall be 
 23.32  divided by the total estimated referendum market value of all 
 23.33  taxable properties within the taxing district.  The resulting 
 23.34  ratio, the taxing district's new referendum tax rate, multiplied 
 23.35  by each property's estimated referendum market value shall be 
 23.36  each property's new referendum tax before reduction by any 
 24.1   credits.  For the purposes of this subdivision, "referendum 
 24.2   market value" means the market value as defined in section 
 24.3   124A.02, subdivision 3b. 
 24.4      Sec. 5.  Minnesota Statutes 1994, section 275.61, is 
 24.5   amended to read: 
 24.6      275.61 [REFERENDUM LEVY; MARKET VALUE.] 
 24.7      For local governmental subdivisions other than school 
 24.8   districts, any levy, including the issuance of debt obligations 
 24.9   payable in whole or in part from property taxes, required to be 
 24.10  approved and approved by the voters at a general or special 
 24.11  election for taxes payable in 1993 and thereafter, shall be 
 24.12  levied against the referendum market value of all taxable 
 24.13  property within the governmental subdivision, as defined in 
 24.14  section 124A.02, subdivision 3b.  Any levy amount subject to the 
 24.15  requirements of this section shall be certified separately to 
 24.16  the county auditor under section 275.07. 
 24.17     The ballot shall state the maximum amount of the increased 
 24.18  levy as a percentage of market value and the amount that will be 
 24.19  raised by the new referendum tax rate in the first year it is to 
 24.20  be levied. 
 24.21     Sec. 6.  [287.37] [INVESTIGATIONS AND ASSESSMENTS.] 
 24.22     The commissioner of revenue may investigate and examine 
 24.23  persons and transactions that are subject to this chapter using 
 24.24  the powers and authorities granted in chapters 270 and 289A.  
 24.25  The commissioner may issue orders of assessment under chapter 
 24.26  289A, and enforce collection of unpaid tax or penalty amounts, 
 24.27  including interest, under the authority of chapter 270.  All tax 
 24.28  amounts collected by the commissioner must be apportioned under 
 24.29  section 287.12.  The commissioner's expenses under this section 
 24.30  are not expenses of administration under section 287.33.  All 
 24.31  data and information made available to the commissioner under 
 24.32  this section is public except for investigative data covered by 
 24.33  section 270B.03, subdivision 6. 
 24.34     Sec. 7.  [REPEALER.] 
 24.35     Minnesota Statutes 1994, section 273.1316, is repealed. 
 24.36     Sec. 8.  [EFFECTIVE DATE.] 
 25.1      Section 1 is effective for lien amounts first becoming 
 25.2   payable in 1996 and thereafter.  Sections 2, 3, 6, and 7 are 
 25.3   effective the day following final enactment.  Sections 4 and 5 
 25.4   are effective for taxes levied in 1996 and thereafter, payable 
 25.5   in 1997 and thereafter.  
 25.6                              ARTICLE 4
 25.7                            MINNESOTACARE
 25.8      Section 1.  Minnesota Statutes 1995 Supplement, section 
 25.9   295.50, subdivision 3, is amended to read: 
 25.10     Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
 25.11  amounts received in money or otherwise by: 
 25.12     (1) a resident hospital for patient services; 
 25.13     (2) a resident surgical center for patient services; 
 25.14     (3) a nonresident hospital for patient services provided to 
 25.15  patients domiciled in Minnesota; 
 25.16     (4) a nonresident surgical center for patient services 
 25.17  provided to patients domiciled in Minnesota; 
 25.18     (5) a resident health care provider, other than a staff 
 25.19  model health carrier, for patient services; 
 25.20     (6) a nonresident health care provider for patient services 
 25.21  provided to an individual domiciled in Minnesota or patient 
 25.22  services provided in Minnesota; 
 25.23     (7) (4) a wholesale drug distributor for sale or 
 25.24  distribution of legend drugs that are delivered:  (i) to a 
 25.25  Minnesota resident by a wholesale drug distributor who is a 
 25.26  nonresident pharmacy directly, by common carrier, or by mail; or 
 25.27  (ii) in Minnesota by the wholesale drug distributor, by common 
 25.28  carrier, or by mail, unless the legend drugs are delivered to 
 25.29  another wholesale drug distributor who sells legend drugs 
 25.30  exclusively at wholesale.  Legend drugs do not include 
 25.31  nutritional products as defined in Minnesota Rules, part 
 25.32  9505.0325; 
 25.33     (8) (5) a staff model health plan company as gross premiums 
 25.34  for enrollees, copayments, deductibles, coinsurance, and fees 
 25.35  for patient services covered under its contracts with groups and 
 25.36  enrollees; and 
 26.1      (9) (6) a resident pharmacy for medical supplies, 
 26.2   appliances, and equipment; and 
 26.3      (10) a nonresident pharmacy for medical supplies, 
 26.4   appliances, and equipment provided to consumers domiciled in 
 26.5   Minnesota or delivered into Minnesota. 
 26.6      Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 26.7   295.50, subdivision 4, is amended to read: 
 26.8      Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
 26.9   provider" means: 
 26.10     (1) a person furnishing any or all of the following goods 
 26.11  or services directly to a patient or consumer:  medical, 
 26.12  surgical, optical, visual, dental, hearing, nursing services, 
 26.13  drugs, medical supplies, medical appliances, laboratory, 
 26.14  diagnostic or therapeutic services, or any goods and services 
 26.15  not listed above that qualify for reimbursement under the 
 26.16  medical assistance program provided under chapter 256B.  For 
 26.17  purposes of this clause, "directly to a patient or consumer" 
 26.18  includes goods and services provided in connection with 
 26.19  independent medical examinations under section 65B.56 or other 
 26.20  examinations for purposes of litigation or insurance claims; 
 26.21     (2) a staff model health plan company; or 
 26.22     (3) an ambulance service required to be licensed. 
 26.23     (b) Health care provider does not include hospitals, 
 26.24  nursing homes licensed under chapter 144A or licensed in any 
 26.25  other jurisdiction, pharmacies, surgical centers, bus and 
 26.26  taxicab transportation, or any other providers of transportation 
 26.27  services other than ambulance services required to be licensed, 
 26.28  supervised living facilities for persons with mental retardation 
 26.29  or related conditions, licensed under Minnesota Rules, parts 
 26.30  4665.0100 to 4665.9900, residential care homes licensed under 
 26.31  chapter 144B, board and lodging establishments providing only 
 26.32  custodial services that are licensed under chapter 157 and 
 26.33  registered under section 157.031 to provide supportive services 
 26.34  or health supervision services, adult foster homes as defined in 
 26.35  Minnesota Rules, part 9555.5050 9555.5105, day training and 
 26.36  habilitation services for adults with mental retardation and 
 27.1   related conditions as defined in section 252.41, subdivision 3, 
 27.2   and boarding care homes, as defined in Minnesota Rules, part 
 27.3   4655.0100. 
 27.4      Sec. 3.  Minnesota Statutes 1994, section 295.51, 
 27.5   subdivision 1, is amended to read: 
 27.6      Subdivision 1.  [BUSINESS TRANSACTIONS IN MINNESOTA.] A 
 27.7   hospital, surgical center, pharmacy, or health care provider is 
 27.8   subject to tax under sections 295.50 to 295.58 295.59 if it is 
 27.9   "transacting business in Minnesota."  A hospital, surgical 
 27.10  center, pharmacy, or health care provider is transacting 
 27.11  business in Minnesota only if it: 
 27.12     (1) maintains an office in Minnesota used in the trade or 
 27.13  business of providing patient services or medical supplies, 
 27.14  appliances, or equipment; 
 27.15     (2) has employees, representatives, or independent 
 27.16  contractors conducting business in Minnesota related to the 
 27.17  trade or business of providing patient services or medical 
 27.18  supplies, appliances, or equipment; 
 27.19     (3) regularly provides patient services or medical 
 27.20  supplies, appliances, or equipment to customers that receive the 
 27.21  services in Minnesota; 
 27.22     (4) regularly solicits business from potential customers in 
 27.23  Minnesota.  A hospital, surgical center, pharmacy, or health 
 27.24  care provider is presumed to regularly solicit business within 
 27.25  Minnesota if it receives gross receipts for patient services or 
 27.26  medical supplies, appliances, or equipment from 20 or more 
 27.27  patients domiciled in Minnesota in a calendar year; 
 27.28     (5) regularly performs services outside Minnesota the 
 27.29  benefits of which are consumed in Minnesota; 
 27.30     (6) owns or leases tangible personal or real property 
 27.31  physically located in Minnesota and used in the trade or 
 27.32  business of providing patient services or medical supplies, 
 27.33  appliances, or equipment; or 
 27.34     (7) receives medical assistance payments from the state of 
 27.35  Minnesota. maintains contacts with or presence in the state of 
 27.36  Minnesota sufficient to permit taxation of gross revenues 
 28.1   received for patient services under the United States 
 28.2   Constitution. 
 28.3      Sec. 4.  Minnesota Statutes 1994, section 295.51, is 
 28.4   amended by adding a subdivision to read: 
 28.5      Subd. 1a.  [NEXUS IN MINNESOTA.] A wholesale drug 
 28.6   distributor has nexus in Minnesota if its contacts with or 
 28.7   presence in Minnesota is sufficient to satisfy the requirements 
 28.8   of the United States Constitution. 
 28.9      Sec. 5.  Minnesota Statutes 1994, section 295.52, is 
 28.10  amended by adding a subdivision to read: 
 28.11     Subd. 4a.  [TAX COLLECTION.] A wholesale drug distributor 
 28.12  with nexus in Minnesota, who is not subject to tax under 
 28.13  subdivision 3, on all or a particular transaction, is required 
 28.14  to collect the tax imposed under subdivision 4, from the 
 28.15  purchaser of the drugs and give the purchaser a receipt for the 
 28.16  tax paid.  The tax collected shall be remitted to the 
 28.17  commissioner in the manner prescribed by section 295.55, 
 28.18  subdivision 3. 
 28.19     Sec. 6.  Minnesota Statutes 1995 Supplement, section 
 28.20  295.53, subdivision 1, is amended to read: 
 28.21     Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
 28.22  are excluded from the gross revenues subject to the hospital, 
 28.23  surgical center, or health care provider taxes under sections 
 28.24  295.50 to 295.57: 
 28.25     (1) payments received for services provided under the 
 28.26  Medicare program, including payments received from the 
 28.27  government, and organizations governed by sections 1833 and 1876 
 28.28  of title XVIII of the federal Social Security Act, United States 
 28.29  Code, title 42, section 1395, and enrollee deductibles, 
 28.30  coinsurance, and copayments, whether paid by the Medicare 
 28.31  enrollee or by a Medicare supplemental coverage as defined in 
 28.32  section 62A.011, subdivision 3, clause (10).  Payments for 
 28.33  services not covered by Medicare are taxable; 
 28.34     (2) medical assistance payments including payments received 
 28.35  directly from the government or from a prepaid plan; 
 28.36     (3) payments received for home health care services; 
 29.1      (4) payments received from hospitals or surgical centers 
 29.2   for goods and services on which liability for tax is imposed 
 29.3   under section 295.52 or the source of funds for the payment is 
 29.4   exempt under clause (1), (2), (7), (8), or (10) (9); 
 29.5      (5) payments received from health care providers for goods 
 29.6   and services on which liability for tax is imposed under this 
 29.7   chapter or the source of funds for the payment is exempt under 
 29.8   clause (1), (2), (7), (8), or (10) (9); 
 29.9      (6) amounts paid for legend drugs, other than nutritional 
 29.10  products, to a wholesale drug distributor reduced by 
 29.11  reimbursements received for legend drugs under clauses (1), (2), 
 29.12  (7), and (8); 
 29.13     (7) payments received under the general assistance medical 
 29.14  care program including payments received directly from the 
 29.15  government or from a prepaid plan; 
 29.16     (8) payments received for providing services under the 
 29.17  MinnesotaCare program including payments received directly from 
 29.18  the government or from a prepaid plan and enrollee deductibles, 
 29.19  coinsurance, and copayments.  For purposes of this clause, 
 29.20  coinsurance means the portion of payment that the enrollee is 
 29.21  required to pay for the covered service; 
 29.22     (9) payments received by a resident health care provider or 
 29.23  the wholly owned subsidiary of a resident health care provider 
 29.24  for care provided outside Minnesota to a patient who is not 
 29.25  domiciled in Minnesota; 
 29.26     (10) payments received from the chemical dependency fund 
 29.27  under chapter 254B; 
 29.28     (11) (10) payments received in the nature of charitable 
 29.29  donations that are not designated for providing patient services 
 29.30  to a specific individual or group; 
 29.31     (12) (11) payments received for providing patient services 
 29.32  incurred through a formal program of health care research 
 29.33  conducted in conformity with federal regulations governing 
 29.34  research on human subjects.  Payments received from patients or 
 29.35  from other persons paying on behalf of the patients are subject 
 29.36  to tax; 
 30.1      (13) (12) payments received from any governmental agency 
 30.2   for services benefiting the public, not including payments made 
 30.3   by the government in its capacity as an employer or insurer; 
 30.4      (14) (13) payments received for services provided by 
 30.5   community residential mental health facilities licensed under 
 30.6   Minnesota Rules, parts 9520.0500 to 9520.0690, community support 
 30.7   programs and family community support programs approved under 
 30.8   Minnesota Rules, parts 9535.1700 to 9535.1760, and community 
 30.9   mental health centers as defined in section 245.62, subdivision 
 30.10  2; 
 30.11     (15) (14) government payments received by a regional 
 30.12  treatment center; 
 30.13     (16) (15) payments received for hospice care services; 
 30.14     (17) (16) payments received by a resident health care 
 30.15  provider or the wholly owned subsidiary of a resident health 
 30.16  care provider for medical supplies, appliances and equipment 
 30.17  delivered outside of Minnesota; 
 30.18     (18) (17) payments received by a post-secondary educational 
 30.19  institution from student tuition, student activity fees, health 
 30.20  care service fees, government appropriations, donations, or 
 30.21  grants.  Fee for service payments and payments for extended 
 30.22  coverage are taxable; and 
 30.23     (19) (18) payments received for services provided by:  
 30.24  assisted living programs and congregate housing programs. 
 30.25     (b) Payments received by wholesale drug distributors for 
 30.26  prescription drugs sold directly to veterinarians or veterinary 
 30.27  bulk purchasing organizations are excluded from the gross 
 30.28  revenues subject to the wholesale drug distributor tax under 
 30.29  sections 295.50 to 295.59. 
 30.30     Sec. 7.  Minnesota Statutes 1995 Supplement, section 
 30.31  295.53, subdivision 5, is amended to read: 
 30.32     Subd. 5.  [EXEMPTIONS FOR PHARMACIES.] (a) Pharmacies may 
 30.33  exclude from their gross revenues subject to tax payments for 
 30.34  medical supplies, appliances, and devices that are exempt under 
 30.35  subdivision 1, clauses (1), (2), (4), (5), (7), (8), and 
 30.36  (13) (12). 
 31.1      (b) Resident Pharmacies may exclude from their gross 
 31.2   revenues subject to tax payments received for medical supplies, 
 31.3   appliances, and equipment delivered outside of Minnesota. 
 31.4      Sec. 8.  Minnesota Statutes 1994, section 295.54, 
 31.5   subdivision 1, is amended to read: 
 31.6      Subdivision 1.  [TAXES PAID TO ANOTHER STATE.] A resident 
 31.7   hospital, resident surgical center, pharmacy, or resident health 
 31.8   care provider who is liable for that has paid taxes payable to 
 31.9   another state or province or territory of Canada measured by 
 31.10  gross receipts revenues and is subject to tax under section 
 31.11  sections 295.52 to 295.59 on the same gross revenues is entitled 
 31.12  to a credit for the tax legally due and paid to another state or 
 31.13  province or territory of Canada to the extent of the lesser of 
 31.14  (1) the tax actually paid to the other state or province or 
 31.15  territory of Canada, or (2) the amount of tax imposed by 
 31.16  Minnesota on the gross receipts revenues subject to tax in the 
 31.17  other taxing jurisdictions. 
 31.18     Sec. 9.  Minnesota Statutes 1994, section 295.54, 
 31.19  subdivision 2, is amended to read: 
 31.20     Subd. 2.  [PHARMACY CREDIT.] A resident pharmacy may claim 
 31.21  a quarterly credit against the total amount of tax the pharmacy 
 31.22  owes during that quarter under section 295.52, subdivision 1b, 
 31.23  as provided in this subdivision.  The credit shall equal two 
 31.24  percent of the amount paid by the pharmacy to a wholesale drug 
 31.25  distributor subject to tax under section 295.52, subdivision 3, 
 31.26  for legend drugs delivered by the pharmacy outside of Minnesota. 
 31.27  If the amount of the credit exceeds the tax liability of the 
 31.28  pharmacy under section 295.52, subdivision 1b, the commissioner 
 31.29  shall provide the pharmacy with a refund equal to the excess 
 31.30  amount. 
 31.31     Sec. 10.  Minnesota Statutes 1994, section 295.54, is 
 31.32  amended by adding a subdivision to read: 
 31.33     Subd. 3.  [WHOLESALE DRUG DISTRIBUTOR CREDIT.] A wholesale 
 31.34  drug distributor who has paid taxes to another state or province 
 31.35  or territory of Canada measured by gross revenues or sales and 
 31.36  is subject to tax under sections 295.52 to 295.59 on the same 
 32.1   gross revenues or sales is entitled to a credit for the tax 
 32.2   legally due and paid to another state or province or territory 
 32.3   of Canada to the extent of the lesser of (1) the tax actually 
 32.4   paid to the other state or province or territory of Canada or 
 32.5   (2) the amount of tax imposed by Minnesota on the gross revenues 
 32.6   or sales subject to tax in the other taxing jurisdictions. 
 32.7      Sec. 11.  [REPEALER.] 
 32.8      Minnesota Statutes 1994, section 295.50, subdivisions 8, 9, 
 32.9   9a, 11, 12, and 12a, are repealed.  
 32.10     Sec. 12.  [EFFECTIVE DATES.] 
 32.11     Sections 1, 3, 6 to 9, and 11 are effective the day 
 32.12  following final enactment. 
 32.13     Sections 4, 5, and 10 are effective for tax periods 
 32.14  beginning on or after January 1, 1997. 
 32.15                             ARTICLE 5 
 32.16                           MISCELLANEOUS
 32.17     Section 1.  Minnesota Statutes 1994, section 270.067, 
 32.18  subdivision 2, is amended to read: 
 32.19     Subd. 2.  [PREPARATION; SUBMISSION.] The commissioner of 
 32.20  revenue shall prepare a tax expenditure budget for the state. 
 32.21  The tax expenditure budget report shall be submitted to the 
 32.22  legislature as a supplement to the governor's budget and at the 
 32.23  same time as provided for submission of the budget pursuant to 
 32.24  section 16A.11, subdivision 1 by February 1 of each 
 32.25  even-numbered year. 
 32.26     Sec. 2.  Minnesota Statutes 1994, section 270.102, 
 32.27  subdivision 1, is amended to read: 
 32.28     Subdivision 1.  [DEFINITIONS.] (a) The following terms used 
 32.29  in this section have the following meanings. 
 32.30     (b) "Successor" means a person who directly or indirectly 
 32.31  purchases, acquires, is gifted, or succeeds to the business or 
 32.32  stock of goods of any person quitting, selling, or otherwise 
 32.33  disposing of a business or stock of goods.  Successor does not 
 32.34  include a personal representative or beneficiary of an estate, a 
 32.35  trustee in bankruptcy, a debtor in possession, a receiver, a 
 32.36  secured party, a mortgagee, an assignee of rents, or any other 
 33.1   lienholder.  
 33.2      (c) "Person" means an individual, partnership, corporation, 
 33.3   sole proprietorship, joint venture, limited liability company, 
 33.4   or any other type of business entity or association.  
 33.5      (d) "Withhold" means setting aside money or dealing with 
 33.6   the payment of consideration in a manner that denies a 
 33.7   transferring business the benefit of the transfer in an amount 
 33.8   equal to the sales and withholding tax liability of the 
 33.9   transferring business.  
 33.10     (e) "Purchase price" means the consideration paid or to be 
 33.11  paid for the transfer by the successor to the transferring 
 33.12  business, and includes amounts paid for tangible property or 
 33.13  intangibles such as leases, licenses, or goodwill.  Purchase 
 33.14  price also includes debts assumed or forgiven by the successor, 
 33.15  or real or personal property conveyed or to be conveyed by the 
 33.16  successor to the transferring business.  
 33.17     (f) "Arm's length transaction" means a transfer for 
 33.18  adequate consideration between independent parties both acting 
 33.19  in their own best interests.  If the parties are related to each 
 33.20  other, a rebuttable presumption arises that the transaction is 
 33.21  not at arm's length.  
 33.22     (g) "Transfer" means every mode, direct or indirect, 
 33.23  absolute or conditional, voluntary or involuntary, of disposing 
 33.24  of or parting with a business or an interest in a business, or a 
 33.25  stock of goods, whether by gift or for consideration.  Transfer 
 33.26  includes a change in the type of business entity or the name of 
 33.27  the business, where one business is discontinued and a new one 
 33.28  started.  Transfer also includes the acquisition by a new 
 33.29  corporation of the assets of a prior business in exchange for 
 33.30  the stock of the new corporation.  Transfer does not include an 
 33.31  assignment for the benefit of creditors, foreclosure or 
 33.32  enforcement of a mortgage, assignment of rents, security 
 33.33  interest or lien, sale or disposition in a bankruptcy 
 33.34  proceeding, or sale or disposition by a receiver. 
 33.35     (h) "Transfer in bulk" means a transfer, other than in the 
 33.36  ordinary course of the transferor's trade or business, of more 
 34.1   than one-half of all the property of a business at all locations 
 34.2   combined, as measured by the value of the property at the time 
 34.3   of the transfer. 
 34.4      Sec. 3.  Minnesota Statutes 1994, section 270.102, 
 34.5   subdivision 2, is amended to read: 
 34.6      Subd. 2.  [BULK TRANSFERS; LIABILITY OF SUCCESSOR; LIEN.] 
 34.7   (a) Whenever a business transfers in bulk to a successor all or 
 34.8   any part of the business assets, other than in the ordinary 
 34.9   course of business, and a an enforceable lien for unpaid sales 
 34.10  and withholding taxes has been filed against the business by the 
 34.11  commissioner under section 270.69 in the office of the secretary 
 34.12  of state or in the office of the county recorder for the county 
 34.13  in which the business is located, at least 20 days before taking 
 34.14  possession of the assets or paying the purchase price, the 
 34.15  successor shall notify the commissioner of the transfer and the 
 34.16  terms and conditions related to it.  The notice must include the 
 34.17  tax identification number of the transferring business.  If an 
 34.18  agreement to transfer has been entered into, this notice 
 34.19  requirement only applies:  (1) if a lien described under this 
 34.20  paragraph has been filed prior to the date of the agreement; or 
 34.21  (2) if the date of the transfer is more than 30 days after the 
 34.22  date of the agreement, and a lien described under this paragraph 
 34.23  is filed at least 30 days prior to the date of transfer. 
 34.24     (b) If the successor fails to give the notice required in 
 34.25  paragraph (a), the successor is liable for any unpaid sales and 
 34.26  withholding taxes, interest, and penalties due from the 
 34.27  transferring business to the extent of the purchase price.  If 
 34.28  the successor provides the notice required in paragraph (a) and, 
 34.29  within 20 days after receipt of the notice, the commissioner 
 34.30  notifies the successor that tax liabilities exist in addition to 
 34.31  those included on the lien or there are sales and withholding 
 34.32  tax returns due but not filed, the successor is, in addition to 
 34.33  being liable for the amounts included on the lien, liable for 
 34.34  all other uncontested sales and withholding taxes, interest, and 
 34.35  penalties as stated in the commissioner's notice from the 
 34.36  transferring business to the extent of the purchase price if the 
 35.1   successor pays the purchase price or takes possession of the 
 35.2   assets without withholding and remitting the liability to the 
 35.3   commissioner.  The successor is liable whether the purchase 
 35.4   price is paid or the assets are transferred prior to or after 
 35.5   notification from the commissioner.  The commissioner may also 
 35.6   notify the successor that there are no sales or withholding tax 
 35.7   liabilities or returns due from the transferring business other 
 35.8   than the liabilities included on the lien, and of the current 
 35.9   balance due to satisfy the lien. 
 35.10     (c) The commissioner shall have a first priority lien for 
 35.11  all consideration paid or to be paid toward the purchase price 
 35.12  when the requirements of this section have not been met.  
 35.13     (d) If, based upon the information available, the 
 35.14  commissioner determines that a transfer was not at arm's length 
 35.15  or was a gift, the successor's liability under this section 
 35.16  equals the value of the assets transferred.  For purposes of 
 35.17  imposing the liability, the value of the property transferred is 
 35.18  presumed, subject to rebuttal, to equal the unpaid sales and 
 35.19  withholding taxes, interest, and penalties of the transferring 
 35.20  business. 
 35.21     (e) (d) In the case of a gift resulting in successor 
 35.22  liability under this section, return of the gifted property by 
 35.23  the donee to the donor releases the donee's successor liability. 
 35.24     (f) The liability imposed by this section does not include 
 35.25  assignments for the benefit of creditors under chapter 577, 
 35.26  foreclosures of mortgages under chapters 580 to 582 or of 
 35.27  security interests arising under article 9 of the Uniform 
 35.28  Commercial Code, or sales by trustees in bankruptcy.  
 35.29     (g) (e) A successor who complies with the requirements of 
 35.30  paragraphs (a) and (b) is not liable for any assessments of 
 35.31  sales and withholding taxes of the transferring business made 
 35.32  after the commissioner provides notice to the successor under 
 35.33  paragraph (b), except for taxes assessed on returns filed to 
 35.34  comply with the notice.  If the commissioner fails to provide 
 35.35  the notice and the 20-day period expires, the successor is not 
 35.36  liable for any sales and withholding taxes of the transferring 
 36.1   business other than those included on the lien.  
 36.2      Sec. 4.  Minnesota Statutes 1994, section 270.102, 
 36.3   subdivision 3, is amended to read: 
 36.4      Subd. 3.  [ASSESSMENT PROCEDURE; NO STAY ON COLLECTION 
 36.5   REMEDIES.] The commissioner may assess liability under this 
 36.6   section within the time prescribed for collecting the underlying 
 36.7   sales and withholding taxes, interest, and penalties.  The 
 36.8   assessment is presumed to be valid, and the burden is upon the 
 36.9   successor to show it is incorrect or invalid.  An order 
 36.10  assessing successor liability is reviewable administratively 
 36.11  under section 289A.65 and is appealable to tax court under 
 36.12  chapter 271.  The commissioner may abate an assessment if the 
 36.13  successor's failure to give the notice required under this 
 36.14  section is due to reasonable cause.  The procedural and appeal 
 36.15  provisions under section 270.07, subdivision 6, apply to 
 36.16  abatement requests under this subdivision.  Collection remedies 
 36.17  available against the transferring business are available 
 36.18  against the successor from the date of assessment of successor 
 36.19  liability.  
 36.20     Sec. 5.  Minnesota Statutes 1994, section 270.70, 
 36.21  subdivision 2, is amended to read: 
 36.22     Subd. 2.  [NOTICE AND DEMAND; COLLECTION BY LEVY; JEOPARDY 
 36.23  COLLECTION.] (a) Before a levy is made, notice and demand for 
 36.24  payment of the amount due must be given to the person liable for 
 36.25  the payment or collection of the tax at least 30 days prior to 
 36.26  the levy.  The notice required under this paragraph must be sent 
 36.27  to the taxpayer's last known address and must include a brief 
 36.28  statement that sets forth in simple and nontechnical terms: 
 36.29     (1) the administrative appeals available to the taxpayer 
 36.30  with respect to the levy and sale; and 
 36.31     (2) the alternatives available to the taxpayer that can 
 36.32  prevent a levy, including installment payment agreements under 
 36.33  section 270.67, subdivision 2. 
 36.34     (b) Notwithstanding the stay of collection provisions in 
 36.35  sections 270.10, subdivision 5, and 289A.37, subdivision 1, 
 36.36  paragraph (b), and the notice provisions in paragraph (a), if 
 37.1   the commissioner has reason to believe that collection of the 
 37.2   tax is in jeopardy, notice and demand for immediate payment of 
 37.3   the tax may be made.  If the tax is not paid, the commissioner 
 37.4   may proceed to collect by levy or by filing a lien under section 
 37.5   270.69.  
 37.6      Sec. 6.  Minnesota Statutes 1994, section 296.141, 
 37.7   subdivision 4, is amended to read: 
 37.8      Subd. 4.  [CREDIT OR REFUND OF TAX PAID.] The commissioner 
 37.9   shall allow the distributor credit or refund of the tax paid on 
 37.10  gasoline and special fuel: 
 37.11     (1) exported or sold for export from the state, other than 
 37.12  in the supply tank of a motor vehicle or of an aircraft; 
 37.13     (2) sold to the United States government to be used 
 37.14  exclusively in performing its governmental functions and 
 37.15  activities or to any "cost plus a fixed fee" contractor employed 
 37.16  by the United States government on any national defense project; 
 37.17     (3) if the fuel is placed in a tank used exclusively for 
 37.18  residential heating; 
 37.19     (4) destroyed by accident while in the possession of the 
 37.20  distributor; 
 37.21     (5) in error; 
 37.22     (6) sold for storage in an on-farm bulk storage tank, if 
 37.23  the tax was not collected on the sale; and 
 37.24     (7) (6) in such other cases as the commissioner may permit, 
 37.25  not inconsistent with the provisions of this chapter and other 
 37.26  laws relating to the gasoline and special fuel excise taxes. 
 37.27     Sec. 7.  [EFFECTIVE DATE.] 
 37.28     Sections 2 to 4 are effective for business transfers, 
 37.29  acquisitions, successions, or dissolutions on or after January 
 37.30  1, 1995. 
 37.31     Section 5 is effective the day following final enactment. 
 37.32     Section 6 is effective for gasoline or special fuel 
 37.33  purchased after July 1, 1996.