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HF 247

2nd Engrossment - 87th Legislature (2011 - 2012) Posted on 05/10/2012 03:01pm

KEY: stricken = removed, old language. underscored = added, new language.

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Bill Text Versions

Engrossments

Introduction Pdf Posted on 01/27/2011
1st Engrossment Pdf Posted on 05/02/2011
2nd Engrossment Pdf Posted on 05/10/2012

Conference Committee Reports

LS87-CCR-HF0247 Pdf Posted on 05/09/2012

Current Version - 2nd Engrossment

A bill for an act
relating to financing of state and local government; making policy, technical, and
other changes to individual income, corporate franchise, property, sales and
use, special, mineral, liquor, aggregate materials, gross receipts, estate, local,
and other taxes and tax-related provisions; updating references to the Internal
Revenue Code; changing and providing income and franchise tax credits,
exemptions, and deductions; changing income tax withholding requirements;
establishing a veterans jobs tax credit; permitting the filing of certain amended
returns; modifying property tax levies, credits, exemptions, refunds, proposed
levies and property tax notices, and tax statements; providing for use of a local
levy; changing the state general levy; modifying city aid reporting requirements;
modifying tax increment financing district requirements; authorizing, changing,
and extending tax increment financing districts in certain local governments;
changing sales and use tax payment requirements and changing and providing
exemptions; modifying use of revenues and authorizing extension of certain
sales and lodging taxes and other local taxes for certain cities and making other
local tax changes; modifying filing, compliance, and payment requirements
for estate tax returns; modifying requirements for qualified farms and small
business property; modifying definitions and making clarifying, technical, and
other changes relating to the issuance of municipal bonds; authorizing certain
local governments to issue public debt; clarifying limits on taxation, spending,
and incurring debt based on market values; making technical and clarifying
changes, and repealing obsolete provisions related to the homestead market value
credit; changing liquor tax reporting and credits; allocating funds to border city
enterprise zones; changing local standard measures program reimbursement
requirements; requiring certain local budgetary information on local Web sites;
establishing a greater Minnesota internship program; requiring reports; canceling
funds to the general fund from the budget reserve account; appropriating money;
amending Minnesota Statutes 2010, sections 6.91, subdivision 2; 13.4965,
subdivision 3; 16A.46; 38.18; 40A.15, subdivision 2; 65B.84, subdivision 1;
69.011, subdivision 1; 69.021, subdivisions 7, 8; 88.51, subdivision 3; 103B.245,
subdivision 3; 103B.251, subdivision 8; 103B.635, subdivision 2; 103B.691,
subdivision 2; 103D.905, subdivisions 2, 3, 8; 116J.8737, subdivisions 5, 8,
by adding a subdivision; 117.025, subdivision 7; 127A.48, subdivision 1;
138.053; 144F.01, subdivision 4; 162.07, subdivisions 3, 4; 163.04, subdivision
3; 163.06, subdivision 6; 165.10, subdivision 1; 270.077; 270.41, subdivision 5;
270C.38, subdivision 1; 270C.42, subdivision 2; 270C.69, subdivision 1; 272.01,
subdivision 2; 272.03, by adding subdivisions; 273.032; 273.11, subdivision
1; 273.113; 273.124, subdivisions 3a, 13; 273.13, subdivision 21b; 273.1315,
subdivisions 1, 2; 273.1398, subdivisions 3, 4; 273.19, subdivision 1; 273.372,
subdivision 4; 273.39; 275.011, subdivision 1; 275.025, subdivision 1; 275.065,
subdivisions 1, 3; 275.077, subdivision 2; 275.71, subdivision 4; 276A.01,
subdivisions 10, 12, 13, 15; 279.06, subdivision 1; 287.08; 287.20, by adding
a subdivision; 287.23, subdivision 1; 287.385, subdivision 7; 289A.02, by
adding a subdivision; 289A.10, by adding a subdivision; 289A.12, by adding a
subdivision; 289A.18, by adding a subdivision; 289A.20, subdivisions 3, 4, by
adding a subdivision; 289A.26, subdivisions 3, 4, 7, 9; 289A.38, subdivisions
7, 8, 9; 289A.42, subdivision 2; 289A.55, subdivision 9; 289A.60, subdivisions
4, 24; 290.01, subdivisions 6b, 19d; 290.068, subdivision 1; 290.0681,
subdivisions 1, 3, 4, 5, 10; 290.0921, subdivision 3; 290.17, subdivision 4;
290A.04, subdivision 2h; 290A.25; 290B.04, subdivision 2; 296A.22; 297A.61,
subdivision 4; 297A.665; 297A.68, subdivision 5; 297A.70, subdivision 4, by
adding subdivisions; 297A.815, subdivision 3; 297A.8155; 297E.14, subdivision
7; 297F.01, subdivision 23; 297F.09, subdivision 9; 297F.18, subdivision 7;
297G.04, subdivision 2; 297G.09, subdivision 8; 297G.17, subdivision 7;
297I.05, subdivision 11; 297I.30, by adding a subdivision; 297I.80, subdivision
1; 298.018, subdivision 2; 298.75, by adding a subdivision; 353G.08, subdivision
2; 365.025, subdivision 4; 366.095, subdivision 1; 366.27; 368.01, subdivision
23; 368.47; 370.01; 373.40, subdivisions 1, 2, 4; 375.167, subdivision 1; 375.18,
subdivision 3; 375.555; 383B.152; 383B.245; 383B.73, subdivision 1; 383E.20;
383E.23; 385.31; 394.36, subdivision 1; 398A.04, subdivision 8; 401.05,
subdivision 3; 410.32; 412.221, subdivision 2; 412.301; 428A.02, subdivision 1;
430.102, subdivision 2; 447.10; 450.19; 450.25; 458A.10; 458A.31, subdivision
1; 465.04; 469.033, subdivision 6; 469.034, subdivision 2; 469.053, subdivisions
4, 4a, 6; 469.107, subdivision 1; 469.169, by adding a subdivision; 469.174,
subdivisions 2, 10, by adding subdivisions; 469.175, subdivision 3; 469.176,
subdivisions 1b, 4b, by adding a subdivision; 469.1763, subdivisions 3, 4;
469.180, subdivision 2; 469.187; 469.206; 471.24; 471.571, subdivisions 1,
2; 471.73; 473.325, subdivision 2; 473.629; 473.661, subdivision 3; 473.667,
subdivision 9; 473.671; 473.711, subdivision 2a; 473F.02, subdivisions 12,
14, 15, 23; 474A.02, subdivision 23a; 474A.04, subdivision 1a; 474A.062;
474A.091, subdivision 3a; 475.521, subdivisions 2, 4; 475.53, subdivisions 1, 3,
4; 475.58, subdivisions 2, 3b; 475.73, subdivision 1; 477A.011, subdivision 32;
477A.0124, subdivision 2; 477A.017, subdivision 3; 641.23; 641.24; 645.44, by
adding a subdivision; Minnesota Statutes 2011 Supplement, sections 116J.8737,
subdivisions 1, 2; 270C.34, subdivision 1; 270C.991, subdivision 4, as amended;
272.02, subdivision 97; 273.114, subdivision 6; 273.13, subdivision 25; 276.04,
subdivision 2; 289A.02, subdivision 7; 290.01, subdivisions 19, 19b, 19c, 31;
290A.03, subdivision 15; 291.005, subdivision 1; 291.03, subdivisions 8, 9, 10,
11; 295.53, subdivision 1; 297A.68, subdivision 42; 297I.05, subdivisions 7, 12;
297I.30, subdivisions 1, 2; 298.01, subdivision 3; 373.01, subdivision 1; 469.176,
subdivisions 4c, 4m; 469.1763, subdivision 2; 477A.011, subdivision 20; Laws
1971, chapter 773, section 1, subdivision 2, as amended; Laws 1988, chapter 645,
section 3, as amended; Laws 1998, chapter 389, article 8, section 43, subdivision
3, as amended; Laws 1999, chapter 243, article 6, section 11; Laws 2002, chapter
377, article 3, section 25, as amended; Laws 2003, chapter 127, article 12, section
28; Laws 2005, First Special Session chapter 3, article 5, section 37, subdivisions
2, 4; Laws 2008, chapter 366, article 5, section 34, as amended; article 7, section
19, subdivision 3, as amended; Laws 2010, chapter 216, section 11; Laws 2010,
chapter 389, article 1, section 12; proposing coding for new law in Minnesota
Statutes, chapters 136A; 290; 297I; 471; repealing Minnesota Statutes 2010,
sections 168A.40, subdivisions 3, 4; 270C.991, subdivision 5; 272.69; 273.11,
subdivisions 1a, 22; 276A.01, subdivision 11; 276A.06, subdivision 10; 473F.02,
subdivision 13; 473F.08, subdivision 10; 477A.011, subdivision 21; Minnesota
Statutes 2011 Supplement, section 289A.60, subdivision 31; Laws 2009, chapter
88, article 4, section 23, as amended.

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

ARTICLE 1

DEPARTMENT POLICY AND TECHNICAL: INCOME AND
CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2010, section 289A.02, is amended by adding a
subdivision to read:


Subd. 9.

Field audit.

"Field audit" means the physical presence of examiners
in the taxpayer's or taxpayer's representative's office conducting an examination of the
taxpayer with the intention of issuing an assessment or notice of change in tax or which
results in the issuing of an assessment or notice of change in tax. The examination may
include inspecting a taxpayer's place of business, tangible personal property, equipment,
computer systems and facilities, pertinent books, records, papers, vouchers, computer
printouts, accounts, and documents.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2010, section 289A.26, subdivision 3, is amended to read:


Subd. 3.

Short taxable year.

(a) A corporation or an entity with a short taxable
year of less than 12 months, but at least four months, must pay estimated tax in equal
installments on or before the 15th day of the third, sixth, ninth, and final month of the
short taxable year, to the extent applicable based on the number of months in the short
taxable year.

(b) A corporation or an entity is not required to make estimated tax payments for a
short taxable year unless its tax liability before the first day of the last month of the taxable
year can reasonably be expected to exceed $500.

(c) No payment is required for a short taxable year of less than four months.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2010, section 289A.26, subdivision 4, is amended to read:


Subd. 4.

Underpayment of estimated tax.

If there is an underpayment of estimated
tax by a corporation or an entity, there shall be added to the tax for the taxable year an
amount determined at the rate in section 270C.40 on the amount of the underpayment,
determined under subdivision 5, for the period of the underpayment determined under
subdivision 6. This subdivision does not apply in the first taxable year that a corporation is
subject to the tax imposed under section 290.02 or an entity is subject to the tax imposed
under section 290.05, subdivision 3
.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2010, section 289A.26, subdivision 7, is amended to read:


Subd. 7.

Required installments.

(a) Except as otherwise provided in this
subdivision, the amount of a required installment is 25 percent of the required annual
payment.

(b) Except as otherwise provided in this subdivision, the term "required annual
payment" means the lesser of:

(1) 100 percent of the tax shown on the return for the taxable year, or, if no return is
filed, 100 percent of the tax for that year; or

(2) 100 percent of the tax shown on the return of the corporation or entity for the
preceding taxable year provided the return was for a full 12-month period, showed a
liability, and was filed by the corporation or entity.

(c) Except for determining the first required installment for any taxable year,
paragraph (b), clause (2), does not apply in the case of a large corporation. The term
"large corporation" means a corporation or any predecessor corporation that had taxable
net income of $1,000,000 or more for any taxable year during the testing period. The
term "testing period" means the three taxable years immediately preceding the taxable
year involved. A reduction allowed to a large corporation for the first installment that is
allowed by applying paragraph (b), clause (2), must be recaptured by increasing the next
required installment by the amount of the reduction.

(d) In the case of a required installment, if the corporation or entity establishes that
the annualized income installment is less than the amount determined in paragraph (a), the
amount of the required installment is the annualized income installment and the recapture
of previous quarters' reductions allowed by this paragraph must be recovered by increasing
later required installments to the extent the reductions have not previously been recovered.

(e) The "annualized income installment" is the excess, if any, of:

(1) an amount equal to the applicable percentage of the tax for the taxable year
computed by placing on an annualized basis the taxable income:

(i) for the first two months of the taxable year, in the case of the first required
installment;

(ii) for the first two months or for the first five months of the taxable year, in the
case of the second required installment;

(iii) for the first six months or for the first eight months of the taxable year, in the
case of the third required installment; and

(iv) for the first nine months or for the first 11 months of the taxable year, in the
case of the fourth required installment, over

(2) the aggregate amount of any prior required installments for the taxable year.

(3) For the purpose of this paragraph, the annualized income shall be computed
by placing on an annualized basis the taxable income for the year up to the end of the
month preceding the due date for the quarterly payment multiplied by 12 and dividing
the resulting amount by the number of months in the taxable year (2, 5, 6, 8, 9, or 11 as
the case may be) referred to in clause (1).

(4) The "applicable percentage" used in clause (1) is:

For the following
required
installments:
The applicable
percentage is:
1st
25
2nd
50
3rd
75
4th
100

(f)(1) If this paragraph applies, the amount determined for any installment must
be determined in the following manner:

(i) take the taxable income for the months during the taxable year preceding the
filing month;

(ii) divide that amount by the base period percentage for the months during the
taxable year preceding the filing month;

(iii) determine the tax on the amount determined under item (ii); and

(iv) multiply the tax computed under item (iii) by the base period percentage for the
filing month and the months during the taxable year preceding the filing month.

(2) For purposes of this paragraph:

(i) the "base period percentage" for a period of months is the average percent that the
taxable income for the corresponding months in each of the three preceding taxable years
bears to the taxable income for the three preceding taxable years;

(ii) the term "filing month" means the month in which the installment is required
to be paid;

(iii) this paragraph only applies if the base period percentage for any six consecutive
months of the taxable year equals or exceeds 70 percent; and

(iv) the commissioner may provide by rule for the determination of the base period
percentage in the case of reorganizations, new corporations or entities, and other similar
circumstances.

(3) In the case of a required installment determined under this paragraph, if the
corporation or
entity determines that the installment is less than the amount determined in
paragraph (a), the amount of the required installment is the amount determined under this
paragraph and the recapture of previous quarters' reductions allowed by this paragraph
must be recovered by increasing later required installments to the extent the reductions
have not previously been recovered.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2010, section 289A.26, subdivision 9, is amended to read:


Subd. 9.

Failure to file an estimate.

In the case of a corporation or an entity
that fails to file an estimated tax for a taxable year when one is required, the period of
the underpayment runs from the four installment dates in subdivision 2 or 3, whichever
applies, to the earlier of the periods in subdivision 6, clauses (1) and (2).

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6.

Minnesota Statutes 2010, section 289A.38, subdivision 7, is amended to read:


Subd. 7.

Federal tax changes.

If the amount of income, items of tax preference,
deductions, or credits for any year of a taxpayer, or the wages paid by a taxpayer for
any period, as reported to the Internal Revenue Service is changed or corrected by the
commissioner of Internal Revenue or other officer of the United States or other competent
authority, or where a renegotiation of a contract or subcontract with the United States
results in a change in income, items of tax preference, deductions, credits, or withholding
tax, or, in the case of estate tax, where there are adjustments to the taxable estate, the
taxpayer shall report the change or correction or renegotiation results in writing to the
commissioner of revenue. The report must be submitted within 180 days after the
final determination and must be
in the form of either an amended Minnesota estate,
withholding tax, corporate franchise tax, or income tax return conceding the accuracy of
the federal determination or a letter detailing how the federal determination is incorrect
or does not change the Minnesota tax. An amended Minnesota income tax return must
be accompanied by an amended property tax refund return, if necessary. A taxpayer
filing an amended federal tax return must also file a copy of the amended return with the
commissioner of revenue within 180 days after filing the amended return.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2010, section 289A.38, subdivision 8, is amended to read:


Subd. 8.

Failure to report change or correction of federal return Time
requirement to report federal tax changes
.

If a taxpayer fails to make a report as
required by subdivision 7, the commissioner may recompute the tax, including a refund,
based on information available to the commissioner. The tax may be recomputed within
six years after the report should have been filed, notwithstanding any period of limitations
to the contrary.
A taxpayer must submit the report or file the amended return required by
subdivision 7 within 180 days after the final determination by the commissioner of internal
revenue or other officer of the United States or other competent authority of a change or
correction of the person's federal tax return or the filing of an amended federal tax return.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2010, section 289A.38, subdivision 9, is amended to read:


Subd. 9.

Report made of change or correction of federal return Limitations
on time for assessment for federal tax changes
.

(a) If a taxpayer is required to make a
submits the
report under or files the amended return as required by subdivision 7, and does
report the change or files a copy of the amended return
at any time within six years after
the time period provided by subdivision 8
, the commissioner may recompute and reassess
the tax due, including a refund (1) within one year after the report or amended return is
filed with the commissioner, notwithstanding any period of limitations to the contrary, or
(2) within any other applicable period stated in this section, whichever period is longer.
The period provided for the carryback of any amount of loss or credit is also extended as
provided in this subdivision, notwithstanding any law to the contrary.

(b) If a taxpayer fails to submit the report or file the amended return as required by
subdivision 7, the commissioner may recompute the tax, including a refund, based on
information available to the commissioner. The tax may be recomputed within six years
after the time period provided by subdivision 8, notwithstanding any period of limitations
to the contrary.

(c) If the commissioner has completed a field audit of the taxpayer, and, but for this
subdivision, the commissioner's time period to adjust the tax has expired, the additional
tax due or refund is limited to only those changes that are required to be made to the
return which relate to the changes made on the federal return. This subdivision does not
apply to sales and use tax.

For purposes of this subdivision and section 289A.42, subdivision 2, a "field audit"
is the physical presence of examiners in the taxpayer's or taxpayer's representative's office
conducting an examination of the taxpayer with the intention of issuing an assessment or
notice of change in tax or which results in the issuing of an assessment or notice of change
in tax. The examination may include inspecting a taxpayer's place of business, tangible
personal property, equipment, computer systems and facilities, pertinent books, records,
papers, vouchers, computer printouts, accounts, and documents.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

Minnesota Statutes 2010, section 289A.42, subdivision 2, is amended to read:


Subd. 2.

Federal extensions.

When a taxpayer consents to an extension of time
for the assessment of federal withholding or income taxes, the period in which the
commissioner may recompute the tax is also extended, notwithstanding any period of
limitations to the contrary, as follows:

(1) for the periods provided in section 289A.38, subdivisions 8 and 9;

(2) for six months following the expiration of the extended federal period of
limitations when no change is made by the federal authority. If no change is made by the
federal authority, and, but for this subdivision, the commissioner's time period to adjust
the tax has expired, and if the commissioner has completed a field audit of the taxpayer, no
additional changes resulting in additional tax due or a refund may be made. For purposes
of this subdivision, "field audit" has the meaning given it in section 289A.38, subdivision 9.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 10.

Minnesota Statutes 2010, section 289A.60, subdivision 24, is amended to read:


Subd. 24.

Penalty for failure to notify of federal change.

If a person fails to
report to the commissioner a change or correction of the person's federal return in the
manner prescribed by section 289A.38, subdivision 7, and within the 180-day time period
prescribed in section 289A.38, subdivision 7 8, there must be added to the tax an amount
equal to ten percent of the amount of any underpayment of Minnesota tax attributable to
the federal change.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 11.

Minnesota Statutes 2010, section 290.01, subdivision 6b, is amended to read:


Subd. 6b.

Foreign operating corporation.

The term "foreign operating
corporation," when applied to a corporation, means a domestic corporation with the
following characteristics:

(1) it is part of a unitary business at least one member of which is taxable in this state;

(2) it is not a foreign sales corporation under section 922 of the Internal Revenue
Code, as amended through December 31, 1999, for the taxable year;

(3) it is not an interest charge domestic international sales corporation under sections
992, 993, 994, and 995 of the Internal Revenue Code;

(4) either (i) it has in effect a valid election under section 936 of the Internal Revenue
Code; or (ii)
at least 80 percent of the gross income from all sources of the corporation in
the tax year is active foreign business income; and

(5) for purposes of this subdivision, active foreign business income means gross
income that is (i) derived from sources without the United States, as defined in subtitle A,
chapter 1, subchapter N, part 1, of the Internal Revenue Code; and (ii) attributable to the
active conduct of a trade or business in a foreign country.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2011.

Sec. 12.

Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19b,
is amended to read:


Subd. 19b.

Subtractions from federal taxable income.

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

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

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

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. No
deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
the qualifying child's vehicle to provide such transportation for a qualifying child. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

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

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
under the provisions of Public Law 109-1 and Public Law 111-126;

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

(8) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (15) (14), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (15) (14), in the case of a shareholder of an S corporation, minus
the positive value of any net operating loss under section 172 of the Internal Revenue
Code generated for the tax year of the addition. The resulting delayed depreciation
cannot be less than zero;

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

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

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

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

(13) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (16) (15), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause
(16) (15), in the case of a shareholder of a corporation that is an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. If the net operating loss exceeds the addition for
the tax year, a subtraction is not allowed under this clause;

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

(15) international economic development zone income as provided under section
469.325;

(16) to the extent included in federal taxable income, the amount of national service
educational awards received from the National Service Trust under United States Code,
title 42, sections 12601 to 12604, for service in an approved Americorps National Service
program;

(17) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19a, clause (16); and

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

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2011.

Sec. 13.

Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19c,
is amended to read:


Subd. 19c.

Corporations; additions to federal taxable income.

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

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

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

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

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

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

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

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

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

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

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

(11) the amount of any deemed dividend from a foreign operating corporation
determined pursuant to section 290.17, subdivision 4, paragraph (g). The deemed dividend
shall be reduced by the amount of the addition to income required by clauses (19), (20),
(21), and (22), and (23);

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

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

(14) (13) any increase in subpart F income, as defined in section 952(a) of the
Internal Revenue Code, for the taxable year when subpart F income is calculated without
regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;

(15) (14) 80 percent of the depreciation deduction allowed under section
168(k)(1)(A) and (k)(4)(A) of the Internal Revenue Code. For purposes of this clause, if
the taxpayer has an activity that in the taxable year generates a deduction for depreciation
under section 168(k)(1)(A) and (k)(4)(A) and the activity generates a loss for the taxable
year that the taxpayer is not allowed to claim for the taxable year, "the depreciation
allowed under section 168(k)(1)(A) and (k)(4)(A)" for the taxable year is limited to excess
of the depreciation claimed by the activity under section 168(k)(1)(A) and (k)(4)(A)
over the amount of the loss from the activity that is not allowed in the taxable year. In
succeeding taxable years when the losses not allowed in the taxable year are allowed, the
depreciation under section 168(k)(1)(A) and (k)(4)(A) is allowed;

(16) (15) 80 percent of the amount by which the deduction allowed by section 179 of
the Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;

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

(18) (17) for taxable years beginning before January 1, 2013, the exclusion allowed
under section 139A of the Internal Revenue Code for federal subsidies for prescription
drug plans;

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

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

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

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

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

(iv) licensing fees; and

(v) other similar expenses and costs.

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

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

(21) (20) except as already included in the taxpayer's taxable income pursuant to
clause (20) (19), any interest income and income generated from intangible property
received or accrued by a foreign operating corporation that is a member of the taxpayer's
unitary group. For purposes of this clause, income generated from intangible property
includes:

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

(ii) income from factoring transactions or discounting transactions;

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

(iv) licensing fees; and

(v) other similar income.

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

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

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

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

(24) (23) for taxable years beginning before January 1, 2010, the additional amount
allowed as a deduction for donation of computer technology and equipment under section
170(e)(6) of the Internal Revenue Code, to the extent deducted from taxable income; and

(25) (24) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2011.

Sec. 14.

Minnesota Statutes 2010, section 290.01, subdivision 19d, is amended to read:


Subd. 19d.

Corporations; modifications decreasing federal taxable income.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(16) (15) any decrease in subpart F income, as defined in section 952(a) of the
Internal Revenue Code, for the taxable year when subpart F income is calculated without
regard to the provisions of Division C, title III, section 303(b) of Public Law 110-343;

(17) (16) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (15) (14), an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means the
amount of the addition made by the taxpayer under subdivision 19c, clause (15) (14). The
resulting delayed depreciation cannot be less than zero;

(18) (17) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19c, clause (16) (15), an amount equal to one-fifth
of the amount of the addition; and

(19) (18) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19c, clause (25) (24).

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2011.

Sec. 15.

Minnesota Statutes 2010, section 290.0921, subdivision 3, is amended to read:


Subd. 3.

Alternative minimum taxable income.

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

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

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

(2) The portion of the depreciation deduction allowed for federal income tax
purposes under section 168(k) of the Internal Revenue Code that is required as an addition
under section 290.01, subdivision 19c, clause (15) (14), is disallowed in determining
alternative minimum taxable income.

(3) The subtraction for depreciation allowed under section 290.01, subdivision
19d
, clause (17) (16), is allowed as a depreciation deduction in determining alternative
minimum taxable income.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2011.

Sec. 16.

Minnesota Statutes 2010, section 290.17, subdivision 4, is amended to read:


Subd. 4.

Unitary business principle.

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

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

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

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

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

(f) The net income and apportionment factors under section 290.191 or 290.20 of
foreign corporations and other foreign entities which are part of a unitary business shall
not be included in the net income or the apportionment factors of the unitary business.
A foreign corporation or other foreign entity which is required to file a return under this
chapter shall file on a separate return basis. The net income and apportionment factors
under section 290.191 or 290.20 of foreign operating corporations shall not be included in
the net income or the apportionment factors of the unitary business except as provided in
paragraph (g).

(g) The adjusted net income of a foreign operating corporation shall be deemed to
be paid as a dividend on the last day of its taxable year to each shareholder thereof, in
proportion to each shareholder's ownership, with which such corporation is engaged in
a unitary business. Such deemed dividend shall be treated as a dividend under section
290.21, subdivision 4.

Dividends actually paid by a foreign operating corporation to a corporate shareholder
which is a member of the same unitary business as the foreign operating corporation shall
be eliminated from the net income of the unitary business in preparing a combined report
for the unitary business. The adjusted net income of a foreign operating corporation
shall be its net income adjusted as follows:

(1) any taxes paid or accrued to a foreign country, the commonwealth of Puerto
Rico, or a United States possession or political subdivision of any of the foregoing shall
be a deduction; and

(2) the subtraction from federal taxable income for payments received from foreign
corporations or foreign operating corporations under section 290.01, subdivision 19d,
clause (10), shall not be allowed.

If a foreign operating corporation incurs a net loss, neither income nor deduction
from that corporation shall be included in determining the net income of the unitary
business.

(h) For purposes of determining the net income of a unitary business and the factors
to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
must be included only the income and apportionment factors of domestic corporations or
other domestic entities other than foreign operating corporations that are determined to
be part of the unitary business pursuant to this subdivision, notwithstanding that foreign
corporations or other foreign entities might be included in the unitary business.

(i) Deductions for expenses, interest, or taxes otherwise allowable under this chapter
that are connected with or allocable against dividends, deemed dividends described
in paragraph (g), or royalties, fees, or other like income described in section 290.01,
subdivision 19d
, clause (10), shall not be disallowed.

(j) Each corporation or other entity, except a sole proprietorship, that is part of a
unitary business must file combined reports as the commissioner determines. On the
reports, all intercompany transactions between entities included pursuant to paragraph
(h) must be eliminated and the entire net income of the unitary business determined in
accordance with this subdivision is apportioned among the entities by using each entity's
Minnesota factors for apportionment purposes in the numerators of the apportionment
formula and the total factors for apportionment purposes of all entities included pursuant
to paragraph (h) in the denominators of the apportionment formula.

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

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

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

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 2

DEPARTMENT POLICY AND TECHNICAL: PROPERTY TAX

Section 1.

Minnesota Statutes 2010, section 13.4965, subdivision 3, is amended to read:


Subd. 3.

Homestead and other applications.

The classification and disclosure of
certain information collected to determine eligibility of property for a homestead or other
classification or benefit under section 273.13 are governed by section sections 273.124,
subdivision subdivisions 13, 13a, 13c, and 13d, and 273.1315.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2010, section 270.077, is amended to read:


270.077 TAXES CREDITED TO STATE AIRPORTS FUND.

All taxes levied under sections 270.071 to 270.079 must be collected by the
commissioner and
credited to the state airports fund created in section 360.017.

EFFECTIVE DATE.

This section is effective for reports filed on July 1, 2012,
and thereafter.

Sec. 3.

Minnesota Statutes 2010, section 270.41, subdivision 5, is amended to read:


Subd. 5.

Prohibited activity.

A licensed assessor or other person employed by an
assessment jurisdiction or contracting with an assessment jurisdiction for the purpose
of valuing or classifying property for property tax purposes is prohibited from making
appraisals or analyses, accepting an appraisal assignment, or preparing an appraisal report
as defined in section 82B.021, subdivisions 2, 4, 6, and 7, on any property within the
assessment jurisdiction where the individual is employed or performing the duties of the
assessor under contract. Violation of this prohibition shall result in immediate revocation
of the individual's license to assess property for property tax purposes. This prohibition
must not be construed to prohibit an individual from carrying out any duties required
for the proper assessment of property for property tax purposes or performing duties
enumerated in section 273.061, subdivision 7 or 8. If a formal resolution has been adopted
by the governing body of a governmental unit, which specifies the purposes for which
such work will be done, this prohibition does not apply to appraisal activities undertaken
on behalf of and at the request of the governmental unit that has employed or contracted
with the individual. The resolution may only allow appraisal activities which are related to
condemnations, right-of-way acquisitions, land exchanges, or special assessments.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2011 Supplement, section 270C.34, subdivision 1, is
amended to read:


Subdivision 1.

Authority.

(a) The commissioner may abate, reduce, or refund any
penalty or interest that is imposed by a law administered by the commissioner, or imposed
by section 270.0725, subdivision 1 or 2, or 270.075, as a result of the late payment of tax
or late filing of a return, or any part of an additional tax charge under section 289A.25,
subdivision 2
, or 289A.26, subdivision 4, if the failure to timely pay the tax or failure
to timely file the return is due to reasonable cause, or if the taxpayer is located in a
presidentially declared disaster or in a presidentially declared state of emergency area or
in an area declared to be in a state of emergency by the governor under section 12.31.

(b) The commissioner shall abate any part of a penalty or additional tax charge
under section 289A.25, subdivision 2, or 289A.26, subdivision 4, attributable to erroneous
advice given to the taxpayer in writing by an employee of the department acting in
an official capacity, if the advice:

(1) was reasonably relied on and was in response to a specific written request of the
taxpayer; and

(2) was not the result of failure by the taxpayer to provide adequate or accurate
information.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2010, section 272.01, subdivision 2, is amended to read:


Subd. 2.

Exempt property used by private entity for profit.

(a) When any real or
personal property which is exempt from ad valorem taxes, and taxes in lieu thereof, is
leased, loaned, or otherwise made available and used by a private individual, association,
or corporation in connection with a business conducted for profit, there shall be imposed a
tax, for the privilege of so using or possessing such real or personal property, in the same
amount and to the same extent as though the lessee or user was the owner of such property.

(b) The tax imposed by this subdivision shall not apply to:

(1) property leased or used as a concession in or relative to the use in whole
or part of a public park, market, fairgrounds, port authority, economic development
authority established under chapter 469, municipal auditorium, municipal parking facility,
municipal museum, or municipal stadium;

(2) property of an airport owned by a city, town, county, or group thereof which is:

(i) leased to or used by any person or entity including a fixed base operator; and

(ii) used as a hangar for the storage or repair of aircraft or to provide aviation goods,
services, or facilities to the airport or general public;

the exception from taxation provided in this clause does not apply to:

(i) property located at an airport owned or operated by the Metropolitan Airports
Commission or by a city of over 50,000 population according to the most recent federal
census or such a city's airport authority; or

(ii) hangars leased by a private individual, association, or corporation in connection
with a business conducted for profit other than an aviation-related business;

(3) property constituting or used as a public pedestrian ramp or concourse in
connection with a public airport;

(4) property constituting or used as a passenger check-in area or ticket sale counter,
boarding area, or luggage claim area in connection with a public airport but not the
airports owned or operated by the Metropolitan Airports Commission or cities of over
50,000 population or an airport authority therein. Real estate owned by a municipality
in connection with the operation of a public airport and leased or used for agricultural
purposes is not exempt;

(5) property leased, loaned, or otherwise made available to a private individual,
corporation, or association under a cooperative farming agreement made pursuant to
section 97A.135; or

(6) property leased, loaned, or otherwise made available to a private individual,
corporation, or association under section 272.68, subdivision 4.

(c) Taxes imposed by this subdivision are payable as in the case of personal property
taxes and shall be assessed to the lessees or users of real or personal property in the same
manner as taxes assessed to owners of real or personal property, except that such taxes
shall not become a lien against the property. When due, the taxes shall constitute a debt
due from the lessee or user to the state, township, city, county, and school district for
which the taxes were assessed and shall be collected in the same manner as personal
property taxes. If property subject to the tax imposed by this subdivision is leased or used
jointly by two or more persons, each lessee or user shall be jointly and severally liable for
payment of the tax.

(d) The tax on real property of the federal government, the state or any of its political
subdivisions that is leased by a private individual, association, or corporation and becomes
taxable under this subdivision or other provision of law must be assessed and collected as
a personal property assessment. The taxes do not become a lien against the real property.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6.

Minnesota Statutes 2011 Supplement, section 273.114, subdivision 6, is
amended to read:


Subd. 6.

Additional taxes.

(a) When real property which is being, or has been
valued and assessed under this section is sold, transferred, or no longer qualifies under
subdivision 2, the portion sold, transferred, or no longer qualifying shall be subject to
additional taxes in the amount equal to the difference between the taxes determined in
accordance with subdivision 3 and the amount determined under subdivision 4, provided
that the amount determined under subdivision 4 shall not be greater than it would have
been had the actual bona fide sale price of the real property at an arm's-length transaction
been used in lieu of the market value determined under subdivision 4. The additional taxes
shall be extended against the property on the tax list for taxes payable in the current year,
provided that no interest or penalties shall be levied on the additional taxes if timely paid
and provided that the additional taxes shall only be levied with respect to the current year
plus two prior years that the property has been valued and assessed under this section.

(b) In the case of a sale or transfer, the additional taxes under paragraph (a) shall not
be extended against the property if the new owner submits a successful application by the
later of May 1 of the current year or 30 days after the sale or transfer.

(c) For the purposes of this section, the following events do not constitute a sale or
transfer for property that qualified under subdivision 2 prior to the event:

(1) death of a property owner when the surviving owners retain ownership of the
property;

(2) divorce of a married couple when one of the spouses retains ownership of the
property;

(3) marriage of a single property owner when that owner retains ownership of the
property in whole or in part;

(4) the organization or reorganization of a farm ownership entity that is not prohibited
from owning agricultural land in this state under section 500.24, if all owners maintain the
same beneficial interest both before and after the organization or reorganization; and

(5) transfer of the property to a trust or trustee, provided that the individual owners
of the property are the grantors of the trust and they maintain the same beneficial interest
both before and after placement of the property in trust.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2010, section 273.124, subdivision 13, is amended to read:


Subd. 13.

Homestead application.

(a) A person who meets the homestead
requirements under subdivision 1 must file a homestead application with the county
assessor to initially obtain homestead classification.

(b) The format and contents of a uniform homestead application shall be prescribed
by the commissioner of revenue. The application must clearly inform the taxpayer that
this application must be signed by all owners who occupy the property or by the qualifying
relative and returned to the county assessor in order for the property to receive homestead
treatment.

(c) Every property owner applying for homestead classification must furnish to the
county assessor the Social Security number of each occupant who is listed as an owner
of the property on the deed of record, the name and address of each owner who does not
occupy the property, and the name and Social Security number of each owner's spouse who
occupies the property. The application must be signed by each owner who occupies the
property and by each owner's spouse who occupies the property, or, in the case of property
that qualifies as a homestead under subdivision 1, paragraph (c), by the qualifying relative.

If a property owner occupies a homestead, the property owner's spouse may not
claim another property as a homestead unless the property owner and the property owner's
spouse file with the assessor an affidavit or other proof required by the assessor stating that
the property qualifies as a homestead under subdivision 1, paragraph (e).

Owners or spouses occupying residences owned by their spouses and previously
occupied with the other spouse, either of whom fail to include the other spouse's name
and Social Security number on the homestead application or provide the affidavits or
other proof requested, will be deemed to have elected to receive only partial homestead
treatment of their residence. The remainder of the residence will be classified as
nonhomestead residential. When an owner or spouse's name and Social Security number
appear on homestead applications for two separate residences and only one application is
signed, the owner or spouse will be deemed to have elected to homestead the residence for
which the application was signed.

The Social Security numbers, state or federal tax returns or tax return information,
including the federal income tax schedule F, required by this section, or section 273.13,
and
affidavits or other proofs of the property owners and spouses submitted under this
or another section to support a claim for a property tax homestead classification or other
classification or benefit under section 273.13,
are private data on individuals as defined by
section 13.02, subdivision 12, or nonpublic data as defined in section 13.02, subdivision 9,
but, notwithstanding that section, the private and nonpublic data may be disclosed to the
commissioner of revenue, or, for purposes of proceeding under the Revenue Recapture
Act to recover personal property taxes owing, to the county treasurer.

(d) If residential real estate is occupied and used for purposes of a homestead by a
relative of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in
order for the property to receive homestead status, a homestead application must be filed
with the assessor. The Social Security number of each relative and spouse of a relative
occupying the property shall be required on the homestead application filed under this
subdivision. If a different relative of the owner subsequently occupies the property, the
owner of the property must notify the assessor within 30 days of the change in occupancy.
The Social Security number of a relative or relative's spouse occupying the property
is private data on individuals as defined by section 13.02, subdivision 12, but may be
disclosed to the commissioner of revenue, or, for the purposes of proceeding under the
Revenue Recapture Act to recover personal property taxes owing, to the county treasurer.

(e) The homestead application shall also notify the property owners that the
application filed under this section will not be mailed annually and that
if the property
is granted homestead status for any assessment year, that same property shall remain
classified as homestead until the property is sold or transferred to another person, or
the owners, the spouse of the owner, or the relatives no longer use the property as their
homestead. Upon the sale or transfer of the homestead property, a certificate of value must
be timely filed with the county auditor as provided under section 272.115. Failure to
notify the assessor within 30 days that the property has been sold, transferred, or that the
owner, the spouse of the owner, or the relative is no longer occupying the property as a
homestead, shall result in the penalty provided under this subdivision and the property
will lose its current homestead status.

(f) If the homestead application is not returned within 30 days, the county will send a
second application to the present owners of record. The notice of proposed property taxes
prepared under section 275.065, subdivision 3, shall reflect the property's classification.
If
a homestead application has not been filed with the county by December 15, the assessor
shall classify the property as nonhomestead for the current assessment year for taxes
payable in the following year, provided that the owner may be entitled to receive the
homestead classification by proper application under section 375.192.

Subd. 13a.

Occupant list.

(g) At the request of the commissioner, each county
must give the commissioner a list that includes the name and Social Security number
of each occupant of homestead property who is the property owner, property owner's
spouse, qualifying relative of a property owner, or a spouse of a qualifying relative. The
commissioner shall use the information provided on the lists as appropriate under the law,
including for the detection of improper claims by owners, or relatives of owners, under
chapter 290A.

Subd. 13b.

Improper homestead.

(h) (a) If the commissioner finds that a
property owner may be claiming a fraudulent homestead, the commissioner shall notify
the appropriate counties. Within 90 days of the notification, the county assessor shall
investigate to determine if the homestead classification was properly claimed. If the
property owner does not qualify, the county assessor shall notify the county auditor who
will determine the amount of homestead benefits that had been improperly allowed. For the
purpose of this section subdivision, "homestead benefits" means the tax reduction resulting
from the classification as a homestead under section 273.13, the taconite homestead credit
under section 273.135, the residential homestead and agricultural homestead credits under
section 273.1384, and the supplemental homestead credit under section 273.1391.

The county auditor shall send a notice to the person who owned the affected property
at the time the homestead application related to the improper homestead was filed,
demanding reimbursement of the homestead benefits plus a penalty equal to 100 percent
of the homestead benefits. The person notified may appeal the county's determination
by serving copies of a petition for review with county officials as provided in section
278.01 and filing proof of service as provided in section 278.01 with the Minnesota Tax
Court within 60 days of the date of the notice from the county. Procedurally, the appeal
is governed by the provisions in chapter 271 which apply to the appeal of a property tax
assessment or levy, but without requiring any prepayment of the amount in controversy. If
the amount of homestead benefits and penalty is not paid within 60 days, and if no appeal
has been filed, the county auditor shall certify the amount of taxes and penalty to the county
treasurer. The county treasurer will add interest to the unpaid homestead benefits and
penalty amounts at the rate provided in section 279.03 for real property taxes becoming
delinquent in the calendar year during which the amount remains unpaid. Interest may be
assessed for the period beginning 60 days after demand for payment was made.

If the person notified is the current owner of the property, the treasurer may add the
total amount of homestead benefits, penalty, interest, and costs to the ad valorem taxes
otherwise payable on the property by including the amounts on the property tax statements
under section 276.04, subdivision 3. The amounts added under this paragraph to the ad
valorem taxes shall include interest accrued through December 31 of the year preceding
the taxes payable year for which the amounts are first added. These amounts, when added
to the property tax statement, become subject to all the laws for the enforcement of real or
personal property taxes for that year, and for any subsequent year.

If the person notified is not the current owner of the property, the treasurer may
collect the amounts due under the Revenue Recapture Act in chapter 270A, or use any of
the powers granted in sections 277.20 and 277.21 without exclusion, to enforce payment
of the homestead benefits, penalty, interest, and costs, as if those amounts were delinquent
tax obligations of the person who owned the property at the time the application related
to the improperly allowed homestead was filed. The treasurer may relieve a prior owner
of personal liability for the homestead benefits, penalty, interest, and costs, and instead
extend those amounts on the tax lists against the property as provided in this paragraph
to the extent that the current owner agrees in writing. On all demands, billings, property
tax statements, and related correspondence, the county must list and state separately the
amounts of homestead benefits, penalty, interest and costs being demanded, billed or
assessed.

(i) (b) Any amount of homestead benefits recovered by the county from the property
owner shall be distributed to the county, city or town, and school district where the
property is located in the same proportion that each taxing district's levy was to the total
of the three taxing districts' levy for the current year. Any amount recovered attributable
to taconite homestead credit shall be transmitted to the St. Louis County auditor to be
deposited in the taconite property tax relief account. Any amount recovered that is
attributable to supplemental homestead credit is to be transmitted to the commissioner of
revenue for deposit in the general fund of the state treasury. The total amount of penalty
collected must be deposited in the county general fund.

(j) (c) If a property owner has applied for more than one homestead and the county
assessors cannot determine which property should be classified as homestead, the county
assessors will refer the information to the commissioner. The commissioner shall make
the determination and notify the counties within 60 days.

Subd. 13c.

Property lists.

(k) In addition to lists of homestead properties, the
commissioner may ask the counties to furnish lists of all properties and the record owners.
The Social Security numbers and federal identification numbers that are maintained by
a county or city assessor for property tax administration purposes, and that may appear
on the lists retain their classification as private or nonpublic data; but may be viewed,
accessed, and used by the county auditor or treasurer of the same county for the limited
purpose of assisting the commissioner in the preparation of microdata samples under
section 270C.12. The commissioner shall use the information provided on the lists as
appropriate under the law, including for the detection of improper claims by owners, or
relatives of owners, under chapter 290A.

Subd. 13d.

Homestead data.

(l) On or before April 30 each year beginning in 2007,
each county must provide the commissioner with the following data for each parcel of
homestead property by electronic means as defined in section 289A.02, subdivision 8:

(i) (1) the property identification number assigned to the parcel for purposes of
taxes payable in the current year;

(ii) (2) the name and Social Security number of each occupant of homestead property
who is the property owner, property owner's spouse, qualifying relative of a property
owner, or spouse of a qualifying relative;

(iii) (3) the classification of the property under section 273.13 for taxes payable
in the current year and in the prior year;

(iv) (4) an indication of whether the property was classified as a homestead for
taxes payable in the current year because of occupancy by a relative of the owner or
by a spouse of a relative;

(v) (5) the property taxes payable as defined in section 290A.03, subdivision 13, for
the current year and the prior year;

(vi) (6) the market value of improvements to the property first assessed for tax
purposes for taxes payable in the current year;

(vii) (7) the assessor's estimated market value assigned to the property for taxes
payable in the current year and the prior year;

(viii) (8) the taxable market value assigned to the property for taxes payable in the
current year and the prior year;

(ix) (9) whether there are delinquent property taxes owing on the homestead;

(x) (10) the unique taxing district in which the property is located; and

(xi) (11) such other information as the commissioner decides is necessary.

The commissioner shall use the information provided on the lists as appropriate
under the law, including for the detection of improper claims by owners, or relatives
of owners, under chapter 290A.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2011 Supplement, section 273.13, subdivision 25, is
amended to read:


Subd. 25.

Class 4.

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

(b) Class 4b includes:

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

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

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

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

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

(c) Class 4bb includes:

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

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

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

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

(d) Class 4c property includes:

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

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

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

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

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

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

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

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

For purposes of this clause:

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

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

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

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

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

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

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

(5)(i) manufactured home parks as defined in section 327.14, subdivision 3,
excluding manufactured home parks described in section 273.124, subdivision 3a, and (ii)
manufactured home parks as defined in section 327.14, subdivision 3, that are described in
section 273.124, subdivision 3a;

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

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

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

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

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

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

(i) the land abuts a public airport; and

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

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

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

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

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

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

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

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

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

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

Class 4c property has a class rate of 1.5 percent of market value, except that (i) each
parcel of noncommercial seasonal residential recreational property under clause (12)
has the same class rates as class 4bb property, (ii) manufactured home parks assessed
under clause (5), item (i), have the same class rate as class 4b property, and the market
value of manufactured home parks assessed under clause (5), item (ii), has the same class
rate as class 4d property if more than 50 percent of the lots in the park are occupied by
shareholders in the cooperative corporation or association and a class rate of one percent if
50 percent or less of the lots are so occupied, (iii) commercial-use seasonal residential
recreational property and marina recreational land as described in clause (11), has a
class rate of one percent for the first $500,000 of market value, and 1.25 percent for the
remaining market value, (iv) the market value of property described in clause (4) has a
class rate of one percent, (v) the market value of property described in clauses (2), (6), and
(10) has a class rate of 1.25 percent, and (vi) that portion of the market value of property
in clause (9) qualifying for class 4c property has a class rate of 1.25 percent.

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

Class 4d property has a class rate of 0.75 percent.

EFFECTIVE DATE.

This section is effective for taxes payable in 2013 and
thereafter.

Sec. 9.

Minnesota Statutes 2010, section 273.1315, subdivision 1, is amended to read:


Subdivision 1.

Class 1b homestead declaration before 2009.

Any property owner
seeking classification and assessment of the owner's homestead as class 1b property
pursuant to section 273.13, subdivision 22, paragraph (b), on or before October 1, 2008,
shall file with the commissioner of revenue a 1b homestead declaration, on a form
prescribed by the commissioner. The declaration shall contain the following information:

(a) (1) the information necessary to verify that on or before June 30 of the filing year,
the property owner or the owner's spouse satisfies the requirements of section 273.13,
subdivision 22
, paragraph (b), for 1b classification; and

(b) (2) any additional information prescribed by the commissioner.

The declaration must be filed on or before October 1 to be effective for property
taxes payable during the succeeding calendar year. The declaration and any supplementary
information received from the property owner pursuant to this subdivision shall be subject
to chapter 270B. If approved by the commissioner, the declaration remains in effect until
the property no longer qualifies under section 273.13, subdivision 22, paragraph (b).
Failure to notify the commissioner within 30 days that the property no longer qualifies
under that paragraph because of a sale, change in occupancy, or change in the status
or condition of an occupant shall result in the penalty provided in section 273.124,
subdivision 13 13b, computed on the basis of the class 1b benefits for the property, and
the property shall lose its current class 1b classification.

The commissioner shall provide to the assessor on or before November 1 a listing
of the parcels of property qualifying for 1b classification.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 10.

Minnesota Statutes 2010, section 273.1315, subdivision 2, is amended to read:


Subd. 2.

Class 1b homestead declaration 2009 and thereafter.

(a) Any property
owner seeking classification and assessment of the owner's homestead as class 1b property
pursuant to section 273.13, subdivision 22, paragraph (b), after October 1, 2008, shall file
with the county assessor a class 1b homestead declaration, on a form prescribed by the
commissioner of revenue. The declaration must contain the following information:

(1) the information necessary to verify that, on or before June 30 of the filing year,
the property owner or the owner's spouse satisfies the requirements of section 273.13,
subdivision 22, paragraph (b), for class 1b classification; and

(2) any additional information prescribed by the commissioner.

(b) The declaration must be filed on or before October 1 to be effective for property
taxes payable during the succeeding calendar year. The Social Security numbers and
income and medical information received from the property owner pursuant to this
subdivision are private data on individuals as defined in section 13.02. If approved by
the assessor, the declaration remains in effect until the property no longer qualifies under
section 273.13, subdivision 22, paragraph (b). Failure to notify the assessor within 30
days that the property no longer qualifies under that paragraph because of a sale, change in
occupancy, or change in the status or condition of an occupant shall result in the penalty
provided in section 273.124, subdivision 13 13b, computed on the basis of the class 1b
benefits for the property, and the property shall lose its current class 1b classification.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 11.

Minnesota Statutes 2010, section 273.19, subdivision 1, is amended to read:


Subdivision 1.

Tax-exempt property; lease.

Except as provided in subdivision 3 or
4, tax-exempt property held under a lease for a term of at least one year, and not taxable
under section 272.01, subdivision 2, or under a contract for the purchase thereof, shall
be considered, for all purposes of taxation, as the property of the person holding it. In
this subdivision, "tax-exempt property" means property owned by the United States, the
state or any of its political subdivisions, a school, or any religious, scientific, or benevolent
society or institution, incorporated or unincorporated, or any corporation whose property
is not taxed in the same manner as other property. This subdivision does not apply to
property exempt from taxation under section 272.01, subdivision 2, paragraph (b), clauses
(2), (3), and (4), or to property exempt from taxation under section 272.0213.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 12.

Minnesota Statutes 2010, section 273.372, subdivision 4, is amended to read:


Subd. 4.

Administrative appeals.

(a) Companies that submit the reports under
section 270.82 or 273.371 by the date specified in that section, or by the date specified by
the commissioner in an extension, may appeal administratively to the commissioner prior
to bringing an action in court by submitting.

(b) Companies that must submit reports under section 270.82 must submit a written
request with to the commissioner for a conference within ten days after the date of the
commissioner's valuation certification or notice to the company, or by May June 15,
whichever is earlier.

(c) Companies that submit reports under section 273.371 must submit a written
request to the commissioner for a conference within ten days after the date of the
commissioner's valuation certification or notice to the company, or by July 1, whichever
is earlier.

(d) The commissioner shall conduct the conference upon the commissioner's entire
files and records and such further information as may be offered. The conference must
be held no later than 20 days after the date of the commissioner's valuation certification
or notice to the company, or by the date specified by the commissioner in an extension.
Within 60 days after the conference the commissioner shall make a final determination of
the matter and shall notify the company promptly of the determination. The conference
is not a contested case hearing.

(b) (e) In addition to the opportunity for a conference under paragraph (a), the
commissioner shall also provide the railroad and utility companies the opportunity to
discuss any questions or concerns relating to the values established by the commissioner
through certification or notice in a less formal manner. This does not change or modify
the deadline for requesting a conference under paragraph (a), the deadline in section
271.06 for appealing an order of the commissioner, or the deadline in section 278.01 for
appealing property taxes in court.

EFFECTIVE DATE.

This section is effective beginning with assessment year 2013.

Sec. 13.

Minnesota Statutes 2010, section 273.39, is amended to read:


273.39 RURAL AREA.

As used in sections 273.39 to 273.41, the term "rural area" shall be deemed to mean
any area of the state not included within the boundaries of any incorporated statutory
city or home rule charter
city, and such term shall be deemed to include both farm and
nonfarm population thereof.

EFFECTIVE DATE.

This section is effective beginning with assessment year 2012.

Sec. 14.

Minnesota Statutes 2010, section 279.06, subdivision 1, is amended to read:


Subdivision 1.

List and notice.

Within five days after the filing of such list, the
court administrator shall return a copy thereof to the county auditor, with a notice prepared
and signed by the court administrator, and attached thereto, which may be substantially in
the following form:

State of Minnesota
)
) ss.
County of
.
)
District Court
. Judicial District.

The state of Minnesota, to all persons, companies, or corporations who have or claim
any estate, right, title, or interest in, claim to, or lien upon, any of the several parcels of
land described in the list hereto attached:

The list of taxes and penalties on real property for the county of ...............................
remaining delinquent on the first Monday in January, ......., has been filed in the office of
the court administrator of the district court of said county, of which that hereto attached is a
copy. Therefore, you, and each of you, are hereby required to file in the office of said court
administrator, on or before the 20th day after the publication of this notice and list, your
answer, in writing, setting forth any objection or defense you may have to the taxes, or any
part thereof, upon any parcel of land described in the list, in, to, or on which you have or
claim any estate, right, title, interest, claim, or lien, and, in default thereof, judgment will
be entered against such parcel of land for the taxes on such list appearing against it, and
for all penalties, interest, and costs. Based upon said judgment, the land shall be sold to
the state of Minnesota on the second Monday in May, ....... The period of redemption for
all lands sold to the state at a tax judgment sale shall be three years from the date of sale to
the state of Minnesota if the land is within an incorporated area unless it is:

(a) nonagricultural homesteaded land as defined in section 273.13, subdivision 22;

(b) homesteaded agricultural land as defined in section 273.13, subdivision 23,
paragraph (a);

(c) seasonal residential recreational land as defined in section 273.13, subdivisions
22, paragraph (c)
, and 25, paragraph (d), clause (1), in which event the period of
redemption is five years from the date of sale to the state of Minnesota;

(d) abandoned property and pursuant to section 281.173 a court order has been
entered shortening the redemption period to five weeks; or

(e) vacant property as described under section 281.174, subdivision 2, and for which
a court order is entered shortening the redemption period under section 281.174.

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

Inquiries as to the proceedings set forth above can be made to the county auditor of
..... county whose address is ......

(Signed) . ,
Court Administrator of the District Court of the
County of
.
(Here insert list.)

The notice must contain a narrative description of the various periods to redeem
specified in sections 281.17, 281.173, and 281.174, in the manner prescribed by the
commissioner of revenue under subdivision 2.

The list referred to in the notice shall be substantially in the following form:

List of real property for the county of ......................., on which taxes remain
delinquent on the first Monday in January, .......

Town of (Fairfield),

Township (40), Range (20),

Names (and Current
Filed Addresses) for
the Taxpayers and Fee
Owners and in Addition
Those Parties Who Have
Filed Their Addresses
Pursuant to section
276.041
Subdivision of
Section
Section
Tax Parcel
Number
Total Tax
and Penalty
$ cts.
John Jones (825 Fremont
Fairfield, MN 55000)
S.E. 1/4 of S.W. 1/4
10
23101
2.20
Bruce Smith (2059 Hand
Fairfield, MN 55000)
and Fairfield State
Bank (100 Main Street
Fairfield, MN 55000)
That part of N.E. 1/4
of S.W. 1/4 desc. as
follows: Beg. at the
S.E. corner of said N.E.
1/4 of S.W. 1/4; thence
N. along the E. line of
said N.E. 1/4 of S.W.
1/4 a distance of 600
ft.; thence W. parallel
with the S. line of said
N.E. 1/4 of S.W. 1/4
a distance of 600 ft.;
thence S. parallel with
said E. line a distance of
600 ft. to S. line of said
N.E. 1/4 of S.W. 1/4;
thence E. along said S.
line a distance of 600 ft.
to the point of beg.
21
33211
3.15

As to platted property, the form of heading shall conform to circumstances and be
substantially in the following form:

City of (Smithtown)

Brown's Addition, or Subdivision

Names (and Current
Filed Addresses) for
the Taxpayers and Fee
Owners and in Addition
Those Parties Who Have
Filed Their Addresses
Pursuant to section
276.041
Lot
Block
Tax Parcel
Number
Total Tax
and Penalty
$ cts.
John Jones (825 Fremont
Fairfield, MN 55000)
15
9
58243
2.20
Bruce Smith (2059 Hand
Fairfield, MN 55000)
and Fairfield State
Bank (100 Main Street
Fairfield, MN 55000)
16
9
58244
3.15

The names, descriptions, and figures employed in parentheses in the above forms are
merely for purposes of illustration.

The name of the town, township, range or city, and addition or subdivision, as the
case may be, shall be repeated at the head of each column of the printed lists as brought
forward from the preceding column.

Errors in the list shall not be deemed to be a material defect to affect the validity
of the judgment and sale.

EFFECTIVE DATE.

This section is effective for lists and notices required after
December 31, 2012.

Sec. 15.

Minnesota Statutes 2010, section 290A.25, is amended to read:


290A.25 VERIFICATION OF SOCIAL SECURITY NUMBERS.

Annually, the commissioner of revenue shall furnish a list to the county assessor
containing the names and Social Security numbers of persons who have applied for both
homestead classification under section 273.13 and a property tax refund as a renter
under this chapter.

Within 90 days of the notification, the county assessor shall investigate to determine
if the homestead classification was improperly claimed. If the property owner does
not qualify, the county assessor shall notify the county auditor who will determine the
amount of homestead benefits that has been improperly allowed. For the purpose of this
section, "homestead benefits" has the meaning given in section 273.124, subdivision
13
, paragraph (h) 13b. The county auditor shall send a notice to persons who owned the
affected property at the time the homestead application related to the improper homestead
was filed, demanding reimbursement of the homestead benefits plus a penalty equal to
100 percent of the homestead benefits. The person notified may appeal the county's
determination with the Minnesota Tax Court within 60 days of the date of the notice from
the county as provided in section 273.124, subdivision 13, paragraph (h) 13b.

If the amount of homestead benefits and penalty is not paid within 60 days, and if
no appeal has been filed, the county auditor shall certify the amount of taxes and penalty
to the county treasurer. The county treasurer will add interest to the unpaid homestead
benefits and penalty amounts at the rate provided for delinquent personal property taxes
for the period beginning 60 days after demand for payment was made until payment. If
the person notified is the current owner of the property, the treasurer may add the total
amount of benefits, penalty, interest, and costs to the real estate taxes otherwise payable on
the property in the following year. If the person notified is not the current owner of the
property, the treasurer may collect the amounts due under the Revenue Recapture Act in
chapter 270A, or use any of the powers granted in sections 277.20 and 277.21 without
exclusion, to enforce payment of the benefits, penalty, interest, and costs, as if those
amounts were delinquent tax obligations of the person who owned the property at the time
the application related to the improperly allowed homestead was filed. The treasurer may
relieve a prior owner of personal liability for the benefits, penalty, interest, and costs, and
instead extend those amounts on the tax lists against the property for taxes payable in the
following year to the extent that the current owner agrees in writing.

Any amount of homestead benefits recovered by the county from the property owner
shall be distributed to the county, city or town, and school district where the property is
located in the same proportion that each taxing district's levy was to the total of the three
taxing districts' levy for the current year. Any amount recovered attributable to taconite
homestead credit shall be transmitted to the St. Louis County auditor to be deposited in
the taconite property tax relief account. Any amount recovered that is attributable to
supplemental homestead credit is to be transmitted to the commissioner of revenue for
deposit in the general fund of the state treasury. The total amount of penalty collected
must be deposited in the county general fund.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 16.

Minnesota Statutes 2010, section 290B.04, subdivision 2, is amended to read:


Subd. 2.

Approval; recording.

The commissioner shall approve all initial
applications that qualify under this chapter and shall notify qualifying homeowners on or
before December 1. The commissioner may investigate the facts or require confirmation
in regard to an application. The commissioner shall record or file a notice of qualification
for deferral, including the names of the qualifying homeowners and a legal description
of the property, in the office of the county recorder, or registrar of titles, whichever is
applicable, in the county where the qualifying property is located. The notice must state
that it serves as a notice of lien and that it includes deferrals under this section for future
years. The commissioner shall prescribe the form of the notice. Execution of the notice
by the original or facsimile signature of the commissioner or a delegate entitles them to
be recorded, and no other attestation, certification, or acknowledgment is necessary.
The
homeowner shall pay the recording or filing fees for the notice, which, notwithstanding
section 357.18, shall be paid by the homeowner at the time of satisfaction of the lien.

EFFECTIVE DATE.

This section is effective for notices that are both executed
and recorded after June 30, 2012.

Sec. 17.

Minnesota Statutes 2011 Supplement, section 373.01, subdivision 1, is
amended to read:


Subdivision 1.

Public corporation; listed powers.

(a) Each county is a body politic
and corporate and may:

(1) Sue and be sued.

(2) Acquire and hold real and personal property for the use of the county, and lands
sold for taxes as provided by law.

(3) Purchase and hold for the benefit of the county real estate sold by virtue of
judicial proceedings, to which the county is a party.

(4) Sell, lease, and convey real or personal estate owned by the county, and give
contracts or options to sell, lease, or convey it, and make orders respecting it as deemed
conducive to the interests of the county's inhabitants.

(5) Make all contracts and do all other acts in relation to the property and concerns
of the county necessary to the exercise of its corporate powers.

(b) No sale, lease, or conveyance of real estate owned by the county, except the lease
of a residence acquired for the furtherance of an approved capital improvement project, nor
any contract or option for it, shall be valid, without first advertising for bids or proposals in
the official newspaper of the county for three consecutive weeks and once in a newspaper
of general circulation in the area where the property is located. The notice shall state the
time and place of considering the proposals, contain a legal description of any real estate,
and a brief description of any personal property. Leases that do not exceed $15,000 for any
one year may be negotiated and are not subject to the competitive bid procedures of this
section. All proposals estimated to exceed $15,000 in any one year shall be considered at
the time set for the bid opening, and the one most favorable to the county accepted, but the
county board may, in the interest of the county, reject any or all proposals.

(c) Sales of personal property the value of which is estimated to be $15,000 or
more shall be made only after advertising for bids or proposals in the county's official
newspaper, on the county's Web site, or in a recognized industry trade journal. At the same
time it posts on its Web site or publishes in a trade journal, the county must publish in the
official newspaper, either as part of the minutes of a regular meeting of the county board
or in a separate notice, a summary of all requests for bids or proposals that the county
advertises on its Web site or in a trade journal. After publication in the official newspaper,
on the Web site, or in a trade journal, bids or proposals may be solicited and accepted by
the electronic selling process authorized in section 471.345, subdivision 17. Sales of
personal property the value of which is estimated to be less than $15,000 may be made
either on competitive bids or in the open market, in the discretion of the county board.
"Web site" means a specific, addressable location provided on a server connected to the
Internet and hosting World Wide Web pages and other files that are generally accessible
on the Internet all or most of a day.

(d) Notwithstanding anything to the contrary herein, the county may, when acquiring
real property for county highway right-of-way, exchange parcels of real property of
substantially similar or equal value without advertising for bids. The estimated values for
these parcels shall be determined by the county assessor.

(e) Notwithstanding anything in this section to the contrary, the county may, when
acquiring real property for purposes other than county highway right-of-way, exchange
parcels of real property of substantially similar or equal value without advertising for bids.
The estimated values for these parcels must be determined by the county assessor or a
private appraisal performed by a licensed Minnesota real estate appraiser. For the purpose
of making these estimates, the county assessor need not be licensed under chapter 82B.
Before giving final approval to any exchange of land, the county board shall hold a public
hearing on the exchange. At least two weeks before the hearing, the county auditor shall
post a notice in the auditor's office and the official newspaper of the county of the hearing
that contains a description of the lands affected.

(f) If real estate or personal property remains unsold after advertising for and
consideration of bids or proposals the county may employ a broker to sell the property.
The broker may sell the property for not less than 90 percent of its appraised market value
as determined by the county. The broker's fee shall be set by agreement with the county but
may not exceed ten percent of the sale price and must be paid from the proceeds of the sale.

(g) A county or its agent may rent a county-owned residence acquired for the
furtherance of an approved capital improvement project subject to the conditions set
by the county board and not subject to the conditions for lease otherwise provided by
paragraph (a), clause (4), and paragraphs (b), (c), (d), (f), and (h).

(h) In no case shall lands be disposed of without there being reserved to the county
all iron ore and other valuable minerals in and upon the lands, with right to explore for,
mine and remove the iron ore and other valuable minerals, nor shall the minerals and
mineral rights be disposed of, either before or after disposition of the surface rights,
otherwise than by mining lease, in similar general form to that provided by section 93.20
for mining leases affecting state lands. The lease shall be for a term not exceeding 50
years, and be issued on a royalty basis, the royalty to be not less than 25 cents per ton of
2,240 pounds, and fix a minimum amount of royalty payable during each year, whether
mineral is removed or not. Prospecting options for mining leases may be granted for
periods not exceeding one year. The options shall require, among other things, periodical
showings to the county board of the results of exploration work done.

(i) Notwithstanding anything in this subdivision to the contrary, the county may,
when selling real property owned in fee simple that cannot be improved because of
noncompliance with local ordinances regarding minimum area, shape, frontage, or access,
proceed to sell the nonconforming parcel without advertising for bid. At the county's
discretion, the real property may be restricted to sale to adjoining landowners or may be
sold to any other interested party. The property shall be sold to the highest bidder, but
in no case shall the property be sold for less than 90 percent of its fair market value as
determined by the county assessor. All owners of land adjoining the land to be sold shall
be given a written notice at least 30 days before the sale. This paragraph shall be liberally
construed to encourage the sale of nonconforming real property and promote its return to
the tax roles.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 18. REPEALER.

(a) Minnesota Statutes 2010, section 272.69, is repealed.

(b) Minnesota Statutes 2010, section 273.11, subdivision 22, is repealed.

EFFECTIVE DATE.

Paragraph (a) is effective the day following final enactment.
Paragraph (b) is effective for taxes payable in 2013 and thereafter.

ARTICLE 3

DEPARTMENT POLICY AND TECHNICAL: SALES AND USE
TAXES; SPECIAL TAXES

Section 1.

Minnesota Statutes 2010, section 65B.84, subdivision 1, is amended to read:


Subdivision 1.

Program described; commissioner's duties; appropriation.

(a)
The commissioner of commerce shall:

(1) develop and sponsor the implementation of statewide plans, programs, and
strategies to combat automobile theft, improve the administration of the automobile theft
laws, and provide a forum for identification of critical problems for those persons dealing
with automobile theft;

(2) coordinate the development, adoption, and implementation of plans, programs,
and strategies relating to interagency and intergovernmental cooperation with respect
to automobile theft enforcement;

(3) annually audit the plans and programs that have been funded in whole or in part
to evaluate the effectiveness of the plans and programs and withdraw funding should the
commissioner determine that a plan or program is ineffective or is no longer in need
of further financial support from the fund;

(4) develop a plan of operation including:

(i) an assessment of the scope of the problem of automobile theft, including areas
of the state where the problem is greatest;

(ii) an analysis of various methods of combating the problem of automobile theft;

(iii) a plan for providing financial support to combat automobile theft;

(iv) a plan for eliminating car hijacking; and

(v) an estimate of the funds required to implement the plan; and

(5) distribute money, in consultation with the commissioner of public safety,
pursuant to subdivision 3 from the automobile theft prevention special revenue account
for automobile theft prevention activities, including:

(i) paying the administrative costs of the program;

(ii) providing financial support to the State Patrol and local law enforcement
agencies for automobile theft enforcement teams;

(iii) providing financial support to state or local law enforcement agencies for
programs designed to reduce the incidence of automobile theft and for improved
equipment and techniques for responding to automobile thefts;

(iv) providing financial support to local prosecutors for programs designed to reduce
the incidence of automobile theft;

(v) providing financial support to judicial agencies for programs designed to reduce
the incidence of automobile theft;

(vi) providing financial support for neighborhood or community organizations or
business organizations for programs designed to reduce the incidence of automobile
theft and to educate people about the common methods of automobile theft, the models
of automobiles most likely to be stolen, and the times and places automobile theft is
most likely to occur; and

(vii) providing financial support for automobile theft educational and training
programs for state and local law enforcement officials, driver and vehicle services exam
and inspections staff, and members of the judiciary.

(b) The commissioner may not spend in any fiscal year more than ten percent of the
money in the fund for the program's administrative and operating costs. The commissioner
is annually appropriated and must distribute the amount of the proceeds credited to
the automobile theft prevention special revenue account each year, less the transfer
of $1,300,000 each year to the general fund described in section 168A.40, subdivision
4
297I.11, subdivision 2.

EFFECTIVE DATE.

This section is effective for premiums collected after June
30, 2012.

Sec. 2.

Minnesota Statutes 2010, section 287.20, is amended by adding a subdivision
to read:


Subd. 11.

Partition.

"Partition" means the division by conveyance of real property
that is held jointly or in common by two or more persons into individually owned interests.
If one of the co-owners gives consideration for all or a part of the individually owned
interest conveyed to them, that portion of the conveyance is not a part of the partition.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2010, section 297A.665, is amended to read:


297A.665 PRESUMPTION OF TAX; BURDEN OF PROOF.

(a) For the purpose of the proper administration of this chapter and to prevent
evasion of the tax, until the contrary is established, it is presumed that:

(1) all gross receipts are subject to the tax; and

(2) all retail sales for delivery in Minnesota are for storage, use, or other consumption
in Minnesota.

(b) The burden of proving that a sale is not a taxable retail sale is on the seller.
However, a seller is relieved of liability if:

(1) the seller obtains a fully completed exemption certificate or all the relevant
information required by section 297A.72, subdivision 2, at the time of the sale or within
90 days after the date of the sale; or

(2) if the seller has not obtained a fully completed exemption certificate or all the
relevant information required by section 297A.72, subdivision 2, within the time provided
in clause (1), within 120 days after a request for substantiation by the commissioner,
the seller either:

(i) obtains in good faith from the purchaser a fully completed exemption certificate
or all the relevant information required by section 297A.72, subdivision 2, from the
purchaser
taken in good faith which means that the exemption certificate claims an
exemption that (A) was statutorily available on the date of the transaction, (B) could be
applicable to the item for which the exemption is claimed, and (C) is reasonable for the
purchaser's type of business
; or

(ii) proves by other means that the transaction was not subject to tax.

(c) Notwithstanding paragraph (b), relief from liability does not apply to a seller who:

(1) fraudulently fails to collect the tax; or

(2) solicits purchasers to participate in the unlawful claim of an exemption.

(d) Notwithstanding paragraph (b), relief from liability does not apply to a seller
who has obtained information under paragraph (b), clause (2), if through the audit process
the commissioner finds the following:

(1) that at the time the information was provided the seller had knowledge or had
reason to know that the information relating to the exemption was materially false; or

(2) that the seller knowingly participated in activity intended to purposefully evade
the sales tax due on the transaction.

(d) (e) A certified service provider, as defined in section 297A.995, subdivision 2, is
relieved of liability under this section to the extent a seller who is its client is relieved of
liability.

(e) (f) A purchaser of tangible personal property or any items listed in section
297A.63 that are shipped or brought to Minnesota by the purchaser has the burden
of proving that the property was not purchased from a retailer for storage, use, or
consumption in Minnesota.

(f) (g) If a seller claims that certain sales are exempt and does not provide the
certificate, information, or proof required by paragraph (b), clause (2), within 120 days
after the date of the commissioner's request for substantiation, then the exemptions
claimed by the seller that required substantiation are disallowed.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2010, section 297F.01, subdivision 23, is amended to read:


Subd. 23.

Wholesale sales price.

"Wholesale sales price" means the price stated on
the price list in effect at the time of sale for which a manufacturer or person sells a tobacco
product to a distributor, exclusive of any discount, promotional offer, or other reduction.
For purposes of this subdivision, "price list" means the manufacturer's price at which
tobacco products are made available for sale to all distributors on an ongoing basis
at which
a distributor purchases a tobacco product without any reduction for federal excise taxes,
freight charges, discounts, packaging, or other reductions. Wholesale sales price includes
the applicable federal excise tax regardless of whether it is included in the purchase price
.

EFFECTIVE DATE.

This section is effective for purchases made after December
31, 2012.

Sec. 5.

Minnesota Statutes 2010, section 297G.04, subdivision 2, is amended to read:


Subd. 2.

Tax credit.

A qualified brewer producing fermented malt beverages
is entitled to a tax credit of $4.60 per barrel on 25,000 barrels sold in any fiscal year
beginning July 1, regardless of the alcohol content of the product. Qualified brewers may
take the credit on the 18th day of each month, but the total credit allowed may not exceed
in any fiscal year the lesser of:

(1) the liability for tax; or

(2) $115,000.

For purposes of this subdivision, a "qualified brewer" means a brewer, whether
or not located in this state, manufacturing less than 100,000 barrels of fermented malt
beverages in the calendar year immediately preceding the calendar fiscal year for which
the credit under this subdivision is claimed. In determining the number of barrels, all
brands or labels of a brewer must be combined. All facilities for the manufacture of
fermented malt beverages owned or controlled by the same person, corporation, or other
entity must be treated as a single brewer. A brewer is owned or controlled when more than
50 percent of the voting stock of each member of the group is directly or indirectly owned
by a common owner or by common owners, whether they are corporate or noncorporate.

EFFECTIVE DATE.

This section is effective for claims filed after December
31, 2012.

Sec. 6.

Minnesota Statutes 2011 Supplement, section 297I.05, subdivision 7, is
amended to read:


Subd. 7.

Nonadmitted insurance premium tax.

(a) A tax is imposed on surplus
lines brokers. The rate of tax is equal to three percent of the gross premiums less return
premiums paid by an insured whose home state is Minnesota.

(b) A tax is imposed on persons, firms, or corporations a person, firm, corporation,
or purchasing group as defined in section 60E.02, or any member of a purchasing group,

that procure insurance directly from a nonadmitted insurer. The rate of tax is equal to two
percent of the gross premiums less return premiums paid by an insured whose home
state is Minnesota.

(c) No state other than the home state of an insured may require any premium tax
payment for nonadmitted insurance. When Minnesota is the home state of the insured,
as provided under section 297I.01, 100 percent of the gross premiums are taxable in
Minnesota with no allocation of the tax to other states.

EFFECTIVE DATE.

This section is effective for premiums received after
December 31, 2012.

Sec. 7.

Minnesota Statutes 2010, section 297I.05, subdivision 11, is amended to read:


Subd. 11.

Retaliatory provisions.

(a) If any other state or country imposes any
taxes, fines, deposits, penalties, licenses, or fees upon any insurance companies of this
state and their agents doing business in another state or country that are in addition to or in
excess of those imposed by the laws of this state upon foreign insurance companies and
their agents doing business in this state, the same taxes, fines, deposits, penalties, licenses,
and fees are imposed upon every similar insurance company of that state or country and
their agents doing or applying to do business in this state.

(b) If any conditions precedent to the right to do business in any other state or
country are imposed by the laws of that state or country, beyond those imposed upon
foreign companies by the laws of this state, the same conditions precedent are imposed
upon every similar insurance company of that state or country and their agents doing or
applying to do business in that state.

(c) For purposes of this subdivision, "taxes, fines, deposits, penalties, licenses, or
fees" means an amount of money that is deposited in the general revenue fund of the state
or other similar fund in another state or country and is not dedicated to a special purpose
or use or money deposited in the general revenue fund of the state or other similar fund in
another state or country and appropriated to the commissioner of commerce or insurance
for the operation of the Department of Commerce or other similar agency with jurisdiction
over insurance. Taxes, fines, deposits, penalties, licenses, or fees do not include:

(1) special purpose obligations or assessments imposed in connection with particular
kinds of insurance, including but not limited to assessments imposed in connection with
residual market mechanisms; or

(2) assessments made by the insurance guaranty association, life and health
guarantee association, or similar association.

(d) This subdivision applies to taxes imposed under subdivisions 1,; 3,; 4, 6, and; 12,
paragraph (a), clauses (1) and (2); and 14.

(e) This subdivision does not apply to insurance companies organized or domiciled
in a state or country, the laws of which do not impose retaliatory taxes, fines, deposits,
penalties, licenses, or fees or which grant, on a reciprocal basis, exemptions from
retaliatory taxes, fines, deposits, penalties, licenses, or fees to insurance companies
domiciled in this state.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2011 Supplement, section 297I.05, subdivision 12, is
amended to read:


Subd. 12.

Other entities.

(a) A tax is imposed equal to two percent of:

(1) gross premiums less return premiums written for risks resident or located in
Minnesota by a risk retention group;

(2) gross premiums less return premiums received by an attorney in fact acting
in accordance with chapter 71A;

(3) gross premiums less return premiums received pursuant to assigned risk policies
and contracts of coverage under chapter 79; and

(4) the direct funded premium received by the reinsurance association under section
79.34 from self-insurers approved under section 176.181 and political subdivisions that
self-insure; and.

(5) gross premiums less return premiums paid to an insurer other than a licensed
insurance company or a surplus lines broker for coverage of risks resident or located in
Minnesota by a purchasing group or any members of the purchasing group to a broker or
agent for the purchasing group.

(b) A tax is imposed on a joint self-insurance plan operating under chapter 60F. The
rate of tax is equal to two percent of the total amount of claims paid during the fund year,
with no deduction for claims wholly or partially reimbursed through stop-loss insurance.

(c) A tax is imposed on a joint self-insurance plan operating under chapter 62H.
The rate of tax is equal to two percent of the total amount of claims paid during the
fund's fiscal year, with no deduction for claims wholly or partially reimbursed through
stop-loss insurance.

(d) A tax is imposed equal to the tax imposed under section 297I.05, subdivision 5,
on the gross premiums less return premiums on all coverages received by an accountable
provider network or agents of an accountable provider network in Minnesota, in cash or
otherwise, during the year.

EFFECTIVE DATE.

This section is effective for premiums received after
December 31, 2012.

Sec. 9.

[297I.11] AUTOMOBILE THEFT PREVENTION SURCHARGE.

Subdivision 1.

Surcharge.

Each insurer engaged in the writing of policies of
automobile insurance shall collect a surcharge, at the rate of 50 cents per vehicle
for every six months of coverage, on each policy of automobile insurance providing
comprehensive insurance coverage issued or renewed in this state. The surcharge may not
be considered premium for any purpose, including the computation of premium tax or
agents' commissions. The amount of the surcharge must be separately stated on either a
billing or policy declaration sent to an insured. Insurers shall remit the revenue derived
from this surcharge to the commissioner of revenue for purposes of the automobile theft
prevention program described in section 65B.84. For purposes of this subdivision, "policy
of automobile insurance" has the meaning given it in section 65B.14, covering only the
following types of vehicles as defined in section 168.002:

(1) a passenger automobile;

(2) a pickup truck;

(3) a van but not commuter vans as defined in section 168.126; or

(4) a motorcycle,

except that no vehicle with a gross vehicle weight in excess of 10,000 pounds is included
within this definition.

Subd. 2.

Automobile theft prevention account.

A special revenue account in
the state treasury shall be credited with the proceeds of the surcharge imposed under
subdivision 1. Of the revenue in the account, $1,300,000 each year must be transferred to
the general fund. Revenues in excess of $1,300,000 each year may be used only for the
automobile theft prevention program described in section 65B.84.

Subd. 3.

Collection and administration.

The commissioner shall collect and
administer the surcharge imposed by this section in the same manner as the taxes imposed
by this chapter. The commissioner is appropriated annually, from the automobile theft
prevention special revenue account, an amount to reimburse the Department of Revenue
for the costs incurred in administering and collecting the surcharge imposed under
subdivision 1.

EFFECTIVE DATE.

This section is effective for premiums collected after June
30, 2012.

Sec. 10.

Minnesota Statutes 2011 Supplement, section 297I.30, subdivision 1, is
amended to read:


Subdivision 1.

General rule.

On or before March 1, every taxpayer subject to
taxation under section 297I.05, subdivisions 1 to 5,; 7, paragraph (b),; 12, paragraphs (a),
clauses (1) to (4), (b), (c), and (d),
; and 14, shall file an annual return for the preceding
calendar year in the form prescribed by the commissioner.

EFFECTIVE DATE.

This section is effective for premiums received after
December 31, 2012.

Sec. 11.

Minnesota Statutes 2011 Supplement, section 297I.30, subdivision 2, is
amended to read:


Subd. 2.

Surplus lines brokers and purchasing groups.

On or before February
15 and August 15 of each year, every surplus lines broker subject to taxation under
section 297I.05, subdivision 7, paragraph (a), and every purchasing group or member of
a purchasing group subject to tax under section 297I.05, subdivision 12, paragraph (a),
clause (5),
shall file a return with the commissioner for the preceding six-month period
ending December 31, or June 30, in the form prescribed by the commissioner.

EFFECTIVE DATE.

This section is effective for premiums received after
December 31, 2012.

Sec. 12.

Minnesota Statutes 2010, section 297I.30, is amended by adding a subdivision
to read:


Subd. 10.

Automobile theft prevention surcharge.

On or before May 1, August
1, November 1, and February 1 of each year, every insurer required to pay the surcharge
under section 297I.11 shall file a return with the commissioner for the preceding
three-month period ending March 31, June 30, September 30, and December 31, in the
form prescribed by the commissioner.

EFFECTIVE DATE.

This section is effective for premiums collected after June
30, 2012.

Sec. 13. REPEALER.

Minnesota Statutes 2010, section 168A.40, subdivisions 3 and 4, are repealed.

EFFECTIVE DATE.

This section is effective for premiums collected after June
30, 2012.

ARTICLE 4

DEPARTMENT POLICY AND TECHNICAL: MINERALS

Section 1.

Minnesota Statutes 2011 Supplement, section 272.02, subdivision 97,
is amended to read:


Subd. 97.

Property used in business of mining subject to net proceeds tax.

The
following property used in the business of mining that is subject to the net proceeds tax
under section 298.015 is exempt:

(1) deposits of ores, metals, and minerals and the lands in which they are contained;

(2) all real and personal property used in mining, quarrying, producing, or refining
ores, minerals, or metals, including lands occupied by or used in connection with the
mining, quarrying, production, or ore refining facilities; and

(3) concentrate or direct reduced ore.

This exemption applies for each year that a person subject to tax under section
298.015 uses the property for mining, quarrying, producing, or refining ores, metals, or
minerals.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2011 Supplement, section 298.01, subdivision 3, is
amended to read:


Subd. 3.

Occupation tax; other ores.

Every person engaged in the business of
mining, refining, or producing ores, metals, or minerals in this state, except iron ore or
taconite concentrates, shall pay an occupation tax to the state of Minnesota as provided
in this subdivision. For purposes of this subdivision, mining includes the application of
hydrometallurgical processes. Hydrometallurgical processes are processes that extract
the ores, metals, or minerals, by use of aqueous solutions that leach, concentrate, and
recover the ore, metal, or mineral.
The tax is determined in the same manner as the tax
imposed by section 290.02, except that sections 290.05, subdivision 1, clause (a), 290.17,
subdivision 4
, and 290.191, subdivision 2, do not apply, and the occupation tax must
be computed by applying to taxable income the rate of 2.45 percent. A person subject
to occupation tax under this section shall apportion its net income on the basis of the
percentage obtained by taking the sum of:

(1) 75 percent of the percentage which the sales made within this state in connection
with the trade or business during the tax period are of the total sales wherever made in
connection with the trade or business during the tax period;

(2) 12.5 percent of the percentage which the total tangible property used by the
taxpayer in this state in connection with the trade or business during the tax period is of
the total tangible property, wherever located, used by the taxpayer in connection with the
trade or business during the tax period; and

(3) 12.5 percent of the percentage which the taxpayer's total payrolls paid or incurred
in this state or paid in respect to labor performed in this state in connection with the trade
or business during the tax period are of the taxpayer's total payrolls paid or incurred in
connection with the trade or business during the tax period.

The tax is in addition to all other taxes.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2010, section 298.018, subdivision 2, is amended to read:


Subd. 2.

Outside taconite assistance area.

The proceeds of the tax paid under
sections 298.015 to 298.017 on ores, metals, or minerals and energy resources mined
or extracted outside of the taconite assistance area defined in section 273.1341, shall
be deposited in the general fund.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 5

DEPARTMENT POLICY AND TECHNICAL: MISCELLANEOUS

Section 1.

Minnesota Statutes 2010, section 16A.46, is amended to read:


16A.46 LOST OR DESTROYED WARRANT DUPLICATE; INDEMNITY.

Subdivision 1.

Duplicate warrant.

The commissioner may issue a duplicate
of an unpaid warrant to an owner if the owner certifies that the original was lost or
destroyed. The commissioner may require certification be documented by affidavit.
The commissioner may refuse to issue a duplicate of an unpaid state warrant. If the
commissioner acts in good faith the commissioner is not liable, whether the application is
granted or denied.

Subd. 2.

Original warrant is void.

When the duplicate is issued, the original is
void. The commissioner may require an indemnity bond from the applicant to the state for
double the amount of the warrant for anyone damaged by the issuance of the duplicate.
The commissioner may refuse to issue a duplicate of an unpaid state warrant. If the
commissioner acts in good faith the commissioner is not liable, whether the application is
granted or denied
is not liable to any holder who took the void original warrant for value,
whether the commissioner required an indemnity bond from the applicant or not
.

Subd. 3.

Unpaid refund or rebate.

For an unpaid refund or rebate issued under a
tax law administered by the commissioner of revenue that has been lost or destroyed, an
affidavit is not required for the commissioner to issue a duplicate if the duplicate is issued
to the same name and Social Security number as the original warrant and that information
is verified on a tax return filed by the recipient.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2010, section 270C.38, subdivision 1, is amended to read:


Subdivision 1.

Sufficient notice.

(a) If no method of notification of a written
determination or action of the commissioner is otherwise specifically provided for by
law, notice of the determination or action sent postage prepaid by United States mail to
the taxpayer or other person affected by the determination or action at the taxpayer's
or person's last known address, is sufficient. If the taxpayer or person being notified is
deceased or is under a legal disability, or, in the case of a corporation being notified that
has terminated its existence, notice to the last known address of the taxpayer, person, or
corporation is sufficient, unless the department has been provided with a new address by a
party authorized to receive notices from the commissioner.

(b) If a taxpayer or other person agrees to accept notification by electronic means,
notice of a determination or action of the commissioner sent by electronic mail to the
taxpayer's or person's last known electronic mailing address as provided for in section
325L.08 is sufficient.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2010, section 270C.42, subdivision 2, is amended to read:


Subd. 2.

Penalty for failure to pay electronically.

In addition to other applicable
penalties imposed by law, after notification from the commissioner to the taxpayer that
payments for a tax payable to the commissioner are required to be made by electronic
means, and the payments are remitted by some other means, there is a penalty in the
amount of five percent of each payment that should have been remitted electronically.
After the commissioner's initial notification to the taxpayer that payments are required to
be made by electronic means, the commissioner is not required to notify the taxpayer in
subsequent periods if the initial notification specified the amount of tax liability at which a
taxpayer is required to remit payments by electronic means. The penalty can be abated
under the abatement procedures prescribed in section 270C.34 if the failure to remit the
payment electronically is due to reasonable cause. The penalty bears interest at the rate
specified in section 270C.40 from the due date of the payment of the tax provided in
section 270C.40, subdivision 3,
to the date of payment of the penalty.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2010, section 270C.69, subdivision 1, is amended to read:


Subdivision 1.

Notice and procedures.

(a) The commissioner may, within five years
after the date of assessment of the tax, or if a lien has been filed under section 270C.63,
within the statutory period for enforcement of the lien, give notice to any employer
deriving income which has a taxable situs in this state regardless of whether the income is
exempt from taxation, that an employee of that employer is delinquent in a certain amount
with respect to any taxes, including penalties, interest, and costs. The commissioner can
proceed under this section only if the tax is uncontested or if the time for appeal of the tax
has expired. The commissioner shall not proceed under this section until the expiration of
30 days after mailing to the taxpayer, at the taxpayer's last known address, a written notice
of (1) the amount of taxes, interest, and penalties due from the taxpayer and demand for
their payment, and (2) the commissioner's intention to require additional withholding by
the taxpayer's employer pursuant to this section. The effect of the notice shall expire one
year after it has been mailed to the taxpayer provided that the notice may be renewed by
mailing a new notice which is in accordance with this section. The renewed notice shall
have the effect of reinstating the priority of the original claim. The notice to the taxpayer
shall be in substantially the same form as that provided in section 571.72. The notice
shall further inform the taxpayer of the wage exemptions contained in section 550.37,
subdivision 14
. If no statement of exemption is received by the commissioner within 30
days from the mailing of the notice, the commissioner may proceed under this section.
The notice to the taxpayer's employer may be served by mail or by delivery by an agent of
the department and shall be in substantially the same form as provided in section 571.75.
Upon receipt of notice, the employer shall withhold from compensation due or to become
due to the employee, the total amount shown by the notice, subject to the provisions of
section 571.922. The employer shall continue to withhold each pay period until the notice
is released by the commissioner under section 270C.7109. Upon receipt of notice by the
employer, the claim of the state of Minnesota shall have priority over any subsequent
garnishments or wage assignments. The commissioner may arrange between the employer
and the employee for withholding a portion of the total amount due the employee each pay
period, until the total amount shown by the notice plus accrued interest has been withheld.

(b) The "compensation due" any employee is defined in accordance with the
provisions of section 571.921. The maximum withholding allowed under this section for
any one pay period shall be decreased by any amounts payable pursuant to a garnishment
action with respect to which the employer was served prior to being served with the notice
of delinquency and any amounts covered by any irrevocable and previously effective
assignment of wages; the employer shall give notice to the commissioner of the amounts
and the facts relating to such assignments within ten days after the service of the notice of
delinquency on the form provided by the commissioner as noted in this section.

(c) Within ten days after the expiration of such pay period, the employer shall remit
to the commissioner, on a form and in the manner prescribed by the commissioner, the
amount withheld during each pay period under this section. The employer must file all
wage levy disclosure forms and remit all wage levy payments by electronic means.

EFFECTIVE DATE.

This section is effective for wage levy disclosures or wage
levy payments filed or made after December 31, 2012.

Sec. 5.

Minnesota Statutes 2010, section 287.385, subdivision 7, is amended to read:


Subd. 7.

Interest on penalties.

A penalty imposed under this chapter bears interest
from the date payment was required to be paid, including any extensions, provided in
section 270C.40, subdivision 3,
to the date of payment of the penalty.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6.

Minnesota Statutes 2010, section 289A.55, subdivision 9, is amended to read:


Subd. 9.

Interest on penalties.

(a) A penalty imposed under section 289A.60,
subdivision 1
, 2, 2a, 4, 5, 6, or 21 bears interest from the date the return or payment
was required to be filed or paid, including any extensions
provided in section 270C.40,
subdivision 3
, to the date of payment of the penalty.

(b) A penalty not included in paragraph (a) bears interest only if it is not paid within
60 days from the date of notice. In that case interest is imposed from the date of notice
to the date of payment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2010, section 289A.60, subdivision 4, is amended to read:


Subd. 4.

Substantial understatement of liability; penalty.

(a) The commissioner
of revenue shall impose a penalty for substantial understatement of any tax payable to the
commissioner, except a tax imposed under chapter 297A.

(b) There must be added to the tax an amount equal to 20 percent of the amount of any
underpayment attributable to the understatement. There is a substantial understatement of
tax for the period if the amount of the understatement for the period exceeds the greater of:

(1) ten percent of the tax required to be shown on the return for the period; or

(2)(i) $10,000 in the case of a mining company or a corporation, other than an S
corporation as defined in section 290.9725, when the tax is imposed by chapter 290 or
section 298.01 or 298.015, or

(ii) $5,000 in the case of any other taxpayer, and in the case of a mining company or
a corporation any tax not imposed by chapter 290 or section 298.01 or 298.015.

(c) For a corporation, other than an S corporation, there is also a substantial
understatement of tax for any taxable year if the amount of the understatement for the
taxable year exceeds the lesser of:

(1) ten percent of the tax required to be shown on the return for the taxable year
(or, if greater, $10,000); or

(2) $10,000,000.

(d) The term "understatement" means the excess of the amount of the tax required
to be shown on the return for the period, over the amount of the tax imposed that is
shown on the return. The excess must be determined without regard to items to which
subdivision 27 applies. The amount of the understatement shall be reduced by that part of
the understatement that is attributable to the tax treatment of any item by the taxpayer if
(1) there is or was substantial authority for the treatment, or (2)(i) any item with respect to
which the relevant facts affecting the item's tax treatment are adequately disclosed in the
return or in a statement attached to the return and (ii) there is a reasonable basis for the tax
treatment of the item. The exception for substantial authority under clause (1) does not
apply to positions listed by the Secretary of the Treasury under section 6662(d)(3) of the
Internal Revenue Code. A corporation does not have a reasonable basis for its tax treatment
of an item attributable to a multiple-party financing transaction if the treatment does not
clearly reflect the income of the corporation within the meaning of section 6662(d)(2)(B)
of the Internal Revenue Code. The special rules in cases involving tax shelters provided in
section 6662(d)(2)(C) of the Internal Revenue Code shall apply and shall apply to a tax
shelter the principal purpose of which is the avoidance or evasion of state taxes.

(e) The commissioner may abate all or any part of the addition to the tax provided
by this section on a showing by the taxpayer that there was reasonable cause for the
understatement, or part of it, and that the taxpayer acted in good faith. The additional tax
and penalty shall bear interest at the rate as specified in section 270C.40 from the time
the tax should have been paid
until paid.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2010, section 296A.22, is amended to read:


296A.22 NONPAYMENT OF TAX; CIVIL PENALTIES.

Subdivision 1.

Penalty for failure to pay tax, general rule.

Upon the failure of
any person to pay any tax or fee when due, a penalty of one percent per day for the first
ten days of delinquency shall accrue, and thereafter the tax, fees, and penalty shall bear
interest at the rate specified in section 270C.40 until paid.

Subd. 2.

Collection authority.

Upon such a failure to pay any tax or fees within the
time provided by this chapter, all taxes and fees imposed by this chapter shall become
immediately due and payable, and may be collected as provided in chapter 270C.

Subd. 3.

Operating without license.

If any person operates as a distributor, special
fuel dealer, bulk purchaser, or motor carrier without first securing the license required
under this chapter, any tax or fee imposed by this chapter shall become immediately due
and payable. A penalty of 25 percent is imposed upon the tax and fee due. The tax, and
fees, and penalty shall bear interest at the rate specified in section 270C.40. The penalty
imposed in this subdivision shall bear interest from the date provided in section 270C.40,
subdivision 3, to the date of payment of the penalty.

Subd. 4.

Unlawful use of dyed fuel.

(a) If any dyed fuel is sold or held for sale by a
person for any use which the person knows or has reason to know is not a nontaxable use
of the fuel; or if any dyed fuel is held for use or used in a licensed motor vehicle or for any
other use by a person for a use other than a nontaxable use and the person knew, or had
reason to know, that the fuel was so dyed; or if a person willfully alters, or attempts to
alter, the strength or composition of any dye or marking in any dyed fuel, then the person
shall pay a penalty in addition to the tax, if any.

(b) Except as provided in paragraph (c), the amount of penalty under paragraph (a)
for each act is the greater of $1,000, or $10 for each gallon of dyed fuel involved.

(c) With regard to a multiple violation under paragraph (a), the penalty shall be
applied by increasing the amount in paragraph (b) by the product of (1) such amount, and
(2) the number of prior penalties, if any, imposed by this section on the person, or a related
person, or any predecessor of the person or related person.

(d) If a penalty is imposed under this subdivision on a business entity, each officer,
employee, or agent of the entity who willfully participated in any act giving rise to the
penalty is jointly and severally liable with the entity for the penalty.

Subd. 5.

Receiver appointed.

In the event a suit is instituted as provided in
subdivision 2, the court shall, upon application, appoint a receiver of the property and
business of the delinquent defendant for the purpose of impounding the same as security
for any judgment which has been or may be recovered.

Subd. 6.

Sale prohibited under certain conditions.

No petroleum product shall
be unloaded or sold by any person or distributor whose tax and fees are the basis for
collection action under subdivision 2.

Subd. 7.

Payment of penalties.

The penalties imposed by this section are collected
and paid in the same manner as taxes.

Subd. 8.

Penalties are additional.

The civil penalties imposed by this section are in
addition to the criminal penalties imposed by this chapter.

Subd. 9.

Abatement of penalty.

(a) The commissioner may by written order
abate any penalty imposed under this section, if in the commissioner's opinion there is
reasonable cause to do so.

(b) A request for abatement of penalty must be filed with the commissioner within
60 days of the date the notice stating that a penalty has been imposed was mailed to
the taxpayer's last known address.

(c) If the commissioner issues an order denying a request for abatement of penalty,
the taxpayer may file an administrative appeal as provided in section 270C.35 or appeal to
Tax Court as provided in section 271.06. If the commissioner does not issue an order on
the abatement request within 60 days from the date the request is received, the taxpayer
may appeal to Tax Court as provided in section 271.06.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

Minnesota Statutes 2010, section 297E.14, subdivision 7, is amended to read:


Subd. 7.

Interest on penalties.

(a) A penalty imposed under section 297E.12,
subdivision 1
, 2, 3, 4, or 5, bears interest from the date the return or payment was required
to be filed or paid, including any extensions
provided in section 270C.40, subdivision 3, to
the date of payment of the penalty.

(b) A penalty not included in paragraph (a) bears interest only if it is not paid within
ten days from the date of notice. In that case interest is imposed from the date of notice
to the date of payment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 10.

Minnesota Statutes 2010, section 297F.09, subdivision 9, is amended to read:


Subd. 9.

Interest.

The amount of tax not timely paid, together with any penalty
imposed in this section,
bears interest at the rate specified in section 270C.40 from the
time such tax should have been paid until paid. The penalty imposed in this section bears
interest at the rate specified in section 270C.40 from the date provided in section 270C.40,
subdivision 3, to the date of payment of the penalty.
Any interest and penalty is added to
the tax and collected as a part of it.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 11.

Minnesota Statutes 2010, section 297F.18, subdivision 7, is amended to read:


Subd. 7.

Interest on penalties.

(a) A penalty imposed under section 297F.19,
subdivisions 2 to 7
, bears interest from the date the return or payment was required to be
filed or paid, including any extensions
provided in section 270C.40, subdivision 3, to the
date of payment of the penalty.

(b) A penalty not included in paragraph (a) bears interest only if it is not paid within
ten days from the date of the notice. In that case interest is imposed from the date of notice
to the date of payment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 12.

Minnesota Statutes 2010, section 297G.09, subdivision 8, is amended to read:


Subd. 8.

Interest.

The amount of tax not timely paid, together with any penalty
imposed by this chapter,
bears interest at the rate specified in section 270C.40 from the
time the tax should have been paid until paid. Any penalty imposed by this chapter bears
interest from the date provided in section 270C.40, subdivision 3, to the date of payment
of the penalty.
Any interest and penalty is added to the tax and collected as a part of it.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 13.

Minnesota Statutes 2010, section 297G.17, subdivision 7, is amended to read:


Subd. 7.

Interest on penalties.

(a) A penalty imposed under section 297G.18,
subdivisions 2 to 7
, bears interest from the date the return or payment was required to be
filed or paid, including any extensions
provided in section 270C.40, subdivision 3, to the
date of payment of the penalty.

(b) A penalty not included in paragraph (a) bears interest only if it is not paid within
ten days from the date of the notice. In that case interest is imposed from the date of notice
to the date of payment.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 14.

Minnesota Statutes 2010, section 297I.80, subdivision 1, is amended to read:


Subdivision 1.

Payable to commissioner.

(a) When interest is required under this
section, interest is computed at the rate specified in section 270C.40.

(b) If a tax or surcharge is not paid within the time named by law for payment, the
unpaid tax or surcharge bears interest from the date the tax or surcharge should have been
paid until the date the tax or surcharge is paid.

(c) Whenever a taxpayer is liable for additional tax or surcharge because of a
redetermination by the commissioner or other reason, the additional tax or surcharge
bears interest from the time the tax or surcharge should have been paid until the date the
tax or surcharge is paid.

(d) A penalty bears interest from the date the return or payment was required to be
filed or paid
provided in section 270C.40, subdivision 3, to the date of payment of the
penalty.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 6

PUBLIC FINANCE

Section 1.

Minnesota Statutes 2010, section 373.40, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

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

(a) "Bonds" means an obligation as defined under section 475.51.

(b) "Capital improvement" means acquisition or betterment of public lands,
buildings, or other improvements within the county for the purpose of a county courthouse,
administrative building, health or social service facility, correctional facility, jail, law
enforcement center, hospital, morgue, library, park, qualified indoor ice arena, roads
and bridges, public works facilities, fairgrounds buildings, and records and data storage
facilities,
and the acquisition of development rights in the form of conservation easements
under chapter 84C. An improvement must have an expected useful life of five years or
more to qualify. "Capital improvement" does not include a recreation or sports facility
building (such as, but not limited to, a gymnasium, ice arena, racquet sports facility,
swimming pool, exercise room or health spa), unless the building is part of an outdoor
park facility and is incidental to the primary purpose of outdoor recreation.

(c) "Metropolitan county" means a county located in the seven-county metropolitan
area as defined in section 473.121 or a county with a population of 90,000 or more.

(d) "Population" means the population established by the most recent of the
following (determined as of the date the resolution authorizing the bonds was adopted):

(1) the federal decennial census,

(2) a special census conducted under contract by the United States Bureau of the
Census, or

(3) a population estimate made either by the Metropolitan Council or by the state
demographer under section 4A.02.

(e) "Qualified indoor ice arena" means a facility that meets the requirements of
section 373.43.

(f) "Tax capacity" means total taxable market value, but does not include captured
market value.

Sec. 2.

Minnesota Statutes 2010, section 373.40, subdivision 2, is amended to read:


Subd. 2.

Application of election requirement.

(a) Bonds issued by a county
to finance capital improvements under an approved capital improvement plan are not
subject to the election requirements of section 375.18 or 475.58. The bonds must be
approved by vote of at least three-fifths of the members of the county board. In the case
of a metropolitan county, the bonds must be approved by vote of at least two-thirds of
the members of the county board.

(b) Before issuance of bonds qualifying under this section, the county must publish
a notice of its intention to issue the bonds and the date and time of a hearing to obtain
public comment on the matter. The notice must be published in the official newspaper
of the county or in a newspaper of general circulation in the county. The notice must be
published at least 14, but not more than 28, days before the date of the hearing.

(c) A county may issue the bonds only upon obtaining the approval of a majority of
the voters voting on the question of issuing the obligations, if a petition requesting a vote
on the issuance is signed by voters equal to five percent of the votes cast in the county in
the last county general election and is filed with the county auditor within 30 days after
the public hearing. The commissioner of revenue shall prepare a suggested form of the
question to be presented at the election
If the county elects not to submit the question to
the voters, the county shall not propose the issuance of bonds under this section for the
same purpose and in the same amount for a period of 365 days from the date of receipt
of the petition. If the question of issuing the bonds is submitted and not approved by the
voters, the provisions of section 475.58, subdivision 1a, apply
.

Sec. 3.

Minnesota Statutes 2010, section 373.40, subdivision 4, is amended to read:


Subd. 4.

Limitations on amount.

A county may not issue bonds under this section
if the maximum amount of principal and interest to become due in any year on all the
outstanding bonds issued pursuant to this section (including the bonds to be issued) will
equal or exceed 0.12 percent of taxable market value of property in the county. Calculation
of the limit must be made using the taxable market value for the taxes payable year in
which the obligations are issued and sold, provided that, for purposes of determining
the principal and interest due in any year, the county may deduct the amount of interest
expected to be paid or reimbursed to the county by the federal government in that year on
any outstanding bonds or the bonds to be issued
. This section does not limit the authority
to issue bonds under any other special or general law.

Sec. 4.

Minnesota Statutes 2010, section 474A.02, subdivision 23a, is amended to read:


Subd. 23a.

Qualified bonds.

"Qualified bonds" means the specific type or types
of obligations that are subject to the annual volume cap. Qualified bonds include the
following types of obligations as defined in federal tax law:

(a) "public facility bonds" means "exempt facility bonds" as defined in federal
tax law, except for residential rental project bonds, which are those obligations issued
to finance airports, docks and wharves, mass commuting facilities, facilities for the
furnishing of water, sewage facilities, solid waste disposal facilities, facilities for the
local furnishing of electric energy or gas, local district heating or cooling facilities, and
qualified hazardous waste facilities
. New bonds and other obligations are ineligible to
receive state allocations or entitlement authority for public facility projects under this
section if they have been issued:

(1) for the purpose of refinancing, refunding, or otherwise defeasing existing debt;
and

(2) more than one calendar year prior to the date of application;

(b) "residential rental project bonds" which are those obligations issued to finance
qualified residential rental projects;

(c) "mortgage bonds";

(d) "small issue bonds" issued to finance manufacturing projects and the acquisition
or improvement of agricultural real or personal property under sections 41C.01 to 41C.13;

(e) "student loan bonds" issued by or on behalf of the Minnesota Office of Higher
Education;

(f) "redevelopment bonds";

(g) "governmental bonds" with a nonqualified amount in excess of $15,000,000 as
set forth in section 141(b)5 of federal tax law; and

(h) "enterprise zone facility bonds" issued to finance facilities located within
empowerment zones or enterprise communities, as authorized under Public Law 103-66,
section 13301
section 1394 of the Internal Revenue Code.

Sec. 5.

Minnesota Statutes 2010, section 474A.04, subdivision 1a, is amended to read:


Subd. 1a.

Entitlement reservations; carryforward; deduction.

Any amount
returned by an entitlement issuer before July 15 shall be reallocated through the housing
pool. Any amount returned on or after July 15 shall be reallocated through the unified
pool. An amount returned after the last Monday in November shall be reallocated to the
Minnesota housing finance agency. Any amount of bonding authority that an entitlement
issuer carries forward under federal tax law that is not permanently issued or for which
the governing body of the entitlement issuer has not enacted a resolution electing to use
the authority for mortgage credit certificates and has not provided a notice of issue to the
commissioner before 4:30 p.m. on the last business day in December of the succeeding
calendar year shall be deducted from the entitlement allocation for that entitlement issuer
in the next succeeding calendar year. Any amount deducted from an entitlement issuer's
allocation under this subdivision shall be reallocated to other entitlement issuers, the
housing pool, the small issue pool, and the public facilities pool on a proportional basis
consistent with section 474A.03.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to any bonding authority allocated in 2011 and subsequent years.

Sec. 6.

Minnesota Statutes 2010, section 474A.062, is amended to read:


474A.062 MINNESOTA OFFICE OF HIGHER EDUCATION 120-DAY
ISSUANCE EXEMPTION.

The Minnesota Office of Higher Education is exempt from the 120-day issuance
requirements in this chapter and may carry forward allocations for student loan bonds
into one successive calendar year, subject to carryforward notice requirements of section
474A.131, subdivision 2.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to any bonding authority allocated in 2011 and subsequent years.

Sec. 7.

Minnesota Statutes 2010, section 474A.091, subdivision 3a, is amended to read:


Subd. 3a.

Mortgage bonds.

(a) Bonding authority remaining in the unified pool on
October 1 is available for single-family housing programs for cities that applied in January
and received an allocation under section 474A.061, subdivision 2a, in the same calendar
year. The Minnesota Housing Finance Agency shall receive an allocation for mortgage
bonds pursuant to this section, minus any amounts for a city or consortium that intends to
issue bonds on its own behalf under paragraph (c).

(b) The agency may issue bonds on behalf of participating cities. The agency shall
request an allocation from the commissioner for all applicants who choose to have the
agency issue bonds on their behalf and the commissioner shall allocate the requested
amount to the agency. Allocations shall be awarded by the commissioner each Monday
commencing on the first Monday in October through the last Monday in November for
applications received by 4:30 p.m. on the Monday of the week preceding an allocation.

For cities who choose to have the agency issue bonds on their behalf, allocations
will be made loan by loan, on a first-come, first-served basis among the cities. The
agency shall submit an application fee pursuant to section 474A.03, subdivision 4, and an
application deposit equal to two percent of the requested allocation to the commissioner
when requesting an allocation from the unified pool. After awarding an allocation and
receiving a notice of issuance for mortgage bonds issued on behalf of the participating
cities, the commissioner shall transfer the application deposit to the Minnesota Housing
Finance Agency.

For purposes of paragraphs (a) to (d), "city" means a county or a consortium of
local government units that agree through a joint powers agreement to apply together
for single-family housing programs, and has the meaning given it in section 462C.02,
subdivision 6
. "Agency" means the Minnesota Housing Finance Agency.

(c) Any city that received an allocation pursuant to section 474A.061, subdivision
2a, paragraph (f)
, in the current year that wishes to receive an additional allocation from
the unified pool and issue bonds on its own behalf or pursuant to a joint powers agreement
shall notify the Minnesota Housing Finance Agency by the third Monday in September.
The total amount of allocation for mortgage bonds for a city choosing to issue bonds on its
own behalf or through a joint powers agreement is limited to the lesser of: (i) the amount
requested, or (ii) the product of the total amount available for mortgage bonds from the
unified pool, multiplied by the ratio of the population of each city that applied in January
and received an allocation under section 474A.061, subdivision 2a, in the same calendar
year, as determined by the most recent estimate of the city's population released by the
state demographer's office to the total of the population of all the cities that applied in
January and received an allocation under section 474A.061, subdivision 2a, in the same
calendar year. If a city choosing to issue bonds on its own behalf or through a joint powers
agreement is located within a county that has also chosen to issue bonds on its own behalf
or through a joint powers agreement, the city's population will be deducted from the
county's population in calculating the amount of allocations under this paragraph.

The Minnesota Housing Finance Agency shall notify each city choosing to issue
bonds on its own behalf or pursuant to a joint powers agreement of the amount of its
allocation by October 15. Upon determining the amount of the allocation of each choosing
to issue bonds on its own behalf or through a joint powers agreement, the agency shall
forward a list specifying the amounts allotted to each city.

A city that chooses to issue bonds on its own behalf or through a joint powers
agreement may request an allocation from the commissioner by forwarding an application
with an application fee pursuant to section 474A.03, subdivision 4, and an application
deposit equal to two percent of the requested amount to the commissioner no later than
4:30 p.m. on the Monday of the week preceding an allocation. Allocations to cities that
choose to issue bonds on their own behalf shall be awarded by the commissioner on
the first Monday after October 15 through the last Monday in November. No city may
receive an allocation from the commissioner after the last Monday in November. The
commissioner shall allocate the requested amount to the city or cities subject to the
limitations under this subdivision.

If a city issues mortgage bonds from an allocation received under this paragraph,
the issuer must provide for the recycling of funds into new loans. If the issuer is not
able to provide for recycling, the issuer must notify the commissioner in writing of the
reason that recycling was not possible and the reason the issuer elected not to have the
Minnesota Housing Finance Agency issue the bonds. "Recycling" means the use of money
generated from the repayment and prepayment of loans for further eligible loans or for the
redemption of bonds and the issuance of current refunding bonds.

(d) No entitlement city or county or city in an entitlement county may apply for or
be allocated authority to issue mortgage bonds or use mortgage credit certificates from
the unified pool.

(e) An allocation awarded to the agency for mortgage bonds under this section
may be carried forward by the agency into the next succeeding calendar year subject to
notice requirements under section 474A.131 and is available until the last business day in
December of that succeeding calendar year
.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to any bonding authority allocated in 2011 and subsequent years.

Sec. 8.

Minnesota Statutes 2010, section 475.521, subdivision 2, is amended to read:


Subd. 2.

Election requirement.

(a) Bonds issued by a municipality to finance
capital improvements under an approved capital improvements plan are not subject to the
election requirements of section 475.58. The bonds must be approved by an affirmative
vote of three-fifths of the members of a five-member governing body. In the case of a
governing body having more or less than five members, the bonds must be approved by a
vote of at least two-thirds of the members of the governing body.

(b) Before the issuance of bonds qualifying under this section, the municipality
must publish a notice of its intention to issue the bonds and the date and time of the
hearing to obtain public comment on the matter. The notice must be published in the
official newspaper of the municipality or in a newspaper of general circulation in the
municipality. Additionally, the notice may be posted on the official Web site, if any, of the
municipality. The notice must be published at least 14 but not more than 28 days before
the date of the hearing.

(c) A municipality may issue the bonds only after obtaining the approval of a
majority of the voters voting on the question of issuing the obligations, if a petition
requesting a vote on the issuance is signed by voters equal to five percent of the votes cast
in the municipality in the last municipal general election and is filed with the clerk within
30 days after the public hearing. The commissioner of revenue shall prepare a suggested
form of the question to be presented at the election
If the municipality elects not to submit
the question to the voters, the municipality shall not propose the issuance of bonds under
this section for the same purpose and in the same amount for a period of 365 days from the
date of receipt of the petition. If the question of issuing the bonds is submitted and not
approved by the voters, the provisions of section 475.58, subdivision 1a, apply
.

Sec. 9.

Minnesota Statutes 2010, section 475.521, subdivision 4, is amended to read:


Subd. 4.

Limitations on amount.

A municipality may not issue bonds under
this section if the maximum amount of principal and interest to become due in any
year on all the outstanding bonds issued under this section, including the bonds to be
issued, will equal or exceed 0.16 percent of the taxable market value of property in the
municipality. Calculation of the limit must be made using the taxable market value for
the taxes payable year in which the obligations are issued and sold, provided that, for
purposes of determining the principal and interest due in any year, the municipality may
deduct the amount of interest expected to be paid or reimbursed to the municipality by the
federal government in that year on any outstanding bonds or the bonds to be issued
. In
the case of a municipality with a population of 2,500 or more, the bonds are subject to
the net debt limits under section 475.53. In the case of a shared facility in which more
than one municipality participates, upon compliance by each participating municipality
with the requirements of subdivision 2, the limitations in this subdivision and the net debt
represented by the bonds shall be allocated to each participating municipality in proportion
to its required financial contribution to the financing of the shared facility, as set forth in
the joint powers agreement relating to the shared facility. This section does not limit the
authority to issue bonds under any other special or general law.

Sec. 10.

Minnesota Statutes 2010, section 475.58, subdivision 3b, is amended to read:


Subd. 3b.

Street reconstruction.

(a) A municipality may, without regard to
the election requirement under subdivision 1, issue and sell obligations for street
reconstruction, if the following conditions are met:

(1) the streets are reconstructed under a street reconstruction plan that describes the
street reconstruction to be financed, the estimated costs, and any planned reconstruction
of other streets in the municipality over the next five years, and the plan and issuance of
the obligations has been approved by a vote of all of the members of the governing body
present at the meeting following a public hearing for which notice has been published in
the official newspaper at least ten days but not more than 28 days prior to the hearing; and

(2) if a petition requesting a vote on the issuance is signed by voters equal to
five percent of the votes cast in the last municipal general election and is filed with the
municipal clerk within 30 days of the public hearing, the municipality may issue the bonds
only after obtaining the approval of a majority of the voters voting on the question of the
issuance of the obligations. If the municipality elects not to submit the question to the
voters, the municipality shall not propose the issuance of bonds under this section for the
same purpose and in the same amount for a period of 365 days from the date of receipt
of the petition. If the question of issuing the bonds is submitted and not approved by the
voters, the provisions of subdivision 1a, apply
.

(b) Obligations issued under this subdivision are subject to the debt limit of the
municipality and are not excluded from net debt under section 475.51, subdivision 4.

(c) For purposes of this subdivision, street reconstruction includes utility
replacement and relocation and other activities incidental to the street reconstruction, turn
lanes and other improvements having a substantial public safety function, realignments,
other modifications to intersect with state and county roads, and the local share of state
and county road projects.

(d) Except in the case of turn lanes, safety improvements, realignments, intersection
modifications, and the local share of state and county road projects, street reconstruction
does not include the portion of project cost allocable to widening a street or adding curbs
and gutters where none previously existed.

Sec. 11.

Laws 1971, chapter 773, section 1, subdivision 2, as amended by Laws 1974,
chapter 351, section 5, Laws 1976, chapter 234, sections 1 and 7, Laws 1978, chapter 788,
section 1, Laws 1981, chapter 369, section 1, Laws 1983, chapter 302, section 1, Laws
1988, chapter 513, section 1, Laws 1992, chapter 511, article 9, section 23, Laws 1998,
chapter 389, article 3, section 27, and Laws 2002, chapter 390, section 23, is amended to
read:


Subd. 2. For each of the years 2003 to 2013 2012 to 2024, the city of St. Paul is
authorized to issue bonds in the aggregate principal amount of $20,000,000 for each year.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 12.

Laws 2003, chapter 127, article 12, section 28, is amended to read:


Sec. 28. NURSING HOME BONDS AUTHORIZED.

(a) Itasca County may issue bonds under Minnesota Statutes, sections 376.55 and
376.56, to finance the construction of a 35-bed nursing home facility to replace an existing
35-bed private facility located in the county. The bonds issued under this section must
may
be payable solely from revenues and or may not be general obligations of the county.

(b) Before issuing general obligation bonds under this section, the county must
publish a notice of its intention to issue the bonds and the date and time of a hearing to
obtain public comment on the matter. The notice must be published on the official Web
site of the county or in a newspaper of general circulation in the county. The notice must
be published at least 14 but not more than 28 days before the date of the hearing. The
county may issue the bonds only upon obtaining the approval of a majority of the voters
voting on the question of issuing the obligations, if a petition requesting a vote on the
issuance is signed by voters equal to five percent of the votes cast in the county in the last
general election and is filed with the county auditor within 30 days after the public hearing.

EFFECTIVE DATE; LOCAL APPROVAL.

This section is effective the day after
the governing body of Itasca County and its chief clerical officer timely complete their
compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Sec. 13. CARRYFORWARD OF BONDING AUTHORITY FOR 2008, 2009,
AND 2010; NO DEDUCTION FROM ENTITLEMENT ALLOCATION.

Notwithstanding Minnesota Statutes, section 474A.04, subdivision 1a, and Laws
2009, chapter 88, article 6, section 27, bonding authority that was allocated to an
entitlement issuer in 2008, 2009, and 2010 and that was carried forward under federal
tax law, but for which the entitlement issuer did not provide a notice of issue to the
commissioner of management and budget before 4:30 p.m. on the last business day of
December 2011 must not be deducted from the entitlement allocation for that entitlement
issuer in 2012.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies retroactively to rescind any reallocation by the commissioner of management
and budget under Minnesota Statutes, section 474A.04, subdivision 1a, of any amounts so
deducted.

Sec. 14. WOODBURY; EXEMPTION FROM REFERENDUM.

(a) Notwithstanding the referendum requirement in Minnesota Statutes, section
475.58, subdivision 1, or any other provision of law, the city of Woodbury may issue and
sell obligations to pay for the cost of renovating, improving, expanding, and equipping the
Bielenberg Sports Center, along with costs of issuance of the obligations and capitalized
interest, if:

(1) the obligations are secured by a pledge of revenues from the facility; and

(2) the city finds, based on analysis provided by a professional experienced in
finance, that the facility's revenues and a property tax levy equal to the maximum annual
property tax levy used to pay the bonds previously issued to finance, in whole or in part,
the facility will in the aggregate be sufficient to pay the obligations without the imposition
of an additional property tax levy pledged to the obligations.

(b) Before issuing bonds under this section, the city must publish a notice of its
intention to issue the bonds and the date and time of a hearing to obtain public comment
on the matter. The notice must be published on the official Web site of the city or in a
newspaper of general circulation in the city. The notice must be published at least 14 but
not more than 28 days before the date of the hearing. The city may issue the bonds only
upon obtaining the approval of a majority of the voters voting on the question of issuing
the obligations, if a petition requesting a vote on the issuance is signed by voters equal to
five percent of the votes cast in the city in the last general election and is filed with the city
clerk within 30 days after the public hearing.

EFFECTIVE DATE; LOCAL APPROVAL.

This section is effective the day after
the governing body of the city of Woodbury and its chief clerical officer timely complete
their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3.

ARTICLE 7

PROPERTY TAXES

Section 1.

Minnesota Statutes 2010, section 6.91, subdivision 2, is amended to read:


Subd. 2.

Benefits of participation.

(a) A county or city that elects to participate in
the standard measures program for 2011 is: (1) eligible for per capita reimbursement of
$0.14 per capita, but not to exceed $25,000 for any government entity; and (2) exempt
from levy limits under sections 275.70 to 275.74 for taxes payable in 2012, if levy limits
are in effect.

(b) Any county or city that elects to participate in the standard measures program
for 2012 is eligible for per capita reimbursement of $0.14 per capita, but not to exceed
$25,000 for any government entity, provided that for 2012, a county or city with a
population over 5,000 must also participate in the expenditure-type reporting under section
471.703 in order to be eligible
. Any jurisdiction participating in the comprehensive
performance measurement program is exempt from levy limits under sections 275.70 to
275.74 for taxes payable in 2013 if levy limits are in effect.

(c) Any county or city that elects to participate in the standard measures program for
2013 or any year thereafter is eligible for per capita reimbursement of $0.14 per capita,
but not to exceed $25,000 for any government entity. Any jurisdiction participating in
the comprehensive performance measurement program for 2013 or any year thereafter is
exempt from levy limits under sections 275.70 to 275.74 for taxes payable in the following
year, if levy limits are in effect.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2011 Supplement, section 270C.991, subdivision 4, as
amended by Laws 2012, chapter 187, article 1, section 45, is amended to read:


Subd. 4.

Property tax working group.

(a) A property tax working group is
established as provided in this subdivision. The goals of the working group are:

(1) to investigate ways to simplify the property tax system and make advisory
recommendations on ways to make the system more understandable;

(2) to reexamine the property tax calendar to determine what changes could be made
to shorten the two-year cycle from assessment through property tax collection; and

(3) to determine the cost versus the benefits of the various property tax components,
including property classifications, credits, aids, exclusions, exemptions, and abatements,
and to suggest ways to achieve some of the goals in simpler and more cost-efficient ways.

(b) The 12-member working group shall consist of the following members:

(1) two state representatives, both appointed by the chair of the house of
representatives Taxes Committee, one from the majority party and one from the largest
minority party;

(2) two senators appointed by the Subcommittee on Committees of the Senate Rules
and Administration Committee, one from the majority party and one from the largest
minority party;

(3) one person appointed by the Association of Minnesota Counties;

(4) one person appointed by the League of Minnesota Cities;

(5) one person appointed by the Minnesota Association of Townships;

(6) one person appointed by the Minnesota Chamber of Commerce;

(7) one person appointed by the Minnesota Association of Assessing Officers;

(8) two homeowners, one who is under 65 years of age, and one who is 65 years of
age or older, both appointed by the commissioner of revenue; and

(9) one person jointly appointed by the Minnesota Farm Bureau and the Minnesota
Farmers Union.

The commissioner of revenue shall chair the initial meeting, and the working
group shall elect a chair at that initial meeting. The working group will meet at the call
of the chair. Members of the working group shall serve without compensation. The
commissioner of revenue must provide administrative support to the working group.
Chapter 13D does not apply to meetings of the working group. Meetings of the working
group must be open to the public and the working group must provide notice of a meeting
to potentially interested persons at least seven days before the meeting. A meeting of the
working group occurs when a quorum is present.

(c) The working group shall make its advisory recommendations to the chairs of the
house of representatives and senate Taxes Committees on or before February 1, 2013, at
which time the working group shall be finished and this subdivision expires. The advisory
recommendations should be reviewed by the Taxes Committees under subdivision 5.

Sec. 3.

Minnesota Statutes 2010, section 273.113, is amended to read:


273.113 TAX CREDIT FOR PROPERTY IN PROPOSED BOVINE
TUBERCULOSIS MODIFIED ACCREDITED MANAGEMENT ZONE.

Subdivision 1.

Definitions.

For the purposes of this section, the following terms
have the meanings given to them:

(1) "bovine tuberculosis modified accredited management zone" means the modified
accredited
management zone designated by the Board of Animal Health under section
35.244;

(2) "located within" means that the herd is kept in the area for at least a part of
calendar year 2006, 2007, or 2008; and

(3) "animal" means cattle, bison, goats, and farmed cervidae.

Subd. 2.

Eligibility; amount of credit.

Agricultural and rural vacant land classified
under section 273.13, subdivision 23, located within a bovine tuberculosis modified
accredited
management zone is eligible for a property tax credit equal to the greater of: (1)
$5 per acre on the first 160 acres of the property where the herd had been located; or (2) an
amount equal to $5 per acre times five acres times the highest number of animals tested
on the property for bovine tuberculosis in a whole-herd test as reported by the Board of
Animal Health in 2006, 2007, or 2008
the amount of credit received under this section for
taxes payable in 2011
. The amount of the credit cannot exceed the property tax payable on
the property where the herd had been located, excluding any tax attributable to residential
structures. To begin to qualify for the tax credit for taxes payable in 2012, the owner shall
file an application with the county by December 1 of the levy year July 1, 2012. For
taxes payable in 2012, the credit shall be paid as a direct payment to the property owner,
issued by the county within 30 days of receipt of the application, provided that there are
no delinquent taxes on the property.
The credit must be given for each subsequent taxes
payable year until the credit terminates under subdivision 4. For taxes payable in 2013
and thereafter,
the assessor shall indicate the amount of the property tax reduction on the
property tax statement of each taxpayer receiving a credit under this section. For taxes
payable in 2013 and thereafter,
the credit paid pursuant to this section shall be deducted
from the tax due on the property as provided in section 273.1393.

Subd. 3.

Reimbursement for lost revenue.

The county auditor shall certify to the
commissioner of revenue, as part of the abstracts of tax lists required to be filed with the
commissioner under section 275.29, the amount of tax lost to the county from the property
tax credit under subdivision 2, except that for taxes payable in 2012 only, the county shall
submit the credit amounts to the commissioner of revenue in a separate report, in a form
prescribed by the commissioner, prior to August 15, 2012
. Any prior year adjustments
must also be certified in the abstracts of tax lists. The commissioner of revenue shall
review the certifications to determine their accuracy. The commissioner may make the
changes in the certification that are considered necessary or return a certification to the
county auditor for corrections. The commissioner shall reimburse each taxing district,
other than school districts, for the taxes lost. The payments must be made at the time
provided in section 473H.10 for payment to taxing jurisdictions in the same proportion
that the ad valorem tax is distributed, except that for taxes payable in 2012 the entire
reimbursement must be made to the county
. Reimbursements to school districts must be
made as provided in section 273.1392. The amount necessary to make the reimbursements
under this section is annually appropriated from the general fund to the commissioner of
revenue.

Subd. 4.

Termination of credit.

The credits provided under this section cease to
be available beginning with taxes payable in the year following the date when the Board
of Animal Health notifies the commissioner of revenue in writing that the board has
certified that the state is free of discontinued all required bovine tuberculosis related
activities within the bovine tuberculosis management zone
.

EFFECTIVE DATE.

This section is effective for taxes payable in 2012 and
thereafter.

Sec. 4.

Minnesota Statutes 2010, section 275.025, subdivision 1, is amended to read:


Subdivision 1.

Levy amount.

The state general levy is levied against
commercial-industrial property and seasonal residential recreational property, as defined in
this section. The state general levy base amount is $592,000,000 $817,423,000 for taxes
payable in 2002 2013. For taxes payable in subsequent years, the levy base amount is
increased each year by multiplying the levy base amount for the prior year by the sum
of one plus the rate of increase, if any, in the implicit price deflator for government
consumption expenditures and gross investment for state and local governments prepared
by the Bureau of Economic Analysts of the United States Department of Commerce for
the 12-month period ending March 31 of the year prior to the year the taxes are payable.
The tax under this section is not treated as a local tax rate under section 469.177 and is not
the levy of a governmental unit under chapters 276A and 473F.

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

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

(2) an erroneous calculation by the commissioner; and

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

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

EFFECTIVE DATE.

This section is effective for taxes payable in 2013 and
thereafter.

Sec. 5.

Minnesota Statutes 2010, section 275.065, subdivision 1, is amended to read:


Subdivision 1.

Proposed levy.

(a) Notwithstanding any law or charter to the
contrary, on or before September 15, each taxing authority, other than a school district,
shall adopt a proposed budget and shall certify to the county auditor the proposed or, in
the case of a town, the final property tax levy for taxes payable in the following year. All
counties with a population of more than 5,000 and home rule charter or statutory cities
with a population of more than 5,000, shall also provide to the county auditor the county
or city Web site, if there is one, where the public is able to access the budget information
required to be reported under section 471.703.

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

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

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

(c) If the board of estimate and taxation or any similar board that establishes
maximum tax levies for taxing jurisdictions within a first class city certifies the maximum
property tax levies for funds under its jurisdiction by charter to the county auditor by
September 15, the city shall be deemed to have certified its levies for those taxing
jurisdictions.

(d) For purposes of this section, "taxing authority" includes all home rule and
statutory cities, towns, counties, school districts, and special taxing districts as defined
in section 275.066. Intermediate school districts that levy a tax under chapter 124 or
136D, joint powers boards established under sections 123A.44 to 123A.446, and Common
School Districts No. 323, Franconia, and No. 815, Prinsburg, are also special taxing
districts for purposes of this section.

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

(1) the time and place of the meetings described in this paragraph; and

(2) a statement that the budget information required to be reported under section
471.703 is available on the county or city Web site, if there is one
.

EFFECTIVE DATE.

This section is effective July 1, 2012.

Sec. 6.

Minnesota Statutes 2010, section 275.065, subdivision 3, is amended to read:


Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare
and the county treasurer shall deliver after November 10 and on or before November 24
each year, by first class mail to each taxpayer at the address listed on the county's current
year's assessment roll, a notice of proposed property taxes. Upon written request by
the taxpayer, the treasurer may send the notice in electronic form or by electronic mail
instead of on paper or by ordinary mail.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes
each taxing authority proposes to collect for taxes payable the following year. In the
case of a town, or in the case of the state general tax, the final tax amount will be its
proposed tax. The notice must clearly state for each city that has a population over 500,
county, school district, regional library authority established under section 134.201, and
metropolitan taxing districts as defined in paragraph (i), the time and place of a meeting
for each taxing authority in which the budget and levy will be discussed and public input
allowed, prior to the final budget and levy determination. The notice must clearly state
for each county with a population of more than 5,000 and for each city with a population
of more than 5,000 that the budget information required to be reported under section
471.703 is available on the county or city Web site, if there is one.
The taxing authorities
must provide the county auditor with the information to be included in the notice on or
before the time it certifies its proposed levy under subdivision 1. The public must be
allowed to speak at that meeting, which must occur after November 24 and must not be
held before 6:00 p.m. It must provide a telephone number for the taxing authority that
taxpayers may call if they have questions related to the notice and an address where
comments will be received by mail, except that no notice required under this section
shall be interpreted as requiring the printing of a personal telephone number or address
as the contact information for a taxing authority. If a taxing authority does not maintain
public offices where telephone calls can be received by the authority, the authority may
inform the county of the lack of a public telephone number and the county shall not list a
telephone number for that taxing authority.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used
for computing property taxes payable in the following year and for taxes payable in the
current year as each appears in the records of the county assessor on November 1 of the
current year; and, in the case of residential property, whether the property is classified as
homestead or nonhomestead. The notice must clearly inform taxpayers of the years to
which the market values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state general
tax, net of the residential and agricultural homestead credit under section 273.1384, voter
approved school levy, other local school levy, and the sum of the special taxing districts,
and as a total of all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement
district as defined under sections 103B.501 to 103B.581, the amount attributable for that
purpose must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed
tax unless the town changes its levy at a special town meeting under section 365.52. If a
school district has certified under section 126C.17, subdivision 9, that a referendum will
be held in the school district at the November general election, the county auditor must
note next to the school district's proposed amount that a referendum is pending and that, if
approved by the voters, the tax amount may be higher than shown on the notice. In the
case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be
listed separately from the remaining amount of the city's levy. In the case of the city of
St. Paul, the levy for the St. Paul Library Agency must be listed separately from the
remaining amount of the city's levy. In the case of Ramsey County, any amount levied
under section 134.07 may be listed separately from the remaining amount of the county's
levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax
under chapter 276A or 473F applies, the proposed tax levy on the captured value or the
proposed tax levy on the tax capacity subject to the areawide tax must each be stated
separately and not included in the sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and
the total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under
the senior citizens' property tax deferral program under chapter 290B is the total amount
of property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include
the following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified,
including bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first
Monday in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster
occurring after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value
reductions for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or
the county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant,
renter, or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within
three days of receipt of the notice, whichever is later. A taxpayer may notify the county
treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to
which the notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing
districts" means the following taxing districts in the seven-county metropolitan area that
levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325,
473.446, 473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672;
and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the
county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
398A shall be included with the appropriate county's levy.

(j) The governing body of a county, city, or school district may, with the consent
of the county board, include supplemental information with the statement of proposed
property taxes about the impact of state aid increases or decreases on property tax
increases or decreases and on the level of services provided in the affected jurisdiction.
This supplemental information may include information for the following year, the current
year, and for as many consecutive preceding years as deemed appropriate by the governing
body of the county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and
local government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

EFFECTIVE DATE.

This section is effective July 1, 2012.

Sec. 7.

Minnesota Statutes 2010, section 275.065, subdivision 3, is amended to read:


Subd. 3.

Notice of proposed property taxes.

(a) The county auditor shall prepare
and the county treasurer shall deliver after November 10 and on or before November 24
each year, by first class mail to each taxpayer at the address listed on the county's current
year's assessment roll, a notice of proposed property taxes. Upon written request by
the taxpayer, the treasurer may send the notice in electronic form or by electronic mail
instead of on paper or by ordinary mail.

(b) The commissioner of revenue shall prescribe the form of the notice.

(c) The notice must inform taxpayers that it contains the amount of property taxes
each taxing authority proposes to collect for taxes payable the following year. In the
case of a town, or in the case of the state general tax, the final tax amount will be its
proposed tax. The notice must clearly state For each city that has a population over 500,
county, school district, regional library authority established under section 134.201, and
metropolitan taxing districts as defined in paragraph (i), the notice must state the time and
place of a meeting for each taxing authority in which the budget and levy will be discussed
and public input allowed, prior to the final budget and levy determination. For each special
taxing district, the notice must: (1) list separately any levy by a special taxing district that
exceeds 25 percent of the total of all special taxing district levies; and (2) provide county
government contact information where additional information may be obtained for each
special taxing district.
The taxing authorities must provide the county auditor with the
information to be included in the notice on or before the time it certifies its proposed
levy under subdivision 1. The public must be allowed to speak at that meeting, which
must occur after November 24 and must not be held before 6:00 p.m. It must provide a
telephone number for the taxing authority that taxpayers may call if they have questions
related to the notice and an address where comments will be received by mail, except that
no notice required under this section shall be interpreted as requiring the printing of a
personal telephone number or address as the contact information for a taxing authority. If
a taxing authority does not maintain public offices where telephone calls can be received
by the authority, the authority may inform the county of the lack of a public telephone
number and the county shall not list a telephone number for that taxing authority.

(d) The notice must state for each parcel:

(1) the market value of the property as determined under section 273.11, and used
for computing property taxes payable in the following year and for taxes payable in the
current year as each appears in the records of the county assessor on November 1 of the
current year; and, in the case of residential property, whether the property is classified as
homestead or nonhomestead. The notice must clearly inform taxpayers of the years to
which the market values apply and that the values are final values;

(2) the items listed below, shown separately by county, city or town, and state
general tax, net of the residential and agricultural homestead credit under section
273.1384, voter approved school levy, other local school levy, and the sum of the each
special taxing districts district, provided that the levies of all special taxing districts whose
levies do not exceed 25 percent of the total amount of all special taxing district levies may
be aggregated,
and as a total of for all taxing authorities:

(i) the actual tax for taxes payable in the current year; and

(ii) the proposed tax amount.

If the county levy under clause (2) includes an amount for a lake improvement
district as defined under sections 103B.501 to 103B.581, the amount attributable for that
purpose must be separately stated from the remaining county levy amount.

In the case of a town or the state general tax, the final tax shall also be its proposed
tax unless the town changes its levy at a special town meeting under section 365.52. If a
school district has certified under section 126C.17, subdivision 9, that a referendum will
be held in the school district at the November general election, the county auditor must
note next to the school district's proposed amount that a referendum is pending and that, if
approved by the voters, the tax amount may be higher than shown on the notice. In the
case of the city of Minneapolis, the levy for Minneapolis Park and Recreation shall be
listed separately from the remaining amount of the city's levy. In the case of the city of
St. Paul, the levy for the St. Paul Library Agency must be listed separately from the
remaining amount of the city's levy. In the case of Ramsey County, any amount levied
under section 134.07 may be listed separately from the remaining amount of the county's
levy. In the case of a parcel where tax increment or the fiscal disparities areawide tax
under chapter 276A or 473F applies, the proposed tax levy on the captured value or the
proposed tax levy on the tax capacity subject to the areawide tax must each be stated
separately and not included in the sum of the special taxing districts; and

(3) the increase or decrease between the total taxes payable in the current year and
the total proposed taxes, expressed as a percentage.

For purposes of this section, the amount of the tax on homesteads qualifying under
the senior citizens' property tax deferral program under chapter 290B is the total amount
of property tax before subtraction of the deferred property tax amount.

(e) The notice must clearly state that the proposed or final taxes do not include
the following:

(1) special assessments;

(2) levies approved by the voters after the date the proposed taxes are certified,
including bond referenda and school district levy referenda;

(3) a levy limit increase approved by the voters by the first Tuesday after the first
Monday in November of the levy year as provided under section 275.73;

(4) amounts necessary to pay cleanup or other costs due to a natural disaster
occurring after the date the proposed taxes are certified;

(5) amounts necessary to pay tort judgments against the taxing authority that become
final after the date the proposed taxes are certified; and

(6) the contamination tax imposed on properties which received market value
reductions for contamination.

(f) Except as provided in subdivision 7, failure of the county auditor to prepare or
the county treasurer to deliver the notice as required in this section does not invalidate the
proposed or final tax levy or the taxes payable pursuant to the tax levy.

(g) If the notice the taxpayer receives under this section lists the property as
nonhomestead, and satisfactory documentation is provided to the county assessor by the
applicable deadline, and the property qualifies for the homestead classification in that
assessment year, the assessor shall reclassify the property to homestead for taxes payable
in the following year.

(h) In the case of class 4 residential property used as a residence for lease or rental
periods of 30 days or more, the taxpayer must either:

(1) mail or deliver a copy of the notice of proposed property taxes to each tenant,
renter, or lessee; or

(2) post a copy of the notice in a conspicuous place on the premises of the property.

The notice must be mailed or posted by the taxpayer by November 27 or within
three days of receipt of the notice, whichever is later. A taxpayer may notify the county
treasurer of the address of the taxpayer, agent, caretaker, or manager of the premises to
which the notice must be mailed in order to fulfill the requirements of this paragraph.

(i) For purposes of this subdivision and subdivision 6, "metropolitan special taxing
districts" means the following taxing districts in the seven-county metropolitan area that
levy a property tax for any of the specified purposes listed below:

(1) Metropolitan Council under section 473.132, 473.167, 473.249, 473.325,
473.446, 473.521, 473.547, or 473.834;

(2) Metropolitan Airports Commission under section 473.667, 473.671, or 473.672;
and

(3) Metropolitan Mosquito Control Commission under section 473.711.

For purposes of this section, any levies made by the regional rail authorities in the
county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
398A shall be included with the appropriate county's levy.

(j) The governing body of a county, city, or school district may, with the consent
of the county board, include supplemental information with the statement of proposed
property taxes about the impact of state aid increases or decreases on property tax
increases or decreases and on the level of services provided in the affected jurisdiction.
This supplemental information may include information for the following year, the current
year, and for as many consecutive preceding years as deemed appropriate by the governing
body of the county, city, or school district. It may include only information regarding:

(1) the impact of inflation as measured by the implicit price deflator for state and
local government purchases;

(2) population growth and decline;

(3) state or federal government action; and

(4) other financial factors that affect the level of property taxation and local services
that the governing body of the county, city, or school district may deem appropriate to
include.

The information may be presented using tables, written narrative, and graphic
representations and may contain instruction toward further sources of information or
opportunity for comment.

EFFECTIVE DATE.

This section is effective for tax statements relating to taxes
payable in 2014 and thereafter.

Sec. 8.

Minnesota Statutes 2011 Supplement, section 276.04, subdivision 2, is
amended to read:


Subd. 2.

Contents of tax statements.

(a) The treasurer shall provide for the
printing of the tax statements. The commissioner of revenue shall prescribe the form of
the property tax statement and its contents. The tax statement must not state or imply
that property tax credits are paid by the state of Minnesota. The statement must contain
a tabulated statement of the dollar amount due to each taxing authority and the amount
of the state tax from the parcel of real property for which a particular tax statement is
prepared. The dollar amounts attributable to the county, the state tax, the voter approved
school tax, the other local school tax, the township or municipality, and the total of
the metropolitan special taxing districts as defined in section 275.065, subdivision 3,
paragraph (i), must be separately stated. The amounts due all other special taxing districts,
if any, may be aggregated except that (1) any levies made by the regional rail authorities
in the county of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington under
chapter 398A shall be listed on a separate line directly under the appropriate county's
levy, and (2) any levy by a special taxing district that exceeds 25 percent of the total of all
special taxing district levies on a tax statement must be separately stated
. If the county
levy under this paragraph includes an amount for a lake improvement district as defined
under sections 103B.501 to 103B.581, the amount attributable for that purpose must be
separately stated from the remaining county levy amount. In the case of Ramsey County,
if the county levy under this paragraph includes an amount for public library service
under section 134.07, the amount attributable for that purpose may be separated from the
remaining county levy amount. The amount of the tax on homesteads qualifying under the
senior citizens' property tax deferral program under chapter 290B is the total amount of
property tax before subtraction of the deferred property tax amount. The amount of the
tax on contamination value imposed under sections 270.91 to 270.98, if any, must also
be separately stated. The dollar amounts, including the dollar amount of any special
assessments, may be rounded to the nearest even whole dollar. For purposes of this section
whole odd-numbered dollars may be adjusted to the next higher even-numbered dollar.
The amount of market value excluded under section 273.11, subdivision 16, if any, must
also be listed on the tax statement.

(b) The property tax statements for manufactured homes and sectional structures
taxed as personal property shall contain the same information that is required on the
tax statements for real property.

(c) Real and personal property tax statements must contain the following information
in the order given in this paragraph. The information must contain the current year tax
information in the right column with the corresponding information for the previous year
in a column on the left:

(1) the property's estimated market value under section 273.11, subdivision 1;

(2) the property's homestead market value exclusion under section 273.13,
subdivision 35;

(3) the property's taxable market value after reductions under sections 273.11,
subdivisions 1a and 16, and 273.13, subdivision 35;

(4) the property's gross tax, before credits;

(5) for homestead agricultural properties, the credit under section 273.1384;

(6) any credits received under sections 273.119; 273.1234 or 273.1235; 273.135;
273.1391; 273.1398, subdivision 4; 469.171; and 473H.10, except that the amount of
credit received under section 273.135 must be separately stated and identified as "taconite
tax relief"; and

(7) the net tax payable in the manner required in paragraph (a).

(d) If the county uses envelopes for mailing property tax statements and if the county
agrees, a taxing district may include a notice with the property tax statement notifying
taxpayers when the taxing district will begin its budget deliberations for the current
year, and encouraging taxpayers to attend the hearings. If the county allows notices to
be included in the envelope containing the property tax statement, and if more than
one taxing district relative to a given property decides to include a notice with the tax
statement, the county treasurer or auditor must coordinate the process and may combine
the information on a single announcement.

EFFECTIVE DATE.

This section is effective for tax statements relating to taxes
payable in 2014 and thereafter.

Sec. 9.

Minnesota Statutes 2010, section 290A.04, subdivision 2h, is amended to read:


Subd. 2h.

Additional refund.

(a) If the gross property taxes payable on a homestead
increase more than 12 percent over the property taxes payable in the prior year on the same
property that is owned and occupied by the same owner on January 2 of both years, and the
amount of that increase is $100 or more, a claimant who is a homeowner shall be allowed
an additional refund equal to 60 75 percent of the amount of the increase over the greater
of 12 percent of the prior year's property taxes payable or $100. This subdivision shall not
apply to any increase in the gross property taxes payable attributable to improvements
made to the homestead after the assessment date for the prior year's taxes. This subdivision
shall not apply to any increase in the gross property taxes payable attributable to the
termination of valuation exclusions under section 273.11, subdivision 16.

The maximum refund allowed under this subdivision is $1,000.

(b) For purposes of this subdivision "gross property taxes payable" means property
taxes payable determined without regard to the refund allowed under this subdivision.

(c) In addition to the other proofs required by this chapter, each claimant under
this subdivision shall file with the property tax refund return a copy of the property tax
statement for taxes payable in the preceding year or other documents required by the
commissioner.

(d) Upon request, the appropriate county official shall make available the names and
addresses of the property taxpayers who may be eligible for the additional property tax
refund under this section. The information shall be provided on a magnetic computer
disk. The county may recover its costs by charging the person requesting the information
the reasonable cost for preparing the data. The information may not be used for any
purpose other than for notifying the homeowner of potential eligibility and assisting the
homeowner, without charge, in preparing a refund claim.

EFFECTIVE DATE.

This section is effective beginning with refunds based on
taxes payable in 2013.

Sec. 10.

[471.703] EXPENDITURE TYPE REPORTING.

Subdivision 1.

Purpose.

In order to facilitate involvement of the public in local
government budgeting, municipalities shall provide the following budgetary information
on a municipal Web site, except as provided in subdivision 4, and publicize the availability
of this information as part of the property tax and budget notices required in section
275.065.

Subd. 2.

Definitions.

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

(b) "Municipality" means a county with a population of more than 5,000 or a home
rule charter or statutory city with a population of more than 5,000.

(c) "Population" means the population of the municipality as established by the last
federal census, by a special census conducted under contract with the United States Bureau
of the Census, by a population estimate made by the Metropolitan Council pursuant to
section 473.24, or by a population estimate of the state demographer made pursuant to
section 4A.02, whichever is the most recent as to the stated date of the count or estimate for
the preceding calendar year, and which has been certified to the commissioner of revenue
on or before July 15 of the year in which the information is required to be reported.

Subd. 3.

Electronic budgetary information.

(a) By July 31 of each year, a
municipality shall publish on its Web site, except as provided in subdivision 4, four years
of budget information on both revenues and expenditures organized by function and by
expenditure type. The four years shall include actual data from the three most recently
concluded budget years and estimated data for the current budget year.

(b) The governmental funds included in the budget information required under
this section shall include the municipality's general fund, debt service fund, and special
revenue funds, except for special revenue funds specifically used for the acquisition and
construction of major capital facilities. The reported information shall also exclude
enterprise funds and fiduciary funds.

(c) The forms and reporting requirements for revenues and expenditures by function
shall be established by the state auditor's office and shall be based on the revenue and
expenditure breakdowns used by that office in the five-year summary tables for annual
revenue, expenditure, and debt reports for counties and cities with a population over
2,500, under section 6.75.

(d) The forms and reporting requirements for expenditures by expenditure type shall
be established by the state auditor's office and at minimum shall include the following line
items: employee costs, purchased services, supplies, central services, capital items, debt
service, transfer to other funds, and miscellaneous; with employee costs further subdivided
into the following items: wages and salaries, pensions, Social Security, health care, and
other benefits. The state auditor shall consult with the commissioner of management and
budget, city and county representatives, and members of the governmental accounting
community in developing the definition of expenditure types for reporting purposes.

Subd. 4.

Alternative publication of budgetary information.

A municipality
that does not maintain an official Web site must either (1) set up a separate Web site to
make accessible the budgetary information as required in subdivision 3, or (2) publish the
same information required in subdivision 3 by August 31 of each year in one issue of the
official newspaper of the municipality. If a county publishes the information in its official
newspaper it must also publish the same information in one other newspaper, if one of
general circulation is located in a different city in the county than the official newspaper.
The state auditor must prescribe the form for the newspaper notice.

Subd. 5.

Incentives.

In 2012 only, a city or county that complies with the
requirement of this section and section 6.91, subdivision 1, shall receive the benefits
pursuant to section 6.91, subdivision 2.

Subd. 6.

Penalties.

In 2013 and thereafter, failure of a municipality to provide
the information required in this section shall result in the withholding of aids payable
the following calendar year under sections 162.01 to 162.14, 423A.02, and 477A.011
to 477A.014.

EFFECTIVE DATE.

This section is effective July 1, 2012.

Sec. 11.

Minnesota Statutes 2010, section 477A.017, subdivision 3, is amended to read:


Subd. 3.

Conformity.

Other law to the contrary notwithstanding, in order to receive
distributions under sections 477A.011 to 477A.03, counties and cities must conform to
the standards set in subdivision 2 in making all financial reports required to be made to
the state auditor after June 30, 1984 by the deadline set by the state auditor. Counties and
cities that fail to submit the required information to the state auditor within 45 days of
the reporting deadline shall forfeit an amount equal to ten percent of the distributions
under sections 477A.011 to 477A.03. Counties and cities that fail to submit the required
information within 60 days of the reporting deadline shall forfeit an amount equal to 30
percent of the distributions. Counties and cities that fail to submit the required information
within 90 days of the reporting deadline shall forfeit an amount equal to 50 percent of the
distributions
.

EFFECTIVE DATE.

This section is effective for financial reports for calendar
year 2012 and thereafter.

Sec. 12.

Laws 1988, chapter 645, section 3, as amended by Laws 1999, chapter 243,
article 6, section 9, Laws 2000, chapter 490, article 6, section 15, and Laws 2008, chapter
154, article 2, section 30, is amended to read:


Sec. 3. TAX; PAYMENT OF EXPENSES.

(a) The tax levied by the hospital district under Minnesota Statutes, section 447.34,
must not be levied at a rate that exceeds the amount authorized to be levied under that
section. The proceeds of the tax may be used for all purposes of the hospital district,
except as provided in paragraph (b).

(b) 0.015 percent of taxable market value of the tax in paragraph (a) may be used
solely by the Cook ambulance service and the Orr ambulance service for the purpose of
capital expenditures as it relates to:

(1) ambulance acquisitions for the Cook ambulance service and the Orr ambulance
service and not;

(2) attached and portable equipment for use in and for the ambulances; and

(3) parts and replacement parts for maintenance and repair of the ambulances.

The money may not be used for administrative, operation, or salary expenses.

(c) The part of the levy referred to in paragraph (b) must be administered by the Cook
Hospital and passed on directly to the Cook area ambulance service board and the city of
Orr to be held in trust until funding for a new ambulance is needed by either the Cook
ambulance service or the Orr ambulance service
used for the purposes in paragraph (b).

Sec. 13.

Laws 1999, chapter 243, article 6, section 11, is amended to read:


Sec. 11. CEMETERY LEVY FOR SAWYER BY CARLTON COUNTY.

Subdivision 1.

Levy authorized.

Notwithstanding other law to the contrary, the
Carlton county board of commissioners may annually levy in and for the unorganized
township of Sawyer an amount up to $1,000 annually for cemetery purposes, beginning
with taxes payable in 2000 and ending with taxes payable in 2009
.

Subd. 2.

Effective date.

This section is effective June 1, 1999, without local
approval.

EFFECTIVE DATE; LOCAL APPROVAL.

This section applies to taxes
payable in 2013 and thereafter, and is effective the day after the Carlton county board
of commissioners and its chief clerical officer timely complete their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3.

Sec. 14.

Laws 2010, chapter 389, article 1, section 12, the effective date, is amended to
read:


EFFECTIVE DATE.

This section is effective for assessment years year 2010 and
2011, for taxes payable in 2011 and 2012 thereafter.

EFFECTIVE DATE.

This section is effective for assessment year 2012 and
thereafter.

Sec. 15. HOLDING OF PROPERTY FOR ECONOMIC DEVELOPMENT;
TEMPORARY EXTENSION.

(a) For purposes of Minnesota Statutes, section 272.02, subdivision 39, a political
subdivision's holding for resale for economic development of a property that is located in
a city in the metropolitan area, or in a city with a population of more than 5,000 outside
of the metropolitan area, as defined in Minnesota Statutes, section 473.121, subdivision
2, for up to ten years, is a public purpose.

(b) The authority under this section expires on December 31, 2015.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 16. REPEALER.

Minnesota Statutes 2010, section 270C.991, subdivision 5, is repealed.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 8

INDIVIDUAL INCOME AND CORPORATE FRANCHISE TAXES

Section 1.

Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 1,
is amended to read:


Subdivision 1.

Definitions.

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

(b) "Qualified small business" means a business that has been certified by the
commissioner under subdivision 2.

(c) "Qualified investor" means an investor who has been certified by the
commissioner under subdivision 3.

(d) "Qualified fund" means a pooled angel investment network fund that has been
certified by the commissioner under subdivision 4.

(e) "Qualified investment" means a cash investment in a qualified small business
of a minimum of:

(1) $10,000 in a calendar year by a qualified investor; or

(2) $30,000 in a calendar year by a qualified fund.

A qualified investment must be made in exchange for common stock, a partnership
or membership interest, preferred stock, debt with mandatory conversion to equity, or an
equivalent ownership interest as determined by the commissioner.

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

(g) "Pass-through entity" means a corporation that for the applicable taxable year is
treated as an S corporation or a general partnership, limited partnership, limited liability
partnership, trust, or limited liability company and which for the applicable taxable year is
not taxed as a corporation under chapter 290.

(h) "Intern" means a student of an accredited institution of higher education, or a
former student who has graduated in the past six months from an accredited institution
of higher education, who is employed by a qualified small business in a nonpermanent
position for a duration of nine months or less that provides training and experience in the
primary business activity of the business.

(i) "Liquidation event" means a conversion of qualified investment for cash, cash
and other consideration, or any other form of equity or debt interest.

EFFECTIVE DATE.

This section is effective for qualified small businesses
certified after June 30, 2012.

Sec. 2.

Minnesota Statutes 2011 Supplement, section 116J.8737, subdivision 2, is
amended to read:


Subd. 2.

Certification of qualified small businesses.

(a) Businesses may apply
to the commissioner for certification as a qualified small business for a calendar year.
The application must be in the form and be made under the procedures specified by the
commissioner, accompanied by an application fee of $150. Application fees are deposited
in the small business investment tax credit administration account in the special revenue
fund. The application for certification for 2010 must be made available on the department's
Web site by August 1, 2010. Applications for subsequent years' certification must be made
available on the department's Web site by November 1 of the preceding year.

(b) Within 30 days of receiving an application for certification under this subdivision,
the commissioner must either certify the business as satisfying the conditions required of a
qualified small business, request additional information from the business, or reject the
application for certification. If the commissioner requests additional information from the
business, the commissioner must either certify the business or reject the application within
30 days of receiving the additional information. If the commissioner neither certifies the
business nor rejects the application within 30 days of receiving the original application or
within 30 days of receiving the additional information requested, whichever is later, then
the application is deemed rejected, and the commissioner must refund the $150 application
fee. A business that applies for certification and is rejected may reapply.

(c) To receive certification, a business must satisfy all of the following conditions:

(1) the business has its headquarters in Minnesota;

(2) at least 51 percent of the business's employees are employed in Minnesota, and
51 percent of the business's total payroll is paid or incurred in the state;

(3) the business is engaged in, or is committed to engage in, innovation in Minnesota
in one of the following as its primary business activity:

(i) using proprietary technology to add value to a product, process, or service in a
qualified high-technology field;

(ii) researching or developing a proprietary product, process, or service in a qualified
high-technology field; or

(iii) researching, developing, or producing a new proprietary technology for use in
the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation;

(4) other than the activities specifically listed in clause (3), the business is not
engaged in real estate development, insurance, banking, lending, lobbying, political
consulting, information technology consulting, wholesale or retail trade, leisure,
hospitality, transportation, construction, ethanol production from corn, or professional
services provided by attorneys, accountants, business consultants, physicians, or health
care consultants;

(5) the business has fewer than 25 employees;

(6) the business must pay its employees annual wages of at least 175 percent of the
federal poverty guideline for the year for a family of four and must pay its interns annual
wages of at least 175 percent of the federal minimum wage used for federally covered
employers, except that this requirement must be reduced proportionately for employees
and interns who work less than full-time, and does not apply to an executive, officer, or
member of the board of the business, or to any employee who owns, controls, or holds
power to vote more than 20 percent of the outstanding securities of the business;

(7) the business has not been in operation for more than ten years, except as provided
in clause (8)
;

(8) the business has not been in operation for more than 20 years if the business is
engaged in the research, development, or production of medical devices or pharmaceuticals
for which U.S. Food and Drug Administration approval is required for use in the treatment
or diagnosis of a disease or condition;

(8) (9) the business has not previously received private equity investments of more
than $4,000,000; and

(9) (10) the business is not an entity disqualified under section 80A.50, paragraph
(b), clause (3); and

(11) the business has not issued securities that are traded on a public exchange.

(d) In applying the limit under paragraph (c), clause (5), the employees in all
members of the unitary business, as defined in section 290.17, subdivision 4, must be
included.

(e) In order for a qualified investment in a business to be eligible for tax credits,:

(1) the business must have applied for and received certification for the calendar
year in which the investment was made prior to the date on which the qualified investment
was made.;

(2) the business must not have issued securities that are traded on a public exchange;

(3) the business must not issue securities that are traded on a public exchange within
180 days subsequent to the date on which the qualified investment was made; and

(4) the business must not have a liquidation event within 180 days subsequent to the
date on which the qualified investment was made.

(f) The commissioner must maintain a list of businesses certified under this
subdivision for the calendar year and make the list accessible to the public on the
department's Web site.

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

(1) "qualified high-technology field" includes aerospace, agricultural processing,
renewable energy, energy efficiency and conservation, environmental engineering, food
technology, cellulosic ethanol, information technology, materials science technology,
nanotechnology, telecommunications, biotechnology, medical device products,
pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, and similar
fields; and

(2) "proprietary technology" means the technical innovations that are unique and
legally owned or licensed by a business and includes, without limitation, those innovations
that are patented, patent pending, a subject of trade secrets, or copyrighted.

EFFECTIVE DATE.

This section is effective for qualified small businesses
certified after June 30, 2012, except the amendments to paragraph (c), clause (7), and
paragraph (c), adding clause (8), are effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2010, section 116J.8737, subdivision 5, is amended to read:


Subd. 5.

Credit allowed.

(a) A qualified investor or qualified fund is eligible for
a credit equal to 25 percent of the qualified investment in a qualified small business.
Investments made by a pass-through entity qualify for a credit only if the entity is a
qualified fund. The commissioner must not allocate more than $11,000,000 in credits to
qualified investors or qualified funds for taxable years beginning after December 31,
2009, and before January 1, 2011, and must not allocate more than $12,000,000 in credits
per year for taxable years beginning after December 31, 2010, and before January 1,
2015 2012, must not allocate more than $16,500,000 in credits per year for taxable years
beginning after December 31, 2011, and before January 1, 2013, and must not allocate
more than $12,000,000 in credits per year for taxable years beginning after December 31,
2012, and before January 1, 2015
. Any portion of a taxable year's credits that is not
allocated by the commissioner does not cancel and may be carried forward to subsequent
taxable years until all credits have been allocated.

(b) The commissioner may not allocate more than a total maximum amount in credits
for a taxable year to a qualified investor for the investor's cumulative qualified investments
as an individual qualified investor and as an investor in a qualified fund; for married
couples filing joint returns the maximum is $250,000, and for all other filers the maximum
is $125,000. The commissioner may not allocate more than a total of $1,000,000 in credits
over all taxable years for qualified investments in any one qualified small business.

(c) The commissioner may not allocate a credit to a qualified investor either as an
individual qualified investor or as an investor in a qualified fund if the investor receives
more than 50 percent of the investor's gross annual income from the qualified small
business in which the qualified investment is proposed. A member of the family of an
individual disqualified by this paragraph is not eligible for a credit under this section. For
a married couple filing a joint return, the limitations in this paragraph apply collectively
to the investor and spouse. For purposes of determining the ownership interest of an
investor under this paragraph, the rules under section 267(c) and 267(e) of the Internal
Revenue Code apply.

(d) Applications for tax credits for 2010 must be made available on the department's
Web site by September 1, 2010, and the department must begin accepting applications
by September 1, 2010. Applications for subsequent years must be made available by
November 1 of the preceding year.

(e) Qualified investors and qualified funds must apply to the commissioner for tax
credits. Tax credits must be allocated to qualified investors or qualified funds in the order
that the tax credit request applications are filed with the department. The commissioner
must approve or reject tax credit request applications within 15 days of receiving the
application. The investment specified in the application must be made within 60 days of
the allocation of the credits. If the investment is not made within 60 days, the credit
allocation is canceled and available for reallocation. A qualified investor or qualified fund
that fails to invest as specified in the application, within 60 days of allocation of the
credits, must notify the commissioner of the failure to invest within five business days of
the expiration of the 60-day investment period.

(f) All tax credit request applications filed with the department on the same day must
be treated as having been filed contemporaneously. If two or more qualified investors or
qualified funds file tax credit request applications on the same day, and the aggregate
amount of credit allocation claims exceeds the aggregate limit of credits under this section
or the lesser amount of credits that remain unallocated on that day, then the credits must
be allocated among the qualified investors or qualified funds who filed on that day on a
pro rata basis with respect to the amounts claimed. The pro rata allocation for any one
qualified investor or qualified fund is the product obtained by multiplying a fraction,
the numerator of which is the amount of the credit allocation claim filed on behalf of
a qualified investor and the denominator of which is the total of all credit allocation
claims filed on behalf of all applicants on that day, by the amount of credits that remain
unallocated on that day for the taxable year.

(g) A qualified investor or qualified fund, or a qualified small business acting on their
behalf, must notify the commissioner when an investment for which credits were allocated
has been made, and the taxable year in which the investment was made. A qualified fund
must also provide the commissioner with a statement indicating the amount invested by
each investor in the qualified fund based on each investor's share of the assets of the
qualified fund at the time of the qualified investment. After receiving notification that the
investment was made, the commissioner must issue credit certificates for the taxable year
in which the investment was made to the qualified investor or, for an investment made by
a qualified fund, to each qualified investor who is an investor in the fund. The certificate
must state that the credit is subject to revocation if the qualified investor or qualified
fund does not hold the investment in the qualified small business for at least three years,
consisting of the calendar year in which the investment was made and the two following
years. The three-year holding period does not apply if:

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

(2) 80 percent or more of the assets of the qualified small business is sold before
the end of the three-year period;

(3) the qualified small business is sold before the end of the three-year period; or

(4) the qualified small business's common stock begins trading on a public exchange
before the end of the three-year period.

(h) The commissioner must notify the commissioner of revenue of credit certificates
issued under this section.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2011.

Sec. 4.

Minnesota Statutes 2010, section 116J.8737, is amended by adding a
subdivision to read:


Subd. 5a.

Promotion of credit in greater Minnesota.

(a) By July 1, 2012, the
commissioner shall develop a plan to increase awareness of and use of the credit for
investments in greater Minnesota businesses with a target goal that a minimum of 30
percent of the credit will be awarded for those investments during the second half
of calendar year 2013 and for each full calendar year thereafter. Beginning with the
legislative report due on March 15, 2013, under subdivision 9, the commissioner shall
report on its plan under this subdivision and the results achieved.

(b) If the target goal of 30 percent under paragraph (a) is not achieved for the
six-month period ending on December 31, 2013, the credit percentage under subdivision
5, paragraph (a), is increased to 40 percent for a qualified investment made after December
31, 2013, in a greater Minnesota business. This paragraph does not apply and the credit
percentage for all qualified investments is the rate provided under subdivision 5 for any
calendar year beginning after a calendar year for which the commissioner determines the
30 percent target has been satisfied. The commissioner shall timely post notification of
changes in the credit rate under this paragraph on the department's website.

(c) For purposes of this section, a "greater Minnesota business" means a qualified
small business with its headquarters and 51 percent or more of its employees employed
at Minnesota locations outside of the metropolitan area as defined in section 473.121,
subdivision 2.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2010, section 116J.8737, subdivision 8, is amended to read:


Subd. 8.

Data privacy.

(a) Data contained in an application submitted to the
commissioner under subdivision 2, 3, or 4 are nonpublic data, or private data on
individuals, as defined in section 13.02, subdivision 9 or 12, except that the following
data items are public:

(1) the name, mailing address, telephone number, e-mail address, contact person's
name, and industry type
of a qualified small business upon approval of the application
and certification by the commissioner under subdivision 2;

(2) the name of a qualified investor upon approval of the application and certification
by the commissioner under subdivision 3;

(3) the name of a qualified fund upon approval of the application and certification
by the commissioner under subdivision 4;

(4) for credit certificates issued under subdivision 5, the amount of the credit
certificate issued, amount of the qualifying investment, the name of the qualifying investor
or qualifying fund that received the certificate, and the name of the qualifying small
business in which the qualifying investment was made;

(5) for credits revoked under subdivision 7, paragraph (a), the amount revoked and
the name of the qualified investor or qualified fund; and

(6) for credits revoked under subdivision 7, paragraphs (b) and (c), the amount
revoked and the name of the qualified small business.

(b) The following data, including data classified as nonpublic or private, must be
provided to the consultant for use in conducting the program evaluation under subdivision
10:

(1) the commissioner of employment and economic development shall provide data
contained in an application for certification received from a qualified small business,
qualified investor, or qualified fund, and any annual reporting information received on a
qualified small business, qualified investor, or qualified fund; and

(2) the commissioner of revenue shall provide data contained in any applicable tax
returns of a qualified small business, qualified investor, or qualified fund.

EFFECTIVE DATE.

This section is effective for businesses requesting certification
starting on the day following final enactment.

Sec. 6.

Minnesota Statutes 2011 Supplement, section 289A.02, subdivision 7, is
amended to read:


Subd. 7.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through April 14,
2011
February 14, 2012.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2011 Supplement, section 290.01, subdivision 19, is
amended to read:


Subd. 19.

Net income.

The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:

(1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;

(2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and

(3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.

The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.

The Internal Revenue Code of 1986, as amended through April 14, 2011 February
14, 2012
, shall be in effect for taxable years beginning after December 31, 1996. The
provisions of the act of January 22, 2010, Public Law 111-126, to accelerate the benefits
for charitable cash contributions for the relief of victims of the Haitian earthquake, are
effective at the same time they became effective for federal purposes and apply to the
subtraction under subdivision 19b, clause (6). The provisions of title II, section 2112, of
the act of September 27, 2010, Public Law 111-240, rollovers from elective deferral plans
to designated Roth accounts, are effective at the same time they became effective for
federal purposes and taxable rollovers are included in net income at the same time they are
included in gross income for federal purposes.

Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2011 Supplement, section 290.01, subdivision 31, is
amended to read:


Subd. 31.

Internal Revenue Code.

Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through April 14,
2011
February 14, 2012. Internal Revenue Code also includes any uncodified provision in
federal law that relates to provisions of the Internal Revenue Code that are incorporated
into Minnesota law. When used in this chapter, the reference to "subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as
amended through March 18, 2010.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

Minnesota Statutes 2010, section 290.068, subdivision 1, is amended to read:


Subdivision 1.

Credit allowed.

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

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

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

(2) the base amount; and

(b) 2.5 2.8 percent on all of such excess expenses over $2,000,000 for taxable years
beginning after December 31, 2011
.

EFFECTIVE DATE.

This section is effective for taxable years beginning after
December 31, 2011.

Sec. 10.

Minnesota Statutes 2010, section 290.0681, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

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

(b) "Account" means the historic credit administration account in the special
revenue fund.

(c) "Office" means the State Historic Preservation Office of the Minnesota Historical
Society.

(d) "Project" means rehabilitation of a certified historic structure, as defined in
section 47(c)(3)(A) of the Internal Revenue Code, that is located in Minnesota and is
allowed a federal credit under section 47(a)(2) of the Internal Revenue Code.

(e) "Society" means the Minnesota Historical Society.

(f) "Federal credit" means the credit allowed under section 47(a)(2) of the Internal
Revenue Code.

(g) "Placed in service" has the meaning used in section 47 of the Internal Revenue
Code.

(h) "Qualified rehabilitation expenditures" has the meaning given in section 47 of
the Internal Revenue Code.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 11.

Minnesota Statutes 2010, section 290.0681, subdivision 3, is amended to read:


Subd. 3.

Applications; allocations.

(a) To qualify for a credit or grant under this
section, the developer of a project must apply to the office before the rehabilitation begins.
The application must contain the information and be in the form prescribed by the office.
The office may collect a fee for application of up to $5,000, based on estimated qualified
rehabilitation expenses expenditures, to offset costs associated with personnel and
administrative expenses related to administering the credit and preparing the economic
impact report in subdivision 9. Application fees are deposited in the account. The
application must indicate if the application is for a credit or a grant in lieu of the credit
or a combination of the two and designate the taxpayer qualifying for the credit or the
recipient of the grant.

(b) Upon approving an application for credit, the office shall issue allocation
certificates that:

(1) verify eligibility for the credit or grant;

(2) state the amount of credit or grant anticipated with the project, with the credit
amount equal to 100 percent and the grant amount equal to 90 percent of the federal
credit anticipated in the application;

(3) state that the credit or grant allowed may increase or decrease if the federal
credit the project receives at the time it is placed in service is different than the amount
anticipated at the time the allocation certificate is issued; and

(4) state the fiscal year in which the credit or grant is allocated, and that the taxpayer
or grant recipient is entitled to receive the credit or grant at the time the project is placed
in service, provided that date is within three calendar years following the issuance of
the allocation certificate.

(c) The office, in consultation with the commissioner of revenue, shall determine
if the project is eligible for a credit or a grant under this section and must notify the
developer in writing of its determination
. Eligibility for the credit is subject to review
and audit by the commissioner of revenue.

(d) The federal credit recapture and repayment requirements under section 50 of the
Internal Revenue Code do not apply to the credit allowed under this section.

(e) Any decision of the office under paragraph (c) of this subdivision may be
challenged as a contested case under chapter 14. The contested case proceeding must be
initiated within 45 days of the date of written notification by the office.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 12.

Minnesota Statutes 2010, section 290.0681, subdivision 4, is amended to read:


Subd. 4.

Credit certificates; grants.

(a)(1) The developer of a project for which the
office has issued an allocation certificate must notify the office when the project is placed
in service. Upon verifying that the project has been placed in service, and was allowed a
federal credit, the office must issue a credit certificate to the taxpayer designated in the
application or must issue a grant to the recipient designated in the application. The credit
certificate must state the amount of the credit.

(2) The credit amount equals the federal credit allowed for the project.

(3) The grant amount equals 90 percent of the federal credit allowed for the project.

(b) The recipient of a credit certificate may assign the certificate to another taxpayer,
which is then allowed the credit under this section or section 297I.20, subdivision 3. An
assignment is not valid unless the assignee notifies the commissioner within 30 days of the
date that the assignment is made.
The commissioner shall prescribe the forms necessary
for notifying the commissioner of the assignment of a credit certificate and for claiming
a credit by assignment.

(c) Credits passed through pursuant to subdivision 5 of this section are not an
assignment of a credit certificate under this subdivision.

(d) A grant agreement between the office and the recipient of a grant may allow the
grant to be issued to another individual or entity.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 13.

Minnesota Statutes 2010, section 290.0681, subdivision 5, is amended to read:


Subd. 5.

Partnerships; multiple owners.

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

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 14.

Minnesota Statutes 2010, section 290.0681, subdivision 10, is amended to
read:


Subd. 10.

Sunset.

This section expires after fiscal year 2015 2021, except that
the office's authority to issue credit certificates under subdivision 4 based on allocation
certificates that were issued before fiscal year 2016 2022 remains in effect through 2018
2024
, and the reporting requirements in subdivision 9 remain in effect through the year
following the year in which all allocation certificates have either been canceled or resulted
in issuance of credit certificates, or 2019 2025, whichever is earlier.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 15.

[290.0693] VETERANS JOBS TAX CREDIT.

Subdivision 1.

Definitions.

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

(b)(1) "Full-time employee" means an employee as defined in section 290.92,
subdivision 1, who meets the following criteria:

(i) the employee is paid wages as defined in section 290.92, subdivision 1, for at
least 1,820 hours during the 12-month period that starts on the date of hire;

(ii) the employee's wages are attributable to Minnesota under section 290.191,
subdivision 12;

(iii) the employee performs services for the employer in at least 50 weeks during the
12-month period that starts on the date of hire; and

(iv) the employee's total compensation, including benefits not mandated by law, is at
least $25,000 for the 12-month period that starts on the date of hire.

(2) "Full-time employee" does not include:

(i) any employee who bears any of the relationships described in subparagraphs (A)
to (G) of section 152(d)(2) of the Internal Revenue Code to the employer;

(ii) if the employer is a corporation, any employee who owns, directly or indirectly,
more than 50 percent in value of the outstanding stock of the corporation, or if the
employer is an entity other than a corporation, an employee who owns, directly or
indirectly, more than 50 percent of the capital and profits interests in the entity, as
determined with the application of section 267(c) of the Internal Revenue Code; or

(iii) if the employer is an estate or trust, any employee who is a fiduciary of the estate
or trust, or is an individual who bears any of the relationships described in subparagraphs
(A) to (G) of section 152(d)(2) of the Internal Revenue Code to a grantor, beneficiary,
or fiduciary of the estate or trust.

(c) "Qualified employer" means an employer that:

(1) employed a total of five or more full-time employees on December 31, 2011; and

(2) hired one or more qualified full-time employees after March 31, 2012.

(d) "Qualified full-time employee" means a full-time employee who:

(1) has completed 12 consecutive months of service as a full-time employee for a
qualified employer;

(2) is a qualified unemployed veteran; and

(3) is a resident of Minnesota on the date of hire.

(e) "Qualified unemployed veteran" is a person who:

(1) was in active military service in a designated area after September 11, 2001,
as defined in section 290.0677;

(2) was separated from active military service at any time during the five-year period
prior to the date of hire;

(3) received unemployment compensation under state or federal law for not less than
four weeks during the one-year period prior to the date of hire; and

(4) was unemployed on the date of hire.

(f) "Date of hire" means the day that the qualified full-time employee begins
performing services as an employee for the qualified employer.

(g) "Construction trades employer" means a person carrying on a trade or business
described in industry code numbers 23 through 238990 of the North American Industry
Classification System.

Subd. 2.

Credit for new full-time employees.

(a) A qualified employer who is
required to file a return under section 289A.08, subdivision 1, 2, or 3, is allowed a credit
against the tax imposed by this chapter for the net increase in qualified full-time employees.

(b)(1) For hiring qualified full-time employees after March 30, 2012, but before
January 1, 2013, the credit is equal to $3,000 times the net increase in full-time employees.
The net increase in full-time employees is the difference between:

(i) the total number of full-time employees employed by the employer on December
31, 2011; and

(ii) the number of full-time employees employed by the employer on December
31, 2012.

The net increase in full-time employees cannot exceed the number of qualified full-time
employees hired after March 31, 2012, but before January 1, 2013.

(2) For hiring qualified full-time employees after December 31, 2012, but before
July 1, 2013, the credit is equal to $1,500 times the net increase in full-time employees.
The net increase in full-time employees is the difference between:

(i) the total number of full-time employees employed by the taxpayer on December
31, 2011; and

(ii) the number of full-time employees employed by the taxpayer on December
31, 2013.

The net increase in full-time employees cannot exceed the number of qualified full-time
employees hired after December 31, 2012, but before July 1, 2013.

(c) The credit may be claimed in the taxable year in which the qualified full-time
employee completes 12 consecutive months of continuous service as a full-time employee
of the qualified employer.

(d) The maximum aggregate credits allowed to a qualified employer under this
section for all taxable years is $50,000.

(e) For members of a unitary business whose income and factors are included on a
combined income report under section 289A.08, subdivision 3, the number of full-time
employees and the maximum allowable credit are not determined at the individual
member level but are instead determined at the group level.

Subd. 3.

Allocation of credits.

(a) By July 1, 2012, the commissioner shall develop
an Internet application that allows employers to apply for tentative credits. The application
must include the employer's name, tax identification number, and North American Industry
Classification System industry code, and the name and date of hire of the employee.

(b) The credit is available only to employers who apply for a tentative credit using
the application in paragraph (a) and who receive notice that their application has been
approved for a tentative credit.

(c) Employers may apply for a tentative credit no earlier than the date of hire of
each qualified full-time employee. Any employer may file more than one tentative credit
application, but no employer may apply for tentative credits for more than a total of 16
employees hired in 2012 or 33 employees hired in 2013.

(d) The commissioner shall approve applications seeking tentative credits for the
first 1,250 full-time employees based on the order in which the applications are received.

(e) The commissioner must promptly notify employers if they are eligible for a
tentative credit. The notice must state that the employer is eligible for a credit only after
the employee named in the application has worked for 12 consecutive months and all other
conditions of eligibility are met.

(f) The commissioner shall promptly publish public notice when all 2,500 tentative
credits have been applied for.

Subd. 4.

Tentative credits for construction trades employers.

(a) Any
construction trades employer may apply for a tentative credit.

(b) To remain eligible for a credit, a construction trades employer who has received
a tentative credit must renew the tentative credit by filing an application with the
commissioner no earlier than 180 days after date of hire and no more than 210 days after
date of hire. The renewal notice must state that the employee for whom the tentative credit
was originally granted is still an employee and that the employer reasonably believes that
all qualifications of eligibility for a credit will be met.

(c) Any tentative credit issued to a construction trades employer that is not renewed
within the time required for renewal is canceled. Any canceled tentative credits are
available to be reissued by the commissioner to employers under subdivision 3.

Subd. 5.

Flow-through entities.

Credits granted to a partnership, limited liability
company taxed as a partnership, S corporation, or multiple owners of a business are passed
through to the partners, members, shareholders, or owners, respectively, pro rata to each
partner, member, shareholder, or owner based on their share of the entity's assets or as
specially allocated in their organizational documents, as of the last day of the taxable year.

Subd. 6.

Refundable.

If the amount of the credit allowed under this section exceeds
the liability for tax under this chapter, the commissioner shall refund the excess to the
taxpayer.

Subd. 7.

Appropriation.

An amount sufficient to pay the refunds authorized by this
section is appropriated to the commissioner from the general fund.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 16.

Minnesota Statutes 2011 Supplement, section 290A.03, subdivision 15,
is amended to read:


Subd. 15.

Internal Revenue Code.

"Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through April 14, 2011 February 14, 2012.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 17.

Minnesota Statutes 2011 Supplement, section 291.005, subdivision 1, is
amended to read:


Subdivision 1.

Scope.

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

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

(2) "Federal gross estate" means the gross estate of a decedent as required to be
valued and otherwise determined for federal estate tax purposes under the Internal
Revenue Code.

(3) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through April 14, 2011 February 14, 2012, but without regard to the
provisions of sections 501 and 901 of Public Law 107-16, as amended by Public Law
111-312, and section 301(c) of Public Law 111-312.

(4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, plus

(i) the amount of deduction for state death taxes allowed under section 2058 of
the Internal Revenue Code; less

(ii)(A) the value of qualified small business property under section 291.03,
subdivision 9
, and the value of qualified farm property under section 291.03, subdivision
10
, or (B) $4,000,000, whichever is less.

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

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

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

(8) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota.

(9) "Situs of property" means, with respect to real property, the state or country in
which it is located; with respect to tangible personal property, the state or country in which
it was normally kept or located at the time of the decedent's death; and with respect to
intangible personal property, the state or country in which the decedent was domiciled
at death.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 18.

Laws 2010, chapter 216, section 11, the effective date, is amended to read:


EFFECTIVE DATE.

This section is effective for taxable years beginning
after December 31, 2009, for certified historic structures for which qualified costs of
rehabilitation are first paid under construction contracts entered into
after May 1, 2010
rehabilitation expenditures are first paid by the developer or taxpayer after May 1, 2010,
for rehabilitation that occurs after May 1, 2010, provided that the application under
subdivision 3 is submitted before the project is placed in service
.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies retroactively for taxable years beginning after December 31, 2009, and for
certified historic structures placed in service after May 1, 2010, but the office may not
issue certificates allowed under the change to this section until July 1, 2012.

Sec. 19. AMENDED RETURNS; CERTAIN IRA ROLLOVERS.

An individual who excludes an amount from net income in a prior taxable year
through rollover of an airline payment amount to a traditional IRA, as authorized under
Public Law 112-95, section 1106, may file an amended individual income tax return and
claim for refund of state taxes as provided under Minnesota Statutes, section 289A.40,
subdivision 1, or, if later, by April 15, 2013.

EFFECTIVE DATE.

This section is effective the day following final enactment.

ARTICLE 9

SALES AND SPECIAL TAXES

Section 1.

Minnesota Statutes 2010, section 289A.20, subdivision 4, is amended to
read:


Subd. 4.

Sales and use tax.

(a) The taxes imposed by chapter 297A are due and
payable to the commissioner monthly on or before the 20th day of the month following
the month in which the taxable event occurred, or following another reporting period
as the commissioner prescribes or as allowed under section 289A.18, subdivision 4,
paragraph (f) or (g), except that:

(1) use taxes due on an annual use tax return as provided under section 289A.11,
subdivision 1
, are payable by April 15 following the close of the calendar year; and.

(2) except as provided in paragraph (f), for a vendor having a liability of $120,000
or more during a fiscal year ending June 30, 2009, and fiscal years thereafter, the taxes
imposed by chapter 297A, except as provided in paragraph (b), are due and payable to the
commissioner monthly in the following manner:

(i) On or before the 14th day of the month following the month in which the taxable
event occurred, the vendor must remit to the commissioner 90 percent of the estimated
liability for the month in which the taxable event occurred.

(ii) On or before the 20th day of the month in which the taxable event occurs, the
vendor must remit to the commissioner a prepayment for the month in which the taxable
event occurs equal to 67 percent of the liability for the previous month.

(iii) On or before the 20th day of the month following the month in which the taxable
event occurred, the vendor must pay any additional amount of tax not previously remitted
under either item (i) or (ii ) or, if the payment made under item (i) or (ii) was greater than
the vendor's liability for the month in which the taxable event occurred, the vendor may
take a credit against the next month's liability in a manner prescribed by the commissioner.

(iv) Once the vendor first pays under either item (i) or (ii), the vendor is required to
continue to make payments in the same manner, as long as the vendor continues having a
liability of $120,000 or more during the most recent fiscal year ending June 30.

(v) Notwithstanding items (i), (ii), and (iv), if a vendor fails to make the required
payment in the first month that the vendor is required to make a payment under either item
(i) or (ii), then the vendor is deemed to have elected to pay under item (ii) and must make
subsequent monthly payments in the manner provided in item (ii).

(vi) For vendors making an accelerated payment under item (ii), for the first month
that the vendor is required to make the accelerated payment, on the 20th of that month, the
vendor will pay 100 percent of the liability for the previous month and a prepayment for
the first month equal to 67 percent of the liability for the previous month.

(b) Notwithstanding paragraph (a), A vendor having a liability of $120,000 or more
during a fiscal year ending June 30 must remit the June liability for the next year in the
following manner:

(1) Two business days before June 30 of the year, the vendor must remit 90 percent
of the estimated June liability to the commissioner.

(2) On or before August 20 of the year, the vendor must pay any additional amount
of tax not remitted in June.

(c) A vendor having a liability of:

(1) $10,000 or more, but less than $120,000 during a fiscal year ending June 30,
2009, and fiscal years thereafter, must remit by electronic means all liabilities on returns
due for periods beginning in the subsequent calendar year on or before the 20th day of
the month following the month in which the taxable event occurred, or on or before the
20th day of the month following the month in which the sale is reported under section
289A.18, subdivision 4; or

(2) $120,000 or more, during a fiscal year ending June 30, 2009, and fiscal years
thereafter, must remit by electronic means all liabilities in the manner provided in
paragraph (a), clause (2), on returns due for periods beginning in the subsequent calendar
year, except for 90 percent of the estimated June liability, which is due two business days
before June 30. The remaining amount of the June liability is due on August 20.

(d) Notwithstanding paragraph (b) or (c), a person prohibited by the person's
religious beliefs from paying electronically shall be allowed to remit the payment by mail.
The filer must notify the commissioner of revenue of the intent to pay by mail before
doing so on a form prescribed by the commissioner. No extra fee may be charged to a
person making payment by mail under this paragraph. The payment must be postmarked
at least two business days before the due date for making the payment in order to be
considered paid on a timely basis.

(e) Whenever the liability is $120,000 or more separately for: (1) the tax imposed
under chapter 297A; (2) a fee that is to be reported on the same return as and paid with the
chapter 297A taxes; or (3) any other tax that is to be reported on the same return as and
paid with the chapter 297A taxes, then the payment of all the liabilities on the return must
be accelerated as provided in this subdivision.

(f) At the start of the first calendar quarter at least 90 days after the cash flow
account established in section 16A.152, subdivision 1, and the budget reserve account
established in section 16A.152, subdivision 1a, reach the amounts listed in section
16A.152, subdivision 2, paragraph (a), the remittance of the accelerated payments required
under paragraph (a), clause (2), must be suspended. The commissioner of management
and budget shall notify the commissioner of revenue when the accounts have reached
the required amounts. Beginning with the suspension of paragraph (a), clause (2), for a
vendor with a liability of $120,000 or more during a fiscal year ending June 30, 2009,
and fiscal years thereafter, the taxes imposed by chapter 297A are due and payable to the
commissioner on the 20th day of the month following the month in which the taxable
event occurred. Payments of tax liabilities for taxable events occurring in June under
paragraph (b) are not changed.

EFFECTIVE DATE.

This section is effective for taxes due and payable after
June 30, 2012.

Sec. 2.

Minnesota Statutes 2011 Supplement, section 295.53, subdivision 1, is
amended to read:


Subdivision 1.

Exemptions.

(a) The following payments are excluded from the
gross revenues subject to the hospital, surgical center, or health care provider taxes under
sections 295.50 to 295.59:

(1) payments received for services provided under the Medicare program, including
payments received from the government, and organizations governed by sections 1833
and 1876 of title XVIII of the federal Social Security Act, United States Code, title 42,
section 1395, and enrollee deductibles, coinsurance, and co-payments, whether paid by the
Medicare enrollee or by a Medicare supplemental coverage as defined in section 62A.011,
subdivision 3
, clause (10), or by Medicaid payments under title XIX of the federal Social
Security Act. Payments for services not covered by Medicare are taxable;

(2) payments received for home health care services;

(3) payments received from hospitals or surgical centers for goods and services on
which liability for tax is imposed under section 295.52 or the source of funds for the
payment is exempt under clause (1), (7), (10), or (14);

(4) payments received from health care providers for goods and services on which
liability for tax is imposed under this chapter or the source of funds for the payment is
exempt under clause (1), (7), (10), or (14);

(5) amounts paid for legend drugs, other than nutritional products and blood and
blood components, to a wholesale drug distributor who is subject to tax under section
295.52, subdivision 3, reduced by reimbursements received for legend drugs otherwise
exempt under this chapter;

(6) payments received by a health care provider or the wholly owned subsidiary of a
health care provider for care provided outside Minnesota;

(7) payments received from the chemical dependency fund under chapter 254B;

(8) payments received in the nature of charitable donations that are not designated
for providing patient services to a specific individual or group;

(9) payments received for providing patient services incurred through a formal
program of health care research conducted in conformity with federal regulations
governing research on human subjects. Payments received from patients or from other
persons paying on behalf of the patients are subject to tax;

(10) payments received from any governmental agency for services benefiting the
public, not including payments made by the government in its capacity as an employer
or insurer or payments made by the government for services provided under general
assistance medical care, the MinnesotaCare program, or the medical assistance program
governed by title XIX of the federal Social Security Act, United States Code, title 42,
sections 1396 to 1396v;

(11) government payments received by the commissioner of human services for
state-operated services;

(12) payments received by a health care provider for hearing aids and related
equipment or prescription eyewear delivered outside of Minnesota;

(13) payments received by an educational institution from student tuition, student
activity fees, health care service fees, government appropriations, donations, or grants,
and for services identified in and provided under an individualized education program
as defined in section 256B.0625 or Code of Federal Regulations, chapter 34, section
300.340(a). Fee for service payments and payments for extended coverage are taxable;

(14) payments received under the federal Employees Health Benefits Act, United
States Code, title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of
1990. Enrollee deductibles, coinsurance, and co-payments are subject to tax; and

(15) payments received under the federal Tricare program, Code of Federal
Regulations, title 32, section 199.17(a)(7). Enrollee deductibles, coinsurance, and
co-payments are subject to tax.; and

(16) payments for laboratory services to examine and report results for a biological
specimen that is collected outside the state. The entity claiming the exemption is required
to keep adequate records demonstrating that the specimen was collected outside the state,
so that the commissioner can ensure that the correct amount of tax is paid.

(b) Payments received by wholesale drug distributors for legend drugs sold directly
to veterinarians or veterinary bulk purchasing organizations are excluded from the gross
revenues subject to the wholesale drug distributor tax under sections 295.50 to 295.59.

EFFECTIVE DATE.

This section is effective for gross revenues received from
laboratory services provided on or after July 1, 2013.

Sec. 3.

Minnesota Statutes 2010, section 297A.61, subdivision 4, is amended to read:


Subd. 4.

Retail sale.

(a) A "retail sale" means any sale, lease, or rental for any
purpose, other than resale, sublease, or subrent of items by the purchaser in the normal
course of business as defined in subdivision 21.

(b) A sale of property used by the owner only by leasing it to others or by holding it
in an effort to lease it, and put to no use by the owner other than resale after the lease or
effort to lease, is a sale of property for resale.

(c) A sale of master computer software that is purchased and used to make copies for
sale or lease is a sale of property for resale.

(d) A sale of building materials, supplies, and equipment to owners, contractors,
subcontractors, or builders for the erection of buildings or the alteration, repair, or
improvement of real property is a retail sale in whatever quantity sold, whether the sale is
for purposes of resale in the form of real property or otherwise.

(e) A sale of carpeting, linoleum, or similar floor covering to a person who provides
for installation of the floor covering is a retail sale and not a sale for resale since a sale
of floor covering which includes installation is a contract for the improvement of real
property.

(f) A sale of shrubbery, plants, sod, trees, and similar items to a person who provides
for installation of the items is a retail sale and not a sale for resale since a sale of
shrubbery, plants, sod, trees, and similar items that includes installation is a contract for
the improvement of real property.

(g) A sale of tangible personal property that is awarded as prizes is a retail sale and
is not considered a sale of property for resale.

(h) A sale of tangible personal property utilized or employed in the furnishing or
providing of services under subdivision 3, paragraph (g), clause (1), including, but not
limited to, property given as promotional items, is a retail sale and is not considered a
sale of property for resale.

(i) A sale of tangible personal property used in conducting lawful gambling under
chapter 349 or the State Lottery under chapter 349A, including, but not limited to,
property given as promotional items, is a retail sale and is not considered a sale of
property for resale.

(j) A sale of machines, equipment, or devices that are used to furnish, provide, or
dispense goods or services, including, but not limited to, coin-operated devices, is a retail
sale and is not considered a sale of property for resale.

(k) In the case of a lease, a retail sale occurs (1) when an obligation to make a lease
payment becomes due under the terms of the agreement or the trade practices of the lessor
or; (2) in the case of a lease of a motor vehicle, as defined in section 297B.01, subdivision
11
, but excluding vehicles with a manufacturer's gross vehicle weight rating greater than
10,000 pounds and rentals of vehicles for not more than 28 days, at the time the lease is
executed; or (3) for rent-to-own or lease-to-own used vehicles where the lessee may
purchase or return the vehicle at any time without penalty, at the time each payment is
made under the terms of the agreement
.

(l) In the case of a conditional sales contract, a retail sale occurs upon the transfer of
title or possession of the tangible personal property.

(m) A sale of a bundled transaction in which one or more of the products included
in the bundle is a taxable product is a retail sale, except that if one of the products
is a telecommunication service, ancillary service, Internet access, or audio or video
programming service, and the seller has maintained books and records identifying through
reasonable and verifiable standards the portions of the price that are attributable to the
distinct and separately identifiable products, then the products are not considered part of a
bundled transaction. For purposes of this paragraph:

(1) the books and records maintained by the seller must be maintained in the regular
course of business, and do not include books and records created and maintained by the
seller primarily for tax purposes;

(2) books and records maintained in the regular course of business include, but are
not limited to, financial statements, general ledgers, invoicing and billing systems and
reports, and reports for regulatory tariffs and other regulatory matters; and

(3) books and records are maintained primarily for tax purposes when the books
and records identify taxable and nontaxable portions of the price, but the seller maintains
other books and records that identify different prices attributable to the distinct products
included in the same bundled transaction.

EFFECTIVE DATE.

This section is effective for leases entered into after June
30, 2012.

Sec. 4.

Minnesota Statutes 2010, section 297A.68, subdivision 5, is amended to read:


Subd. 5.

Capital equipment.

(a) Capital equipment is exempt. Except as provided
in paragraph (e),
the tax must be imposed and collected as if the rate under section
297A.62, subdivision 1, applied, and then refunded in the manner provided in section
297A.75.

"Capital equipment" means machinery and equipment purchased or leased, and used
in this state by the purchaser or lessee primarily for manufacturing, fabricating, mining,
or refining tangible personal property to be sold ultimately at retail if the machinery and
equipment are essential to the integrated production process of manufacturing, fabricating,
mining, or refining. Capital equipment also includes machinery and equipment
used primarily to electronically transmit results retrieved by a customer of an online
computerized data retrieval system.

(b) Capital equipment includes, but is not limited to:

(1) machinery and equipment used to operate, control, or regulate the production
equipment;

(2) machinery and equipment used for research and development, design, quality
control, and testing activities;

(3) environmental control devices that are used to maintain conditions such as
temperature, humidity, light, or air pressure when those conditions are essential to and are
part of the production process;

(4) materials and supplies used to construct and install machinery or equipment;

(5) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to machinery or equipment;

(6) materials used for foundations that support machinery or equipment;

(7) materials used to construct and install special purpose buildings used in the
production process;

(8) ready-mixed concrete equipment in which the ready-mixed concrete is mixed
as part of the delivery process regardless if mounted on a chassis, repair parts for
ready-mixed concrete trucks, and leases of ready-mixed concrete trucks; and

(9) machinery or equipment used for research, development, design, or production
of computer software.

(c) Capital equipment does not include the following:

(1) motor vehicles taxed under chapter 297B;

(2) machinery or equipment used to receive or store raw materials;

(3) building materials, except for materials included in paragraph (b), clauses (6)
and (7);

(4) machinery or equipment used for nonproduction purposes, including, but not
limited to, the following: plant security, fire prevention, first aid, and hospital stations;
support operations or administration; pollution control; and plant cleaning, disposal of
scrap and waste, plant communications, space heating, cooling, lighting, or safety;

(5) farm machinery and aquaculture production equipment as defined by section
297A.61, subdivisions 12 and 13;

(6) machinery or equipment purchased and installed by a contractor as part of an
improvement to real property;

(7) machinery and equipment used by restaurants in the furnishing, preparing, or
serving of prepared foods as defined in section 297A.61, subdivision 31;

(8) machinery and equipment used to furnish the services listed in section 297A.61,
subdivision 3
, paragraph (g), clause (6), items (i) to (vi) and (viii);

(9) machinery or equipment used in the transportation, transmission, or distribution
of petroleum, liquefied gas, natural gas, water, or steam, in, by, or through pipes, lines,
tanks, mains, or other means of transporting those products. This clause does not apply to
machinery or equipment used to blend petroleum or biodiesel fuel as defined in section
239.77; or

(10) any other item that is not essential to the integrated process of manufacturing,
fabricating, mining, or refining.

(d) For purposes of this subdivision:

(1) "Equipment" means independent devices or tools separate from machinery but
essential to an integrated production process, including computers and computer software,
used in operating, controlling, or regulating machinery and equipment; and any subunit or
assembly comprising a component of any machinery or accessory or attachment parts of
machinery, such as tools, dies, jigs, patterns, and molds.

(2) "Fabricating" means to make, build, create, produce, or assemble components or
property to work in a new or different manner.

(3) "Integrated production process" means a process or series of operations through
which tangible personal property is manufactured, fabricated, mined, or refined. For
purposes of this clause, (i) manufacturing begins with the removal of raw materials
from inventory and ends when the last process prior to loading for shipment has been
completed; (ii) fabricating begins with the removal from storage or inventory of the
property to be assembled, processed, altered, or modified and ends with the creation
or production of the new or changed product; (iii) mining begins with the removal of
overburden from the site of the ores, minerals, stone, peat deposit, or surface materials and
ends when the last process before stockpiling is completed; and (iv) refining begins with
the removal from inventory or storage of a natural resource and ends with the conversion
of the item to its completed form.

(4) "Machinery" means mechanical, electronic, or electrical devices, including
computers and computer software, that are purchased or constructed to be used for the
activities set forth in paragraph (a), beginning with the removal of raw materials from
inventory through completion of the product, including packaging of the product.

(5) "Machinery and equipment used for pollution control" means machinery and
equipment used solely to eliminate, prevent, or reduce pollution resulting from an activity
described in paragraph (a).

(6) "Manufacturing" means an operation or series of operations where raw materials
are changed in form, composition, or condition by machinery and equipment and which
results in the production of a new article of tangible personal property. For purposes of
this subdivision, "manufacturing" includes the generation of electricity or steam to be
sold at retail.

(7) "Mining" means the extraction of minerals, ores, stone, or peat.

(8) "Online data retrieval system" means a system whose cumulation of information
is equally available and accessible to all its customers.

(9) "Primarily" means machinery and equipment used 50 percent or more of the time
in an activity described in paragraph (a).

(10) "Refining" means the process of converting a natural resource to an intermediate
or finished product, including the treatment of water to be sold at retail.

(11) This subdivision does not apply to telecommunications equipment as
provided in subdivision 35, and does not apply to wire, cable, fiber, poles, or conduit
for telecommunications services.

(e) Materials exempt under this section may be purchased without imposing and
collecting the tax and applying for a refund under section 297A.75, provided that:

(1) the purchaser employed not more than 50 full-time employees at any time
during the calendar year that is immediately prior to the calendar year of the sale and
purchase; and

(2) if another business owns at least 20 percent of the purchaser, then the sum of the
number of full-time employees employed by the purchaser and the number of full-time
employees employed by any other business that owns at least 20 percent of the purchaser's
business is not more than 50 full-time employees at any time during the calendar year that
is immediately prior to the calendar year of the sale and purchase. This clause must be
applied for each business that owns at least 20 percent of the purchaser.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2012.

Sec. 5.

Minnesota Statutes 2011 Supplement, section 297A.68, subdivision 42, is
amended to read:


Subd. 42.

Qualified data centers.

(a) Purchases of enterprise information
technology equipment and computer software for use in a qualified data center are exempt.
The tax on purchases exempt under this paragraph must be imposed and collected as if
the rate under section 297A.62, subdivision 1, applied, and then refunded after June 30,
2013, in the manner provided in section 297A.75. This exemption includes enterprise
information technology equipment and computer software purchased to replace or upgrade
enterprise information technology equipment and computer software in a qualified data
center.

(b) Electricity used or consumed in the operation of a qualified data center is exempt.

(c) For purposes of this subdivision, "qualified data center" means a facility in
Minnesota:

(1) that is comprised of one or more buildings that consist in the aggregate of
at least 30,000 square feet, and that are located on a single parcel or on contiguous
parcels, where the total cost of construction or refurbishment, investment in enterprise
information technology equipment, and computer software is at least $50,000,000 within
a 24-month period;

(2) that is constructed or substantially refurbished after June 30, 2012, where
"substantially refurbished" means that at least 30,000 25,000 square feet have been rebuilt
or modified; and, including:

(i) installation of enterprise information technology equipment, computer software,
environmental control and energy efficiency improvements; and

(ii) building improvements; and

(3) that is used to house enterprise information technology equipment, where the
facility has the following characteristics:

(i) uninterruptible power supplies, generator backup power, or both;

(ii) sophisticated fire suppression and prevention systems; and

(iii) enhanced security. A facility will be considered to have enhanced security if it
has restricted access to the facility to selected personnel; permanent security guards; video
camera surveillance; an electronic system requiring pass codes, keycards, or biometric
scans, such as hand scans and retinal or fingerprint recognition; or similar security features.

In determining whether the facility has the required square footage, the square
footage of the following spaces shall be included if the spaces support the operation
of enterprise information technology equipment: office space, meeting space, and
mechanical and other support facilities. For purposes of this subdivision, "computer
software" includes, but is not limited to, software utilized or loaded at the qualified data
center, including maintenance, licensing, and software customization.

(d) For purposes of this subdivision, "enterprise information technology equipment"
means computers and equipment supporting computing, networking, or data storage,
including servers and routers. It includes, but is not limited to: cooling systems,
cooling towers, and other temperature control infrastructure; power infrastructure for
transformation, distribution, or management of electricity used for the maintenance
and operation of a qualified data center, including but not limited to exterior dedicated
business-owned substations, backup power generation systems, battery systems, and
related infrastructure; and racking systems, cabling, and trays, which are necessary for
the maintenance and operation of the qualified data center.

(e) A qualified data center may claim the exemptions in this subdivision for
purchases made either within 20 years of the date of its first purchase qualifying for the
exemption under paragraph (a), or by June 30, 2042, whichever is earlier.

(f) The purpose of this exemption is to create jobs in the construction and data
center industries.

(g) This subdivision is effective for sales and purchases made after June 30, 2012,
and before July 1, 2042.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2012.

Sec. 6.

Minnesota Statutes 2010, section 297A.70, subdivision 4, is amended to read:


Subd. 4.

Sales to nonprofit groups.

(a) All sales, except those listed in paragraph
(b), to the following "nonprofit organizations" are exempt:

(1) a corporation, society, association, foundation, or institution organized and
operated exclusively for charitable, religious, or educational purposes if the item
purchased is used in the performance of charitable, religious, or educational functions; and

(2) any senior citizen group or association of groups that:

(i) in general limits membership to persons who are either age 55 or older, or
physically disabled;

(ii) is organized and operated exclusively for pleasure, recreation, and other
nonprofit purposes, not including housing, no part of the net earnings of which inures to
the benefit of any private shareholders; and

(iii) is an exempt organization under section 501(c) of the Internal Revenue Code.

For purposes of this subdivision, charitable purpose includes the maintenance of a
cemetery owned by a religious organization.

(b) This exemption does not apply to the following sales:

(1) building, construction, or reconstruction materials purchased by a contractor
or a subcontractor as a part of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for use in the construction,
alteration, or repair of a building or facility;

(2) construction materials purchased by tax-exempt entities or their contractors to
be used in constructing buildings or facilities that will not be used principally by the
tax-exempt entities; and

(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
297A.67, subdivision 2, except wine purchased by an established religious organization
for sacramental purposes or as allowed under subdivision 9a; and

(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
as provided in paragraph (c).

(c) This exemption applies to the leasing of a motor vehicle as defined in section
297B.01, subdivision 11, only if the vehicle is:

(1) a truck, as defined in section 168.002, a bus, as defined in section 168.002, or a
passenger automobile, as defined in section 168.002, if the automobile is designed and
used for carrying more than nine persons including the driver; and

(2) intended to be used primarily to transport tangible personal property or
individuals, other than employees, to whom the organization provides service in
performing its charitable, religious, or educational purpose.

(d) A limited liability company also qualifies for exemption under this subdivision if
(1) it consists of a sole member that would qualify for the exemption, and (2) the items
purchased qualify for the exemption.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2012.

Sec. 7.

Minnesota Statutes 2010, section 297A.70, is amended by adding a subdivision
to read:


Subd. 9a.

Established religious orders.

(a) Sales of lodging, prepared food, candy,
soft drinks, and alcoholic beverages at noncatered events between an established religious
order and an affiliated institution of higher education are exempt.

(b) For purposes of this subdivision, "established religious order" means an
organization directly or indirectly under the control or supervision of a church or
convention or association of churches, where members of the organization (1) normally
live together as part of a community, (2) make long-term commitments to live under a
strict set of moral and spiritual rules, and (3) work or engage full time in a combination
of prayer, religious study, church reform or renewal, or other religious, educational, or
charitable goals of the organization.

(c) For purposes of this subdivision, an institution of higher education is "affiliated"
with an established religious order if members of the religious order are represented
on the governing board of the institution of higher education and the two organization
share campus space and common facilities.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2012.

Sec. 8.

Minnesota Statutes 2010, section 297A.70, is amended by adding a subdivision
to read:


Subd. 18.

Nursing homes and boarding care homes.

(a) All sales, except those
listed in paragraph (b), to a nursing home licensed under section 144A.02 or a boarding
care home certified as a nursing facility under title 19 of the Social Security Act are
exempt if the facility:

(1) is exempt from federal income taxation pursuant to section 501(c)(3) of the
Internal Revenue Code; and

(2) is certified to participate in the medical assistance program under title 19 of the
Social Security Act, or certifies to the commissioner that it does not discharge residents
due to the inability to pay.

(b) This exemption does not apply to the following sales:

(1) building, construction, or reconstruction materials purchased by a contractor
or a subcontractor as a part of a lump-sum contract or similar type of contract with a
guaranteed maximum price covering both labor and materials for use in the construction,
alteration, or repair of a building or facility;

(2) construction materials purchased by tax-exempt entities or their contractors to
be used in constructing buildings or facilities that will not be used principally by the
tax-exempt entities;

(3) lodging as defined under section 297A.61, subdivision 3, paragraph (g), clause
(2), and prepared food, candy, soft drinks, and alcoholic beverages as defined in section
297A.67, subdivision 2; and

(4) leasing of a motor vehicle as defined in section 297B.01, subdivision 11, except
as provided in paragraph (c).

(c) This exemption applies to the leasing of a motor vehicle as defined in section
297B.01, subdivision 11, only if the vehicle is:

(1) a truck, as defined in section 168.002; a bus, as defined in section 168.002; or a
passenger automobile, as defined in section 168.002, if the automobile is designed and
used for carrying more than nine persons including the driver; and

(2) intended to be used primarily to transport tangible personal property or residents
of the nursing home or boarding care home.

EFFECTIVE DATE.

This section is effective for sales and purchases made after
June 30, 2012.

Sec. 9.

Minnesota Statutes 2010, section 297A.815, subdivision 3, is amended to read:


Subd. 3.

Motor vehicle lease sales tax revenue.

(a) For purposes of this
subdivision, "net revenue" means an amount equal to:

(1) the revenues, including interest and penalties, collected under this section and
on the leases under section 297A.61, subdivision 4, paragraph (k), clause (3)
, during
the fiscal year; less

(2) in fiscal year 2011, $30,100,000; in fiscal year 2012, $31,100,000; and in fiscal
year 2013 and following fiscal years, $32,000,000.

(b) On or before June 30 of each fiscal year, the commissioner of revenue shall
estimate the amount of the revenues and subtraction under paragraph (a) for the current
fiscal year.

(c) On or after July 1 of the subsequent fiscal year, the commissioner of management
and budget shall transfer the net revenue as estimated in paragraph (b) from the general
fund, as follows:

(1) 50 percent to the greater Minnesota transit account; and

(2) 50 percent to the county state-aid highway fund. Notwithstanding any other law
to the contrary, the commissioner of transportation shall allocate the funds transferred
under this clause to the counties in the metropolitan area, as defined in section 473.121,
subdivision 4, excluding the counties of Hennepin and Ramsey, so that each county shall
receive of such amount the percentage that its population, as defined in section 477A.011,
subdivision 3, estimated or established by July 15 of the year prior to the current calendar
year, bears to the total population of the counties receiving funds under this clause.

(d) For fiscal years 2010 and 2011, the amount under paragraph (a), clause (1), must
be calculated using the following percentages of the total revenues:

(1) for fiscal year 2010, 83.75 percent; and

(2) for fiscal year 2011, 93.75 percent.

EFFECTIVE DATE.

This section is effective for leases entered into after June
30, 2012.

Sec. 10.

Minnesota Statutes 2010, section 297A.8155, is amended to read:


297A.8155 LIQUOR REPORTING REQUIREMENTS; PENALTY.

A person who sells liquor, as defined in section 295.75, subdivision 1, in Minnesota
to a retailer that sells liquor, shall file with the commissioner an annual informational
report, in the form and manner prescribed by the commissioner, indicating the name,
address, and Minnesota business identification number of each retailer, and the total
dollar amount of liquor sold to each retailer in the previous calendar year. The report
must be filed on or before March 31 following the close of the calendar year. A person
failing to file this report is subject to the penalty imposed under section 289A.60. A
person required to file a report under this section is not required to provide a copy of an
exemption certificate, as defined in section 297A.72, provided to the person by a retailer,
along with the annual informational report.

EFFECTIVE DATE.

This section is effective for reports required to be filed
beginning in calendar year 2012 and thereafter.

Sec. 11.

Laws 1998, chapter 389, article 8, section 43, subdivision 3, as amended by
Laws 2005, First Special Session chapter 3, article 5, section 28, and Laws 2011, First
Special Session chapter 7, article 4, section 5, is amended to read:


Subd. 3.

Use of revenues.

(a) Revenues received from the taxes authorized by
subdivisions 1 and 2 must be used by the city to pay for the cost of collecting and
administering the taxes and to pay for the following projects:

(1) transportation infrastructure improvements including regional highway and
airport improvements;

(2) improvements to the civic center complex;

(3) a municipal water, sewer, and storm sewer project necessary to improve regional
ground water quality; and

(4) construction of a regional recreation and sports center and other higher education
facilities available for both community and student use.

(b) The total amount of capital expenditures or bonds for projects listed in paragraph
(a) that may be paid from the revenues raised from the taxes authorized in this section
may not exceed $111,500,000. The total amount of capital expenditures or bonds for the
project in clause (4) that may be paid from the revenues raised from the taxes authorized
in this section may not exceed $28,000,000.

(c) In addition to the projects authorized in paragraph (a) and not subject to the
amount stated in paragraph (b), the city of Rochester may, if approved by the voters at an
election under subdivision 5, paragraph (c), use the revenues received from the taxes and
bonds authorized in this section to pay the costs of or bonds for the following purposes:

(1) $17,000,000 for capital expenditures and bonds for the following Olmsted
County transportation infrastructure improvements:

(i) County State Aid Highway 34 reconstruction;

(ii) Trunk Highway 63 and County State Aid Highway 16 interchange;

(iii) phase II of the Trunk Highway 52 and County State Aid Highway 22
interchange;

(iv) widening of County State Aid Highway 22 West Circle Drive; and

(v) 60th Avenue Northwest corridor preservation;

(2) $30,000,000 for city transportation projects including:

(i) Trunk Highway 52 and 65th Street interchange;

(ii) NW transportation corridor acquisition;

(iii) Phase I of the Trunk Highway 52 and County State Aid Highway 22 interchange;

(iv) Trunk Highway 14 and Trunk Highway 63 intersection;

(v) Southeast transportation corridor acquisition;

(vi) Rochester International Airport expansion; and

(vii) a transit operations center bus facility;

(3) $14,000,000 for the University of Minnesota Rochester academic and
complementary facilities;

(4) $6,500,000 for the Rochester Community and Technical College/Winona State
University career technical education and science and math facilities;

(5) $6,000,000 for the Rochester Community and Technical College regional
recreation facilities at University Center Rochester;

(6) $20,000,000 for the Destination Medical Community Initiative;

(7) $8,000,000 for the regional public safety and 911 dispatch center facilities;

(8) $20,000,000 for a regional recreation/senior center;

(9) $10,000,000 for an economic development fund; and

(10) $8,000,000 for downtown infrastructure.

(d) No revenues from the taxes raised from the taxes authorized in subdivisions 1
and 2 may be used to fund transportation improvements related to a railroad bypass that
would divert traffic from the city of Rochester.

(e) The city shall use $5,000,000 of the money allocated to the purpose in paragraph
(c), clause (9), for grants to the cities of Byron, Chatfield, Dodge Center, Dover, Elgin,
Eyota, Kasson, Mantorville, Oronoco, Pine Island, Plainview, St. Charles, Stewartville,
Zumbrota, Spring Valley, West Concord, and Hayfield, and any other city with a 2010
population of at least 1,000 that has a city boundary within 25 miles of the geographic
center of Rochester and is closer to Rochester than to any other city located wholly
outside of the seven-county metropolitan area with a population of 20,000 or more,

for economic development projects that these communities would fund through their
economic development authority or housing and redevelopment authority.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 12.

Laws 2002, chapter 377, article 3, section 25, as amended by Laws 2009,
chapter 88, article 4, section 19, and Laws 2010, chapter 389, article 5, section 3, is
amended to read:


Sec. 25. ROCHESTER LODGING TAX.

Subdivision 1.

Authorization.

Notwithstanding Minnesota Statutes, section
469.190 or 477A.016, or any other law, the city of Rochester may impose an additional
tax of one percent on the gross receipts from the furnishing for consideration of lodging at
a hotel, motel, rooming house, tourist court, or resort, other than the renting or leasing of it
for a continuous period of 30 days or more.

Subd. 1a.

Authorization.

Notwithstanding Minnesota Statutes, section 469.190
or 477A.016, or any other law, and in addition to the tax authorized by subdivision 1,
the city of Rochester may impose an additional tax of one three percent on the gross
receipts from the furnishing for consideration of lodging at a hotel, motel, rooming house,
tourist court, or resort, other than the renting or leasing of it for a continuous period of
30 days or more only upon the approval of the city governing body of a total financial
package for the project.

Subd. 2.

Disposition of proceeds.

(a) The gross proceeds from the tax imposed
under subdivision 1 must be used by the city to fund a local convention or tourism bureau
for the purpose of marketing and promoting the city as a tourist or convention center.

(b) The gross proceeds from the one three percent tax imposed under subdivision
1a shall be used to pay for (1) construction, renovation, improvement, and expansion of
the Mayo Civic Center and related skyway access, lighting, parking, or landscaping; and
(2) for payment of any principal, interest, or premium on bonds issued to finance the
construction, renovation, improvement, and expansion of the Mayo Civic Center Complex.

Subd. 2a.

Bonds.

The city of Rochester may issue, without an election, general
obligation bonds of the city, in one or more series, in the aggregate principal amount
not to exceed $43,500,000, to pay for capital and administrative costs for the design,
construction, renovation, improvement, and expansion of the Mayo Civic Center Complex,
and related skyway, access, lighting, parking, and landscaping. The city may pledge
the lodging tax authorized by subdivision 1a and the food and beverage tax authorized
under Laws 2009, chapter 88, article 4, section 23,
to the payment of the bonds. The debt
represented by the bonds is not included in computing any debt limitations applicable to
the city, and the levy of taxes required by Minnesota Statutes, section 475.61, to pay the
principal of and interest on the bonds is not subject to any levy limitation or included in
computing or applying any levy limitation applicable to the city.

Subd. 3.

Expiration of taxing authority.

The authority of the city to impose a
tax under subdivision 1a shall expire when the principal and interest on any bonds or
other obligations issued prior to December 31, 2014 2016, to finance the construction,
renovation, improvement, and expansion of the Mayo Civic Center Complex and related
skyway access, lighting, parking, or landscaping have been paid, including any bonds
issued to refund such bonds, or at an earlier time as the city shall, by ordinance, determine.
Any funds remaining after completion of the project and retirement or redemption of the
bonds shall be placed in the general fund of the city.

EFFECTIVE DATE.

This section is effective the day after the governing body of
the city of Rochester and its chief clerical officer comply with Minnesota Statutes, section
645.021, subdivisions 2 and 3.

Sec. 13.

Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
2, is amended to read:


Subd. 2.

Use of revenues.

(a) Revenues received from the tax authorized by
subdivision 1 by the city of St. Cloud must be used for the cost of collecting and
administering the tax and to pay all or part of the capital or administrative costs of the
development, acquisition, construction, improvement, and securing and paying debt
service on bonds or other obligations issued to finance the following regional projects as
approved by the voters and specifically detailed in the referendum authorizing the tax or
extending the tax
:

(1) St. Cloud Regional Airport;

(2) regional transportation improvements;

(3) regional community and aquatics centers and facilities;

(4) regional public libraries; and

(5) acquisition and improvement of regional park land and open space.

(b) Revenues received from the tax authorized by subdivision 1 by the cities of St.
Joseph, Waite Park, Sartell, Sauk Rapids, and St. Augusta must be used for the cost of
collecting and administering the tax and to pay all or part of the capital or administrative
costs of the development, acquisition, construction, improvement, and securing and paying
debt service on bonds or other obligations issued to fund the projects specifically approved
by the voters at the referendum authorizing the tax or extending the tax. The portion of
revenues from the city going to fund the regional airport or regional library located in the
city of St. Cloud will be as required under the applicable joint powers agreement.

(c) The use of revenues received from the taxes authorized in subdivision 1 for
projects allowed under paragraphs (a) and (b) are limited to the amount authorized for
each project under the enabling referendum.

EFFECTIVE DATE.

This section is effective for the city that approves them the
day after compliance by the governing body of each city with Minnesota Statutes, section
645.021, subdivision 3.

Sec. 14.

Laws 2005, First Special Session chapter 3, article 5, section 37, subdivision
4, is amended to read:


Subd. 4.

Termination of tax.

The tax imposed in the cities of St. Joseph, St. Cloud,
St. Augusta, Sartell, Sauk Rapids, and Waite Park under subdivision 1 expires when the
city council determines that sufficient funds have been collected from the tax to retire or
redeem the bonds and obligations authorized under subdivision 2, paragraph (a), but no
later than December 31, 2018. Notwithstanding Minnesota Statutes, section 297A.99,
subdivision 3, paragraphs (a), (c), and (d), a city may extend the tax imposed under
subdivision 1 through December 31, 2038, if approved under the referendum authorizing
the tax under subdivision 1 or if approved by voters of the city at a general election held
no later than November 6, 2017.

EFFECTIVE DATE.

This section is effective for the city that approves them the
day after compliance by the governing body of each city with Minnesota Statutes, section
645.021, subdivision 3.

Sec. 15.

Laws 2008, chapter 366, article 7, section 19, subdivision 3, as amended by
Laws 2011, First Special Session chapter 7, article 4, section 8, is amended to read:


Subd. 3.

Use of revenues.

Notwithstanding Minnesota Statutes, section 297A.99,
subdivision 3
, paragraph (b), the proceeds of the tax imposed under this section shall be
used to pay for the costs of improvements to the Sportsman Park/Ballfields, Riverside
Park, Lions Park/Pavilion, Cedar South Park also known as Eldorado Park, and Spring
Street Park; improvements to and extension of the River County bike trail;
acquisition,
and
construction, improvement, and development of regional parks, bicycle trails, park
land, open space, and
of a pedestrian walkways, as described in the city improvement plan
adopted by the city council by resolution on December 12, 2006, and
walkway over
Interstate 94 and State Highway 24; and the acquisition of
land and construction of
buildings for a community and recreation center. The total amount of revenues from the
taxes in subdivisions 1 and 2 that may be used to fund these projects is $12,000,000
plus any associated bond costs.

EFFECTIVE DATE.

This section is effective the day after compliance by the
governing body of the city of Clearwater with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.

Sec. 16. LIQUOR REPORTING REQUIREMENTS.

A person who was required to submit an annual informational report under
Minnesota Statutes, section 297A.8155, to the commissioner of revenue during calendar
year 2010 or 2011 is not required to provide a copy of an exemption certificate or a
retailer's tax identification number along with the informational report.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to reports required to be filed in calendar year 2010 or 2011.

Sec. 17. REPEALER.

(a) Minnesota Statutes 2011 Supplement, section 289A.60, subdivision 31, is
repealed.
(b) Laws 2009, chapter 88, article 4, section 23, as amended by Laws 2010, chapter
389, article 5, section 4,
is repealed.

EFFECTIVE DATE.

Paragraph (a) is effective for taxes due and payable after June
30, 2012. Paragraph (b) is effective the day following final enactment.

ARTICLE 10

LOCAL DEVELOPMENT

Section 1.

Minnesota Statutes 2010, section 469.174, subdivision 2, is amended to read:


Subd. 2.

Authority.

"Authority" means a rural development financing authority
created pursuant to sections 469.142 to 469.151; a housing and redevelopment authority
created pursuant to sections 469.001 to 469.047; a port authority created pursuant to
sections 469.048 to 469.068; an economic development authority created pursuant to
sections 469.090 to 469.108; a redevelopment agency as defined in sections 469.152 to
469.165; a municipality that is administering a development district created pursuant to
sections 469.124 to 469.134 or any special law; a municipality that undertakes a project
pursuant to sections 469.152 to 469.165, except a town located outside the metropolitan
area or with a population of 5,000 persons or less; a municipality that undertakes a project
located in an area designated under subdivision 30;
or a municipality that exercises the
powers of a port authority pursuant to any general or special law.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2010, section 469.174, subdivision 10, is amended to read:


Subd. 10.

Redevelopment district.

(a) "Redevelopment district" means a type of
tax increment financing district consisting of a project, or portions of a project, within
which the authority finds by resolution that one or more of the following conditions,
reasonably distributed throughout the district, exists:

(1) parcels consisting of 70 percent of the area of the district are occupied by
buildings, streets, utilities, paved or gravel parking lots, or other similar structures and
more than 50 percent or more of the buildings, not including outbuildings, are structurally
substandard to a degree requiring substantial renovation or clearance;

(2) the property consists of vacant, unused, underused, inappropriately used, or
infrequently used rail yards, rail storage facilities, or excessive or vacated railroad
rights-of-way;

(3) tank facilities, or property whose immediately previous use was for tank
facilities, as defined in section 115C.02, subdivision 15, if the tank facilities:

(i) have or had a capacity of more than 1,000,000 gallons;

(ii) are located adjacent to rail facilities; and

(iii) have been removed or are unused, underused, inappropriately used, or
infrequently used; or

(4) a qualifying disaster area, as defined in subdivision 10b.

(b) For purposes of this subdivision, "structurally substandard" shall mean
containing defects in structural elements or a combination of deficiencies in essential
utilities and facilities, light and ventilation, fire protection including adequate egress,
layout and condition of interior partitions, or similar factors, which defects or deficiencies
are of sufficient total significance to justify substantial renovation or clearance.

(c) A building is not structurally substandard if it is in compliance with the building
code applicable to new buildings or could be modified to satisfy the building code at
a cost of less than 15 percent of the cost of constructing a new structure of the same
square footage and type on the site. The municipality may find that a building is not
disqualified as structurally substandard under the preceding sentence on the basis of
reasonably available evidence, such as the size, type, and age of the building, the average
cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The
municipality may not make such a determination without an interior inspection of the
property, but need not have an independent, expert appraisal prepared of the cost of repair
and rehabilitation of the building. An interior inspection of the property is not required,
if the municipality finds that (1) the municipality or authority is unable to gain access to
the property after using its best efforts to obtain permission from the party that owns or
controls the property; and (2) the evidence otherwise supports a reasonable conclusion that
the building is structurally substandard. Items of evidence that support such a conclusion
include recent fire or police inspections, on-site property tax appraisals or housing
inspections, exterior evidence of deterioration, or other similar reliable evidence. Written
documentation of the findings and reasons why an interior inspection was not conducted
must be made and retained under section 469.175, subdivision 3, clause (1). Failure of a
building to be disqualified under the provisions of this paragraph is a necessary, but not a
sufficient, condition to determining that the building is substandard.

(d) A parcel is deemed to be occupied by a structurally substandard building
for purposes of the finding under paragraph (a) or by the improvements described in
paragraph (e) if all of the following conditions are met:

(1) the parcel was occupied by a substandard building or met the requirements
of paragraph (e), as the case may be, within three years of the filing of the request for
certification of the parcel as part of the district with the county auditor;

(2) the substandard building or the improvements described in paragraph (e) were
demolished or removed by the authority or the demolition or removal was financed by the
authority or was done by a developer under a development agreement with the authority;

(3) the authority found by resolution before the demolition or removal that the
parcel was occupied by a structurally substandard building or met the requirements of
paragraph (e) and that after demolition and clearance the authority intended to include
the parcel within a district; and

(4) upon filing the request for certification of the tax capacity of the parcel as part
of a district, the authority notifies the county auditor that the original tax capacity of the
parcel must be adjusted as provided by section 469.177, subdivision 1, paragraph (f).

(e) For purposes of this subdivision, a parcel is not occupied by buildings, streets,
utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the
area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or
other similar structures.

(f) For districts consisting of two or more noncontiguous areas, each area must
qualify as a redevelopment district under paragraph (a) to be included in the district, and
the entire area of the district must satisfy paragraph (a).

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2010, section 469.174, is amended by adding a subdivision
to read:


Subd. 19a.

Soil deficiency district.

"Soil deficiency district" means a type of tax
increment financing district consisting of a project, or portions of a project, within which
the authority finds by resolution that the following conditions exist:

(1) parcels consisting of 70 percent of the area of the district contain unusual terrain
or soil deficiencies which require substantial filling, grading, or other physical preparation
for use and a parcel is eligible for inclusion if at least 50 percent of the area of the parcel
requires substantial filling, grading, or other physical preparation for use; and

(2) the estimated cost of the physical preparation under clause (1), but excluding
costs directly related to roads as defined in section 160.01, and local improvements as
described in sections 429.021, subdivision 1, clauses (1) to (7), (11), and (12), and 430.01,
exceeds the fair market value of the land before completion of the preparation.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after April 30, 2012.

Sec. 4.

Minnesota Statutes 2010, section 469.174, is amended by adding a subdivision
to read:


Subd. 30.

Mining reclamation project area.

(a) An authority may designate an
area within its jurisdiction as a mining reclamation project area by finding by resolution,
that parcels consisting of at least 70 percent of the acreage, excluding street and railroad
rights-of-way, are characterized by one or more of the following conditions:

(1) peat or other soils with geotechnical deficiencies that impair development of
buildings or infrastructure;

(2) soils or terrain that requires substantial filling in order to permit the development
of buildings or infrastructure;

(3) landfills, dumps, or similar deposits of municipal or private waste;

(4) quarries or similar resource extraction sites;

(5) floodway; and

(6) substandard buildings, within the meaning of section 469.174, subdivision 10.

(b) For the purposes of paragraph (a), clauses (1) to (5), a parcel is characterized by
the relevant condition if at least 50 percent of the area of the parcel contains the relevant
condition. For the purposes of paragraph (a), clause (6), a parcel is characterized by
substandard buildings if substandard buildings occupy at least 30 percent of the area
of the parcel.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after April 30, 2012.

Sec. 5.

Minnesota Statutes 2010, section 469.175, subdivision 3, is amended to read:


Subd. 3.

Municipality approval.

(a) A county auditor shall not certify the original
net tax capacity of a tax increment financing district until the tax increment financing plan
proposed for that district has been approved by the municipality in which the district
is located. If an authority that proposes to establish a tax increment financing district
and the municipality are not the same, the authority shall apply to the municipality in
which the district is proposed to be located and shall obtain the approval of its tax
increment financing plan by the municipality before the authority may use tax increment
financing. The municipality shall approve the tax increment financing plan only after a
public hearing thereon after published notice in a newspaper of general circulation in the
municipality at least once not less than ten days nor more than 30 days prior to the date
of the hearing. The published notice must include a map of the area of the district from
which increments may be collected and, if the project area includes additional area, a map
of the project area in which the increments may be expended. The hearing may be held
before or after the approval or creation of the project or it may be held in conjunction with
a hearing to approve the project.

(b) Before or at the time of approval of the tax increment financing plan, the
municipality shall make the following findings, and shall set forth in writing the reasons
and supporting facts for each determination:

(1) that the proposed tax increment financing district is a redevelopment district, a
renewal or renovation district, a housing district, a soils condition district, soil deficiency
district,
or an economic development district; if the proposed district is a redevelopment
district or a renewal or renovation district, the reasons and supporting facts for the
determination that the district meets the criteria of section 469.174, subdivision 10,
paragraph (a), clauses (1) and (2), or subdivision 10a, must be documented in writing
and retained and made available to the public by the authority until the district has been
terminated;

(2) that, in the opinion of the municipality:

(i) the proposed development or redevelopment would not reasonably be expected to
occur solely through private investment within the reasonably foreseeable future; and

(ii) the increased market value of the site that could reasonably be expected to occur
without the use of tax increment financing would be less than the increase in the market
value estimated to result from the proposed development after subtracting the present
value of the projected tax increments for the maximum duration of the district permitted
by the plan. The requirements of this item do not apply if the district is a housing district;

(3) that the tax increment financing plan conforms to the general plan for the
development or redevelopment of the municipality as a whole;

(4) that the tax increment financing plan will afford maximum opportunity,
consistent with the sound needs of the municipality as a whole, for the development or
redevelopment of the project by private enterprise;

(5) that the municipality elects the method of tax increment computation set forth in
section 469.177, subdivision 3, paragraph (b), if applicable; and

(6) that for a redevelopment district, renewal and renovation district, soils condition
district, or soil deficiency district established by the authority in a mining reclamation
project area, the reasons and supporting facts for the determination that the mining
reclamation project area meets the requirements under section 469.174, subdivision 30,
must be documented in writing and retained and made available to the public by the
authority until two years after the district is decertified. These findings must have been
made and documented no more than ten years before approval of the tax increment
financing plan for the district
.

(c) When the municipality and the authority are not the same, the municipality shall
approve or disapprove the tax increment financing plan within 60 days of submission by
the authority. When the municipality and the authority are not the same, the municipality
may not amend or modify a tax increment financing plan except as proposed by the
authority pursuant to subdivision 4. Once approved, the determination of the authority
to undertake the project through the use of tax increment financing and the resolution of
the governing body shall be conclusive of the findings therein and of the public need for
the financing.

(d) For a district that is subject to the requirements of paragraph (b), clause (2),
item (ii), the municipality's statement of reasons and supporting facts must include all of
the following:

(1) an estimate of the amount by which the market value of the site will increase
without the use of tax increment financing;

(2) an estimate of the increase in the market value that will result from the
development or redevelopment to be assisted with tax increment financing; and

(3) the present value of the projected tax increments for the maximum duration of
the district permitted by the tax increment financing plan.

(e) For purposes of this subdivision, "site" means the parcels on which the
development or redevelopment to be assisted with tax increment financing will be located.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after April 30, 2012.

Sec. 6.

Minnesota Statutes 2010, section 469.176, subdivision 1b, is amended to read:


Subd. 1b.

Duration limits; terms.

(a) No tax increment shall in any event be
paid to the authority:

(1) after 15 years after receipt by the authority of the first increment for a renewal
and renovation district;

(2) after 20 years after receipt by the authority of the first increment for a soils
condition district or a soil deficiency district;

(3) after eight years after receipt by the authority of the first increment for an
economic development district;

(4) for a housing district, a compact development district, or a redevelopment
district, after 25 years from the date of receipt by the authority of the first increment.

(b) For purposes of determining a duration limit under this subdivision or subdivision
1e that is based on the receipt of an increment, any increments from taxes payable in
the year in which the district terminates shall be paid to the authority. This paragraph
does not affect a duration limit calculated from the date of approval of the tax increment
financing plan or based on the recovery of costs or to a duration limit under subdivision
1c. This paragraph does not supersede the restrictions on payment of delinquent taxes in
subdivision 1f.

(c) An action by the authority to waive or decline to accept an increment has no
effect for purposes of computing a duration limit based on the receipt of increment under
this subdivision or any other provision of law. The authority is deemed to have received an
increment for any year in which it waived or declined to accept an increment, regardless
of whether the increment was paid to the authority.

(d) Receipt by a hazardous substance subdistrict of an increment as a result of a
reduction in original net tax capacity under section 469.174, subdivision 7, paragraph
(b), does not constitute receipt of increment by the overlying district for the purpose of
calculating the duration limit under this section.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after April 30, 2012.

Sec. 7.

Minnesota Statutes 2010, section 469.176, subdivision 4b, is amended to read:


Subd. 4b.

Soils condition districts.

Revenue derived from Tax increment from a
soils condition district may be used only to (1) acquire parcels on which the improvements
described in clause (2) will occur; (2) pay for the cost of removal or remedial action; and
(3) pay for the administrative expenses of the authority allocable to the district, including
the cost of preparation of the development action response plan. For a soils condition
district located in a mining reclamation project area, tax increments may also be expended
on the additional cost of public improvements directly caused by the removal or remedial
action and located within the mining reclamation project area.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after April 30, 2012.

Sec. 8.

Minnesota Statutes 2011 Supplement, section 469.176, subdivision 4c, is
amended to read:


Subd. 4c.

Economic development districts.

(a) Revenue derived from tax
increment from an economic development district may not be used to provide
improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form
to developments consisting of buildings and ancillary facilities, if more than 15 percent
of the buildings and facilities (determined on the basis of square footage) are used for a
purpose other than:

(1) the manufacturing or production of tangible personal property, including
processing resulting in the change in condition of the property;

(2) warehousing, storage, and distribution of tangible personal property, excluding
retail sales;

(3) research and development related to the activities listed in clause (1) or (2);

(4) telemarketing if that activity is the exclusive use of the property;

(5) tourism facilities;

(6) qualified border retail facilities; or

(7) space necessary for and related to the activities listed in clauses (1) to (6).

(b) Notwithstanding the provisions of this subdivision, revenues derived from tax
increment from an economic development district may be used to provide improvements,
loans, subsidies, grants, interest rate subsidies, or assistance in any form for up to 15,000
square feet of any separately owned commercial facility located within the municipal
jurisdiction of a small city, if the revenues derived from increments are spent only to
assist the facility directly or for administrative expenses, the assistance is necessary to
develop the facility, and all of the increments, except those for administrative expenses,
are spent only for activities within the district.

(c) A city is a small city for purposes of this subdivision if the city was a small city
in the year in which the request for certification was made and applies for the rest of
the duration of the district, regardless of whether the city qualifies or ceases to qualify
as a small city.

(d) Notwithstanding the requirements of paragraph (a) and the finding requirements
of section 469.174, subdivision 12, tax increments from an economic development district
may be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or
assistance in any form to developments consisting of buildings and ancillary facilities, if
all the following conditions are met:

(1) the municipality finds that the project will create or retain jobs in this state,
including construction jobs, and that construction of the project would not have
commenced before July 1, 2012 January 1, 2014, without the authority providing
assistance under the provisions of this paragraph;

(2) construction of the project begins no later than July 1, 2012 January 1, 2014;

(3) the request for certification of the district is made no later than June 30, 2012
December 31, 2013
; and

(4) for development of housing under this paragraph, the construction must begin
before January 1, 2012.

The provisions of this paragraph may not be used to assist housing that is developed
to qualify under section 469.1761, subdivision 2 or 3, or similar requirements of other law,
if construction of the project begins later than July 1, 2011.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

Minnesota Statutes 2011 Supplement, section 469.176, subdivision 4m, is
amended to read:


Subd. 4m.

Temporary authority to stimulate construction.

(a) Notwithstanding
the restrictions in any other subdivision of this section or any other law to the contrary,
except the requirement to pay bonds to which the increments are pledged and the
provisions of subdivisions 4g and 4h, the authority may spend tax increments for one or
more of the following purposes:

(1) to provide improvements, loans, interest rate subsidies, or assistance in any
form to private development consisting of the construction or substantial rehabilitation of
buildings and ancillary facilities, if doing so will create or retain jobs in this state, including
construction jobs, and that the construction commences before July 1, 2012 January 1,
2014
, and would not have commenced before that date without the assistance; or

(2) to make an equity or similar investment in a corporation, partnership, or limited
liability company that the authority determines is necessary to make construction of a
development that meets the requirements of clause (1) financially feasible.

(b) The authority may undertake actions under the authority of this subdivision only
after approval by the municipality of a written spending plan that specifically authorizes
the authority to take the actions
. The spending plan must contain a detailed description
of each action to be undertaken.
The municipality shall approve the spending plan only
after a public hearing after published notice in a newspaper of general circulation in
the municipality at least once, not less than ten days nor more than 30 days prior to the
date of the hearing.

(c) The authority to spend tax increments under this subdivision expires December
31, 2012
June 30, 2014.

(d) For a development consisting of housing, the authority to spend tax increments
under this subdivision expires December 31, 2011, and construction must commence
before July 1, 2011, except the authority to spend tax increments on market rate housing
developments under this subdivision expires July 31, 2012, and construction must
commence before January 1, 2012.

EFFECTIVE DATE.

This section is effective the day following final enactment
and applies to all tax increment financing districts, regardless of when the request for
certification was made. The amendments to paragraph (b) apply to projects approved
after June 30, 2012.

Sec. 10.

Minnesota Statutes 2010, section 469.176, is amended by adding a subdivision
to read:


Subd. 4n.

Soil deficiency district.

Tax increments from a soil deficiency district
may only be used to pay for the following costs for activities located within the mining
reclamation project area:

(1) acquisition of parcels on which the improvements described in clause (2) will
occur;

(2) the cost of correcting the unusual terrain or soil deficiencies and the additional
cost of installing public improvements directly caused by the deficiencies;

(3) administrative expenses of the authority allocable to the district; and

(4) costs described in subdivision 4j for the district, if these payments do not exceed
25 percent of the tax increment from the district.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after April 30, 2012.

Sec. 11.

Minnesota Statutes 2011 Supplement, section 469.1763, subdivision 2,
is amended to read:


Subd. 2.

Expenditures outside district.

(a) For each tax increment financing
district, an amount equal to at least 75 percent of the total revenue derived from tax
increments paid by properties in the district must be expended on activities in the district
or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities
in the district or to pay, or secure payment of, debt service on credit enhanced bonds.
For districts, other than redevelopment districts for which the request for certification
was made after June 30, 1995, the in-district percentage for purposes of the preceding
sentence is 80 percent. Not more than 25 percent of the total revenue derived from tax
increments paid by properties in the district may be expended, through a development fund
or otherwise, on activities outside of the district but within the defined geographic area of
the project except to pay, or secure payment of, debt service on credit enhanced bonds.
For districts, other than redevelopment districts for which the request for certification was
made after June 30, 1995, the pooling percentage for purposes of the preceding sentence is
20 percent. The revenue derived from tax increments for the district that are expended on
costs under section 469.176, subdivision 4h, paragraph (b), may be deducted first before
calculating the percentages that must be expended within and without the district.

(b) In the case of a housing district, a housing project, as defined in section 469.174,
subdivision 11
, is an activity in the district.

(c) All administrative expenses are for activities outside of the district, except that
if the only expenses for activities outside of the district under this subdivision are for
the purposes described in paragraph (d), administrative expenses will be considered as
expenditures for activities in the district.

(d) The authority may elect, in the tax increment financing plan for the district,
to increase by up to ten percentage points the permitted amount of expenditures for
activities located outside the geographic area of the district under paragraph (a). As
permitted by section 469.176, subdivision 4k, the expenditures, including the permitted
expenditures under paragraph (a), need not be made within the geographic area of the
project. Expenditures that meet the requirements of this paragraph are legally permitted
expenditures of the district, notwithstanding section 469.176, subdivisions 4b, 4c, 4d, and
4j
. To qualify for the increase under this paragraph, the expenditures must:

(1) be used exclusively to assist housing that

(i) meets the requirement for a qualified low-income building, as that term is used in
section 42 of the Internal Revenue Code; and

(2) (ii) does not exceed the qualified basis of the housing, as defined under section
42(c) of the Internal Revenue Code, less the amount of any credit allowed under section
42 of the Internal Revenue Code; and

(3) be (iii) is used to:

(i) (A) acquire and prepare the site of the housing;

(ii) (B) acquire, construct, or rehabilitate the housing; or

(iii) (C) make public improvements directly related to the housing; or

(4) (2) be used to develop housing:

(i) if the market value of the housing prior to demolition or rehabilitation does
not exceed the lesser of:

(A) 150 percent of the average market value of single-family homes in that
municipality; or

(B) $200,000 for municipalities located in the metropolitan area, as defined in
section 473.121, or $125,000 for all other municipalities; and

(ii) if the expenditures are used to pay the cost of site acquisition, relocation,
demolition of existing structures, site preparation, rehabilitation, and pollution abatement
on one or more parcels, if provided that the parcel contains a residence containing is
occupied by
one to four family dwelling units that has been vacant for six or more months
and is in foreclosure as defined in section 325N.10, subdivision 7, but without regard to
whether the residence is the owner's principal residence, and only after the redemption
period stated in the notice provided under section 580.06 has expired
with respect to which
a mortgage was foreclosed under chapter 580, 581, or 582; any applicable redemption
period has expired without redemption
; and the authority or developer enters into a
purchase agreement to acquire the parcel no earlier than 30 days after expiration of the
redemption period
.

(e) For a district created within a biotechnology and health sciences industry zone
as defined in section 469.330, subdivision 6, or for an existing district located within
such a zone, tax increment derived from such a district may be expended outside of the
district but within the zone only for expenditures required for the construction of public
infrastructure necessary to support the activities of the zone, land acquisition, and other
redevelopment costs as defined in section 469.176, subdivision 4j. These expenditures are
considered as expenditures for activities within the district.

(f) The authority under paragraph (d), clause (4) (2), expires on December 31, 2016.
Increments may continue to be expended under this authority after that date, if they are
used to pay bonds or binding contracts that would qualify under subdivision 3, paragraph
(a), if December 31, 2016, is considered to be the last date of the five-year period after
certification under that provision.

(g) The authority may elect, in the tax increment financing plan, for a district located
in a mining reclamation area that "activities within the district" under paragraph (a)
includes activities within the geographic area of the mining reclamation area.

EFFECTIVE DATE.

This section is effective for any district that is subject to
the provisions of Minnesota Statutes, section 469.1763, regardless of when the request
for certification was made, except the amendment adding paragraph (g) is effective for
districts for which the request for certification was made after April 30, 2012.

Sec. 12.

Minnesota Statutes 2010, section 469.1763, subdivision 3, is amended to read:


Subd. 3.

Five-year rule.

(a) Revenues derived from tax increments are considered
to have been expended on an activity within the district under subdivision 2 only if one
of the following occurs:

(1) before or within five years after certification of the district, the revenues are
actually paid to a third party with respect to the activity;

(2) bonds, the proceeds of which must be used to finance the activity, are issued and
sold to a third party before or within five years after certification, the revenues are spent
to repay the bonds, and the proceeds of the bonds either are, on the date of issuance,
reasonably expected to be spent before the end of the later of (i) the five-year period, or
(ii) a reasonable temporary period within the meaning of the use of that term under section
148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve
or replacement fund;

(3) binding contracts with a third party are entered into for performance of the
activity before or within five years after certification of the district and the revenues are
spent under the contractual obligation;

(4) costs with respect to the activity are paid before or within five years after
certification of the district and the revenues are spent to reimburse a party for payment
of the costs, including interest on unreimbursed costs; or

(5) expenditures are made for housing purposes as permitted by subdivision 2,
paragraphs (b) and (d), or for public infrastructure purposes within a zone as permitted
by subdivision 2, paragraph (e).

(b) For purposes of this subdivision, bonds include subsequent refunding bonds if
the original refunded bonds meet the requirements of paragraph (a), clause (2).

(c) For a redevelopment district or a renewal and renovation district certified after
June 30, 2003, and before April 20, 2009, the five-year periods described in paragraph
(a) are extended to ten years after certification of the district. This extension is provided
primarily to accommodate delays in development activities due to unanticipated economic
circumstances.

(d) If the authority so elects in the tax increment financing plan for a redevelopment
district, renewal and renovation district, soils condition district, or soil deficiency district
located in a mining reclamation project area, the five-year periods described in paragraph
(a) do not apply.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after April 30, 2012.

Sec. 13.

Minnesota Statutes 2010, section 469.1763, subdivision 4, is amended to read:


Subd. 4.

Use of revenues for decertification.

(a) In each year beginning with the
sixth year following certification of the district, if the applicable in-district percent of the
revenues derived from tax increments paid by properties in the district exceeds the amount
of expenditures that have been made for costs permitted under subdivision 3, an amount
equal to the difference between the in-district percent of the revenues derived from tax
increments paid by properties in the district and the amount of expenditures that have
been made for costs permitted under subdivision 3 must be used and only used to pay or
defease the following or be set aside to pay the following:

(1) outstanding bonds, as defined in subdivision 3, paragraphs (a), clause (2), and (b);

(2) contracts, as defined in subdivision 3, paragraph (a), clauses (3) and (4);

(3) credit enhanced bonds to which the revenues derived from tax increments are
pledged, but only to the extent that revenues of the district for which the credit enhanced
bonds were issued are insufficient to pay the bonds and to the extent that the increments
from the applicable pooling percent share for the district are insufficient; or

(4) the amount provided by the tax increment financing plan to be paid under
subdivision 2, paragraphs (b), (d), and (e).

(b) The district must be decertified and the pledge of tax increment discharged
when the outstanding bonds have been defeased and when sufficient money has been set
aside to pay, based on the increment to be collected through the end of the calendar year,
the following amounts:

(1) contractual obligations as defined in subdivision 3, paragraph (a), clauses (3)
and (4);

(2) the amount specified in the tax increment financing plan for activities qualifying
under subdivision 2, paragraph (b), that have not been funded with the proceeds of bonds
qualifying under paragraph (a), clause (1); and

(3) the additional expenditures permitted by the tax increment financing plan for
housing activities under an election under subdivision 2, paragraph (d), that have not been
funded with the proceeds of bonds qualifying under paragraph (a), clause (1).

(c) If the authority so elects in the tax increment financing plan for a redevelopment
district, renewal and renovation district, soils condition district, or soil deficiency district
located in a mining reclamation project area, the provisions of this section do not apply.

EFFECTIVE DATE.

This section is effective for districts for which the request for
certification is made after April 30, 2012.

Sec. 14.

Laws 2008, chapter 366, article 5, section 34, as amended by Laws 2009,
chapter 88, article 5, section 11, is amended to read:


Sec. 34. CITY OF OAKDALE; ORIGINAL TAX CAPACITY.

Subdivision 1.

Original tax capacity election.

(a) The provisions of this section
apply to redevelopment tax increment financing districts created by the Housing and
Redevelopment Authority in and for the city of Oakdale in the areas comprised of
the parcels with the following parcel identification numbers: (1) 3102921320053;
3102921320054; 3102921320055; 3102921320056; 3102921320057; 3102921320058;
3102921320062; 3102921320063; 3102921320059; 3102921320060; 3102921320061;
3102921330005; and 3102921330004; and (2) 2902921330001 and 2902921330005.

(b) For a district subject to this section, the Housing and Redevelopment Authority
may, when requesting certification of the original tax capacity of the district under
Minnesota Statutes, section 469.177, elect to have the original tax capacity of the district
be certified as the tax capacity of the land.

(c) The authority to request certification of a district under this section expires on
July 1, 2013 December 31, 2017.

Subd. 2.

Parcels deemed occupied.

(a) Parcel numbers 3102921320054,
3102921320055, 3102921320056, 3102921320057, 3102921320061, and 3102921330004
are deemed to meet the requirements of Minnesota Statutes, section 469.174, subdivision
10, paragraph (d), notwithstanding any contrary provisions of that paragraph, if the
following conditions are met:

(1) a building located on any part of each of the specified parcels was demolished
after the authority adopted a resolution under Minnesota Statutes, section 469.174,
subdivision 10, paragraph (d), clause (3);

(2) the building was removed either by the authority, by a developer under a
development agreement with the authority, or by the owner of the property without
entering into a development agreement with the authority; and

(3) the request for certification of the parcel as part of a district is filed with the
county auditor by December 31, 2017.

(b) The provisions of subdivision 1 apply to allow an election by the authority
for the parcels deemed occupied under paragraph (a), notwithstanding the provisions
of Minnesota Statutes, sections 469.174, subdivision 10, paragraph (d), and 469.177,
subdivision 1, paragraph (f).

EFFECTIVE DATE.

This section is effective upon compliance by the governing
body of the city of Oakdale with the requirements of Minnesota Statutes, section 645.021,
subdivision 3.

Sec. 15. CITY OF BLOOMINGTON; TAX INCREMENT FINANCING.

Notwithstanding Minnesota Statutes, section 469.176, or Laws 1996, chapter 464,
article 1, section 8, or any other law to the contrary, the city of Bloomington and its port
authority may extend the duration limits of tax increment financing district No. 1-G,
containing the former Met Center property, including Lindau Lane and that portion of tax
increment financing district No. 1-C north of the existing building line on Lot 1, Block 1,
Mall of America 7th Addition, exclusive of Lots 2 and 3, through December 31, 2038.

EFFECTIVE DATE.

This section is effective upon compliance of the governing
bodies of the city of Bloomington, Hennepin County, and Independent School District
No. 271, Bloomington, with the requirements of Minnesota Statutes, sections 469.1782,
subdivision 2, and 645.021, subdivision 3.

Sec. 16. CITY OF BLOOMINGTON; TAX INCREMENT FINANCING
EXTENSION.

Notwithstanding the provisions of Minnesota Statutes, section 469.176, or any other
law to the contrary, the city of Bloomington and its port authority may extend the duration
limits of Tax Increment Financing District No. 1-I, containing the Bloomington Central
Station property for a period through December 31, 2038.

EFFECTIVE DATE.

This section is effective upon compliance of the governing
body of the city of Bloomington with the requirements of Minnesota Statutes, sections
469.1782, subdivision 2, and 645.021, subdivision 3.

Sec. 17. DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY; TAX
INCREMENT FINANCING DISTRICT.

Subdivision 1.

Authorization.

Notwithstanding the provisions of any other law,
the Dakota County Community Development Agency may establish a redevelopment tax
increment financing district comprised of the properties that (1) were included in the
CDA 10 Robert and South Street district in the city of West St. Paul, and (2) were not
decertified before July 1, 2012. The district created under this section terminates no later
than December 31, 2027.

Subd. 2.

Special rules.

The requirements for qualifying a redevelopment district
under Minnesota Statutes, section 469.174, subdivision 10, do not apply to parcels located
within the district. Minnesota Statutes, section 469.176, subdivisions 4g, paragraph (c),
clause (1), item (ii), 4j, and 4l, do not apply to the district. The original tax capacity
of the district is $93,239.

Subd. 3.

Authorized expenditures.

Tax increment from the district may be
expended to pay for any eligible activities authorized by Minnesota Statutes, chapter
469, within the redevelopment area that includes the district. All such expenditures are
deemed to be activities within the district under Minnesota Statutes, section 469.1763,
subdivisions 2, 3, and 4.

Subd. 4.

Adjusted net tax capacity.

The captured tax capacity of the district must
be included in the adjusted net tax capacity of the city, county, and school district for the
purposes of determining local government aid, education aid, and county program aid.
The county auditor shall report to the commissioner of revenue the amount of the captured
tax capacity for the district at the time the assessment abstracts are filed.

EFFECTIVE DATE.

This section is effective upon compliance by the governing
body of the Dakota County Community Development Agency with the requirements of
Minnesota Statutes, section 645.021, subdivision 3.

Sec. 18. CITY OF BROOKLYN PARK; TAX INCREMENT FINANCING;
SPECIAL RULES.

The requirement of Minnesota Statutes, section 469.1763, subdivision 3, that
activities must be undertaken within a five-year period from the date of certification of a tax
increment financing district, is considered to be met for Tax Increment Financing District
No. 23 in the city of Brooklyn Park if the activities were undertaken by July 1, 2014.

EFFECTIVE DATE.

This section is effective upon compliance by the governing
body of the city of Brooklyn Park with the requirements of Minnesota Statutes, section
645.021, subdivision 3.

Sec. 19. ST. CLOUD; TAX INCREMENT FINANCING.

The request for certification of Tax Increment District No. 2, commonly referred to
as the Norwest District, in the city of St. Cloud is deemed to have been made on or after
August 1, 1979, and before July 1, 1982. Revenues derived from tax increment for that
district must be treated for purposes of any law as revenue of a tax increment financing
district for which the request for certification was made during that time period.

EFFECTIVE DATE.

This section is effective upon approval by the governing
body of the city of St. Cloud and compliance with Minnesota Statutes, section 645.021,
subdivision 3.

ARTICLE 11

ESTATE TAXES

Section 1.

Minnesota Statutes 2010, section 289A.10, is amended by adding a
subdivision to read:


Subd. 1a.

Recapture tax return required.

If a disposition or cessation as provided
by section 291.03, subdivision 11, paragraph (a), has occurred, the qualified heir, as
defined under section 291.03, subdivision 8, paragraph (c), or personal representative of
the decedent's estate must submit a recapture tax return to the commissioner.

EFFECTIVE DATE.

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

Sec. 2.

Minnesota Statutes 2010, section 289A.12, is amended by adding a subdivision
to read:


Subd. 18.

Returns by qualified heirs.

Within 24 months and within 36 months
after a decedent's death, a qualified heir, as defined under section 291.03, subdivision 8,
paragraph (c), must file a return with the commissioner relating to the qualified property
received from the decedent.

EFFECTIVE DATE.

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

Sec. 3.

Minnesota Statutes 2010, section 289A.18, is amended by adding a subdivision
to read:


Subd. 3a.

Recapture tax return.

A recapture tax return is due within six months
after the date of the disposition or cessation as provided by section 291.03, subdivision
11, paragraph (a).

EFFECTIVE DATE.

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

Sec. 4.

Minnesota Statutes 2010, section 289A.20, subdivision 3, is amended to read:


Subd. 3.

Estate tax.

Taxes imposed by chapter 291 section 291.03, subdivision 1,
take effect at and upon the death of the person whose estate is subject to taxation and are
due and payable on or before the expiration of nine months from that death.

EFFECTIVE DATE.

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

Sec. 5.

Minnesota Statutes 2010, section 289A.20, is amended by adding a subdivision
to read:


Subd. 3a.

Recapture tax.

Taxes imposed by section 291.03, subdivision 11,
paragraph (b), are due and payable on or before the expiration of six months from the date
of disposition or cessation as provided by section 291.03, subdivision 11, paragraph (a).

EFFECTIVE DATE.

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

Sec. 6.

Minnesota Statutes 2011 Supplement, section 291.03, subdivision 8, is
amended to read:


Subd. 8.

Definitions.

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

(b) "Family member" means a family member as defined in section 2032A(e)(2) of
the Internal Revenue Code or a trust whose present beneficiaries are all family members as
defined in section 2032A(e)(2) of the Internal Revenue Code
.

(c) "Qualified heir" means a family member who acquired qualified property from
upon the death of
the decedent and satisfies the requirement under subdivision 9, clause
(6) (8), or subdivision 10, clause (4) (5), for the property.

(d) "Qualified property" means qualified small business property under subdivision
9 and qualified farm property under subdivision 10.

EFFECTIVE DATE.

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

Sec. 7.

Minnesota Statutes 2011 Supplement, section 291.03, subdivision 9, is
amended to read:


Subd. 9.

Qualified small business property.

Property satisfying all of the following
requirements is qualified small business property:

(1) The value of the property was included in the federal adjusted taxable estate.

(2) The property consists of the assets of a trade or business or shares of stock or
other ownership interests in a corporation or other entity engaged in a trade or business.
The decedent or the decedent's spouse must have materially participated in the trade or
business within the meaning of section 469 of the Internal Revenue Code during the
taxable year that ended before the date of the decedent's death.
Shares of stock in a
corporation or an ownership interest in another type of entity do not qualify under this
subdivision if the shares or ownership interests are traded on a public stock exchange at
any time during the three-year period ending on the decedent's date of death. For purposes
of this subdivision, an ownership interest includes the interest the decedent is deemed to
own under sections 2036, 2037, and 2038 of the Internal Revenue Code.

(3) During the decedent's taxable year that ended before the decedent's death, the
trade or business must not have been a passive activity within the meaning of section
469(c) of the Internal Revenue Code and the decedent or the decedent's spouse must have
materially participated in the trade or business within the meaning of section 469(h) of the
Internal Revenue Code, excluding section 469(h)(3) of the Internal Revenue Code and
any other provision provided by Treasury Department regulation that substitutes material
participation in prior taxable years for material participation in the taxable year that ended
before the decedent's death.

(3) (4) The gross annual sales of the trade or business were $10,000,000 or less for
the last taxable year that ended before the date of the death of the decedent.

(4) (5) The property does not consist of cash or, cash equivalents, publicly traded
securities, or assets not used in the operation of the trade or business
. For property
consisting of shares of stock or other ownership interests in an entity, the amount value of
cash or, cash equivalents, publicly traded securities, or assets not used in the operation of
the trade or business
held by the corporation or other entity must be deducted from the
value of the property qualifying under this subdivision in proportion to the decedent's
share of ownership of the entity on the date of death.

(6) The property does not consist of qualified farm property. For property consisting
of shares of stock or other ownership interests in an entity, the value of the qualified
farm property held by the corporation or other entity must be deducted from the value
of the property qualifying under this subdivision in proportion to the decedent's share of
ownership of the entity on the date of death.

(5) (7) The decedent continuously owned the property, including property the
decedent is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue
Code,
for the three-year period ending on the date of death of the decedent. In the case of
a sole proprietor, if the property replaced similar property within the three-year period,
the replacement property will be treated as having been owned for the three-year period
ending on the date of death of the decedent.

(6) A family member continuously uses the property in the operation of the trade or
business for three years following the date of death of the decedent.

(8) For three years following the date of death of the decedent, the trade or business
is not a passive activity within the meaning of section 469(c) of the Internal Revenue
Code and a family member materially participates in the operation of the trade or business
within the meaning of section 469(h) of the Internal Revenue Code, excluding section
469(h)(3) of the Internal Revenue Code and any other provision provided by Treasury
Department regulation that substitutes material participation in prior taxable years for
material participation in the three years following the date of death of the decedent.

(7) (9) The estate and the qualified heir elect to treat the property as qualified small
business property and agree, in the form prescribed by the commissioner, to pay the
recapture tax under subdivision 11, if applicable.

EFFECTIVE DATE.

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

Sec. 8.

Minnesota Statutes 2011 Supplement, section 291.03, subdivision 10, is
amended to read:


Subd. 10.

Qualified farm property.

Property satisfying all of the following
requirements is qualified farm property:

(1) The value of the property was included in the federal adjusted taxable estate.

(2) The property consists of agricultural land as defined by section 500.24,
subdivision 2, paragraph (g), and owned by
a farm meeting the requirements of person
or entity that is not excluded from owning agricultural land by
section 500.24, and was
classified for property tax purposes as the homestead of the decedent or the decedent's
spouse or both under section 273.124, and as class 2a property under section 273.13,
subdivision 23
.

(3) For property taxes payable in the year of decedent's death, the decedent's interest
in the property was classified as the homestead of the decedent or the decedent's spouse or
both under section 273.124, and as class 2a property under section 273.13, subdivision 23.

(4) The decedent continuously owned the property, including property the decedent
is deemed to own under sections 2036, 2037, and 2038 of the Internal Revenue Code,
for
the three-year period ending on the date of death of the decedent either by ownership of
the agricultural land or pursuant to holding an interest in an entity that is not excluded
from owning agricultural land under section 500.24
.

(4) A family member continuously uses the property in the operation of the trade or
business
(5) The property is classified for property tax purposes as class 2a property under
section 273.13, subdivision 23,
for three years following the date of death of the decedent.

(5) (6) The estate and the qualified heir elect to treat the property as qualified farm
property and agree, in a form prescribed by the commissioner, to pay the recapture tax
under subdivision 11, if applicable.

EFFECTIVE DATE.

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

Sec. 9.

Minnesota Statutes 2011 Supplement, section 291.03, subdivision 11, is
amended to read:


Subd. 11.

Recapture tax.

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

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

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

(c) For purposes of paragraph (a), "qualifying entity" means a corporation or other
entity that is owned by a family member or family members and, for qualified farm
property, that is not excluded from owning agricultural land under section 500.24.

EFFECTIVE DATE.

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

ARTICLE 12

HOMESTEAD MARKET VALUE CLEANUP

Section 1.

Minnesota Statutes 2010, section 38.18, is amended to read:


38.18 COUNTY FAIRGROUNDS; IMPROVEMENT AIDED.

Any Each town, statutory city, or school district in this state, now or hereafter at
any time
having a an estimated market value of all its taxable property, exclusive of
money and credits,
of more than $105,000,000, and having a county fair located within its
corporate limits, is hereby authorized to aid in defraying may pay part of the expense of
improving any such the fairground, by appropriating and paying over to the treasurer of
the county owning the fairground such sum of money, not exceeding $10,000, for each
of the political subdivisions,
as the its governing body of the town, statutory city, or
school district may
, by resolution, determine determines to be for the best interest of the
political subdivision,. The sums so appropriated to amounts paid to the county must be
used solely for the purpose of aiding in the improvement of to improve the fairground
in such the manner as the county board of the county shall determine determines to be
for the best interest of the county.

Sec. 2.

Minnesota Statutes 2010, section 40A.15, subdivision 2, is amended to read:


Subd. 2.

Eligible recipients.

All counties within the state, municipalities that
prepare plans and official controls instead of a county, and districts are eligible for
assistance under the program. Counties and districts may apply for assistance on behalf
of other municipalities. In order to be eligible for financial assistance a county or
municipality must agree to levy at least 0.01209 percent of taxable estimated market
value for agricultural land preservation and conservation activities or otherwise spend the
equivalent amount of local money on those activities, or spend $15,000 of local money,
whichever is less.

Sec. 3.

Minnesota Statutes 2010, section 69.011, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

Unless the language or context clearly indicates that
a different meaning is intended, the following words and terms, for the purposes of this
chapter and chapters 423, 423A, 424 and 424A, have the meanings ascribed to them:

(a) "Commissioner" means the commissioner of revenue.

(b) "Municipality" means:

(1) a home rule charter or statutory city;

(2) an organized town;

(3) a park district subject to chapter 398;

(4) the University of Minnesota;

(5) for purposes of the fire state aid program only, an American Indian tribal
government entity located within a federally recognized American Indian reservation;

(6) for purposes of the police state aid program only, an American Indian tribal
government with a tribal police department which exercises state arrest powers under
section 626.90, 626.91, 626.92, or 626.93;

(7) for purposes of the police state aid program only, the Metropolitan Airports
Commission; and

(8) for purposes of the police state aid program only, the Department of Natural
Resources and the Department of Public Safety with respect to peace officers covered
under chapter 352B.

(c) "Minnesota Firetown Premium Report" means a form prescribed by the
commissioner containing space for reporting by insurers of fire, lightning, sprinkler
leakage and extended coverage premiums received upon risks located or to be performed
in this state less return premiums and dividends.

(d) "Firetown" means the area serviced by any municipality having a qualified fire
department or a qualified incorporated fire department having a subsidiary volunteer
firefighters' relief association.

(e) "Estimated market value" means latest available estimated market value of all
property in a taxing jurisdiction, whether the property is subject to taxation, or exempt
from ad valorem taxation obtained from information which appears on abstracts filed with
the commissioner of revenue or equalized by the State Board of Equalization.

(f) "Minnesota Aid to Police Premium Report" means a form prescribed by the
commissioner for reporting by each fire and casualty insurer of all premiums received
upon direct business received by it in this state, or by its agents for it, in cash or otherwise,
during the preceding calendar year, with reference to insurance written for insuring against
the perils contained in auto insurance coverages as reported in the Minnesota business
schedule of the annual financial statement which each insurer is required to file with
the commissioner in accordance with the governing laws or rules less return premiums
and dividends.

(g) "Peace officer" means any person:

(1) whose primary source of income derived from wages is from direct employment
by a municipality or county as a law enforcement officer on a full-time basis of not less
than 30 hours per week;

(2) who has been employed for a minimum of six months prior to December 31
preceding the date of the current year's certification under subdivision 2, clause (b);

(3) who is sworn to enforce the general criminal laws of the state and local
ordinances;

(4) who is licensed by the Peace Officers Standards and Training Board and is
authorized to arrest with a warrant; and

(5) who is a member of the Minneapolis Police Relief Association, the State Patrol
retirement plan, or the public employees police and fire fund.

(h) "Full-time equivalent number of peace officers providing contract service" means
the integral or fractional number of peace officers which would be necessary to provide
the contract service if all peace officers providing service were employed on a full-time
basis as defined by the employing unit and the municipality receiving the contract service.

(i) "Retirement benefits other than a service pension" means any disbursement
authorized under section 424A.05, subdivision 3, clauses (3) and (4).

(j) "Municipal clerk, municipal clerk-treasurer, or county auditor" means the person
who was elected or appointed to the specified position or, in the absence of the person,
another person who is designated by the applicable governing body. In a park district,
the clerk is the secretary of the board of park district commissioners. In the case of the
University of Minnesota, the clerk is that official designated by the Board of Regents.
For the Metropolitan Airports Commission, the clerk is the person designated by the
commission. For the Department of Natural Resources or the Department of Public Safety,
the clerk is the respective commissioner. For a tribal police department which exercises
state arrest powers under section 626.90, 626.91, 626.92, or 626.93, the clerk is the person
designated by the applicable American Indian tribal government.

(k) "Voluntary statewide lump-sum volunteer firefighter retirement plan" means the
retirement plan established by chapter 353G.

Sec. 4.

Minnesota Statutes 2010, section 69.021, subdivision 7, is amended to read:


Subd. 7.

Apportionment of fire state aid to municipalities and relief associations.

(a) The commissioner shall apportion the fire state aid relative to the premiums reported
on the Minnesota Firetown Premium Reports filed under this chapter to each municipality
and/or firefighters relief association.

(b) The commissioner shall calculate an initial fire state aid allocation amount for
each municipality or fire department under paragraph (c) and a minimum fire state aid
allocation amount for each municipality or fire department under paragraph (d). The
municipality or fire department must receive the larger fire state aid amount.

(c) The initial fire state aid allocation amount is the amount available for
apportionment as fire state aid under subdivision 5, without inclusion of any additional
funding amount to support a minimum fire state aid amount under section 423A.02,
subdivision 3
, allocated one-half in proportion to the population as shown in the last
official statewide federal census for each fire town and one-half in proportion to the
estimated market value of each fire town, including (1) the estimated market value of
tax-exempt property and (2) the estimated market value of natural resources lands
receiving in lieu payments under sections 477A.11 to 477A.14, but excluding the
estimated market value of minerals. In the case of incorporated or municipal fire
departments furnishing fire protection to other cities, towns, or townships as evidenced
by valid fire service contracts filed with the commissioner, the distribution must be
adjusted proportionately to take into consideration the crossover fire protection service.
Necessary adjustments must be made to subsequent apportionments. In the case of
municipalities or independent fire departments qualifying for the aid, the commissioner
shall calculate the state aid for the municipality or relief association on the basis of the
population and the estimated market value of the area furnished fire protection service
by the fire department as evidenced by duly executed and valid fire service agreements
filed with the commissioner. If one or more fire departments are furnishing contracted fire
service to a city, town, or township, only the population and estimated market value of the
area served by each fire department may be considered in calculating the state aid and
the fire departments furnishing service shall enter into an agreement apportioning among
themselves the percent of the population and the estimated market value of each service
area. The agreement must be in writing and must be filed with the commissioner.

(d) The minimum fire state aid allocation amount is the amount in addition to the
initial fire state allocation amount that is derived from any additional funding amount
to support a minimum fire state aid amount under section 423A.02, subdivision 3, and
allocated to municipalities with volunteer firefighters relief associations or covered by the
voluntary statewide lump-sum volunteer firefighter retirement plan based on the number
of active volunteer firefighters who are members of the relief association as reported
in the annual financial reporting for the calendar year 1993 to the Office of the State
Auditor, but not to exceed 30 active volunteer firefighters, so that all municipalities or
fire departments with volunteer firefighters relief associations receive in total at least a
minimum fire state aid amount per 1993 active volunteer firefighter to a maximum of
30 firefighters. If a relief association is established after calendar year 1993 and before
calendar year 2000, the number of active volunteer firefighters who are members of the
relief association as reported in the annual financial reporting for calendar year 1998
to the Office of the State Auditor, but not to exceed 30 active volunteer firefighters,
shall be used in this determination. If a relief association is established after calendar
year 1999, the number of active volunteer firefighters who are members of the relief
association as reported in the first annual financial reporting submitted to the Office of
the State Auditor, but not to exceed 20 active volunteer firefighters, must be used in this
determination. If a relief association is terminated as a result of providing retirement
coverage for volunteer firefighters by the voluntary statewide lump-sum volunteer
firefighter retirement plan under chapter 353G, the number of active volunteer firefighters
of the municipality covered by the statewide plan as certified by the executive director of
the Public Employees Retirement Association to the commissioner and the state auditor,
but not to exceed 30 active firefighters, must be used in this determination.

(e) Unless the firefighters of the applicable fire department are members of the
voluntary statewide lump-sum volunteer firefighter retirement plan, the fire state aid must
be paid to the treasurer of the municipality where the fire department is located and the
treasurer of the municipality shall, within 30 days of receipt of the fire state aid, transmit
the aid to the relief association if the relief association has filed a financial report with the
treasurer of the municipality and has met all other statutory provisions pertaining to the
aid apportionment. If the firefighters of the applicable fire department are members of
the voluntary statewide lump-sum volunteer firefighter retirement plan, the fire state aid
must be paid to the executive director of the Public Employees Retirement Association
and deposited in the voluntary statewide lump-sum volunteer firefighter retirement fund.

(f) The commissioner may make rules to permit the administration of the provisions
of this section.

(g) Any adjustments needed to correct prior misallocations must be made to
subsequent apportionments.

Sec. 5.

Minnesota Statutes 2010, section 69.021, subdivision 8, is amended to read:


Subd. 8.

Population and estimated market value.

(a) In computations relating to
fire state aid requiring the use of population figures, only official statewide federal census
figures are to be used. Increases or decreases in population disclosed by reason of any
special census must not be taken into consideration.

(b) In calculations relating to fire state aid requiring the use of estimated market
value property figures, only the latest available estimated market value property figures
may be used.

Sec. 6.

Minnesota Statutes 2010, section 88.51, subdivision 3, is amended to read:


Subd. 3.

Determination of market value.

In determining the net tax capacity of
property within any taxing district the value of the surface of lands within any auxiliary
forest therein, as determined by the county board under the provisions of section 88.48,
subdivision 3
, shall, for all purposes except the levying of taxes on lands within any such
forest, be deemed the estimated market value thereof.

Sec. 7.

Minnesota Statutes 2010, section 103B.245, subdivision 3, is amended to read:


Subd. 3.

Tax.

After adoption of the ordinance under subdivision 2, a local
government unit may annually levy a tax on all taxable property in the district for the
purposes for which the tax district is established. The tax may not exceed 0.02418 percent
of estimated market value on taxable property located in rural towns other than urban
towns, unless allowed by resolution of the town electors. The proceeds of the tax shall
be paid into a fund reserved for these purposes. Any proceeds remaining in the reserve
fund at the time the tax is terminated or the district is dissolved shall be transferred and
irrevocably pledged to the debt service fund of the local unit to be used solely to reduce
tax levies for bonded indebtedness of taxable property in the district.

Sec. 8.

Minnesota Statutes 2010, section 103B.251, subdivision 8, is amended to read:


Subd. 8.

Tax.

(a) For the payment of principal and interest on the bonds issued
under subdivision 7 and the payment required under subdivision 6, the county shall
irrevocably pledge and appropriate the proceeds of a tax levied on all taxable property
located within the territory of the watershed management organization or subwatershed
unit for which the bonds are issued. Each year until the reserve for payment of the bonds
is sufficient to retire the bonds, the county shall levy on all taxable property in the territory
of the organization or unit, without respect to any statutory or other limitation on taxes, an
amount of taxes sufficient to pay principal and interest on the bonds and to restore any
deficiencies in reserves required to be maintained for payment of the bonds.

(b) The tax levied on rural towns other than urban towns may not exceed 0.02418
percent of taxable estimated market value, unless approved by resolution of the town
electors.

(c) If at any time the amounts available from the levy on property in the territory of
the organization are insufficient to pay principal and interest on the bonds when due, the
county shall make payment from any available funds in the county treasury.

(d) The amount of any taxes which are required to be levied outside of the territory
of the watershed management organization or unit or taken from the general funds of the
county to pay principal or interest on the bonds shall be reimbursed to the county from
taxes levied within the territory of the watershed management organization or unit.

Sec. 9.

Minnesota Statutes 2010, section 103B.635, subdivision 2, is amended to read:


Subd. 2.

Municipal funding of district.

(a) The governing body or board of
supervisors of each municipality in the district must provide the funds necessary to meet
its proportion of the total cost determined by the board, provided the total funding from
all municipalities in the district for the costs shall not exceed an amount equal to .00242
percent of the total taxable estimated market value within the district, unless three-fourths
of the municipalities in the district pass a resolution concurring to the additional costs.

(b) The funds must be deposited in the treasury of the district in amounts and at
times as the treasurer of the district requires.

Sec. 10.

Minnesota Statutes 2010, section 103B.691, subdivision 2, is amended to read:


Subd. 2.

Municipal funding of district.

(a) The governing body or board of
supervisors of each municipality in the district shall provide the funds necessary to
meet its proportion of the total cost to be borne by the municipalities as finally certified
by the board.

(b) The municipality's funds may be raised by any means within the authority of
the municipality. The municipalities may each levy a tax not to exceed .02418 percent of
taxable estimated market value on the taxable property located in the district to provide
the funds. The levy shall be within all other limitations provided by law.

(c) The funds must be deposited into the treasury of the district in amounts and at
times as the treasurer of the district requires.

Sec. 11.

Minnesota Statutes 2010, section 103D.905, subdivision 2, is amended to read:


Subd. 2.

Organizational expense fund.

(a) An organizational expense fund,
consisting of an ad valorem tax levy, shall not exceed 0.01596 percent of taxable estimated
market value, or $60,000, whichever is less. The money in the fund shall be used for
organizational expenses and preparation of the watershed management plan for projects.

(b) The managers may borrow from the affected counties up to 75 percent of the
anticipated funds to be collected from the organizational expense fund levy and the
counties affected may make the advancements.

(c) The advancement of anticipated funds shall be apportioned among affected
counties in the same ratio as the net tax capacity of the area of the counties within
the watershed district bears to the net tax capacity of the entire watershed district. If a
watershed district is enlarged, an organizational expense fund may be levied against the
area added to the watershed district in the same manner as provided in this subdivision.

(d) Unexpended funds collected for the organizational expense may be transferred to
the administrative fund and used for the purposes of the administrative fund.

Sec. 12.

Minnesota Statutes 2010, section 103D.905, subdivision 3, is amended to read:


Subd. 3.

General fund.

A general fund, consisting of an ad valorem tax levy, may
not exceed 0.048 percent of taxable estimated market value, or $250,000, whichever is
less. The money in the fund shall be used for general administrative expenses and for
the construction or implementation and maintenance of projects of common benefit to
the watershed district. The managers may make an annual levy for the general fund as
provided in section 103D.911. In addition to the annual general levy, the managers may
annually levy a tax not to exceed 0.00798 percent of taxable estimated market value
for a period not to exceed 15 consecutive years to pay the cost attributable to the basic
water management features of projects initiated by petition of a political subdivision
within the watershed district or by petition of at least 50 resident owners whose property
is within the watershed district.

Sec. 13.

Minnesota Statutes 2010, section 103D.905, subdivision 8, is amended to read:


Subd. 8.

Survey and data acquisition fund.

(a) A survey and data acquisition fund
is established and used only if other funds are not available to the watershed district to pay
for making necessary surveys and acquiring data.

(b) The survey and data acquisition fund consists of the proceeds of a property tax
that can be levied only once every five years. The levy may not exceed 0.02418 percent of
taxable estimated market value.

(c) The balance of the survey and data acquisition fund may not exceed $50,000.

(d) In a subsequent proceeding for a project where a survey has been made, the
attributable cost of the survey as determined by the managers shall be included as a part of
the cost of the work and the sum shall be repaid to the survey and data acquisition fund.

Sec. 14.

Minnesota Statutes 2010, section 117.025, subdivision 7, is amended to read:


Subd. 7.

Structurally substandard.

"Structurally substandard" means a building:

(1) that was inspected by the appropriate local government and cited for one or more
enforceable housing, maintenance, or building code violations;

(2) in which the cited building code violations involve one or more of the following:

(i) a roof and roof framing element;

(ii) support walls, beams, and headers;

(iii) foundation, footings, and subgrade conditions;

(iv) light and ventilation;

(v) fire protection, including egress;

(vi) internal utilities, including electricity, gas, and water;

(vii) flooring and flooring elements; or

(viii) walls, insulation, and exterior envelope;

(3) in which the cited housing, maintenance, or building code violations have not
been remedied after two notices to cure the noncompliance; and

(4) has uncured housing, maintenance, and building code violations, satisfaction of
which would cost more than 50 percent of the assessor's taxable estimated market value
for the building, excluding land value, as determined under section 273.11 for property
taxes payable in the year in which the condemnation is commenced.

A local government is authorized to seek from a judge or magistrate an administrative
warrant to gain access to inspect a specific building in a proposed development or
redevelopment area upon showing of probable cause that a specific code violation has
occurred and that the violation has not been cured, and that the owner has denied the local
government access to the property. Items of evidence that may support a conclusion of
probable cause may include recent fire or police inspections, housing inspection, exterior
evidence of deterioration, or other similar reliable evidence of deterioration in the specific
building.

Sec. 15.

Minnesota Statutes 2010, section 127A.48, subdivision 1, is amended to read:


Subdivision 1.

Computation.

The Department of Revenue must annually conduct
an assessment/sales ratio study of the taxable property in each county, city, town, and
school district in accordance with the procedures in subdivisions 2 and 3. Based upon the
results of this assessment/sales ratio study, the Department of Revenue must determine an
aggregate equalized net tax capacity for the various classes of taxable property in each
taxing district, the aggregate of which tax capacity shall be is designated as the adjusted
net tax capacity. The adjusted net tax capacity must be reduced by the captured tax
capacity of tax increment districts under section 469.177, subdivision 2, fiscal disparities
contribution tax capacities under sections 276A.06 and 473F.08, and the tax capacity of
transmission lines required to be subtracted from the local tax base under section 273.425;
and increased by fiscal disparities distribution tax capacities under sections 276A.06 and
473F.08.
The adjusted net tax capacities shall be determined using the net tax capacity
percentages in effect for the assessment year following the assessment year of the study.
The Department of Revenue must make whatever estimates are necessary to account for
changes in the classification system. The Department of Revenue may incur the expense
necessary to make the determinations. The commissioner of revenue may reimburse any
county or governmental official for requested services performed in ascertaining the
adjusted net tax capacity. On or before March 15 annually, the Department of Revenue
shall file with the chair of the Tax Committee of the house of representatives and the
chair of the Committee on Taxes and Tax laws of the senate a report of adjusted net tax
capacities for school districts. On or before June 15 annually, the Department of Revenue
shall file its final report on the adjusted net tax capacities for school districts established
by the previous year's assessments and the current year's net tax capacity percentages with
the commissioner of education and each county auditor for those school districts for
which the auditor has the responsibility for determination of local tax rates. A copy of
the report so filed shall be mailed to the clerk of each school district involved and to the
county assessor or supervisor of assessments of the county or counties in which each
school district is located.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 16.

Minnesota Statutes 2010, section 138.053, is amended to read:


138.053 COUNTY HISTORICAL SOCIETY; TAX LEVY; CITIES OR
TOWNS.

The governing body of any home rule charter or statutory city or town may annually
appropriate from its general fund an amount not to exceed 0.02418 percent of taxable
estimated
market value, derived from ad valorem taxes on property or other revenues,
to be paid to the historical society of its respective county to be used for the promotion
of historical work and to aid in defraying the expenses of carrying on the historical
work in the county. No city or town may appropriate any funds for the benefit of any
historical society unless the society is affiliated with and approved by the Minnesota
Historical Society.

Sec. 17.

Minnesota Statutes 2010, section 144F.01, subdivision 4, is amended to read:


Subd. 4.

Property tax levy authority.

The district's board may levy a tax on the
taxable real and personal property in the district. The ad valorem tax levy may not
exceed 0.048 percent of the taxable estimated market value of the district or $400,000,
whichever is less. The proceeds of the levy must be used as provided in subdivision 5.
The board shall certify the levy at the times as provided under section 275.07. The board
shall provide the county with whatever information is necessary to identify the property
that is located within the district. If the boundaries include a part of a parcel, the entire
parcel shall be included in the district. The county auditors must spread, collect, and
distribute the proceeds of the tax at the same time and in the same manner as provided by
law for all other property taxes.

Sec. 18.

Minnesota Statutes 2010, section 162.07, subdivision 3, is amended to read:


Subd. 3.

Computation for rural counties.

An amount equal to a levy of 0.01596
percent on each rural county's total taxable estimated market value for the last preceding
calendar year shall be computed and shall be subtracted from the county's total estimated
construction costs. The result thereof shall be the money needs of the county. For the
purpose of this section, "rural counties" means all counties having a population of less
than 175,000.

Sec. 19.

Minnesota Statutes 2010, section 162.07, subdivision 4, is amended to read:


Subd. 4.

Computation for urban counties.

An amount equal to a levy of 0.00967
percent on each urban county's total taxable estimated market value for the last preceding
calendar year shall be computed and shall be subtracted from the county's total estimated
construction costs. The result thereof shall be the money needs of the county. For
the purpose of this section, "urban counties" means all counties having a population
of 175,000 or more.

Sec. 20.

Minnesota Statutes 2010, section 163.04, subdivision 3, is amended to read:


Subd. 3.

Bridges within certain cities.

When the council of any statutory city or
city of the third or fourth class may determine that it is necessary to build or improve any
bridge or bridges, including approaches thereto, and any dam or retaining works connected
therewith, upon or forming a part of streets or highways either wholly or partly within
its limits, the county board shall appropriate one-half of the money as may be necessary
therefor from the county road and bridge fund, not exceeding during any year one-half
the amount of taxes paid into the county road and bridge fund during the preceding year,
on property within the corporate limits of the city. The appropriation shall be made upon
the petition of the council, which petition shall be filed by the council with the county
board prior to the fixing by the board of the annual county tax levy. The county board
shall determine the plans and specifications, shall let all necessary contracts, shall have
charge of construction, and upon its request, warrants in payment thereof shall be issued
by the county auditor, from time to time, as the construction work proceeds. Any unpaid
balance may be paid or advanced by the city. On petition of the council, the appropriations
of the county board, during not to exceed three successive years, may be made to apply
on the construction of the same items and to repay any money advanced by the city in
the construction thereof. None of the provisions of this section shall be construed to
be mandatory as applied to any city whose estimated market value exceeds $2,100 per
capita of its population.

Sec. 21.

Minnesota Statutes 2010, section 163.06, subdivision 6, is amended to read:


Subd. 6.

Expenditure in certain counties.

In any county having not less than 95
nor more than 105 full and fractional townships, and having a an estimated market value
of not less than $12,000,000 nor more than $21,000,000, exclusive of money and credits,
the county board, by resolution, may expend the funds provided in subdivision 4 in any
organized or unorganized township or portion thereof in such county.

Sec. 22.

Minnesota Statutes 2010, section 165.10, subdivision 1, is amended to read:


Subdivision 1.

Certain counties may issue and sell.

The county board of any
county having no outstanding road and bridge bonds may issue and sell county road bonds
in an amount not exceeding 0.12089 percent of the estimated market value of the taxable
property within the county exclusive of money and credits, for the purpose of constructing,
reconstructing, improving, or maintaining any bridge or bridges on any highway under its
jurisdiction, without submitting the matter to a vote of the electors of the county.

Sec. 23.

Minnesota Statutes 2010, section 272.03, is amended by adding a subdivision
to read:


Subd. 14.

Estimated market value.

"Estimated market value" means the assessor's
determination of market value, including the effects of any orders made under section
270.12 or chapter 274, for the parcel. The provisions of section 273.032 apply for certain
uses in determining the total estimated market value for the taxing jurisdiction.

Sec. 24.

Minnesota Statutes 2010, section 272.03, is amended by adding a subdivision
to read:


Subd. 15.

Taxable market value.

"Taxable market value" means estimated market
value for the parcel as reduced by market value exclusions, deferments of value, or other
adjustments, required by law, that reduce market value before the application of class rates.

Sec. 25.

Minnesota Statutes 2010, section 273.032, is amended to read:


273.032 MARKET VALUE DEFINITION.

(a) Unless otherwise provided, for the purpose of determining any property tax
levy limitation based on market value or any limit on net debt, the issuance of bonds,
certificates of indebtedness, or capital notes based on market value
, any qualification to
receive state aid based on market value, or any state aid amount based on market value,
the terms "market value," "taxable estimated market value," and "market valuation,"
whether equalized or unequalized, mean the total taxable estimated market value of
taxable property within the local unit of government before any of the following or
similar
adjustments for:

(1) the market value exclusions under:

(i) section 273.11, subdivisions 14a and 14c (vacant platted land);

(ii) section 273.11, subdivision 16 (certain improvements to homestead property);

(iii) section 273.11, subdivisions 19 and 20 (certain improvements to business
properties);

(iv) section 273.11, subdivision 21 (homestead property damaged by mold);

(v) section 273.11, subdivision 22 (qualifying lead hazardous reduction projects);

(vi) section 273.13, subdivision 34 (homestead of a disabled veteran, spouse, or
caregiver);

(vii) section 273.13, subdivision 35 (homestead market value exclusion); or

(2) the deferment of value under:

(i) the Minnesota Agricultural Property Tax Law, section 273.111;

(ii) the aggregate resource preservation law, section 273.1115;

(iii) the Minnesota Open Space Property Tax Law, section 273.112;

(iv) the rural preserves property tax program, section 273.114; or

(v) the Metropolitan Agricultural Preserves Act, section 473H.10; or

(3) the adjustments to tax capacity for:

(i) tax increment, financing under sections 469.174 to 469.1794;

(ii) fiscal disparity, disparities under chapter 276A or 473F; or

(iii) powerline credit, or wind energy values, but after the limited market adjustments
under section 273.11, subdivision 1a, and after the market value exclusions of certain
improvements to homestead property under section 273.11, subdivision 16
under section
273.425
.

(b) Estimated market value under paragraph (a) also includes the market value
of tax exempt property if the applicable law specifically provides that the limitation,
qualification, or aid calculation includes tax exempt property.

(c) Unless otherwise provided, "market value," "taxable estimated market value,"
and "market valuation" for purposes of this paragraph property tax levy limitations and
calculation of state aid
, refer to the taxable estimated market value for the previous
assessment year and for purposes of limits on net debt, the issuance of bonds, certificates of
indebtedness, or capital notes refer to the estimated market value as last finally equalized
.

For the purpose of determining any net debt limit based on market value, or any limit
on the issuance of bonds, certificates of indebtedness, or capital notes based on market
value, the terms "market value," "taxable market value," and "market valuation," whether
equalized or unequalized, mean the total taxable market value of property within the local
unit of government before any adjustments for tax increment, fiscal disparity, powerline
credit, or wind energy values, but after the limited market value adjustments under section
273.11, subdivision 1a, and after the market value exclusions of certain improvements to
homestead property under section 273.11, subdivision 16. Unless otherwise provided,
"market value," "taxable market value," and "market valuation" for purposes of this
paragraph, mean the taxable market value as last finally equalized.

(d) For purposes of a provision of a home rule charter or of any special law that is
not codified in the statutes and that imposes a levy limitation based on market value or
any limit on debt, the issuance of bonds, certificates of indebtedness, or capital notes
based on market value, the terms "market value," "taxable market value," and "market
valuation," whether equalized or unequalized, mean "estimated market value" as defined
in paragraph (a).

Sec. 26.

Minnesota Statutes 2010, section 273.11, subdivision 1, is amended to read:


Subdivision 1.

Generally.

Except as provided in this section or section 273.17,
subdivision 1
, all property shall be valued at its market value. The market value as
determined pursuant to this section shall be stated such that any amount under $100 is
rounded up to $100 and any amount exceeding $100 shall be rounded to the nearest $100.
In estimating and determining such value, the assessor shall not adopt a lower or different
standard of value because the same is to serve as a basis of taxation, nor shall the assessor
adopt as a criterion of value the price for which such property would sell at a forced sale,
or in the aggregate with all the property in the town or district; but the assessor shall value
each article or description of property by itself, and at such sum or price as the assessor
believes the same to be fairly worth in money. The assessor shall take into account the
effect on the market value of property of environmental factors in the vicinity of the
property. In assessing any tract or lot of real property, the value of the land, exclusive of
structures and improvements, shall be determined, and also the value of all structures and
improvements thereon, and the aggregate value of the property, including all structures
and improvements, excluding the value of crops growing upon cultivated land. In valuing
real property upon which there is a mine or quarry, it shall be valued at such price as such
property, including the mine or quarry, would sell for at a fair, voluntary sale, for cash,
if the material being mined or quarried is not subject to taxation under section 298.015
and the mine or quarry is not exempt from the general property tax under section 298.25.
In valuing real property which is vacant, platted property shall be assessed as provided
in subdivision 14 subdivisions 14a and 14c. All property, or the use thereof, which is
taxable under section 272.01, subdivision 2, or 273.19, shall be valued at the market
value of such property and not at the value of a leasehold estate in such property, or at
some lesser value than its market value.

Sec. 27.

Minnesota Statutes 2010, section 273.124, subdivision 3a, is amended to read:


Subd. 3a.

Manufactured home park cooperative.

(a) When a manufactured home
park is owned by a corporation or association organized under chapter 308A or 308B,
and each person who owns a share or shares in the corporation or association is entitled
to occupy a lot within the park, the corporation or association may claim homestead
treatment for the park. Each lot must be designated by legal description or number, and
each lot is limited to not more than one-half acre of land.

(b) The manufactured home park shall be entitled to homestead treatment if all
of the following criteria are met:

(1) the occupant or the cooperative corporation or association is paying the ad
valorem property taxes and any special assessments levied against the land and structure
either directly, or indirectly through dues to the corporation or association; and

(2) the corporation or association organized under chapter 308A or 308B is wholly
owned by persons having a right to occupy a lot owned by the corporation or association.

(c) A charitable corporation, organized under the laws of Minnesota with no
outstanding stock, and granted a ruling by the Internal Revenue Service for 501(c)(3)
tax-exempt status, qualifies for homestead treatment with respect to a manufactured home
park if its members hold residential participation warrants entitling them to occupy a lot
in the manufactured home park.

(d) "Homestead treatment" under this subdivision means the class rate provided for
class 4c property classified under section 273.13, subdivision 25, paragraph (d), clause (5),
item (ii). The homestead market value credit exclusion under section 273.1384 273.13,
subdivision 35,
does not apply and the property taxes assessed against the park shall not
be included in the determination of taxes payable for rent paid under section 290A.03.

EFFECTIVE DATE.

This section is effective for taxes payable in 2012 and
thereafter.

Sec. 28.

Minnesota Statutes 2010, section 273.124, subdivision 13, is amended to read:


Subd. 13.

Homestead application.

(a) A person who meets the homestead
requirements under subdivision 1 must file a homestead application with the county
assessor to initially obtain homestead classification.

(b) The format and contents of a uniform homestead application shall be prescribed
by the commissioner of revenue. The application must clearly inform the taxpayer that
this application must be signed by all owners who occupy the property or by the qualifying
relative and returned to the county assessor in order for the property to receive homestead
treatment.

(c) Every property owner applying for homestead classification must furnish to the
county assessor the Social Security number of each occupant who is listed as an owner
of the property on the deed of record, the name and address of each owner who does not
occupy the property, and the name and Social Security number of each owner's spouse who
occupies the property. The application must be signed by each owner who occupies the
property and by each owner's spouse who occupies the property, or, in the case of property
that qualifies as a homestead under subdivision 1, paragraph (c), by the qualifying relative.

If a property owner occupies a homestead, the property owner's spouse may not
claim another property as a homestead unless the property owner and the property owner's
spouse file with the assessor an affidavit or other proof required by the assessor stating that
the property qualifies as a homestead under subdivision 1, paragraph (e).

Owners or spouses occupying residences owned by their spouses and previously
occupied with the other spouse, either of whom fail to include the other spouse's name
and Social Security number on the homestead application or provide the affidavits or
other proof requested, will be deemed to have elected to receive only partial homestead
treatment of their residence. The remainder of the residence will be classified as
nonhomestead residential. When an owner or spouse's name and Social Security number
appear on homestead applications for two separate residences and only one application is
signed, the owner or spouse will be deemed to have elected to homestead the residence for
which the application was signed.

The Social Security numbers, state or federal tax returns or tax return information,
including the federal income tax schedule F required by this section, or affidavits or other
proofs of the property owners and spouses submitted under this or another section to
support a claim for a property tax homestead classification are private data on individuals
as defined by section 13.02, subdivision 12, but, notwithstanding that section, the private
data may be disclosed to the commissioner of revenue, or, for purposes of proceeding
under the Revenue Recapture Act to recover personal property taxes owing, to the county
treasurer.

(d) If residential real estate is occupied and used for purposes of a homestead by a
relative of the owner and qualifies for a homestead under subdivision 1, paragraph (c), in
order for the property to receive homestead status, a homestead application must be filed
with the assessor. The Social Security number of each relative and spouse of a relative
occupying the property shall be required on the homestead application filed under this
subdivision. If a different relative of the owner subsequently occupies the property, the
owner of the property must notify the assessor within 30 days of the change in occupancy.
The Social Security number of a relative or relative's spouse occupying the property
is private data on individuals as defined by section 13.02, subdivision 12, but may be
disclosed to the commissioner of revenue, or, for the purposes of proceeding under the
Revenue Recapture Act to recover personal property taxes owing, to the county treasurer.

(e) The homestead application shall also notify the property owners that the
application filed under this section will not be mailed annually and that if the property
is granted homestead status for any assessment year, that same property shall remain
classified as homestead until the property is sold or transferred to another person, or
the owners, the spouse of the owner, or the relatives no longer use the property as their
homestead. Upon the sale or transfer of the homestead property, a certificate of value must
be timely filed with the county auditor as provided under section 272.115. Failure to
notify the assessor within 30 days that the property has been sold, transferred, or that the
owner, the spouse of the owner, or the relative is no longer occupying the property as a
homestead, shall result in the penalty provided under this subdivision and the property
will lose its current homestead status.

(f) If the homestead application is not returned within 30 days, the county will send a
second application to the present owners of record. The notice of proposed property taxes
prepared under section 275.065, subdivision 3, shall reflect the property's classification. If
a homestead application has not been filed with the county by December 15, the assessor
shall classify the property as nonhomestead for the current assessment year for taxes
payable in the following year, provided that the owner may be entitled to receive the
homestead classification by proper application under section 375.192.

(g) At the request of the commissioner, each county must give the commissioner a
list that includes the name and Social Security number of each occupant of homestead
property who is the property owner, property owner's spouse, qualifying relative of a
property owner, or a spouse of a qualifying relative. The commissioner shall use the
information provided on the lists as appropriate under the law, including for the detection
of improper claims by owners, or relatives of owners, under chapter 290A.

(h) If the commissioner finds that a property owner may be claiming a fraudulent
homestead, the commissioner shall notify the appropriate counties. Within 90 days of
the notification, the county assessor shall investigate to determine if the homestead
classification was properly claimed. If the property owner does not qualify, the county
assessor shall notify the county auditor who will determine the amount of homestead
benefits that had been improperly allowed. For the purpose of this section, "homestead
benefits" means the tax reduction resulting from the classification as a homestead and the
homestead market value exclusion
under section 273.13, the taconite homestead credit
under section 273.135, the residential homestead and agricultural homestead credits credit
under section 273.1384, and the supplemental homestead credit under section 273.1391.

The county auditor shall send a notice to the person who owned the affected property
at the time the homestead application related to the improper homestead was filed,
demanding reimbursement of the homestead benefits plus a penalty equal to 100 percent
of the homestead benefits. The person notified may appeal the county's determination
by serving copies of a petition for review with county officials as provided in section
278.01 and filing proof of service as provided in section 278.01 with the Minnesota Tax
Court within 60 days of the date of the notice from the county. Procedurally, the appeal
is governed by the provisions in chapter 271 which apply to the appeal of a property tax
assessment or levy, but without requiring any prepayment of the amount in controversy. If
the amount of homestead benefits and penalty is not paid within 60 days, and if no appeal
has been filed, the county auditor shall certify the amount of taxes and penalty to the county
treasurer. The county treasurer will add interest to the unpaid homestead benefits and
penalty amounts at the rate provided in section 279.03 for real property taxes becoming
delinquent in the calendar year during which the amount remains unpaid. Interest may be
assessed for the period beginning 60 days after demand for payment was made.

If the person notified is the current owner of the property, the treasurer may add the
total amount of homestead benefits, penalty, interest, and costs to the ad valorem taxes
otherwise payable on the property by including the amounts on the property tax statements
under section 276.04, subdivision 3. The amounts added under this paragraph to the ad
valorem taxes shall include interest accrued through December 31 of the year preceding
the taxes payable year for which the amounts are first added. These amounts, when added
to the property tax statement, become subject to all the laws for the enforcement of real or
personal property taxes for that year, and for any subsequent year.

If the person notified is not the current owner of the property, the treasurer may
collect the amounts due under the Revenue Recapture Act in chapter 270A, or use any of
the powers granted in sections 277.20 and 277.21 without exclusion, to enforce payment
of the homestead benefits, penalty, interest, and costs, as if those amounts were delinquent
tax obligations of the person who owned the property at the time the application related
to the improperly allowed homestead was filed. The treasurer may relieve a prior owner
of personal liability for the homestead benefits, penalty, interest, and costs, and instead
extend those amounts on the tax lists against the property as provided in this paragraph
to the extent that the current owner agrees in writing. On all demands, billings, property
tax statements, and related correspondence, the county must list and state separately the
amounts of homestead benefits, penalty, interest and costs being demanded, billed or
assessed.

(i) Any amount of homestead benefits recovered by the county from the property
owner shall be distributed to the county, city or town, and school district where the
property is located in the same proportion that each taxing district's levy was to the total
of the three taxing districts' levy for the current year. Any amount recovered attributable
to taconite homestead credit shall be transmitted to the St. Louis County auditor to be
deposited in the taconite property tax relief account. Any amount recovered that is
attributable to supplemental homestead credit is to be transmitted to the commissioner of
revenue for deposit in the general fund of the state treasury. The total amount of penalty
collected must be deposited in the county general fund.

(j) If a property owner has applied for more than one homestead and the county
assessors cannot determine which property should be classified as homestead, the county
assessors will refer the information to the commissioner. The commissioner shall make
the determination and notify the counties within 60 days.

(k) In addition to lists of homestead properties, the commissioner may ask the
counties to furnish lists of all properties and the record owners. The Social Security
numbers and federal identification numbers that are maintained by a county or city
assessor for property tax administration purposes, and that may appear on the lists retain
their classification as private or nonpublic data; but may be viewed, accessed, and used by
the county auditor or treasurer of the same county for the limited purpose of assisting the
commissioner in the preparation of microdata samples under section 270C.12.

(l) On or before April 30 each year beginning in 2007, each county must provide the
commissioner with the following data for each parcel of homestead property by electronic
means as defined in section 289A.02, subdivision 8:

(i) the property identification number assigned to the parcel for purposes of taxes
payable in the current year;

(ii) the name and Social Security number of each occupant of homestead property
who is the property owner, property owner's spouse, qualifying relative of a property
owner, or spouse of a qualifying relative;

(iii) the classification of the property under section 273.13 for taxes payable in the
current year and in the prior year;

(iv) an indication of whether the property was classified as a homestead for taxes
payable in the current year because of occupancy by a relative of the owner or by a
spouse of a relative;

(v) the property taxes payable as defined in section 290A.03, subdivision 13, for the
current year and the prior year;

(vi) the market value of improvements to the property first assessed for tax purposes
for taxes payable in the current year;

(vii) the assessor's estimated market value assigned to the property for taxes payable
in the current year and the prior year;

(viii) the taxable market value assigned to the property for taxes payable in the
current year and the prior year;

(ix) whether there are delinquent property taxes owing on the homestead;

(x) the unique taxing district in which the property is located; and

(xi) such other information as the commissioner decides is necessary.

The commissioner shall use the information provided on the lists as appropriate
under the law, including for the detection of improper claims by owners, or relatives
of owners, under chapter 290A.

EFFECTIVE DATE.

This section is effective for taxes payable in 2012 and
thereafter.

Sec. 29.

Minnesota Statutes 2010, section 273.13, subdivision 21b, is amended to read:


Subd. 21b.

Net tax capacity.

(a) Gross tax capacity means the product of the
appropriate gross class rates in this section and market values.

(b) Net tax capacity means the product of the appropriate net class rates in this
section and taxable market values.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 30.

Minnesota Statutes 2010, section 273.1398, subdivision 3, is amended to read:


Subd. 3.

Disparity reduction aid.

The amount of disparity aid certified for each
taxing district within each unique taxing jurisdiction for taxes payable in the prior year
shall be multiplied by the ratio of (1) the jurisdiction's tax capacity using the class rates for
taxes payable in the year for which aid is being computed, to (2) its tax capacity using
the class rates for taxes payable in the year prior to that for which aid is being computed,
both based upon taxable market values for taxes payable in the year prior to that for which
aid is being computed. If the commissioner determines that insufficient information is
available to reasonably and timely calculate the numerator in this ratio for the first taxes
payable year that a class rate change or new class rate is effective, the commissioner shall
omit the effects of that class rate change or new class rate when calculating this ratio for
aid payable in that taxes payable year. For aid payable in the year following a year for
which such omission was made, the commissioner shall use in the denominator for the
class that was changed or created, the tax capacity for taxes payable two years prior to that
in which the aid is payable, based on taxable market values for taxes payable in the year
prior to that for which aid is being computed.

Sec. 31.

Minnesota Statutes 2010, section 273.1398, subdivision 4, is amended to read:


Subd. 4.

Disparity reduction credit.

(a) Beginning with taxes payable in 1989,
class 4a, class 3a, and class 3b property qualifies for a disparity reduction credit if: (1)
the property is located in a border city that has an enterprise zone designated pursuant
to section 469.168, subdivision 4; (2) the property is located in a city with a population