as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to the financing and operation of government 1.3 in this state; providing a sales tax rebate; providing 1.4 property tax reform; making changes to income, 1.5 franchise, sales and use, property, motor vehicle 1.6 sales, motor vehicle registration, mortgage registry, 1.7 deed, motor fuels, cigarette and tobacco, liquor, 1.8 insurance premiums, lawful gambling, minerals, estate, 1.9 and special taxes; changing and allowing tax credits, 1.10 subtractions, and exemptions, including an income tax 1.11 subtraction for capital gains; providing a biomedical 1.12 innovation initiative; conforming with changes in 1.13 federal income tax provisions; providing for 1.14 allocation and apportionment of income; imposing a 1.15 state general tax levy on certain property; providing 1.16 a property tax homestead credit; imposing general levy 1.17 limits; providing for property tax levy reverse 1.18 referenda; changing property tax valuation, 1.19 assessment, levy, classification, homestead, credit, 1.20 aid, exemption, deferral, review, appeal, abatement, 1.21 and distribution provisions; abolishing certain 1.22 property tax levies for transit and establishing a 1.23 transit fund; providing and modifying certain aids to 1.24 local units of government; changing levy authority; 1.25 providing for certain payments in lieu of taxes; 1.26 reducing rates on lawful gambling taxes; reducing 1.27 rates on solid waste management taxes; providing for 1.28 state takeover of certain costs of district court 1.29 administration and out-of-home placement; providing 1.30 for uniform sales and use tax administration; 1.31 providing for taxation and incentive payments on 1.32 forest lands; providing for electronic filing and 1.33 payment of taxes; changing procedures for disposition 1.34 of seized contraband; abolishing certain health care 1.35 provider taxes and health plan premium taxes; 1.36 providing for deposit of certain tobacco settlement 1.37 and cigarette tax proceeds to the health care access 1.38 fund; changing tax increment financing provisions and 1.39 authorizing certain grants, duration extensions, and 1.40 expenditures; requiring registration of tax increment 1.41 financing consultants; creating a health care access 1.42 fund reserve; reducing the tax on life insurance 1.43 premiums; increasing property tax refunds and changing 1.44 calculation of rent constituting property taxes for 1.45 purposes of property tax refunds; reducing taconite 1.46 production tax and occupation tax rates; providing 2.1 special authority to certain political subdivisions; 2.2 authorizing special taxing districts; changing and 2.3 clarifying tax administration, collection, 2.4 enforcement, interest, and penalty provisions; 2.5 changing revenue recapture provisions; authorizing 2.6 abatements and waivers of fees and certain taxes in 2.7 disaster areas; changing and imposing fees; changing 2.8 debt collection provisions for student loans; 2.9 providing certain duties and powers to the 2.10 commissioner of revenue; authorizing publication of 2.11 names of certain delinquent taxpayers; authorizing 2.12 border city allocations; changing provisions relating 2.13 to tax-forfeited lands and providing for a 2.14 tax-forfeited lands transfer; defining terms; 2.15 classifying data; establishing a legislative 2.16 commission; requiring studies; imposing a criminal 2.17 penalty; appropriating money; amending Minnesota 2.18 Statutes 2000, sections 16D.08, subdivision 2; 2.19 62J.041, subdivision 1; 62Q.095, subdivision 6; 2.20 69.021, subdivision 5; 84.922, by adding a 2.21 subdivision; 88.49, subdivisions 5, 9a; 88.491, 2.22 subdivision 2; 97A.065, subdivision 2; 103D.905, 2.23 subdivision 3; 115B.24, subdivision 2; 123B.55; 2.24 126C.01, subdivision 3; 126C.13, subdivision 4; 2.25 126C.17, by adding a subdivision; 144.3831, 2.26 subdivision 2; 168.013, subdivision 1a; 174.24, 2.27 subdivision 3b; 179A.101, subdivision 1; 179A.102, 2.28 subdivision 6; 179A.103, subdivision 1; 214.16, 2.29 subdivisions 2, 3; 239.101, subdivision 3; 260.765, by 2.30 adding a subdivision; 260.771, by adding a 2.31 subdivision; 270.06; 270.07, subdivision 3; 270.11, by 2.32 adding a subdivision; 270.12, subdivision 2; 270.271, 2.33 subdivisions 1, 3; 270.60, subdivision 4, by adding a 2.34 subdivision; 270.70, subdivision 13; 270.73, 2.35 subdivision 1; 270.771; 270.78; 270A.03, subdivisions 2.36 5, 7; 270A.11; 270B.01, subdivision 8; 270B.02, 2.37 subdivisions 2, 3; 270B.03, subdivision 6; 270B.14, 2.38 subdivision 1; 271.01, subdivision 5; 271.21, 2.39 subdivision 2; 272.02, subdivisions 9, 10, 22, by 2.40 adding subdivisions; 273.061, subdivisions 1, 2, 8; 2.41 273.072, subdivision 1; 273.11, subdivisions 1a, 14, 2.42 by adding subdivisions; 273.1104, subdivision 2; 2.43 273.111, subdivision 4; 273.121; 273.124, subdivisions 2.44 8, 13, 14; 273.13, subdivisions 22, 23, 24, 25, 31; 2.45 273.1392; 273.1393; 273.1398, subdivisions 1a, 4a, by 2.46 adding subdivisions; 274.01, subdivision 1; 274.13, 2.47 subdivision 1; 275.02; 275.065, subdivisions 1, 3, 5a, 2.48 6, 8, by adding a subdivision; 275.066; 275.07, 2.49 subdivision 1; 275.16; 275.62, subdivision 1; 275.70, 2.50 subdivision 5, by adding subdivisions; 276.04, 2.51 subdivision 2; 276.11, subdivision 1; 276A.01, 2.52 subdivision 3; 276A.06, subdivision 3; 282.01, 2.53 subdivisions 1a, 1b; 282.04, subdivision 2; 287.035; 2.54 287.04; 287.08; 287.12; 287.13, by adding a 2.55 subdivision; 287.20, subdivisions 2, 9; 287.21, 2.56 subdivision 1; 287.28; 289A.02, subdivision 7, by 2.57 adding a subdivision; 289A.08, subdivision 16; 2.58 289A.12, subdivision 3; 289A.18, subdivision 4; 2.59 289A.20, subdivisions 1, 2, 4; 289A.26, subdivision 2.60 2a; 289A.31, subdivision 7; 289A.50, subdivisions 2, 2.61 2a; 289A.60, subdivisions 7, 21; 290.01, subdivisions 2.62 7, 19, 19b, 19c, 19d, 22, 29, 31; 290.014, subdivision 2.63 5; 290.05, subdivision 1; 290.06, subdivisions 2c, 22; 2.64 290.067, subdivisions 1, 2, 2b; 290.0671, subdivisions 2.65 1, 1a, 7; 290.0674, subdivisions 1, 2; 290.0675, 2.66 subdivisions 1, 3; 290.068, subdivisions 1, 3, 4; 2.67 290.091, subdivisions 2, 3; 290.0921, subdivisions 1, 2.68 2, 3, 6; 290.0922, subdivision 2; 290.093; 290.095, 2.69 subdivision 2; 290.17, subdivisions 1, 4; 290.191, 2.70 subdivisions 2, 3, 5; 290.21, subdivision 4; 290.9725; 2.71 290A.03, subdivisions 6, 11, 12, 13, 15; 290A.04, 3.1 subdivisions 2, 2a, 4; 290A.15; 291.005, subdivision 3.2 1; 295.55, subdivision 4; 296A.15, subdivisions 1, 7; 3.3 296A.16, subdivision 2; 296A.21, subdivisions 1, 4; 3.4 296A.24, subdivisions 1, 2; 297A.01, subdivision 3; 3.5 297A.07, subdivision 3; 297A.25, subdivisions 3, 11, 3.6 28; 297A.61, subdivisions 2, 3, 4, 6, 7, 9, 10, 12, 3.7 14, 16, 17, 19, 22, 23, by adding subdivisions; 3.8 297A.62, subdivision 3; 297A.66, subdivisions 1, 3; 3.9 297A.67, subdivisions 2, 8, 23, 24, 25, by adding 3.10 subdivisions; 297A.68, subdivisions 2, 3, 5, 11, 13, 3.11 14, 18, 25, by adding subdivisions; 297A.69, 3.12 subdivision 2; 297A.70, subdivisions 1, 2, 3, 4, 7, 8, 3.13 10, 13, 14; 297A.71, subdivisions 3, 6, by adding 3.14 subdivisions; 297A.72, subdivision 1; 297A.75; 3.15 297A.77, subdivision 1; 297A.80; 297A.82, subdivision 3.16 3, by adding a subdivision; 297A.89, subdivision 1; 3.17 297A.90, subdivision 1; 297A.91; 297A.92, subdivision 3.18 2; 297A.94; 297A.99, subdivisions 7, 9, 11; 297B.03; 3.19 297B.09, subdivision 1; 297E.02, subdivisions 1, 4, 6; 3.20 297E.16, subdivisions 1, 2; 297F.09, subdivision 7; 3.21 297F.10, subdivision 1; 297F.16, subdivision 4; 3.22 297F.20, subdivision 3; 297F.21, subdivisions 1, 2, 3; 3.23 297G.09, subdivision 6; 297G.15, subdivision 4; 3.24 297G.16, subdivisions 5, 7; 297G.20, subdivisions 3, 3.25 4; 297H.02, subdivision 2; 297H.03, subdivision 2; 3.26 297H.04, subdivision 2, by adding a subdivision; 3.27 297H.05; 297H.13, by adding a subdivision; 297I.05, by 3.28 adding a subdivision; 297I.15, by adding a 3.29 subdivision; 297I.20; 297I.35, subdivision 2; 297I.40, 3.30 subdivisions 1, 2, 7; 297I.85, subdivision 7; 298.01, 3.31 subdivisions 3, 3a, 3b, 4, 4a, 4c; 298.225, 3.32 subdivision 1; 298.24, subdivision 1; 298.27; 298.28, 3.33 subdivisions 6, 9a; 298.2961, subdivision 2; 298.75, 3.34 subdivisions 1, 2, by adding a subdivision; 299D.03, 3.35 subdivision 5; 345.41; 345.42, by adding a 3.36 subdivision; 349.19, subdivision 2a; 357.021, 3.37 subdivision 1a; 461.12, by adding a subdivision; 3.38 469.040, subdivision 5; 469.169, by adding a 3.39 subdivision; 469.1732, subdivision 1; 469.174, 3.40 subdivisions 1, 3, 10, 10a, 12, 25; 469.175, 3.41 subdivisions 1, 3, 6, 6b, by adding a subdivision; 3.42 469.176, subdivisions 1b, 1c, 1e, 3, 4, 4g, by adding 3.43 a subdivision; 469.1763, subdivision 6; 469.177, 3.44 subdivisions 1, 11, by adding a subdivision; 469.1771, 3.45 subdivision 1; 469.178, by adding a subdivision; 3.46 469.1791, subdivisions 1, 3, 9; 469.1812, subdivision 3.47 2; 469.1813, subdivisions 4, 6; 469.202, subdivision 3.48 2; 473.388, subdivisions 4, 7; 473.446, subdivision 1, 3.49 by adding a subdivision; 473.843, subdivision 3; 3.50 473F.08, subdivision 3; 473H.10, subdivision 3; 3.51 475.58, subdivision 1; 477A.011, subdivisions 35, 36; 3.52 477A.0121, by adding a subdivision; 477A.0122, by 3.53 adding a subdivision; 477A.013, subdivisions 1, 9; 3.54 477A.03, subdivision 2, by adding a subdivision; 3.55 477A.12; 477A.14; 480.181, subdivision 1; 487.33, 3.56 subdivision 5; 574.34, subdivision 1; Laws 1986, 3.57 chapter 396, section 5; Laws 1997, chapter 231, 3.58 article 10, section 25; Laws 1998, chapter 389, 3.59 article 16, section 35, subdivision 1; Laws 1999, 3.60 chapter 216, article 7, section 46, subdivision 3; 3.61 Laws 1999, chapter 243, article 4, section 19; Laws 3.62 2000, chapter 490, article 8, section 17; Laws 2000, 3.63 chapter 490, article 11, section 26; proposing coding 3.64 for new law in Minnesota Statutes, chapters 3; 12; 3.65 16A; 62Q; 103B; 116J; 123B; 144F; 245; 256L; 270; 272; 3.66 273; 275; 289A; 290; 290A; 295; 296A; 297A; 297H; 469; 3.67 471; 473; 477A; 480; 484; proposing coding for new law 3.68 as Minnesota Statutes, chapter 290C; repealing 3.69 Minnesota Statutes 2000, sections 13.4967, subdivision 3.70 3; 16A.76; 62T.10; 126C.13, subdivisions 1, 2, 3; 3.71 144.1484, subdivision 2; 256L.02, subdivision 3; 4.1 270.31; 270.32; 270.33; 270.34; 270.35; 270.36; 4.2 270.37; 270.38; 270.39; 273.13, subdivision 24a; 4.3 273.1382; 273.1399; 275.08, subdivision 1e; 278.078; 4.4 289A.60, subdivision 15; 290.06, subdivisions 25, 26; 4.5 290.0673; 290.095, subdivisions 1a, 7; 290.191, 4.6 subdivision 4; 290.21, subdivision 3; 290.23; 290.25; 4.7 290.31, subdivisions 2, 2a, 3, 4, 5, 19; 290.35; 4.8 290.9726, subdivision 7; 290A.04, subdivision 2j; 4.9 290A.18, subdivision 2; 295.50; 295.51; 295.52; 4.10 295.53; 295.54; 295.55; 295.56; 295.57; 295.58; 4.11 295.582; 295.59; 296A.16, subdivision 6; 296A.24, 4.12 subdivision 3; 297A.61, subdivision 16; 297A.62, 4.13 subdivision 2; 297A.64; 297A.68, subdivision 21; 4.14 297A.71, subdivisions 2, 15, 16, 21; 297B.032; 4.15 297E.16, subdivision 3; 297F.21, subdivision 4; 4.16 297G.20, subdivision 5; 297I.05, subdivisions 5, 8; 4.17 297I.30, subdivision 3; 469.1732, subdivision 2; 4.18 469.1734, subdivision 4; 469.1782, subdivision 1; Laws 4.19 1988, chapter 426, section 1; Laws 1988, chapter 702, 4.20 section 16; Laws 1992, chapter 511, article 2, section 4.21 52, as amended; Laws 1996, chapter 471, article 8, 4.22 section 45; Laws 1999, chapter 243, article 6, section 4.23 14; Laws 1999, chapter 243, article 6, section 15; 4.24 Laws 2000, chapter 490, article 6, section 17; 4.25 Minnesota Rules, parts 8120.0200; 8120.0500; 4.26 8120.0700; 8120.0900; 8120.1300; 8120.1600; 8120.2000; 4.27 8120.2100; 8120.2200; 8120.2300; 8120.2500; 8120.2700; 4.28 8120.2800; 8120.3000; 8120.3200; 8120.4300; 8120.4400; 4.29 8120.4500; 8120.4600; 8120.4900; 8120.5000; 8120.5100; 4.30 8120.5300. 4.31 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 4.32 ARTICLE 1 4.33 SALES TAX REBATE 4.34 Section 1. [STATEMENT OF PURPOSE.] 4.35 (a) The state of Minnesota derives revenues from a variety 4.36 of taxes, fees, and other sources, including the state sales tax. 4.37 (b) It is fair and reasonable to refund the existing state 4.38 budget surplus in the form of a rebate of nonbusiness consumer 4.39 sales taxes paid by individuals in calendar year 1999. 4.40 (c) Information concerning the amount of sales tax paid at 4.41 various income levels is contained in the Minnesota tax 4.42 incidence report, which is written by the commissioner of 4.43 revenue and presented to the legislature according to Minnesota 4.44 Statutes, section 270.0682. 4.45 (d) It is fair and reasonable to use information contained 4.46 in the Minnesota tax incidence report to determine the 4.47 proportionate share of the sales tax rebate due each eligible 4.48 taxpayer since no effective or practical mechanism exists for 4.49 determining the amount of actual sales tax paid by each eligible 4.50 individual. 5.1 Sec. 2. [SALES TAX REBATE.] 5.2 Subdivision 1. [ELIGIBILITY; REBATE BASED ON INCOME.] An 5.3 individual who was a resident of Minnesota for any part of 1999, 5.4 and filed a 1999 Minnesota income tax return on or before 5.5 November 30, 2001, and had a tax liability before refundable 5.6 credits on that return of at least $1 and who was not allowed to 5.7 be claimed as a dependent on a 1999 federal income tax return 5.8 filed by another person is eligible for a sales tax rebate based 5.9 on income under either subdivision 2 or 3. 5.10 Subd. 2. [MARRIED JOINT AND HEAD OF HOUSEHOLD FILERS.] The 5.11 sales tax rebate for taxpayers who qualify under subdivision 1 5.12 and are married filing joint or head of household filers is 5.13 computed according to the following schedule: 5.14 Income Sales Tax Rebate 5.15 less than $2,500 $237 5.16 at least $2,500 but less than $5,000 $295 5.17 at least $5,000 but less than $10,000 $309 5.18 at least $10,000 but less than $15,000 $341 5.19 at least $15,000 but less than $20,000 $386 5.20 at least $20,000 but less than $25,000 $417 5.21 at least $25,000 but less than $30,000 $445 5.22 at least $30,000 but less than $35,000 $483 5.23 at least $35,000 but less than $40,000 $526 5.24 at least $40,000 but less than $45,000 $571 5.25 at least $45,000 but less than $50,000 $606 5.26 at least $50,000 but less than $60,000 $621 5.27 at least $60,000 but less than $70,000 $648 5.28 at least $70,000 but less than $80,000 $706 5.29 at least $80,000 but less than $90,000 $762 5.30 at least $90,000 but less than $100,000 $825 5.31 at least $100,000 but less than $120,000 $894 5.32 at least $120,000 but less than $140,000 $979 5.33 at least $140,000 but less than $160,000 $1,058 5.34 at least $160,000 but less than $180,000 $1,133 5.35 at least $180,000 but less than $200,000 $1,204 5.36 at least $200,000 but less than $400,000 $1,540 6.1 at least $400,000 but less than $600,000 $2,026 6.2 at least $600,000 but less than $800,000 $2,431 6.3 at least $800,000 but less than $1,000,000 $2,787 6.4 $1,000,000 and over $3,250 6.5 Subd. 3. [SINGLE AND MARRIED SEPARATE FILERS.] The sales 6.6 tax rebate for individuals who qualify under subdivision 1 as 6.7 single or married filing separately is computed according to the 6.8 following schedule: 6.9 Income Sales Tax Rebate 6.10 less than $2,500 $120 6.11 at least $2,500 but less than $5,000 $126 6.12 at least $5,000 but less than $10,000 $168 6.13 at least $10,000 but less than $15,000 $200 6.14 at least $15,000 but less than $20,000 $231 6.15 at least $20,000 but less than $25,000 $258 6.16 at least $25,000 but less than $30,000 $311 6.17 at least $30,000 but less than $40,000 $335 6.18 at least $40,000 but less than $50,000 $370 6.19 at least $50,000 but less than $70,000 $474 6.20 at least $70,000 but less than $100,000 $657 6.21 at least $100,000 but less than $140,000 $792 6.22 at least $140,000 but less than $200,000 $956 6.23 at least $200,000 but less than $400,000 $1,295 6.24 at least $400,000 but less than $600,000 $1,625 6.25 $600,000 and over $1,625 6.26 Subd. 4. [NONRESIDENTS.] Individuals who were not 6.27 residents of Minnesota for any part of 1999 and who paid more 6.28 than $10 in Minnesota sales tax under Minnesota Statutes, 6.29 chapter 297A on nonbusiness consumer purchases in that year 6.30 qualify for a rebate under this subdivision only. Qualifying 6.31 nonresidents must file a claim for rebate on a form prescribed 6.32 by the commissioner by November 30, 2001. The claim must 6.33 include receipts showing the Minnesota sales tax paid and the 6.34 date of the sale. Taxes paid on purchases allowed in the 6.35 computation of federal taxable income or reimbursed by an 6.36 employer are not eligible for the rebate. The commissioner 7.1 shall determine the qualifying taxes paid and rebate the lesser 7.2 of: 7.3 (1) 41.25 percent of that amount; or 7.4 (2) the maximum amount for which the claimant would have 7.5 been eligible as determined under subdivision 2 if the taxpayer 7.6 filed the 1999 federal income tax return as a married taxpayer 7.7 filing jointly or head of household, or as determined under 7.8 subdivision 3 for other taxpayers. 7.9 Subd. 5. [DEFINITION OF INCOME.] "Income," for purposes of 7.10 this section other than subdivision 4, is taxable income as 7.11 defined in section 63 of the Internal Revenue Code of 1986, as 7.12 amended through December 31, 1998, plus the sum of any additions 7.13 to federal taxable income for the taxpayer under Minnesota 7.14 Statutes, section 290.01, subdivision 19a, and reported on the 7.15 original 1999 income tax return, including subsequent 7.16 adjustments to that return made within the time limits specified 7.17 in subdivision 12. For an individual who was a resident of 7.18 Minnesota for less than the entire year, the sales tax rebate 7.19 equals the sales tax rebate calculated under subdivision 2 or 3 7.20 multiplied by the percentage determined pursuant to Minnesota 7.21 Statutes, section 290.06, subdivision 2c, paragraph (e), as 7.22 calculated on the original 1999 income tax return, including 7.23 subsequent adjustments to that return made within the time 7.24 limits specified in subdivision 12. For purposes of subdivision 7.25 4, "income" is taxable income as defined in section 63 of the 7.26 Internal Revenue Code of 1986, as amended through December 31, 7.27 1998, and reported on the taxpayer's original federal tax return 7.28 for the first taxable year beginning after December 31, 1998. 7.29 Subd. 6. [SOCIAL SECURITY AND PUBLIC PENSION 7.30 RECIPIENTS.] (a) An individual qualifies for a rebate of $120 7.31 under this subdivision if the individual: 7.32 (1) was a resident of Minnesota for all of calendar year 7.33 1999; 7.34 (2) is not eligible for a rebate under subdivision 7; 7.35 (3) attained the age of 18 on or before December 31, 1999; 7.36 and 8.1 (4)(i) received social security benefits as defined in 8.2 section 86(d)(1) of the Internal Revenue Code of 1986, as 8.3 amended through December 31, 2000, in calendar year 1999; or 8.4 (ii) received federal, state, or local public pension or 8.5 disability benefits in calendar year 1999 and the commissioner 8.6 is able to obtain reliable information from the appropriate 8.7 public pension plan administrator within a reasonable period of 8.8 time to permit paying the rebate. 8.9 (b) An individual or married couple who qualifies for a 8.10 rebate under both this subdivision and subdivision 1 is eligible 8.11 for the rebate under whichever subdivision provides a larger 8.12 amount. 8.13 (c) If the Social Security Administration, Railroad 8.14 Retirement Board, or the administrator of a public pension is 8.15 paying benefits to a recipient by electronic funds transfers in 8.16 calendar year 2001, the commissioner may pay the rebate under 8.17 this subdivision through electronic funds transfer to the same 8.18 financial institution and into the same account into which those 8.19 benefits are transferred in calendar year 2001. 8.20 (d) For purposes of this subdivision, "public pension plan 8.21 administrator" means (1) a state and local public pension 8.22 administrator, (2) the federal Civil Service Retirement System, 8.23 (3) the United States Department of Defense for the military 8.24 retirement and survivors benefit programs, (4) the United States 8.25 Veterans Administration, and (5) the Federal Employees 8.26 Retirement System. 8.27 (e) A state and local public pension administrator is an 8.28 entity paying benefits under a pension plan enumerated in 8.29 Minnesota Statutes, section 356.20, subdivision 2. Each state 8.30 and local public pension administrator shall provide to the 8.31 commissioner of revenue, in a form the commissioner prescribes, 8.32 a list of individuals to whom it pays benefits that meet the 8.33 requirements of paragraph (a), clauses (1) and (3). 8.34 Subd. 7. [DEPENDENTS.] An individual who: 8.35 (1) was allowed to be claimed as a dependent on a 1999 8.36 federal income tax return filed by another person; 9.1 (2) would have otherwise been eligible for a rebate under 9.2 subdivision 1; and 9.3 (3) reported earned income as defined in section 9.4 32(c)(2)(A)(i) of the Internal Revenue Code, 9.5 is eligible for a rebate under this subdivision only. The 9.6 rebate under this subdivision equals 35 percent of the amount 9.7 allowed under the schedule in subdivision 3 based on the 9.8 individual's income. For an individual who was a resident of 9.9 Minnesota for less than the entire year, the sales tax rebate 9.10 equals the rebate calculated under this subdivision multiplied 9.11 by the percentage determined pursuant to Minnesota Statutes, 9.12 section 290.06, subdivision 2c, paragraph (e), as calculated on 9.13 the original 1999 income tax return. 9.14 Subd. 8. [CREDIT RECIPIENTS.] An individual who 9.15 (1) was a resident of Minnesota for any part of 1999; 9.16 (2) was not eligible for a rebate under subdivision 1, 6, 9.17 or 7; 9.18 (3) was not allowed to be claimed as a dependent on a 1999 9.19 federal income tax return by another person; and 9.20 (4)(i) claimed a refund under Minnesota Statutes, chapter 9.21 290A, for property taxes paid in 2000 or rent constituting 9.22 property taxes paid in 1999; or 9.23 (ii) filed a 1999 Minnesota income tax return before 9.24 November 30, 2001, in order to 9.25 (A) claim a credit under Minnesota Statutes, section 9.26 290.067, 290.0671, or 290.0674; 9.27 (B) claim a refund of withheld taxes; or 9.28 (C) claim a refund of estimated taxes, 9.29 is eligible for a rebate under this subdivision only. For 9.30 married couples filing joint returns and heads of households, 9.31 the rebate equals the minimum amount in subdivision 2. For 9.32 single filers and married individuals filing separate returns 9.33 and for rebates based on refunds under Minnesota Statutes, 9.34 chapter 290A, the rebate equals the minimum amount in 9.35 subdivision 3. For an individual who was a resident of 9.36 Minnesota for less than the entire year, the sales tax rebate 10.1 equals the rebate calculated under this subdivision multiplied 10.2 by the percentage determined under Minnesota Statutes, section 10.3 290.06, subdivision 2c, paragraph (e), as calculated on the 10.4 original 1999 income tax return. 10.5 Subd. 9. [FISCAL YEAR TAXPAYERS.] For a fiscal year 10.6 taxpayer, the dates in subdivisions 1 through 4 are extended one 10.7 month for each month in calendar year 1999 that occurred prior 10.8 to the start of the individual's 1999 fiscal tax year. 10.9 Subd. 10. [PAYMENT TO STATE.] (a) A taxpayer receiving a 10.10 rebate under this section may endorse and return the rebate 10.11 check to the state and designate that the returned rebate be 10.12 deposited in one or more of the following accounts for use only 10.13 for the purposes designated in this subdivision: 10.14 (1) an account for the basic sliding fee child care program 10.15 for child care assistance to families administered by the 10.16 commissioner of children, families, and learning under Minnesota 10.17 Statutes, section 119B.03; 10.18 (2) an account for kindergarten through grade 12 education 10.19 purposes, such as reducing instructor-to-student ratios and 10.20 paying increased heating fuel costs for school facilities, to be 10.21 administered by the commissioner of children, families, and 10.22 learning; 10.23 (3) the affordable rental investment fund to be used by the 10.24 housing finance agency for family rental housing assistance 10.25 under Minnesota Statutes, section 462A.21, subdivision 8b; 10.26 (4) the contaminated site cleanup and development account 10.27 to be used by the commissioner of trade and economic development 10.28 for contamination cleanup development grants under Minnesota 10.29 Statutes, sections 116J.551 to 116J.556; 10.30 (5) an account to provide funding for public transit and 10.31 highway improvement projects to reduce congestion to be 10.32 administered by the commissioner of transportation; 10.33 (6) an account to increase funding for the University of 10.34 Minnesota and the Minnesota state colleges and universities 10.35 under Minnesota Statutes, section 136F.01, as appropriated by 10.36 law; and 11.1 (7) an account to provide a fund for reimbursement of 11.2 nursing homes, licensed under Minnesota Statutes, chapter 144A, 11.3 for increased heating fuel costs to be administered by the 11.4 commissioner of human services. 11.5 (b) The rebate check must be accompanied by a notice 11.6 prepared by the commissioner of revenue that explains the 11.7 taxpayer's option to endorse the check to the state and explains 11.8 the uses of the funds that the taxpayer may designate. In 11.9 preparing the notice, the commissioner of revenue shall consult 11.10 with the commissioners or agencies that administer the funds or 11.11 accounts. The notice must also explain that a taxpayer may cash 11.12 the rebate check and mail a contribution of any amount to the 11.13 state and that the contribution must be used for the option or 11.14 options under paragraph (a) as designated by the taxpayer. The 11.15 notice must contain in bold print the address to which the 11.16 endorsed check or a state contribution may be mailed. 11.17 (c) Funds endorsed and mailed to the state and 11.18 contributions mailed to the state under this subdivision must be 11.19 deposited by the commissioner of finance in the fund or account 11.20 designated and are appropriated to the agency or commissioner 11.21 designated by the taxpayer or contributor for use as provided in 11.22 this subdivision. Funds appropriated under this paragraph are 11.23 available until expended. 11.24 (d) Funds appropriated under this subdivision are in 11.25 addition to any funds appropriated for the purposes given in 11.26 this subdivision and may not be used for any other purposes 11.27 including the reduction of any other appropriations. Funds 11.28 appropriated to a commissioner or agency under this subdivision 11.29 are not included in the department's or agency's budget base. 11.30 Subd. 11. [PAYMENT DATES; INTEREST.] The commissioner of 11.31 revenue shall begin paying sales tax rebates by 90 days after 11.32 final enactment of this act. Sales tax rebates not paid by 11.33 January 1, 2002, bear interest at the rate specified in 11.34 Minnesota Statutes, section 270.75. 11.35 Subd. 12. [NO ADJUSTMENTS AFTER PROCESSING.] A sales tax 11.36 rebate may not be adjusted based on changes to a 1999 income tax 12.1 return that are made by order of assessment after the date the 12.2 rebate is processed, or made by the taxpayer that are filed with 12.3 the commissioner of revenue after that date. 12.4 Subd. 13. [JOINT REBATE RULES.] Individuals who filed a 12.5 joint income tax return for 1999 must receive a joint sales tax 12.6 rebate. After the sales tax rebate has been issued, but before 12.7 the check has been cashed, either joint claimant may request a 12.8 separate check for one-half of the joint sales tax rebate. 12.9 Notwithstanding anything in this section to the contrary, if 12.10 prior to payment, the commissioner has been notified that 12.11 persons who filed a joint 1999 income tax return are living at 12.12 separate addresses, as indicated on their 2000 income tax return 12.13 or otherwise, the commissioner may issue separate checks to each 12.14 person. The amount payable to each person is one-half of the 12.15 total joint rebate. 12.16 Subd. 14. [DECEASED INDIVIDUALS.] If a rebate is received 12.17 by the estate of a deceased individual after the probate estate 12.18 has been closed, and if the original rebate check is returned to 12.19 the commissioner with a copy of the decree of descent or final 12.20 account of the estate, social security numbers, and addresses of 12.21 the beneficiaries, the commissioner may issue separate checks in 12.22 proportion to their share in the residuary estate in the names 12.23 of the residuary beneficiaries of the estate. 12.24 Subd. 15. [APPLICATION OF OTHER LAW.] (a) The sales tax 12.25 rebate is a "Minnesota tax law" for purposes of Minnesota 12.26 Statutes, section 270B.01, subdivision 8. 12.27 (b) The sales tax rebate is "an overpayment of any tax 12.28 collected by the commissioner" for purposes of Minnesota 12.29 Statutes, section 270.07, subdivision 5. For purposes of this 12.30 subdivision, a joint sales tax rebate is payable to each spouse 12.31 equally. 12.32 (c) The sales tax rebate is a refund subject to revenue 12.33 recapture under Minnesota Statutes, chapter 270A. The 12.34 commissioner of revenue shall remit the entire refund to the 12.35 claimant agency, which shall, upon the request of the spouse who 12.36 does not owe the debt, refund one-half of the joint sales tax 13.1 rebate to the spouse who does not owe the debt. 13.2 Subd. 16. [LAPSE OF ENTITLEMENT.] If the commissioner of 13.3 revenue cannot locate an individual entitled to a sales tax 13.4 rebate by July 1, 2003, or if an individual to whom a sales tax 13.5 rebate was issued has not cashed the check by July 1, 2003, the 13.6 right to the sales tax rebate lapses and the check must be 13.7 deposited in the general fund. 13.8 Subd. 17. [CLAIMS FOR UNPAID REBATES.] Individuals 13.9 entitled to a sales tax rebate pursuant to subdivision 1, 6, 7, 13.10 or 8 but who did not receive one, and individuals who receive a 13.11 sales tax rebate that was not correctly computed, must file a 13.12 claim with the commissioner before July 1, 2002, in a form 13.13 prescribed by the commissioner. These claims must be treated as 13.14 if they are a claim for refund under Minnesota Statutes, section 13.15 289A.50, subdivisions 4 and 7. 13.16 Subd. 18. [APPROPRIATION.] The rebate is a reduction of 13.17 fiscal year 2001 sales tax revenues. The amount necessary to 13.18 make the sales tax rebates and interest provided in this section 13.19 is appropriated from the general fund to the commissioner of 13.20 revenue in fiscal year 2001 and is available until June 30, 2003. 13.21 Subd. 19. [ILLEGALLY CASHED CHECKS.] If a sales tax rebate 13.22 check is cashed by someone other than the payee or payees of the 13.23 check, and the commissioner of revenue determines that the check 13.24 has been forged or improperly endorsed or the commissioner 13.25 determines that a rebate was overstated or erroneously issued, 13.26 the commissioner may issue an order of assessment for the amount 13.27 of the check or the amount the check is overstated against the 13.28 person or persons cashing it. The assessment must be made 13.29 within two years after the check is cashed, but if cashing the 13.30 check constitutes theft under Minnesota Statutes, section 13.31 609.52, or forgery under Minnesota Statutes, section 609.631, 13.32 the assessment can be made at any time. The assessment may be 13.33 appealed administratively and judicially. The commissioner may 13.34 take action to collect the assessment in the same manner as 13.35 provided by Minnesota Statutes, chapter 289A, for any other 13.36 order of the commissioner assessing tax. 14.1 Subd. 20. [AUTHORITY TO CONTRACT WITH VENDOR.] 14.2 Notwithstanding Minnesota Statutes, sections 9.031, 16A.40, 14.3 16B.49, 16B.50, and any other law to the contrary, the 14.4 commissioner of revenue may take whatever actions the 14.5 commissioner deems necessary to pay the rebates required by this 14.6 section, and may, in consultation with the commissioner of 14.7 finance and the state treasurer, contract with a private vendor 14.8 or vendors to process, print, and mail the rebate checks or 14.9 warrants required under this section and receive and disburse 14.10 state funds to pay those checks or warrants. 14.11 Subd. 21. [ELECTRONIC PAYMENT.] The commissioner may pay 14.12 rebates required by this section by electronic funds transfer to 14.13 individuals who requested that their 2000 individual income tax 14.14 refund be paid through electronic funds transfer. The 14.15 commissioner may make the electronic funds transfer payments to 14.16 the same financial institution and into the same account as the 14.17 2000 individual income tax refund. 14.18 Subd. 22. [ADJUSTMENTS.] Before payment, the commissioner 14.19 of revenue shall adjust the rebate as follows: 14.20 the rebates calculated in subdivisions 2, 3, 4, 6, 7, and 8 14.21 must be proportionately reduced to account for 1999 income tax 14.22 returns that are filed on or after January 1, 2001, but before 14.23 June 1, 2001, so that the estimated amount of sales tax rebates 14.24 payable under subdivisions 2, 3, 4, 6, 7, and 8 on the date the 14.25 rebate is processed does not exceed $856,280,000. The 14.26 adjustment under this subdivision is not a rule subject to 14.27 Minnesota Statutes, chapter 14. 14.28 Sec. 3. [APPROPRIATIONS.] 14.29 (a) $500,000 for fiscal year 2001 and $800,000 for fiscal 14.30 year 2002 is appropriated from the general fund to the 14.31 commissioner of revenue to administer the sales tax rebate in 14.32 this article. Any unencumbered balance remaining on June 30, 14.33 2001, does not cancel but is available for expenditure by the 14.34 commissioner of revenue until June 30, 2002. Notwithstanding 14.35 Minnesota Statutes, section 16A.285, the commissioner of revenue 14.36 may not use this appropriation for any purpose other than 15.1 administering the sales tax rebate. This is a one-time 15.2 appropriation and may not be added to the agency's budget base. 15.3 (b) $278,000 is appropriated from the general fund to the 15.4 state treasurer to pay the cost of clearing sales tax rebate 15.5 checks through commercial banks. 15.6 Sec. 4. [EFFECTIVE DATE.] 15.7 Sections 1 to 3 are effective the day following final 15.8 enactment. 15.9 ARTICLE 2 15.10 PROPERTY TAX REFORM 15.11 Section 1. [16A.88] [TRANSIT FUND.] 15.12 The transit fund is established within the state treasury. 15.13 At least 5.5 percent of the appropriations from the fund must be 15.14 used for the funding of transit systems outside the metropolitan 15.15 area under section 174.24. Appropriations from the fund may 15.16 also be used for the funding of transit systems within the 15.17 metropolitan area under sections 473.405 to 473.449. Revenues 15.18 in this fund may not be used for the purposes of funding capital 15.19 or operating expenses related to the operation of a light rail 15.20 line or a commuter rail line. 15.21 [EFFECTIVE DATE.] This section is effective July 1, 2002. 15.22 Sec. 2. Minnesota Statutes 2000, section 123B.55, is 15.23 amended to read: 15.24 123B.55 [DEBT SERVICE LEVY.] 15.25 A district may levy the amounts necessary to make payments 15.26 for bonds issued and for interest on them, including the bonds 15.27 and interest on them, issued as authorized by Minnesota Statutes 15.28 1974, section 275.125, subdivision 3, clause (7)(C); and the 15.29 amounts necessary for repayment of debt service loans and 15.30 capital loans, minus the amount of debt service equalization 15.31 revenue of the district and the district's tax base replacement 15.32 aid under section 123B.551. 15.33 [EFFECTIVE DATE.] This section is effective for taxes 15.34 payable in 2003 and subsequent years. 15.35 Sec. 3. [123B.551] [ELECTRIC GENERATION TAX BASE 15.36 REPLACEMENT DEBT SERVICE AID.] 16.1 Each school district is eligible for tax base replacement 16.2 debt service aid for taxes payable in 2003 and subsequent years 16.3 equal to 0.5 percent of the assessment year 2001 taxable market 16.4 value of property classified as class 3(4) under section 273.13, 16.5 subdivision 24, multiplied by the district's local tax rate for 16.6 bonded debt for taxes payable in 2002. In the case of districts 16.7 having debt under multiple debt issues, an aid amount must be 16.8 separately determined for each issue. Debt aid for each debt 16.9 issue must be paid annually as long as the bonds for the debt 16.10 issue remain outstanding. 16.11 [EFFECTIVE DATE.] This section is effective for taxes 16.12 payable in 2003 and subsequent years. 16.13 Sec. 4. Minnesota Statutes 2000, section 126C.01, 16.14 subdivision 3, is amended to read: 16.15 Subd. 3. [REFERENDUM MARKET VALUE.] "Referendum market 16.16 value" means the market value of all taxable property,except16.17thatexcluding property classified as class 2 or class 4c under 16.18 section 273.13. The portion of class 2a property consisting of 16.19 the house, garage, and surrounding one acre of land of an 16.20 agricultural homestead is included in referendum market value. 16.21 Any class of property, or any portion of a class of 16.22 property,withthat is included in the definition of referendum 16.23 market value and that has a class rate of less than one percent 16.24 under section 273.13 shall have a referendum market value equal 16.25 to its net tax capacity multiplied by 100. 16.26 [EFFECTIVE DATE.] This section is effective for taxes 16.27 payable in 2002 and subsequent years. 16.28 Sec. 5. Minnesota Statutes 2000, section 126C.13, 16.29 subdivision 4, is amended to read: 16.30 Subd. 4. [GENERAL EDUCATION AID.] A district's general 16.31 education aid is the sum of the following amounts: 16.32 (1)the product of (i) the difference between thegeneral 16.33 education revenue, excluding transition revenue and supplemental 16.34 revenue, and the general education levy, times (ii) the ratio of16.35the actual amount levied to the permitted levy; 16.36 (2) transition aid according to section 126C.10, 17.1 subdivision 22; 17.2 (3) supplemental aid according to section 127A.49; 17.3 (4) shared time aid according to section 126C.01, 17.4 subdivision 7; and 17.5 (5) referendum aid according to section 126C.17. 17.6 [EFFECTIVE DATE.] This section is effective for taxes 17.7 payable in 2002 and thereafter. 17.8 Sec. 6. Minnesota Statutes 2000, section 126C.17, is 17.9 amended by adding a subdivision to read: 17.10 Subd. 7a. [REFERENDUM TAX BASE REPLACEMENT AID.] For each 17.11 school district, for each separately authorized referendum levy, 17.12 the commissioner of revenue, in consultation with the 17.13 commissioner of children, families, and learning, shall certify 17.14 the amount of the referendum levy in taxes payable year 2001 17.15 levied against property classified as class 2 or class 4c, 17.16 excluding the portion of the tax paid by the portion of class 2a 17.17 property consisting of the house, garage, and surrounding one 17.18 acre of land. The resulting amount must be used to reduce the 17.19 district's referendum levy amount otherwise determined, and must 17.20 be paid to the district each year that the referendum authority 17.21 remains in effect. The aid payable under this subdivision must 17.22 be subtracted from the district's referendum equalization aid 17.23 under subdivision 7. 17.24 For the purposes of this subdivision, the referendum levy 17.25 with the latest year of expiration is assumed to be at the 17.26 highest level of equalization, and the referendum levy with the 17.27 earliest year of expiration is assumed to be at the lowest level 17.28 of equalization. 17.29 [EFFECTIVE DATE.] This section is effective for taxes 17.30 payable in 2002 and subsequent years. 17.31 Sec. 7. Minnesota Statutes 2000, section 174.24, 17.32 subdivision 3b, is amended to read: 17.33 Subd. 3b. [OPERATING ASSISTANCE.] (a) The commissioner 17.34 shall determine the total operating cost of any public transit 17.35 system receiving or applying for assistance in accordance with 17.36 generally accepted accounting principles. To be eligible for 18.1 financial assistance, an applicant or recipient shall provide to 18.2 the commissioner all financial records and other information and 18.3 shall permit any inspection reasonably necessary to determine 18.4 total operating cost and correspondingly the amount of 18.5 assistance which may be paid to the applicant or recipient. 18.6 Where more than one county or municipality contributes 18.7 assistance to the operation of a public transit system, the 18.8 commissioner shall identify one as lead agency for the purpose 18.9 of receiving moneys under this section. 18.10 (b) Prior to distributing operating assistance to eligible 18.11 recipients for any contract period, the commissioner shall place 18.12 all recipients into one of the following classifications: large 18.13 urbanized area service, urbanized area service, small urban area 18.14 service, rural area service, and elderly and handicapped 18.15 service. The commissioner shall distribute funds under this 18.16 section so that the percentage of total operating cost paid by 18.17 any recipient from local sources will not exceed the percentage 18.18 for that recipient's classification, except as provided in an 18.19 undue hardship case. The percentages shall be: for large 18.20 urbanized area service,5035 percent; for urbanized area 18.21 service and small urban area service,4025 percent; for rural 18.22 area service,3525 percent; and for elderly and handicapped 18.23 service,3525 percent. The remainder of the total operating 18.24 cost will be paid from state funds less any assistance received 18.25 by the recipient from any federal source. For purposes of this 18.26 subdivision "local sources" means all local sources of funds and 18.27 includes all operating revenue, tax levies,and contributions 18.28 from public funds, except that the commissioner may exclude from 18.29 the total assistance contract revenues derived from operations 18.30 the cost of which is excluded from the computation of total 18.31 operating cost. Any taxing jurisdiction receiving assistance 18.32 under this section must not use property tax levies to finance 18.33 transit services. 18.34 (c) If a recipient informs the commissioner in writing 18.35 after the establishment of these percentages but prior to the 18.36 distribution of financial assistance for any year that paying 19.1 its designated percentage of total operating cost from local 19.2 sources will cause undue hardship, the commissioner may reduce 19.3 the percentage to be paid from local sources by the recipient 19.4 and increase the percentage to be paid from local sources by one 19.5 or more other recipients inside or outside the classification, 19.6 provided that no recipient shall have its percentage thus 19.7 reduced or increased for more than two years successively. If 19.8 for any year the funds appropriated to the commissioner to carry 19.9 out the purposes of this section are insufficient to allow the 19.10 commissioner to pay the state share of total operating cost as 19.11 provided in this paragraph, the commissioner shall reduce the 19.12 state share in each classification to the extent necessary. 19.13 [EFFECTIVE DATE.] This section is effective for transit 19.14 services provided and property taxes payable in calendar year 19.15 2002 and subsequent years. 19.16 Sec. 8. Minnesota Statutes 2000, section 270.12, 19.17 subdivision 2, is amended to read: 19.18 Subd. 2. [MEETING DATES; DUTIES.] The board shall meet 19.19 annually between April 15 and June 30 at the office of the 19.20 commissioner of revenue and examine and compare the returns of 19.21 the assessment of the property in the several counties, and 19.22 equalize the same so that all the taxable property in the state 19.23 shall be assessed at its market value, subject to the following 19.24 rules: 19.25 (1) The board shall add to the aggregate valuation of the 19.26 real property of every county, which the board believes to be 19.27 valued below its market value in money, such percent as will 19.28 bring the same to its market value in money; 19.29 (2) The board shall deduct from the aggregate valuation of 19.30 the real property of every county, which the board believes to 19.31 be valued above its market value in money, such percent as will 19.32 reduce the same to its market value in money; 19.33 (3) If the board believes the valuation for a part of a 19.34 class determined by a range of market value under clause (8) or 19.35 otherwise, a class, or classes of the real property of any town 19.36 or district in any county, or the valuation for a part of a 20.1 class, a class, or classes of the real property of any county 20.2 not in towns or cities, should be raised or reduced, without 20.3 raising or reducing the other real property of such county, or 20.4 without raising or reducing it in the same ratio, the board may 20.5 add to, or take from, the valuation of a part of a class, a 20.6 class, or classes in any one or more of such towns or cities, or 20.7 of the property not in towns or cities, such percent as the 20.8 board believes will raise or reduce the same to its market value 20.9 in money; 20.10 (4) The board shall add to the aggregate valuation of any 20.11 part of a class, a class, or classes of personal property of any 20.12 county, town, or city, which the board believes to be valued 20.13 below the market value thereof, such percent as will raise the 20.14 same to its market value in money; 20.15 (5) The board shall take from the aggregate valuation of 20.16 any part of a class, a class, or classes of personal property in 20.17 any county, town or city, which the board believes to be valued 20.18 above the market value thereof, such percent as will reduce the 20.19 same to its market value in money; 20.20 (6) The board shall not reduce the aggregate valuation of 20.21 all the property of the state, as returned by the several county 20.22 auditors, more than one percent on the whole valuation thereof; 20.23 (7) When it would be of assistance in equalizing values the 20.24 board may require any county auditor to furnish statements 20.25 showing assessments of real and personal property of any 20.26 individuals, firms, or corporations within the county. The 20.27 board shall consider and equalize such assessments and may 20.28 increase the assessment of individuals, firms, or corporations 20.29 above the amount returned by the county board of equalization 20.30 when it shall appear to be undervalued, first giving notice to 20.31 such persons of the intention of the board so to do, which 20.32 notice shall fix a time and place of hearing. The board shall 20.33 not decrease any such assessment below the valuation placed by 20.34 the county board of equalization; 20.35 (8) In equalizing values pursuant to this section, the 20.36 board shall utilize a 12-month assessment/sales ratio study 21.1 conducted by the department of revenue containing only sales 21.2 that are filed in the county auditor's office under section 21.3 272.115, by November 1 of the previous year and that occurred 21.4 between October 1 of the year immediately preceding the previous 21.5 year and September 30 of the previous year. 21.6 The assessment/sales ratio study may separate the values of 21.7 residential property into market value categories. The board 21.8 may adjust the market value categories and the number of 21.9 categories as necessary to create an adequate sample size for 21.10 each market value category. The board may determine the 21.11 adequate sample size. The board may adjust the relative share 21.12 of market value assigned to land value versus building value, in 21.13 the case of property classes subject to the state general tax 21.14 under section 275.025. To the extent practicable, the 21.15 methodology used in preparing the assessment/sales ratio study 21.16 must be consistent with the most recent Standard on Assessment 21.17 Sales Ratio Studies published by the assessment standards 21.18 committee of the International Association of Assessing 21.19 Officers. The board may determine the geographic area used in 21.20 preparing the study to accurately equalize values. A sales 21.21 ratio study separating residential property into market value 21.22 categories may not be used as the basis for a petition under 21.23 chapter 278. 21.24 The sales prices used in the study must be discounted for 21.25 terms of financing. The board shall use the median ratio as the 21.26 statistical measure of the level of assessment for any 21.27 particular category of property; and 21.28 (9) The board shall receive from each county the estimated 21.29 market values on the assessment date falling within the study 21.30 period for all parcels by magnetic tape or other medium as 21.31 prescribed by the commissioner of revenue. 21.32 [EFFECTIVE DATE.] This section is effective January 1, 2003. 21.33 Sec. 9. Minnesota Statutes 2000, section 273.13, 21.34 subdivision 22, is amended to read: 21.35 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 21.36 23, real estate which is residential and used for homestead 22.1 purposes is class 1. The market value of class 1a property must 22.2 be determined based upon the value of the house, garage, and 22.3 land. 22.4The first $76,000 of market value ofClass 1a property has 22.5 a net class rate of one percent of its market value; and the22.6market value of class 1a property that exceeds $76,000 has a22.7class rate of 1.65 percent of its market value. 22.8 (b) Class 1b property includes homestead real estate or 22.9 homestead manufactured homes used for the purposes of a 22.10 homestead by 22.11 (1) any blind person, or the blind person and the blind 22.12 person's spouse; or 22.13 (2) any person, hereinafter referred to as "veteran," who: 22.14 (i) served in the active military or naval service of the 22.15 United States; and 22.16 (ii) is entitled to compensation under the laws and 22.17 regulations of the United States for permanent and total 22.18 service-connected disability due to the loss, or loss of use, by 22.19 reason of amputation, ankylosis, progressive muscular 22.20 dystrophies, or paralysis, of both lower extremities, such as to 22.21 preclude motion without the aid of braces, crutches, canes, or a 22.22 wheelchair; and 22.23 (iii) has acquired a special housing unit with special 22.24 fixtures or movable facilities made necessary by the nature of 22.25 the veteran's disability, or the surviving spouse of the 22.26 deceased veteran for as long as the surviving spouse retains the 22.27 special housing unit as a homestead; or 22.28 (3) any person who: 22.29 (i) is permanently and totally disabled and 22.30 (ii) receives 90 percent or more of total household income, 22.31 as defined in section 290A.03, subdivision 5, from 22.32 (A) aid from any state as a result of that disability; or 22.33 (B) supplemental security income for the disabled; or 22.34 (C) workers' compensation based on a finding of total and 22.35 permanent disability; or 22.36 (D) social security disability, including the amount of a 23.1 disability insurance benefit which is converted to an old age 23.2 insurance benefit and any subsequent cost of living increases; 23.3 or 23.4 (E) aid under the federal Railroad Retirement Act of 1937, 23.5 United States Code Annotated, title 45, section 228b(a)5; or 23.6 (F) a pension from any local government retirement fund 23.7 located in the state of Minnesota as a result of that 23.8 disability; or 23.9 (G) pension, annuity, or other income paid as a result of 23.10 that disability from a private pension or disability plan, 23.11 including employer, employee, union, and insurance plans and 23.12 (iii) has household income as defined in section 290A.03, 23.13 subdivision 5, of $50,000 or less; or 23.14 (4) any person who is permanently and totally disabled and 23.15 whose household income as defined in section 290A.03, 23.16 subdivision 5, is 275 percent or less of the federal poverty 23.17 level. 23.18 Property is classified and assessed under clause (4) only 23.19 if the government agency or income-providing source certifies, 23.20 upon the request of the homestead occupant, that the homestead 23.21 occupant satisfies the disability requirements of this paragraph. 23.22 Property is classified and assessed pursuant to clause (1) 23.23 only if the commissioner of economic security certifies to the 23.24 assessor that the homestead occupant satisfies the requirements 23.25 of this paragraph. 23.26 Permanently and totally disabled for the purpose of this 23.27 subdivision means a condition which is permanent in nature and 23.28 totally incapacitates the person from working at an occupation 23.29 which brings the person an income. The first $32,000 market 23.30 value of class 1b property has a net class rate of .45 percent 23.31 of its market value. The remaining market value of class 1b 23.32 property has a net class rate using the rates for class 1 or 23.33 class 2a property, whichever is appropriate, of similar market 23.34 value. 23.35 (c) Class 1c property is commercial use real property that 23.36 abuts a lakeshore line and is devoted to temporary and seasonal 24.1 residential occupancy for recreational purposes but not devoted 24.2 to commercial purposes for more than 250 days in the year 24.3 preceding the year of assessment, and that includes a portion 24.4 used as a homestead by the owner, which includes a dwelling 24.5 occupied as a homestead by a shareholder of a corporation that 24.6 owns the resort or a partner in a partnership that owns the 24.7 resort, even if the title to the homestead is held by the 24.8 corporation or partnership. For purposes of this clause, 24.9 property is devoted to a commercial purpose on a specific day if 24.10 any portion of the property, excluding the portion used 24.11 exclusively as a homestead, is used for residential occupancy 24.12 and a fee is charged for residential occupancy. Class 1c 24.13 property has a class rate of one percent of total market value 24.14 with the following limitation: the area of the property must 24.15 not exceed 100 feet of lakeshore footage for each cabin or 24.16 campsite located on the property up to a total of 800 feet and 24.17 500 feet in depth, measured away from the lakeshore. If any 24.18 portion of the class 1c resort property is classified as class 24.19 4c under subdivision 25, the entire property must meet the 24.20 requirements of subdivision 25, paragraph (d), clause (1), to 24.21 qualify for class 1c treatment under this paragraph. 24.22 (d) Class 1d property includes structures that meet all of 24.23 the following criteria: 24.24 (1) the structure is located on property that is classified 24.25 as agricultural property under section 273.13, subdivision 23; 24.26 (2) the structure is occupied exclusively by seasonal farm 24.27 workers during the time when they work on that farm, and the 24.28 occupants are not charged rent for the privilege of occupying 24.29 the property, provided that use of the structure for storage of 24.30 farm equipment and produce does not disqualify the property from 24.31 classification under this paragraph; 24.32 (3) the structure meets all applicable health and safety 24.33 requirements for the appropriate season; and 24.34 (4) the structure is not salable as residential property 24.35 because it does not comply with local ordinances relating to 24.36 location in relation to streets or roads. 25.1 The market value of class 1d property has the same class 25.2 rates as class 1a property under paragraph (a). 25.3 [EFFECTIVE DATE.] This section is effective for taxes 25.4 payable in 2002 and subsequent years. 25.5 Sec. 10. Minnesota Statutes 2000, section 273.13, 25.6 subdivision 23, is amended to read: 25.7 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 25.8 land including any improvements that is homesteaded. The market 25.9 value of the house and garage and immediately surrounding one 25.10 acre of land has the same class rates as class 1a property under 25.11 subdivision 22. The value of the remaining land including 25.12 improvements up to$115,000 has a net class rate of 0.35 percent25.13of market value. The value of class 2a property over $115,00025.14of market value up to and including$600,000 market value has a 25.15 net class rate of0.80.55 percent of market value. The 25.16 remaining property over $600,000 market value has a class rate 25.17 of1.20one percent of market value. 25.18 (b) Class 2b property is (1) real estate, rural in 25.19 character and used exclusively for growing trees for timber, 25.20 lumber, and wood and wood products; (2) real estate that is not 25.21 improved with a structure and is used exclusively for growing 25.22 trees for timber, lumber, and wood and wood products, if the 25.23 owner has participated or is participating in a cost-sharing 25.24 program for afforestation, reforestation, or timber stand 25.25 improvement on that particular property, administered or 25.26 coordinated by the commissioner of natural resources; (3) real 25.27 estate that is nonhomestead agricultural land; or (4) a landing 25.28 area or public access area of a privately owned public use 25.29 airport. Class 2b property has a net class rate of1.20one 25.30 percent of market value. 25.31 (c) Agricultural land as used in this section means 25.32 contiguous acreage of ten acres or more, used during the 25.33 preceding year for agricultural purposes. "Agricultural 25.34 purposes" as used in this section means the raising or 25.35 cultivation of agricultural products or enrollment in the 25.36 Reinvest in Minnesota program under sections 103F.501 to 26.1 103F.535 or the federal Conservation Reserve Program as 26.2 contained in Public Law Number 99-198. Contiguous acreage on 26.3 the same parcel, or contiguous acreage on an immediately 26.4 adjacent parcel under the same ownership, may also qualify as 26.5 agricultural land, but only if it is pasture, timber, waste, 26.6 unusable wild land, or land included in state or federal farm 26.7 programs. Agricultural classification for property shall be 26.8 determined excluding the house, garage, and immediately 26.9 surrounding one acre of land, and shall not be based upon the 26.10 market value of any residential structures on the parcel or 26.11 contiguous parcels under the same ownership. 26.12 (d) Real estate, excluding the house, garage, and 26.13 immediately surrounding one acre of land, of less than ten acres 26.14 which is exclusively and intensively used for raising or 26.15 cultivating agricultural products, shall be considered as 26.16 agricultural land. 26.17 Land shall be classified as agricultural even if all or a 26.18 portion of the agricultural use of that property is the leasing 26.19 to, or use by another person for agricultural purposes. 26.20 Classification under this subdivision is not determinative 26.21 for qualifying under section 273.111. 26.22 The property classification under this section supersedes, 26.23 for property tax purposes only, any locally administered 26.24 agricultural policies or land use restrictions that define 26.25 minimum or maximum farm acreage. 26.26 (e) The term "agricultural products" as used in this 26.27 subdivision includes production for sale of: 26.28 (1) livestock, dairy animals, dairy products, poultry and 26.29 poultry products, fur-bearing animals, horticultural and nursery 26.30 stock described in sections 18.44 to 18.61, fruit of all kinds, 26.31 vegetables, forage, grains, bees, and apiary products by the 26.32 owner; 26.33 (2) fish bred for sale and consumption if the fish breeding 26.34 occurs on land zoned for agricultural use; 26.35 (3) the commercial boarding of horses if the boarding is 26.36 done in conjunction with raising or cultivating agricultural 27.1 products as defined in clause (1); 27.2 (4) property which is owned and operated by nonprofit 27.3 organizations used for equestrian activities, excluding racing; 27.4 (5) game birds and waterfowl bred and raised for use on a 27.5 shooting preserve licensed under section 97A.115; 27.6 (6) insects primarily bred to be used as food for animals; 27.7and27.8 (7) trees, grown for sale as a crop, and not sold for 27.9 timber, lumber, wood, or wood products; and 27.10 (8) maple syrup, grown by a person licensed by the 27.11 Minnesota department of agriculture under chapter 28A as a food 27.12 processor. 27.13 (f) If a parcel used for agricultural purposes is also used 27.14 for commercial or industrial purposes, including but not limited 27.15 to: 27.16 (1) wholesale and retail sales; 27.17 (2) processing of raw agricultural products or other goods; 27.18 (3) warehousing or storage of processed goods; and 27.19 (4) office facilities for the support of the activities 27.20 enumerated in clauses (1), (2), and (3), 27.21 the assessor shall classify the part of the parcel used for 27.22 agricultural purposes as class 1b, 2a, or 2b, whichever is 27.23 appropriate, and the remainder in the class appropriate to its 27.24 use. The grading, sorting, and packaging of raw agricultural 27.25 products for first sale is considered an agricultural purpose. 27.26 A greenhouse or other building where horticultural or nursery 27.27 products are grown that is also used for the conduct of retail 27.28 sales must be classified as agricultural if it is primarily used 27.29 for the growing of horticultural or nursery products from seed, 27.30 cuttings, or roots and occasionally as a showroom for the retail 27.31 sale of those products. Use of a greenhouse or building only 27.32 for the display of already grown horticultural or nursery 27.33 products does not qualify as an agricultural purpose. 27.34 The assessor shall determine and list separately on the 27.35 records the market value of the homestead dwelling and the one 27.36 acre of land on which that dwelling is located. If any farm 28.1 buildings or structures are located on this homesteaded acre of 28.2 land, their market value shall not be included in this separate 28.3 determination. 28.4 (g) To qualify for classification under paragraph (b), 28.5 clause (4), a privately owned public use airport must be 28.6 licensed as a public airport under section 360.018. For 28.7 purposes of paragraph (b), clause (4), "landing area" means that 28.8 part of a privately owned public use airport properly cleared, 28.9 regularly maintained, and made available to the public for use 28.10 by aircraft and includes runways, taxiways, aprons, and sites 28.11 upon which are situated landing or navigational aids. A landing 28.12 area also includes land underlying both the primary surface and 28.13 the approach surfaces that comply with all of the following: 28.14 (i) the land is properly cleared and regularly maintained 28.15 for the primary purposes of the landing, taking off, and taxiing 28.16 of aircraft; but that portion of the land that contains 28.17 facilities for servicing, repair, or maintenance of aircraft is 28.18 not included as a landing area; 28.19 (ii) the land is part of the airport property; and 28.20 (iii) the land is not used for commercial or residential 28.21 purposes. 28.22 The land contained in a landing area under paragraph (b), clause 28.23 (4), must be described and certified by the commissioner of 28.24 transportation. The certification is effective until it is 28.25 modified, or until the airport or landing area no longer meets 28.26 the requirements of paragraph (b), clause (4). For purposes of 28.27 paragraph (b), clause (4), "public access area" means property 28.28 used as an aircraft parking ramp, apron, or storage hangar, or 28.29 an arrival and departure building in connection with the airport. 28.30 (h) Class 2c property consists of any parcel or contiguous 28.31 parcels of unimproved real estate, excluding agricultural land 28.32 classified under this subdivision that meets all the criteria in 28.33 clauses (1) to (5): 28.34 (1) the property consists of at least 200 contiguous feet 28.35 of unimproved real estate that borders a meandered lake as 28.36 defined in section 103G.005, subdivision 15, paragraph (a), 29.1 clause (3); 29.2 (2) the unimproved real estate is located within 400 feet 29.3 from the ordinary high water elevation of the public waters. 29.4 For purposes of this clause, "unimproved" means that the 29.5 property, or that portion of the property qualifying under this 29.6 paragraph, contains no structures, that there are no docks or 29.7 landings on its shoreline, and that the natural terrain and 29.8 vegetation has not been disturbed, or has been restored to 29.9 native vegetation; 29.10 (3) the property is either (i) the homestead of the owner, 29.11 the owner's spouse, or the owner or spouse's son or daughter, or 29.12 (ii) has been in possession of the owner, the owner's spouse, or 29.13 the owner or spouse's son or daughter for a period of at least 29.14 seven years prior to application for benefits under this 29.15 section; 29.16 (4) the owner files an application with the county assessor 29.17 by July 1 for classification under this paragraph for the 29.18 subsequent assessment year; and 29.19 (5) the owner of the property signs a covenant agreement 29.20 and files the covenant with the county assessor in the county 29.21 where the property is located. The covenant agreement must 29.22 include all of the following: 29.23 (i) legal description of the area to which the covenant 29.24 applies; 29.25 (ii) name and address of the owner; 29.26 (iii) a statement that the land described in the covenant 29.27 must be kept as undeveloped land for the duration of the 29.28 covenant; 29.29 (iv) a statement that the landowner may initiate expiration 29.30 of the covenant agreement by notifying the county assessor, in 29.31 writing, with the date of expiration which must be at least 29.32 eight years from the date of the expiration notice; 29.33 (v) a statement that the covenant is binding on the owner 29.34 or owner's successor or assignee and runs with the land; and 29.35 (vi) a witnessed signature of the owner covenanting to keep 29.36 the land in its undeveloped state as it existed on the date the 30.1 covenant was signed. 30.2 Upon expiration of a covenant agreement in clause (5), the 30.3 property which is sold is subject to additional taxes. The 30.4 amount of additional taxes due on the property equals the 30.5 difference between the taxes actually levied and the taxes that 30.6 would have been imposed if the property had been valued and 30.7 classified as if class 2c did not apply. The additional taxes 30.8 must be extended against the property on the tax list for the 30.9 current year, provided, however, that no interest or penalties 30.10 shall be levied on the additional taxes if timely paid, and 30.11 provided further, that the additional taxes must only be levied 30.12 with respect to the last seven years that the property has been 30.13 valued and assessed under this section. For purposes of this 30.14 subdivision, "timely paid" means paid (i) within 60 days after 30.15 notification from the county that the property no longer 30.16 qualifies, or (ii) prior to the recording of the conveyance of 30.17 the property, whichever is earlier. 30.18 The tax imposed under this paragraph is a lien on the 30.19 property assessed to the same extent and for the same duration 30.20 as other real property taxes. The tax must be extended by the 30.21 county auditor and, when payable, be collected and distributed 30.22 in the same manner provided by law for the collection and 30.23 distribution of other property taxes. 30.24 Class 2c has a class rate of 0.6 percent of market value. 30.25 [EFFECTIVE DATE.] This section is effective for the 2001 30.26 assessment and thereafter, for taxes payable in 2002 and 30.27 thereafter. For taxes payable in 2002, the date for filing an 30.28 application with the county assessor under this section, 30.29 paragraph (h), clause (4), is September 1, 2001. 30.30 Sec. 11. Minnesota Statutes 2000, section 273.13, 30.31 subdivision 24, is amended to read: 30.32 Subd. 24. [CLASS 3.] (a) Commercial and industrial 30.33 property and utility real and personal property is class 3a. 30.34 (1) Except as otherwise provided, each parcel of 30.35 commercial, industrial, or utility real property has a class 30.36 rate of2.41.5 percent of the first tier of market value, and 31.13.4two percent of the remaining market value. In the case of 31.2 contiguous parcels of property owned by the same person or 31.3 entity, only the value equal to the first-tier value of the 31.4 contiguous parcels qualifies for the reduced class rate, except 31.5 that contiguous parcels owned by the same person or entity shall 31.6 be eligible for the first-tier value class rate on each separate 31.7 business operated by the owner of the property, provided the 31.8 business is housed in a separate structure. For the purposes of 31.9 this subdivision, the first tier means the 31.10 first$150,000$200,000 of market value. Real property owned in 31.11 fee by a utility for transmission line right-of-way shall be 31.12 classified at the class rate for the higher tier. 31.13 For purposes of this subdivision, parcels are considered to 31.14 be contiguous even if they are separated from each other by a 31.15 road, street, waterway, or other similar intervening type of 31.16 property. Connections between parcels that consist of power 31.17 lines or pipelines do not cause the parcels to be contiguous. 31.18 Property owners who have contiguous parcels of property that 31.19 constitute separate businesses that may qualify for the 31.20 first-tier class rate shall notify the assessor by July 1, for 31.21 treatment beginning in the following taxes payable year. 31.22 (2) Notwithstanding clauses (1) and (2), all railroad 31.23 operating property and all personal property that is: (i) part 31.24 of an electric generation, transmission, or distribution system; 31.25 or (ii) part of a pipeline system transporting or distributing 31.26 water, gas, crude oil, or petroleum products; and (iii) not 31.27 described in clause (3) or (4),has a class rateis subject to 31.28 the class rates as provided under clause (1) for the first tier 31.29 of market value and the remaining market value. In the case of 31.30 multiple parcels in one county that are owned by one person or 31.31 entity, only one first tier amount is eligible for the reduced 31.32 rate. 31.33 (3) The entire market value of personal property that is: 31.34 (i) tools, implements, and machinery of an electricgeneration,31.35 transmission,or distribution system; (ii) tools, implements, 31.36 and machinery of a pipeline system transporting or distributing 32.1 water, gas, crude oil, or petroleum products; or (iii) the mains 32.2 and pipes used in the distribution of steam or hot or chilled 32.3 water for heating or cooling buildings, has a class rate as 32.4 provided under clause (1) for the remaining market value in 32.5 excess of the first tier. 32.6 (4) The entire market value of personal property consisting 32.7 of attached machinery located at an electric generating station 32.8 that is part of an electric generating system has a class rate 32.9 as provided under clause (1) for the first tier of market value. 32.10 (b) Employment property defined in section 469.166, during 32.11 the period provided in section 469.170, shall constitute class 32.12 3b. The class rates for class 3b property are determined under 32.13 paragraph (a). 32.14(c)(1) Subject to the limitations of clause (2), structures32.15which are (i) located on property classified as class 3a, (ii)32.16constructed under an initial building permit issued after32.17January 2, 1996, (iii) located in a transit zone as defined32.18under section 473.3915, subdivision 3, (iv) located within the32.19boundaries of a school district, and (v) not primarily used for32.20retail or transient lodging purposes, shall have a class rate32.21equal to the lesser of 2.975 percent or the class rate of the32.22second tier of the commercial property rate under paragraph (a)32.23on any portion of the market value that does not qualify for the32.24first tier class rate under paragraph (a). As used in item (v),32.25a structure is primarily used for retail or transient lodging32.26purposes if over 50 percent of its square footage is used for32.27those purposes. A class rate equal to the lesser of 2.97532.28percent or the class rate of the second tier of the commercial32.29property class rate under paragraph (a) shall also apply to32.30improvements to existing structures that meet the requirements32.31of items (i) to (v) if the improvements are constructed under an32.32initial building permit issued after January 2, 1996, even if32.33the remainder of the structure was constructed prior to January32.342, 1996. For the purposes of this paragraph, a structure shall32.35be considered to be located in a transit zone if any portion of32.36the structure lies within the zone. If any property once33.1eligible for treatment under this paragraph ceases to remain33.2eligible due to revisions in transit zone boundaries, the33.3property shall continue to receive treatment under this33.4paragraph for a period of three years.33.5(2) This clause applies to any structure qualifying for the33.6transit zone reduced class rate under clause (1) on January 2,33.71999, or any structure meeting any of the qualification criteria33.8in item (i) and otherwise qualifying for the transit zone33.9reduced class rate under clause (1). Such a structure continues33.10to receive the transit zone reduced class rate until the33.11occurrence of one of the events in item (ii). Property33.12qualifying under item (i)(D), that is located outside of a city33.13of the first class, qualifies for the transit zone reduced class33.14rate as provided in that item. Property qualifying under item33.15(i)(E) qualifies for the transit zone reduced class rate as33.16provided in that item.33.17(i) A structure qualifies for the rate in this clause if it33.18is:33.19(A) property for which a building permit was issued before33.20December 31, 1998; or33.21(B) property for which a building permit was issued before33.22June 30, 2001, if:33.23(I) at least 50 percent of the land on which the structure33.24is to be built has been acquired or is the subject of signed33.25purchase agreements or signed options as of March 15, 1998, by33.26the entity that proposes construction of the project or an33.27affiliate of the entity;33.28(II) signed agreements have been entered into with one33.29entity or with affiliated entities to lease for the account of33.30the entity or affiliated entities at least 50 percent of the33.31square footage of the structure or the owner of the structure33.32will occupy at least 50 percent of the square footage of the33.33structure; and33.34(III) one of the following requirements is met:33.35the project proposer has submitted the completed data33.36portions of an environmental assessment worksheet by December34.131, 1998; or34.2a notice of determination of adequacy of an environmental34.3impact statement has been published by April 1, 1999; or34.4an alternative urban areawide review has been completed by34.5April 1, 1999; or34.6(C) property for which a building permit is issued before34.7July 30, 1999, if:34.8(I) at least 50 percent of the land on which the structure34.9is to be built has been acquired or is the subject of signed34.10purchase agreements as of March 31, 1998, by the entity that34.11proposes construction of the project or an affiliate of the34.12entity;34.13(II) a signed agreement has been entered into between the34.14building developer and a tenant to lease for its own account at34.15least 200,000 square feet of space in the building;34.16(III) a signed letter of intent is entered into by July 1,34.171998, between the building developer and the tenant to lease the34.18space for its own account; and34.19(IV) the environmental review process required by state law34.20was commenced by December 31, 1998;34.21(D) property for which an irrevocable letter of credit with34.22a housing and redevelopment authority was signed before December34.2331, 1998. The structure shall receive the transit zone reduced34.24class rate during construction and for the duration of time that34.25the original tenants remain in the building. Any unoccupied net34.26leasable square footage that is not leased within 36 months34.27after the certificate of occupancy has been issued for the34.28building shall not be eligible to receive the reduced class34.29rate. This reduced class rate applies only if a qualifying34.30entity continues to own the property;34.31(E) property, located in a city of the first class, and for34.32which the building permits for the excavation, the parking ramp,34.33and the office tower were issued prior to April 1, 1999, shall34.34receive the reduced class rate during construction and for the34.35first five assessment years immediately following its initial34.36occupancy provided that, when completed, at least 25 percent of35.1the net leasable square footage must be occupied by a qualifying35.2entity each year during this time period. In order to receive35.3the reduced class rate on the structure in any subsequent35.4assessment years, at least 50 percent of the rentable square35.5footage must be occupied by a qualifying entity. This reduced35.6class rate applies only if a qualifying entity continues to own35.7the property.35.8(ii) A structure specified by this clause, other than a35.9structure qualifying under clause (i)(D) or (E), shall continue35.10to receive the transit zone reduced class rate until the35.11occurrence of one of the following events:35.12(A) if the structure upon initial occupancy will be owner35.13occupied by the entity initially constructing the structure or35.14an affiliated entity, the structure receives the reduced class35.15rate until the structure ceases to be at least 50 percent35.16occupied by the entity or an affiliated entity, provided, if the35.17portion of the structure occupied by that entity or an affiliate35.18of the entity is less than 85 percent, the transit zone class35.19rate reduction for the portion of structure not so occupied35.20terminates upon the leasing of such space to any nonaffiliated35.21entity; or35.22(B) if the structure is leased by a single entity or35.23affiliated entity at the time of initial occupancy, the35.24structure shall receive the reduced class rate until the35.25structure ceases to be at least 50 percent occupied by the35.26entity or an affiliated entity, provided, if the portion of the35.27structure occupied by that entity or an affiliate of the entity35.28is less than 85 percent, the transit zone class rate reduction35.29for the portion of structure not so occupied shall terminate35.30upon the leasing of such space to any nonaffiliated entity; or35.31(C) if the structure meets the criteria in item (i)(C), the35.32structure shall receive the reduced class rate until the35.33expiration of the initial lease term of the applicable tenants.35.34Percentages occupied or leased shall be determined based35.35upon net leasable square footage in the structure. The assessor35.36shall allocate the value of the structure in the same fashion as36.1provided in the general law for portions of any structure36.2receiving and not receiving the transit tax class reduction as a36.3result of this clause.36.4(3) For purposes of paragraph (c), "qualifying entity"36.5means the entity owning the property on September 1, 2000, or an36.6affiliate of an entity that owned the property on September 1,36.72000.36.8 [EFFECTIVE DATE.] This section is effective for taxes 36.9 payable in 2002 and subsequent years. 36.10 Sec. 12. Minnesota Statutes 2000, section 273.13, 36.11 subdivision 25, is amended to read: 36.12 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 36.13 estate containing four or more units and used or held for use by 36.14 the owner or by the tenants or lessees of the owner as a 36.15 residence for rental periods of 30 days or more. Class 4a also 36.16 includes hospitals licensed under sections 144.50 to 144.56, 36.17 other than hospitals exempt under section 272.02, and contiguous 36.18 property used for hospital purposes, without regard to whether 36.19 the property has been platted or subdivided. Class 4a property 36.20in a city with a population of 5,000 or less, that is (1)36.21located outside of the metropolitan area, as defined in section36.22473.121, subdivision 2, or outside any county contiguous to the36.23metropolitan area, and (2) whose city boundary is at least 1536.24miles from the boundary of any city with a population greater36.25than 5,000 has a class rate of 2.15 percent of market value.36.26All other class 4a propertyhas a class rate of2.41.5 percent 36.27 of market value for taxes payable in 2002, 1.25 percent of 36.28 market value for taxes payable in 2003, and one percent of 36.29 market value for taxes payable in 2004 and subsequent years, 36.30 except that class 4a property consisting of a structure 36.31 constructed after June 30, 2001, has a class rate of one percent 36.32 of market value for taxes payable in 2003 and subsequent years. 36.33For purposes of this paragraph, population has the same meaning36.34given in section 477A.011, subdivision 3.36.35 (b) Class 4b includes: 36.36 (1) residential real estate containing less than four units 37.1 that does not qualify as class 4bb, other than seasonal 37.2 residential, and recreational; 37.3 (2) manufactured homes not classified under any other 37.4 provision; 37.5 (3) a dwelling, garage, and surrounding one acre of 37.6 property on a nonhomestead farm classified under subdivision 23, 37.7 paragraph (b) containing two or three units; 37.8 (4) unimproved property that is classified residential as 37.9 determined under subdivision 33. 37.10 Class 4b property has a class rate of1.651.5 percent of 37.11 market value for taxes payable in 2002, 1.25 percent of market 37.12 value for taxes payable in 2003, and one percent of market value 37.13 for taxes payable in 2004 and subsequent years. 37.14 (c) Class 4bb includes: 37.15 (1) nonhomestead residential real estate containing one 37.16 unit, other than seasonal residential, and recreational; and 37.17 (2) a single family dwelling, garage, and surrounding one 37.18 acre of property on a nonhomestead farm classified under 37.19 subdivision 23, paragraph (b). 37.20 Class 4bb has a class rate of1.2one percent on the first 37.21 $76,000 of market value and a class rate of1.651.5 percent of 37.22 its market value that exceeds $76,000 for taxes payable in 2002, 37.23 1.25 percent of market value for taxes payable in 2003, and one 37.24 percent of market value for taxes payable in 2004 and subsequent 37.25 years. 37.26 Property that has been classified as seasonal recreational 37.27 residential property at any time during which it has been owned 37.28 by the current owner or spouse of the current owner does not 37.29 qualify for class 4bb. 37.30 (d) Class 4c property includes: 37.31 (1) except as provided in subdivision 22, paragraph (c), 37.32 real property devoted to temporary and seasonal residential 37.33 occupancy for recreation purposes, including real property 37.34 devoted to temporary and seasonal residential occupancy for 37.35 recreation purposes and not devoted to commercial purposes for 37.36 more than 250 days in the year preceding the year of 38.1 assessment. For purposes of this clause, property is devoted to 38.2 a commercial purpose on a specific day if any portion of the 38.3 property is used for residential occupancy, and a fee is charged 38.4 for residential occupancy. In order for a property to be 38.5 classified as class 4c, seasonal recreational residential for 38.6 commercial purposes, at least 40 percent of the annual gross 38.7 lodging receipts related to the property must be from business 38.8 conducted during 90 consecutive days and either (i) at least 60 38.9 percent of all paid bookings by lodging guests during the year 38.10 must be for periods of at least two consecutive nights; or (ii) 38.11 at least 20 percent of the annual gross receipts must be from 38.12 charges for rental of fish houses, boats and motors, 38.13 snowmobiles, downhill or cross-country ski equipment, or charges 38.14 for marina services, launch services, and guide services, or the 38.15 sale of bait and fishing tackle. For purposes of this 38.16 determination, a paid booking of five or more nights shall be 38.17 counted as two bookings. Class 4c also includes commercial use 38.18 real property used exclusively for recreational purposes in 38.19 conjunction with class 4c property devoted to temporary and 38.20 seasonal residential occupancy for recreational purposes, up to 38.21 a total of two acres, provided the property is not devoted to 38.22 commercial recreational use for more than 250 days in the year 38.23 preceding the year of assessment and is located within two miles 38.24 of the class 4c property with which it is used. Class 4c 38.25 property classified in this clause also includes the remainder 38.26 of class 1c resorts provided that the entire property including 38.27 that portion of the property classified as class 1c also meets 38.28 the requirements for class 4c under this clause; otherwise the 38.29 entire property is classified as class 3. Owners of real 38.30 property devoted to temporary and seasonal residential occupancy 38.31 for recreation purposes and all or a portion of which was 38.32 devoted to commercial purposes for not more than 250 days in the 38.33 year preceding the year of assessment desiring classification as 38.34 class 1c or 4c, must submit a declaration to the assessor 38.35 designating the cabins or units occupied for 250 days or less in 38.36 the year preceding the year of assessment by January 15 of the 39.1 assessment year. Those cabins or units and a proportionate 39.2 share of the land on which they are located will be designated 39.3 class 1c or 4c as otherwise provided. The remainder of the 39.4 cabins or units and a proportionate share of the land on which 39.5 they are located will be designated as class 3a. The owner of 39.6 property desiring designation as class 1c or 4c property must 39.7 provide guest registers or other records demonstrating that the 39.8 units for which class 1c or 4c designation is sought were not 39.9 occupied for more than 250 days in the year preceding the 39.10 assessment if so requested. The portion of a property operated 39.11 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 39.12 nonresidential facility operated on a commercial basis not 39.13 directly related to temporary and seasonal residential occupancy 39.14 for recreation purposes shall not qualify for class 1c or 4c; 39.15 (2) qualified property used as a golf course if: 39.16 (i) it is open to the public on a daily fee basis. It may 39.17 charge membership fees or dues, but a membership fee may not be 39.18 required in order to use the property for golfing, and its green 39.19 fees for golfing must be comparable to green fees typically 39.20 charged by municipal courses; and 39.21 (ii) it meets the requirements of section 273.112, 39.22 subdivision 3, paragraph (d). 39.23 A structure used as a clubhouse, restaurant, or place of 39.24 refreshment in conjunction with the golf course is classified as 39.25 class 3a property; 39.26 (3) real property up to a maximum of one acre of land owned 39.27 by a nonprofit community service oriented organization; provided 39.28 that the property is not used for a revenue-producing activity 39.29 for more than six days in the calendar year preceding the year 39.30 of assessment and the property is not used for residential 39.31 purposes on either a temporary or permanent basis. For purposes 39.32 of this clause, a "nonprofit community service oriented 39.33 organization" means any corporation, society, association, 39.34 foundation, or institution organized and operated exclusively 39.35 for charitable, religious, fraternal, civic, or educational 39.36 purposes, and which is exempt from federal income taxation 40.1 pursuant to section 501(c)(3), (10), or (19) of the Internal 40.2 Revenue Code of 1986, as amended through December 31, 1990. For 40.3 purposes of this clause, "revenue-producing activities" shall 40.4 include but not be limited to property or that portion of the 40.5 property that is used as an on-sale intoxicating liquor or 3.2 40.6 percent malt liquor establishment licensed under chapter 340A, a 40.7 restaurant open to the public, bowling alley, a retail store, 40.8 gambling conducted by organizations licensed under chapter 349, 40.9 an insurance business, or office or other space leased or rented 40.10 to a lessee who conducts a for-profit enterprise on the 40.11 premises. Any portion of the property which is used for 40.12 revenue-producing activities for more than six days in the 40.13 calendar year preceding the year of assessment shall be assessed 40.14 as class 3a. The use of the property for social events open 40.15 exclusively to members and their guests for periods of less than 40.16 24 hours, when an admission is not charged nor any revenues are 40.17 received by the organization shall not be considered a 40.18 revenue-producing activity; 40.19 (4) post-secondary student housing of not more than one 40.20 acre of land that is owned by a nonprofit corporation organized 40.21 under chapter 317A and is used exclusively by a student 40.22 cooperative, sorority, or fraternity for on-campus housing or 40.23 housing located within two miles of the border of a college 40.24 campus; 40.25 (5) manufactured home parks as defined in section 327.14, 40.26 subdivision 3; 40.27 (6) real property that is actively and exclusively devoted 40.28 to indoor fitness, health, social, recreational, and related 40.29 uses, is owned and operated by a not-for-profit corporation, and 40.30 is located within the metropolitan area as defined in section 40.31 473.121, subdivision 2; and 40.32 (7) a leased or privately owned noncommercial aircraft 40.33 storage hangar not exempt under section 272.01, subdivision 2, 40.34 and the land on which it is located, provided that: 40.35 (i) the land is on an airport owned or operated by a city, 40.36 town, county, metropolitan airports commission, or group 41.1 thereof; and 41.2 (ii) the land lease, or any ordinance or signed agreement 41.3 restricting the use of the leased premise, prohibits commercial 41.4 activity performed at the hangar. 41.5 If a hangar classified under this clause is sold after June 41.6 30, 2000, a bill of sale must be filed by the new owner with the 41.7 assessor of the county where the property is located within 60 41.8 days of the sale. 41.9 Class 4c property has a class rate of1.65one percent of 41.10 market value, except that(i) each parcel of seasonal41.11residential recreational property not used for commercial41.12purposes has the same class rates as class 4bb property, (ii)41.13 manufactured home parks assessed under clause (5) have the same 41.14 class rate as class 4b property, and (iii) property described in41.15paragraph (d), clause (4), has the same class rate as the rate41.16applicable to the first tier of class 4bb nonhomestead41.17residential real estate under paragraph (c). 41.18 (e) Class 4d property is qualifying low-income rental 41.19 housing certified to the assessor by the housing finance agency 41.20 under sections 273.126 and 462A.071. Class 4d includes land in 41.21 proportion to the total market value of the building that is 41.22 qualifying low-income rental housing. For all properties 41.23 qualifying as class 4d, the market value determined by the 41.24 assessor must be based on the normal approach to value using 41.25 normal unrestricted rents. 41.26 Class 4d property has a class rate ofone0.9 percent of 41.27 market value for taxes payable in 2002, 0.95 percent of market 41.28 value for taxes payable in 2003, and one percent of market value 41.29 for taxes payable in 2004 and thereafter. 41.30 [EFFECTIVE DATE.] This section is effective for taxes 41.31 payable in 2002 and subsequent years. 41.32 Sec. 13. Minnesota Statutes 2000, section 273.13, 41.33 subdivision 31, is amended to read: 41.34 Subd. 31. [CLASS 5.] Class 5 property includes: 41.35 (1) unmined iron ore and low-grade iron-bearing formations 41.36 as defined in section 273.14; and 42.1 (2) all other property not otherwise classified. 42.2 Class 5 property has a class rate of3.4two percent of 42.3 market value. 42.4 [EFFECTIVE DATE.] This section is effective for taxes 42.5 payable in 2002 and subsequent years. 42.6 Sec. 14. [273.1384] [HOMESTEAD AND AGRICULTURAL CREDITS.] 42.7 Subdivision 1. [HOMESTEAD CREDIT.] Each county auditor 42.8 shall determine a homestead credit amount for each property 42.9 classified as class 1 residential homestead or class 2a 42.10 agricultural homestead within the county equal to 0.37 percent 42.11 of net tax capacity, to a maximum of $256 per homestead. In the 42.12 case of an agricultural or resort homestead, only the net tax 42.13 capacity of the house, garage, and surrounding one acre of land 42.14 shall be used in determining the property's homestead credit 42.15 amount. The credit may not exceed the net tax on the property 42.16 after subtraction of all other credits under section 273.1393. 42.17 Subd. 2. [AGRICULTURAL CREDIT.] Property classified as 42.18 class 2a agricultural homestead is eligible for an agricultural 42.19 credit. The credit is equal to 0.2 percent of the market value 42.20 of the property, excluding the market value attributable to the 42.21 house, garage, and surrounding one acre of land, up to a maximum 42.22 of $368 per homestead. 42.23 Subd. 3. [CREDIT APPLICATION.] The credits under this 42.24 section must be used to proportionately reduce the property tax 42.25 payable to all taxing jurisdictions, after subtraction of all 42.26 other credits under section 273.1393. 42.27 Subd. 4. [CREDIT REIMBURSEMENT.] The county auditor shall 42.28 certify the amount of tax reductions granted under this section 42.29 to the commissioner of revenue on the abstracts of tax lists 42.30 submitted under section 275.29. The commissioner of revenue 42.31 shall verify the credit amounts reported, and shall make 42.32 payments directly to the affected taxing jurisdictions other 42.33 than school districts in two equal installments on September 15 42.34 and December 26 each year. The commissioner of revenue shall 42.35 certify the total of the tax reductions granted under this 42.36 section for each school district to the commissioner of 43.1 children, families, and learning before September 1 of each 43.2 taxes payable year. The commissioner of children, families, and 43.3 learning shall reimburse each affected school district for the 43.4 amount of the property tax reductions allowed under this section 43.5 as provided in section 273.1392. 43.6 Subd. 5. [APPROPRIATION.] An amount sufficient to pay the 43.7 credit reimbursements provided under this section for school 43.8 districts, intermediate school districts, or any group of school 43.9 districts levying as a single taxing entity, is annually 43.10 appropriated from the general fund to the commissioner of 43.11 children, families, and learning. An amount sufficient to pay 43.12 the credit reimbursements provided under this section for 43.13 counties, cities, towns, and special taxing districts is 43.14 annually appropriated from the general fund to the commissioner 43.15 of revenue. A jurisdiction's aid amount may be increased or 43.16 decreased based on any prior year adjustments for homestead 43.17 credit or other property tax credit or aid programs. 43.18 [EFFECTIVE DATE.] This section is effective for taxes 43.19 payable in 2002 and subsequent years. 43.20 Sec. 15. Minnesota Statutes 2000, section 273.1392, is 43.21 amended to read: 43.22 273.1392 [PAYMENT; SCHOOL DISTRICTS.] 43.23 The amounts of conservation tax credits under section 43.24 273.119; disaster or emergency reimbursement under section 43.25 273.123; attached machinery aid under section 273.138;homestead43.26credit under section 273.13homestead and agricultural credits 43.27 under section 273.1384; aids and credits under section 273.1398; 43.28 wetlands reimbursement under section 275.295; enterprise zone 43.29 property credit payments under section 469.171; and metropolitan 43.30 agricultural preserve reduction under section 473H.10 for school 43.31 districts, shall be certified to the department of children, 43.32 families, and learning by the department of revenue. The 43.33 amounts so certified shall be paid according to section 127A.45, 43.34 subdivisions 9 and 13. 43.35 [EFFECTIVE DATE.] This section is effective for aids and 43.36 credits payable in 2002 and thereafter. 44.1 Sec. 16. Minnesota Statutes 2000, section 273.1393, is 44.2 amended to read: 44.3 273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 44.4 Notwithstanding any other provisions to the contrary, "net" 44.5 property taxes are determined by subtracting the credits in the 44.6 order listed from the gross tax: 44.7 (1) disaster credit as provided in section 273.123; 44.8 (2) powerline credit as provided in section 273.42; 44.9 (3) agricultural preserves credit as provided in section 44.10 473H.10; 44.11 (4) enterprise zone credit as provided in section 469.171; 44.12 (5) disparity reduction credit; 44.13 (6) conservation tax credit as provided in section 273.119; 44.14 (7)educationhomesteadcreditand agricultural credits as 44.15 provided in section273.1382273.1384; 44.16 (8) taconite homestead credit as provided in section 44.17 273.135; and 44.18 (9) supplemental homestead credit as provided in section 44.19 273.1391. 44.20 The combination of all property tax credits must not exceed 44.21 the gross tax amount. 44.22 [EFFECTIVE DATE.] This section is effective for taxes 44.23 payable in 2002 and subsequent years. 44.24 Sec. 17. Minnesota Statutes 2000, section 273.1398, 44.25 subdivision 1a, is amended to read: 44.26 Subd. 1a. [TAX BASE DIFFERENTIAL.](a)For aids payable in 44.2720002003, for county governments only, the tax base 44.28 differential is:44.29(1) 0.450.5 percent of the assessment year19982001 44.30 taxable market value of class2a agricultural homestead44.31property, excluding the house, garage, and surrounding one acre44.32of land, between $115,000 and $600,000 and over 320 acres, minus44.33the value over $600,000 that is less than 320 acres; plus44.34(2) 0.5 percent of the assessment year 1998 taxable market44.35value of noncommercial seasonal recreational residential44.36property over $75,000 in value; plus45.1(3) for purposes of computing the fiscal disparity45.2adjustment only, 0.2 percent of the assessment year 1998 taxable45.3market value of class 3 commercial-industrial property over45.4$150,000.45.5(b) For the purposes of the distribution of homestead and45.6agricultural credit aid for aids payable in 2000, the45.7commissioner of revenue shall use the best information available45.8as of June 30, 1999, to make an estimate of the value described45.9in paragraph (a), clause (1). The commissioner shall adjust the45.10distribution of homestead and agricultural credit aid for aids45.11payable in 2001 and subsequent years if new information45.12regarding the value described in paragraph (a), clause (1),45.13becomes available after June 30, 19993(4) electric generation 45.14 attached machinery property under section 273.13, subdivision 24. 45.15 Sec. 18. Minnesota Statutes 2000, section 273.1398, is 45.16 amended by adding a subdivision to read: 45.17 Subd. 2e. [HOMESTEAD AND AGRICULTURAL AID FOR CITIES, 45.18 TOWNS, AND SPECIAL TAXING DISTRICTS.] Notwithstanding the 45.19 provisions of subdivision 2, the amount of homestead and 45.20 agricultural credit aid for a statutory or home rule charter 45.21 city, town, school district, or special taxing district for aid 45.22 payable in calendar year 2002 and thereafter is zero. 45.23 [EFFECTIVE DATE.] This section is effective for aids 45.24 payable in 2002 and future years. 45.25 Sec. 19. Minnesota Statutes 2000, section 275.02, is 45.26 amended to read: 45.27 275.02 [STATE LEVY, EXCEPTIONSFOR BONDED DEBT; 45.28 CERTIFICATION OF TAX RATE.] 45.29TheA state tax for bonded debt pursuant to the Minnesota 45.30 Constitution, article XI, shall be levied on the tax capacity of 45.31 all taxable property in the state. The rate of the tax shall be 45.32 certified by the state auditor to each county auditor on or 45.33 before November151 annually. The tax under this section is 45.34 not treated as a local tax rate under 469.177. 45.35 Sec. 20. [275.025] [STATE GENERAL TAX.] 45.36 Subdivision 1. [LEVY AMOUNT.] The state general levy is 46.1 levied against commercial-industrial property and seasonal 46.2 recreational property, as defined in this section. The state 46.3 general levy is $429,400,000 for taxes payable in 2002. For 46.4 taxes payable in subsequent years, the levy is increased each 46.5 year by multiplying the amount for the prior year by the sum of 46.6 one plus the rate of increase, if any, in the implicit price 46.7 deflator for government consumption expenditures and gross 46.8 investment for state and local governments prepared by the 46.9 Bureau of Economic Analysts of the United States Department of 46.10 Commerce for the 12-month period ending March 31 of the year 46.11 prior to the year the taxes are payable. The tax under this 46.12 section is not treated as a local tax rate under section 469.177. 46.13 Subd. 2. [COMMERCIAL-INDUSTRIAL TAX CAPACITY.] For the 46.14 purposes of this section, "commercial-industrial tax capacity" 46.15 means the tax capacity of all taxable property classified as 46.16 class 3 or class 5(1) under section 273.13, except for electric 46.17 generation attached machinery under class 3(4). "Adjusted 46.18 commercial-industrial tax capacity" means commercial-industrial 46.19 tax capacity adjusted by countywide sales ratios for the 46.20 relevant classes of property determined under section 127A.48. 46.21 County commercial-industrial tax capacity amounts are not 46.22 adjusted under chapter 276A or 473F. 46.23 Subd. 3. [COMMERCIAL-INDUSTRIAL LAND TAX CAPACITY.] For 46.24 the purposes of this section, "commercial-industrial land tax 46.25 capacity" means the tax capacity of the land value of all 46.26 taxable property classified as class 3 or class 5 under section 46.27 273.13. "Adjusted commercial-industrial land tax capacity" 46.28 means commercial-industrial land tax capacity adjusted by 46.29 countywide sales ratios for the relevant classes of property 46.30 determined under section 127A.48. County commercial-industrial 46.31 land tax capacity amounts are not adjusted under chapter 276A or 46.32 473F. 46.33 Subd. 4. [SEASONAL RECREATIONAL TAX CAPACITY.] For the 46.34 purposes of this section, "seasonal recreational tax capacity" 46.35 means the tax capacity of all class 4c(1) and 4c(2) property 46.36 under section 273.13, subdivision 25, except that the first 47.1 $80,000 of market value of each noncommercial class 4c(1) 47.2 property shall have a tax capacity equal to one-half of the tax 47.3 capacity specified in section 273.13, subdivision 25. "Adjusted 47.4 seasonal recreational tax capacity" means seasonal recreational 47.5 tax capacity adjusted by countywide sales ratios for the 47.6 relevant class of property determined under section 127A.48. 47.7 Subd. 5. [APPORTIONMENT AND LEVY OF STATE GENERAL TAX; 47.8 TAXES PAYABLE IN 2002.] For taxes payable in 2002, the state 47.9 general tax must be distributed among the counties by applying a 47.10 uniform rate to each county's adjusted commercial-industrial tax 47.11 capacity and its adjusted seasonal recreational tax capacity. 47.12 Within each county, the tax must be levied by applying a uniform 47.13 rate against commercial-industrial tax capacity and seasonal 47.14 recreational tax capacity. 47.15 Subd. 6. [APPORTIONMENT AND LEVY OF STATE GENERAL TAX; 47.16 TAXES PAYABLE IN 2003 AND SUBSEQUENT YEARS.] (a) For taxes 47.17 payable in 2003 and subsequent years, the state general levy 47.18 must first be apportioned into a commercial-industrial share and 47.19 a seasonal recreational share, in proportion to the share of the 47.20 general education tax paid by each of those classes in 2002. 47.21 The commercial-industrial apportionment must be further divided 47.22 into a regular commercial-industrial share and a 47.23 commercial-industrial land share. For taxes payable in 2003, 47.24 100 percent must be apportioned to the regular 47.25 commercial-industrial share. For taxes payable in 2004, 90 47.26 percent must be apportioned to the regular commercial-industrial 47.27 share and 10 percent to the commercial-industrial land share. 47.28 In each succeeding year, an additional ten percent must be 47.29 shifted from regular commercial-industrial to 47.30 commercial-industrial land; for taxes payable in 2013 and 47.31 thereafter the full amount of the commercial-industrial share 47.32 must be levied upon commercial-industrial land. 47.33 (b) For each of the component shares of the state general 47.34 levy determined in paragraph (a), the tax must be distributed 47.35 among the counties by applying a uniform rate to each county's 47.36 adjusted tax capacity for the relevant class. Within each 48.1 county, each component share of the tax must be levied by 48.2 applying a uniform rate against the relevant tax capacity for 48.3 that share of the levy. 48.4 [EFFECTIVE DATE.] This section is effective for taxes 48.5 payable in 2002 and subsequent years. 48.6 Sec. 21. Minnesota Statutes 2000, section 276.11, 48.7 subdivision 1, is amended to read: 48.8 Subdivision 1. [GENERALLY.] As soon as practical after the 48.9 settlement day determined in section 276.09, the county 48.10 treasurer shall pay to the state treasurer or the treasurer of a 48.11 town, city, school district, or special district, on the warrant 48.12 of the county auditor, all receipts of taxes levied by the 48.13 taxing district and deliver up all orders and other evidences of 48.14 indebtedness of the taxing district, taking triplicate receipts 48.15 for them. The treasurer shall file one of the receipts with the 48.16 county auditor, and shall return one by mail on the day of its 48.17 receipt to the clerk of the town, city, school district, or 48.18 special district to which payment was made. The clerk shall 48.19 keep the receipt in the clerk's office. Upon written request of 48.20 the taxing district, to the extent practicable, the county 48.21 treasurer shall make partial payments of amounts collected 48.22 periodically in advance of the next settlement and 48.23 distribution. A statement prepared by the county treasurer must 48.24 accompany each payment. It must state the years for which taxes 48.25 included in the payment were collected and, for each year, the 48.26 amount of the taxes and any penalties on the tax. Upon written 48.27 request of a taxing district, except school districts, the 48.28 county treasurer shall pay at least 70 percent of the estimated 48.29 collection within 30 days after the settlement date determined 48.30 in section 276.09. Within seven business days after the due 48.31 date, or 28 calendar days after the postmark date on the 48.32 envelopes containing real or personal property tax statements, 48.33 whichever is latest, the county treasurer shall pay to the 48.34 treasurer of the school districts 50 percent of the estimated 48.35 collections arising from taxes levied by and belonging to the 48.36 school district, unless the school district elects to receive 50 49.1 percent of the estimated collections arising from taxes levied 49.2 by and belonging to the school district after making a 49.3 proportionate reduction to reflect any loss in collections as 49.4 the result of any delay in mailing tax statements. In that 49.5 case, 50 percent of those adjusted, estimated collections shall 49.6 be paid by the county treasurer to the treasurer of the school 49.7 district within seven business days of the due date. The 49.8 remaining 50 percent of the estimated collections must be paid 49.9 to the treasurer of the school district within the next seven 49.10 business days of the later of the dates in the preceding 49.11 sentence, unless the school district elects to receive the 49.12 remainder of its estimated collections after a proportionate 49.13 reduction has been made to reflect any loss in collections as 49.14 the result of any delay in mailing tax statements. In that 49.15 case, the remaining 50 percent of those adjusted, estimated 49.16 collections shall be paid by the county treasurer to the 49.17 treasurer of the school district within 14 days of the due 49.18 date. The treasurer shall pay the balance of the amounts 49.19 collected to the state within 35 days, or to a municipal 49.20 corporation or other body within 60 days after the settlement 49.21 date determined in section 276.09. After 45 days interest at an 49.22 annual rate of eight percent accrues and must be paid to the 49.23 taxing district. Interest must be paid upon appropriation from 49.24 the general revenue fund of the county. If not paid, it may be 49.25 recovered by the taxing district, in a civil action. 49.26 [EFFECTIVE DATE.] This section is effective for taxes 49.27 payable in 2002 and subsequent years. 49.28 Sec. 22. Minnesota Statutes 2000, section 276A.06, 49.29 subdivision 3, is amended to read: 49.30 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 49.31 apportion the levy of each governmental unit in the county in 49.32 the manner prescribed by this subdivision. The auditor shall: 49.33 (a) by August 20 of 1997 and each subsequent year, 49.34 determine the areawide portion of the levy for each governmental 49.35 unit by multiplying the local tax rate of the governmental unit 49.36 for the preceding levy year times the distribution value set 50.1 forth in subdivision 2, clause (b);and50.2 (b) by September 5 of 1997 and each subsequent year, 50.3 determine the local portion of the current year's levy by 50.4 subtracting the resulting amount from clause (a) from the 50.5 governmental unit's current year's levy; and 50.6 (c) for determinations made under paragraph (a) in the case 50.7 of school districts, for taxes payable in 2002, exclude the 50.8 general education tax rate from the local tax rate for the 50.9 preceding levy year. 50.10 [EFFECTIVE DATE.] This section is effective the day 50.11 following final enactment. 50.12 Sec. 23. Minnesota Statutes 2000, section 297B.09, 50.13 subdivision 1, is amended to read: 50.14 Subdivision 1. [GENERAL FUND SHARE.] Money collected and 50.15 received under this chapter must be deposited as provided in 50.16 this subdivision. 50.17 Thirty-two percent of the money collected and received must 50.18 be deposited in the highway user tax distribution fund, and. 50.19 Nineteen and one-half percent must be deposited in the transit 50.20 fund under section 16A.88. The remaining6848.5 percent of the 50.21 money must be deposited in the general fund. 50.22 [EFFECTIVE DATE.] This section is effective July 1, 2002. 50.23 Sec. 24. Minnesota Statutes 2000, section 473.388, 50.24 subdivision 4, is amended to read: 50.25 Subd. 4. [FINANCIAL ASSISTANCE.] The councilmaymust 50.26 grant the requested financial assistance if it determines that 50.27 the proposed service is intended to replace the service to the 50.28 applying city or town or combination thereof by the council and 50.29 that the proposed service will meet the needs of the applicant 50.30 at least as efficiently and effectively as the existing service. 50.31 The amount of assistance which the council may provide 50.32 under this section may notexceed the sum ofbe less than: 50.33 (a)the portion of the available local transit funds which50.34the applicant proposes to use to subsidize the proposed50.35servicethe grants received under this subdivision by the 50.36 applicant in calendar year 2001 and the tax revenues for transit 51.1 services levied within the city or town, whether by the city or 51.2 town itself or by the metropolitan council, for taxes payable in 51.3 2001;andtimes 51.4 (b)an amount of financial assistance bearing an identical51.5proportional relationship to the amount under clause (a) as the51.6total amount of funds used by the council to fund its transit51.7operations bears tothe ratio of the total appropriation to the 51.8 council for nondebt transit operations in the current fiscal 51.9 year to the sum of the total appropriation to the council for 51.10 nondebt transit operations in fiscal year 2001 and the total 51.11 amount of taxes collected by the council under section 51.12 473.446 and the opt-out municipalities under this section in 51.13 calendar year 2001, including the portion of homestead and 51.14 agricultural credit aid under section 273.1398 attributable to 51.15 the nondebt transit levy. The council shall pay the amount to 51.16 be provided to the recipient from the funds the council would 51.17 otherwise use to fund its transit operations. 51.18For purposes of this section, "available local transit51.19funds" means 90 percent of the tax revenues which would accrue51.20to the council from the tax it levies under section 473.446 in51.21the applicant city or town or combination thereof.51.22 For purposes of this section, "tax revenues" in the city or 51.23 town means the sum of the following: 51.24 (1) the nondebt spread levy, which is the total of the 51.25 taxes extended by application of the local tax rate for nondebt 51.26 purposes on the taxable net tax capacity; 51.27 (2) the portion of the fiscal disparity distribution levy 51.28 under section 473F.08, subdivision 3, attributable to nondebt 51.29 purposes; and 51.30 (3) the portion of the homestead credit and agricultural 51.31 credit aid and disparity reduction aid amounts under section 51.32 273.1398, subdivisions 2 and 3, attributable to nondebt purposes. 51.33 Tax revenues do not include the state feathering 51.34 reimbursement under section 473.446. 51.35 [EFFECTIVE DATE.] This section is effective for calendar 51.36 year 2002 and subsequent years. 52.1 Sec. 25. Minnesota Statutes 2000, section 473.388, 52.2 subdivision 7, is amended to read: 52.3 Subd. 7. [LOCAL LEVY OPTION.](a)A statutory or home rule 52.4 charter city or town that is eligible for assistance under this 52.5 section, in lieu of receiving the assistance,may levy a taxfor52.6payment of the operating and capital expenditures for transit52.7and other related activities and to providefor payment of 52.8 obligations issued by the municipality forsuch purposes,52.9provided that the tax must be sufficient to maintain the level52.10of transit service provided in the municipality in the previous52.11yearcapital expenditures for transit and other related 52.12 activities, provided that property taxes were pledged to satisfy 52.13 the obligations, and provided that legislative appropriations 52.14 are insufficient to satisfy the obligations. 52.15(b) The transit tax revenues derived by the municipality52.16may not exceed:52.17(1) for the first transit levy year and any subsequent52.18transit levy year immediately following a year in which the52.19municipality declines to make the levy, the maximum available52.20local transit funds for the municipality for taxes payable in52.21the current year under section 473.446, calculated as if the52.22percentage of transit tax revenues for the municipality were 8852.23percent instead of 90 percent, and multiplied by the52.24municipality's market value adjustment ratio; and52.25(2) for taxes levied in any year that immediately follows a52.26year in which the municipality elects to levy under this52.27subdivision, the maximum transit tax that the municipality may52.28have levied in the previous year under this subdivision,52.29multiplied by the municipality's market value adjustment ratio.52.30The commissioner of revenue shall certify the52.31municipality's levy limitation under this subdivision to the52.32municipality by June 1 of the levy year. The tax must be52.33accumulated and kept in a separate fund to be known as the52.34"replacement transit fund."52.35(c) To enable the municipality to receive revenues52.36described in clauses (2) and (3) of the definition of "tax53.1revenues" in subdivision 4, that would otherwise be lost if the53.2municipality's transit tax levy was not treated as a successor53.3levy to that made by the council under section 473.446:53.4(1) in the first transit levy year and any subsequent53.5transit levy year immediately following a year in which the53.6municipality declined to make the levy, 88 percent of the53.7council's nondebt spread levy for the current taxes payable year53.8shall be treated as levied by the municipality, and not the53.9council, for purposes of section 473F.08, subdivision 3, for the53.10purpose of determining its local tax rate for the preceding53.11year; and53.12(2) 88 percent of the revenues described in clause (3) of53.13the definition of "tax revenues" in subdivision 4, payable in53.14the first transit levy year, or payable in any subsequent53.15transit levy year following a year in which a municipality53.16declined to make the levy, shall be permanently transferred from53.17the council to the municipality. If a municipality levies a tax53.18under this subdivision in one year, but declines to levy in a53.19subsequent year, the aid transferred under this clause shall be53.20transferred back to the council.53.21(d) Any transit taxes levied under this subdivision are not53.22subject to, or counted towards, any limit hereafter imposed by53.23law on the levy of taxes upon taxable property within any53.24municipality unless the law specifically includes the transit53.25tax.53.26(e) This subdivision is consistent with the transit53.27redesign plan. Eligible municipalities opting to levy the53.28transit tax under this subdivision shall continue to meet the53.29regional performance standards established by the council.53.30(f) Within the designated Americans with Disabilities Act53.31area, metro mobility remains the obligation of the state.53.32(g) For purposes of this subdivision, "transit levy year"53.33is any year in which the municipality elects to levy under this53.34subdivision.53.35(h) A municipality may not levy taxes under this53.36subdivision in any year unless it notifies the council and the54.1commissioner of revenue of its intent to levy before July 1 of54.2the levy year. The notification must include the amount of the54.3municipality's proposed transit tax for the current levy year.54.4After June 30 in the levy year, a municipality's decision to54.5levy or not levy taxes under this subdivision is irrevocable for54.6that levy year.54.7 [EFFECTIVE DATE.] This section is effective for taxes 54.8 payable in 2002 and subsequent years. 54.9 Sec. 26. Minnesota Statutes 2000, section 473.446, 54.10 subdivision 1, is amended to read: 54.11 Subdivision 1. [WITHIN TRANSIT TAXING DISTRICT.] For the 54.12 purposes of sections 473.405 to 473.449 and the metropolitan 54.13 transit system, except as otherwise provided in this subdivision 54.14 and subdivision 1b, the council shall levy each year upon all 54.15 taxable property within the metropolitan transit taxing 54.16 district, defined in subdivision 2, a transit tax consisting of: 54.17 (a)an amount which shall be used for payment of the54.18expenses of operating transit and paratransit service and to54.19provide for payment of obligations issued by the council under54.20section 473.436, subdivision 6;54.21(b)anadditionalamount, if any, the council determines to 54.22 be necessary to provide for the full and timely payment of its 54.23 certificates of indebtedness and other obligations outstanding 54.24 on July 1, 1985, to which property taxes under this section have 54.25 been pledged; and 54.26(c)(b) an additional amount necessary to provide full and 54.27 timely payment of certificates of indebtedness, bonds, including 54.28 refunding bonds or other obligations issued or to be issued 54.29 under section 473.39 by the council for purposes of acquisition 54.30 and betterment of property and other improvements of a capital 54.31 nature and to which the council has specifically pledged tax 54.32 levies under this clause. 54.33The property tax levied by the council for general purposes54.34under paragraph (a) must not exceed the following amount for the54.35years specified:54.36(1) for taxes payable in 1995, the council's property tax55.1levy limitation for general transit purposes is equal to the55.2former regional transit board's property tax levy limitation for55.3general transit purposes under this subdivision, for taxes55.4payable in 1994, multiplied by an index for market valuation55.5changes equal to the total market valuation of all taxable55.6property located within the metropolitan transit taxing district55.7for the current taxes payable year divided by the total market55.8valuation of all taxable property located within the55.9metropolitan transit taxing district for the previous taxes55.10payable year; and55.11(2) for taxes payable in 1996 and subsequent years, the55.12product of (i) the council's property tax levy limitation for55.13general transit purposes for the previous year determined under55.14this subdivision before reduction by the amount levied by any55.15municipality in the previous year under section 473.388,55.16subdivision 7, multiplied by (ii) an index for market valuation55.17changes equal to the total market valuation of all taxable55.18property located within the metropolitan transit taxing district55.19for the current taxes payable year divided by the total market55.20valuation of all taxable property located within the55.21metropolitan transit taxing district for the previous taxes55.22payable year, minus the amount levied by any municipality in the55.23current levy year under section 473.388, subdivision 7.55.24The portion of the property tax levy for transit district55.25operating purposes attributable to a municipality that has55.26exercised a local levy option under section 473.388, subdivision55.277, is the amount as determined under subdivision 1b. The55.28portion of the property tax levy for transit district operating55.29purposes attributable to the remaining municipalities within the55.30transit district is found by subtracting the portions55.31attributable to the municipalities that have exercised a local55.32levy option under section 473.388, subdivision 7.55.33For the taxes payable year 1995, the index for market55.34valuation changes shall be multiplied by an amount equal to the55.35sum of the regional transit board's property tax levy limitation55.36for the taxes payable year 1994 and $160,665. The $160,66556.1increase shall be a permanent adjustment to the levy limit base56.2used in determining the regional transit board's property tax56.3levy limitation for general purposes for subsequent taxes56.4payable years.56.5For the purpose of determining the council's property tax56.6levy limitation for general transit purposes under this56.7subdivision, "total market valuation" means the total market56.8valuation of all taxable property within the metropolitan56.9transit taxing district without valuation adjustments for fiscal56.10disparities (chapter 473F), tax increment financing (sections56.11469.174 to 469.179), and high voltage transmission lines56.12(section 273.425).56.13The county auditor shall reduce the tax levied pursuant to56.14this section and section 473.388 on all property within56.15statutory and home rule charter cities and towns that receive56.16full-peak service and limited off-peak service by an amount56.17equal to the tax levy that would be produced by applying a rate56.18of 0.510 percent of net tax capacity on the property. The56.19county auditor shall reduce the tax levied pursuant to this56.20section and section 473.388 on all property within statutory and56.21home rule charter cities and towns that receive limited peak56.22service by an amount equal to the tax levy that would be56.23produced by applying a rate of 0.765 percent of net tax capacity56.24on the property. The amounts so computed by the county auditor56.25shall be submitted to the commissioner of revenue as part of the56.26abstracts of tax lists required to be filed with the56.27commissioner under section 275.29. Any prior year adjustments56.28shall also be certified in the abstracts of tax lists. The56.29commissioner shall review the certifications to determine their56.30accuracy and may make changes in the certification as necessary56.31or return a certification to the county auditor for56.32corrections. The commissioner shall pay to the council and to56.33the municipalities levying under section 473.388, subdivision 7,56.34the amounts certified by the county auditors on the dates56.35provided in section 273.1398, apportioned between the council56.36and the municipality in the same proportion as the total transit57.1levy is apportioned within the municipality. There is annually57.2appropriated from the general fund in the state treasury to the57.3department of revenue the amounts necessary to make these57.4payments.57.5For the purposes of this subdivision, "full-peak and57.6limited off-peak service" means peak period regular route57.7service, plus weekday midday regular route service at intervals57.8longer than 60 minutes on the route with the greatest frequency;57.9and "limited peak period service" means peak period regular57.10route service only.57.11For the purposes of property taxes payable in the following57.12year, the council shall annually determine which cities and57.13towns qualify for the 0.510 percent or 0.765 percent tax57.14capacity rate reduction and shall certify this list to the57.15county auditor of the county wherein such cities and towns are57.16located on or before September 15. No changes may be made to57.17the annual list after September 15.57.18 [EFFECTIVE DATE.] This section is effective for taxes 57.19 payable in 2002 and subsequent years. 57.20 Sec. 27. Minnesota Statutes 2000, section 473.446, is 57.21 amended by adding a subdivision to read: 57.22 Subd. 1c. [TRANSIT LEVY AFTER 2001.] Notwithstanding any 57.23 other provision of this section, beginning with taxes payable in 57.24 2002, the council may levy the transit tax authorized under 57.25 subdivision 1 only for the purpose of providing for the full and 57.26 timely payment of bonds, certificates of indebtedness, and other 57.27 obligations issued by the council, to which property taxes have 57.28 been pledged. 57.29 [EFFECTIVE DATE.] This section is effective for taxes 57.30 payable in 2002 and subsequent years. 57.31 Sec. 28. Minnesota Statutes 2000, section 473F.08, 57.32 subdivision 3, is amended to read: 57.33 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 57.34 apportion the levy of each governmental unit in the auditor's 57.35 county in the manner prescribed by this subdivision. The 57.36 auditor shall: 58.1 (a) by August 20, determine the areawide portion of the 58.2 levy for each governmental unit by multiplying the local tax 58.3 rate of the governmental unit for the preceding levy year times 58.4 the distribution value set forth in subdivision 2, clause (b); 58.5and58.6 (b) by September 5, determine the local portion of the 58.7 current year's levy by subtracting the resulting amount from 58.8 clause (a) from the governmental unit's current year's levy.; 58.9 (c) for determinations made under clause (a) in the case of 58.10 school districts, for taxes payable in 2002, exclude the general 58.11 education tax rate from the local tax rate for the preceding 58.12 levy year; 58.13 (d) for determinations made under clause (a) in the case of 58.14 the metropolitan council, for taxes payable in 2002, exclude the 58.15 transit operating tax rate from the local tax rate for the 58.16 preceding levy year; and 58.17 (e) for determinations made under clause (a) in the case of 58.18 transit opt-out cities, for taxes payable in 2002, exclude the 58.19 opt-out transit rate from the local tax rate for the preceding 58.20 levy year. 58.21 [EFFECTIVE DATE.] This section is effective the day 58.22 following final enactment. 58.23 Sec. 29. Minnesota Statutes 2000, section 477A.011, 58.24 subdivision 35, is amended to read: 58.25 Subd. 35. [TAX EFFORT RATE.] "Tax effort rate" means the 58.26 sum of (1) the net levy for all cities plus (2) the total aid 58.27 payments to all cities under section 273.1398 in the previous 58.28 year; divided by the sum of the city net tax capacity for all 58.29 cities. For purposes of this section, "net levy" means the city 58.30 levy, after all adjustments, used for calculating the local tax 58.31 rate under section 275.08 for taxes payable in the year prior to 58.32 the aid distribution. The fiscal disparity distribution levy 58.33 under chapter 276A or 473F is included in net levy. 58.34 [EFFECTIVE DATE.] This section is effective for aids 58.35 payable in 2002 and future years. 58.36 Sec. 30. Minnesota Statutes 2000, section 477A.011, 59.1 subdivision 36, is amended to read: 59.2 Subd. 36. [CITY AID BASE.] (a) Except as provided in 59.3 paragraphs (b) to(n)(q), "city aid base" means, for each city, 59.4 the sum of the local government aid and equalization aid it was 59.5 originally certified to receive in calendar year 1993 under 59.6 Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 59.7 and the amount of disparity reduction aid it received in 59.8 calendar year 1993 under Minnesota Statutes 1992, section 59.9 273.1398, subdivision 3. 59.10 (b) For aids payable in 1996 and thereafter, a city that in 59.11 1992 or 1993 transferred an amount from governmental funds to 59.12 its sewer and water fund, which amount exceeded its net levy for 59.13 taxes payable in the year in which the transfer occurred, has a 59.14 "city aid base" equal to the sum of (i) its city aid base, as 59.15 calculated under paragraph (a), and (ii) one-half of the 59.16 difference between its city aid distribution under section 59.17 477A.013, subdivision 9, for aids payable in 1995 and its city 59.18 aid base for aids payable in 1995. 59.19 (c) The city aid base for any city with a population less 59.20 than 500 is increased by $40,000 for aids payable in calendar 59.21 year 1995 and thereafter, and the maximum amount of total aid it 59.22 may receive under section 477A.013, subdivision 9, paragraph 59.23 (c), is also increased by $40,000 for aids payable in calendar 59.24 year 1995 only, provided that: 59.25 (i) the average total tax capacity rate for taxes payable 59.26 in 1995 exceeds 200 percent; 59.27 (ii) the city portion of the tax capacity rate exceeds 100 59.28 percent; and 59.29 (iii) its city aid base is less than $60 per capita. 59.30 (d) The city aid base for a city is increased by $20,000 in 59.31 1998 and thereafter and the maximum amount of total aid it may 59.32 receive under section 477A.013, subdivision 9, paragraph (c), is 59.33 also increased by $20,000 in calendar year 1998 only, provided 59.34 that: 59.35 (i) the city has a population in 1994 of 2,500 or more; 59.36 (ii) the city is located in a county, outside of the 60.1 metropolitan area, which contains a city of the first class; 60.2 (iii) the city's net tax capacity used in calculating its 60.3 1996 aid under section 477A.013 is less than $400 per capita; 60.4 and 60.5 (iv) at least four percent of the total net tax capacity, 60.6 for taxes payable in 1996, of property located in the city is 60.7 classified as railroad property. 60.8 (e) The city aid base for a city is increased by $200,000 60.9 in 1999 and thereafter and the maximum amount of total aid it 60.10 may receive under section 477A.013, subdivision 9, paragraph 60.11 (c), is also increased by $200,000 in calendar year 1999 only, 60.12 provided that: 60.13 (i) the city was incorporated as a statutory city after 60.14 December 1, 1993; 60.15 (ii) its city aid base does not exceed $5,600; and 60.16 (iii) the city had a population in 1996 of 5,000 or more. 60.17 (f) The city aid base for a city is increased by $450,000 60.18 in 1999 to 2008 and the maximum amount of total aid it may 60.19 receive under section 477A.013, subdivision 9, paragraph (c), is 60.20 also increased by $450,000 in calendar year 1999 only, provided 60.21 that: 60.22 (i) the city had a population in 1996 of at least 50,000; 60.23 (ii) its population had increased by at least 40 percent in 60.24 the ten-year period ending in 1996; and 60.25 (iii) its city's net tax capacity for aids payable in 1998 60.26 is less than $700 per capita. 60.27 (g) Beginning in 2002, the city aid base for a city is 60.28 equal to the sum of its city aid base in 2001 and the amount of 60.29 additional aid it was certified to receive under section 477A.06 60.30 in 2001. For 2002 only, the maximum amount of total aid a city 60.31 may receive under section 477A.013, subdivision 9, paragraph 60.32 (c), is also increased by the amount it was certified to receive 60.33 under section 477A.06 in 2001. 60.34 (h) The city aid base for a city is increased by $150,000 60.35 for aids payable in 2000 and thereafter, and the maximum amount 60.36 of total aid it may receive under section 477A.013, subdivision 61.1 9, paragraph (c), is also increased by $150,000 in calendar year 61.2 2000 only, provided that: 61.3 (1) the city has a population that is greater than 1,000 61.4 and less than 2,500; 61.5 (2) its commercial and industrial percentage for aids 61.6 payable in 1999 is greater than 45 percent; and 61.7 (3) the total market value of all commercial and industrial 61.8 property in the city for assessment year 1999 is at least 15 61.9 percent less than the total market value of all commercial and 61.10 industrial property in the city for assessment year 1998. 61.11 (i) The city aid base for a city is increased by $200,000 61.12 in 2000 and thereafter, and the maximum amount of total aid it 61.13 may receive under section 477A.013, subdivision 9, paragraph 61.14 (c), is also increased by $200,000 in calendar year 2000 only, 61.15 provided that: 61.16 (1) the city had a population in 1997 of 2,500 or more; 61.17 (2) the net tax capacity of the city used in calculating 61.18 its 1999 aid under section 477A.013 is less than $650 per 61.19 capita; 61.20 (3) the pre-1940 housing percentage of the city used in 61.21 calculating 1999 aid under section 477A.013 is greater than 12 61.22 percent; 61.23 (4) the 1999 local government aid of the city under section 61.24 477A.013 is less than 20 percent of the amount that the formula 61.25 aid of the city would have been if the need increase percentage 61.26 was 100 percent; and 61.27 (5) the city aid base of the city used in calculating aid 61.28 under section 477A.013 is less than $7 per capita. 61.29 (j) The city aid base for a city is increased by $225,000 61.30 in calendar years 2000 to 2002 and the maximum amount of total 61.31 aid it may receive under section 477A.013, subdivision 9, 61.32 paragraph (c), is also increased by $225,000 in calendar year 61.33 2000 only, provided that: 61.34 (1) the city had a population of at least 5,000; 61.35 (2) its population had increased by at least 50 percent in 61.36 the ten-year period ending in 1997; 62.1 (3) the city is located outside of the Minneapolis-St. Paul 62.2 metropolitan statistical area as defined by the United States 62.3 Bureau of the Census; and 62.4 (4) the city received less than $30 per capita in aid under 62.5 section 477A.013, subdivision 9, for aids payable in 1999. 62.6 (k) The city aid base for a city is increased by $102,000 62.7 in 2000 and thereafter, and the maximum amount of total aid it 62.8 may receive under section 477A.013, subdivision 9, paragraph 62.9 (c), is also increased by $102,000 in calendar year 2000 only, 62.10 provided that: 62.11 (1) the city has a population in 1997 of 2,000 or more; 62.12 (2) the net tax capacity of the city used in calculating 62.13 its 1999 aid under section 477A.013 is less than $455 per 62.14 capita; 62.15 (3) the net levy of the city used in calculating 1999 aid 62.16 under section 477A.013 is greater than $195 per capita; and 62.17 (4) the 1999 local government aid of the city under section 62.18 477A.013 is less than 38 percent of the amount that the formula 62.19 aid of the city would have been if the need increase percentage 62.20 was 100 percent. 62.21 (l) The city aid base for a city is increased by $32,000 in 62.22 2001 and thereafter, and the maximum amount of total aid it may 62.23 receive under section 477A.013, subdivision 9, paragraph (c), is 62.24 also increased by $32,000 in calendar year 2001 only, provided 62.25 that: 62.26 (1) the city has a population in 1998 that is greater than 62.27 200 but less than 500; 62.28 (2) the city's revenue need used in calculating aids 62.29 payable in 2000 was greater than $200 per capita; 62.30 (3) the city net tax capacity for the city used in 62.31 calculating aids available in 2000 was equal to or less than 62.32 $200 per capita; 62.33 (4) the city aid base of the city used in calculating aid 62.34 under section 477A.013 is less than $65 per capita; and 62.35 (5) the city's formula aid for aids payable in 2000 was 62.36 greater than zero. 63.1 (m) The city aid base for a city is increased by $7,200 in 63.2 2001 and thereafter, and the maximum amount of total aid it may 63.3 receive under section 477A.013, subdivision 9, paragraph (c), is 63.4 also increased by $7,200 in calendar year 2001 only, provided 63.5 that: 63.6 (1) the city had a population in 1998 that is greater than 63.7 200 but less than 500; 63.8 (2) the city's commercial industrial percentage used in 63.9 calculating aids payable in 2000 was less than ten percent; 63.10 (3) more than 25 percent of the city's population was 60 63.11 years old or older according to the 1990 census; 63.12 (4) the city aid base of the city used in calculating aid 63.13 under section 477A.013 is less than $15 per capita; and 63.14 (5) the city's formula aid for aids payable in 2000 was 63.15 greater than zero. 63.16 (n) The city aid base for a city is increased by $45,000 in 63.17 2001 and thereafter, and the maximum amount of total aid it may 63.18 receive under section 477A.013, subdivision 9, paragraph (c), is 63.19 also increased by $45,000 in calendar year 2001 only, provided 63.20 that: 63.21 (1) the net tax capacity of the city used in calculating 63.22 its 2000 aid under section 477A.013 is less than $810 per 63.23 capita; 63.24 (2) the population of the city declined more than two 63.25 percent between 1988 and 1998; 63.26 (3) the net levy of the city used in calculating 2000 aid 63.27 under section 477A.013 is greater than $240 per capita; and 63.28 (4) the city received less than $36 per capita in aid under 63.29 section 477A.013, subdivision 9, for aids payable in 2000. 63.30 (o) The city aid base for a city is increased by $150,000 63.31 in calendar years 2002 to 2011 and the maximum amount of total 63.32 aid it may receive under section 477A.013, subdivision 9, 63.33 paragraph (c), is also increased by $150,000 in calendar year 63.34 2002 only, provided that: 63.35 (1) the city had a population of at least 3,000 but no more 63.36 than 4,000 in 1999; 64.1 (2) its home county is located within the seven-county 64.2 metropolitan area; 64.3 (3) its pre-1940 housing percentage is less than 15 64.4 percent; and 64.5 (4) its city net tax capacity per capita for taxes payable 64.6 in 2000 is less than $900 per capita. 64.7 (p) The city aid base for a city with a population greater 64.8 than 50,000 which is located outside of the seven-county 64.9 metropolitan area is increased in 2002 and thereafter, and the 64.10 maximum amount of total aid it may receive under section 64.11 477A.013, subdivision 9, paragraph (b) or (c), is also increased 64.12 in calendar year 2002 only, by an amount equal to the lesser of: 64.13 (1) the total population of the city's metropolitan 64.14 statistical area, as defined by the United States Bureau of the 64.15 Census, which resides outside of the city, multiplied by $25; or 64.16 (2) $1,000,000. 64.17 (q) The city aid base for a city for aid payable in 2003 is 64.18 increased by 0.5 percent of the assessment year 2001 taxable 64.19 market value of property classified as class 3(4) under section 64.20 273.13, subdivision 24, multiplied by the city's local tax rate 64.21 for taxes payable in 2002. 64.22 [EFFECTIVE DATE.] This section is effective beginning with 64.23 aids payable in 2002. 64.24 Sec. 31. Minnesota Statutes 2000, section 477A.013, 64.25 subdivision 1, is amended to read: 64.26 Subdivision 1. [TOWNS.] In1994 each town that had levied64.27for taxes payable in the prior year a local tax rate of at least64.28.008 shall receive a distribution equal to the amount it64.29received in 1993 under this section before any nonpermanent64.30reductions made under section 477A.0132. In 1995 each town that64.31had levied for taxes payable in 1993 a local tax rate of at64.32least .008 shall receive a distribution equal to 102 percent of64.33the amount it received in 1994 under this section before any64.34increases or reductions under sections 16A.711, subdivision 5,64.35and 477A.0132. In 1996 and subsequent years each town that had64.36levied for taxes payable in 1993 a local tax rate of at least65.1.008 shall receive a distribution equal to the amount it65.2received in the previous year under this section, adjusted for65.3inflation as provided under section 477A.03, subdivision 32002, 65.4 no town is eligible for a distribution under this subdivision. 65.5 In 2003 and subsequent years, each town is eligible to receive 65.6 aid under this subdivision equal to 0.5 percent of the 65.7 assessment year 2001 taxable market value of property classified 65.8 as class 3(4) under section 273.13, subdivision 24, multiplied 65.9 by the town's local tax rate for taxes payable in 2002. 65.10 [EFFECTIVE DATE.] This section is effective for aids 65.11 payable in 2002 and subsequent years. 65.12 Sec. 32. Minnesota Statutes 2000, section 477A.013, 65.13 subdivision 9, is amended to read: 65.14 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 65.1519942002 and thereafter, each city shall receive an aid 65.16 distribution equal to the sum of (1) the city formula aid under 65.17 subdivision 8, and (2) its city aid base. 65.18 (b) The percentage increase for a first class city in 65.19 calendar year 1995 and thereafter shall not exceed the 65.20 percentage increase in the sum of the aid to all cities under 65.21 this section in the current calendar year compared to the sum of 65.22 the aid to all cities in the previous year. For aids payable in 65.23 2002 only, the amount of the aid paid to a first class city 65.24 located in the seven-county metropolitan area, shall not exceed 65.25 its aid amount for calendar 2001 by more than 55 percent of its 65.26 aid payment in calendar year 2001 under section 273.1398, 65.27 subdivision 2. 65.28 (c) For aids payable in all years except 2002, the total 65.29 aid for any city, except a first class city, shall not exceed 65.30 the sum of (1) ten percent of the city's net levy for the year 65.31 prior to the aid distribution plus (2) its total aid in the 65.32 previous year before any increases or decreases under sections 65.33 16A.711, subdivision 5, and 477A.0132. For aids payable in 2002 65.34 only, the total aid for any city, except a first class city, 65.35 shall not exceed the sum of (1) 50 percent of the city's net 65.36 levy for the year prior to the aid distribution plus (2) its 66.1 total aid in the previous year before any increases or decreases 66.2 under sections 16A.711, subdivision 5, and 477A.0132. 66.3(d) Notwithstanding paragraph (c), in 1995 only, for cities66.4which in 1992 or 1993 transferred an amount from governmental66.5funds to their sewer and water fund in an amount greater than66.6their net levy for taxes payable in the year in which the66.7transfer occurred, the total aid shall not exceed the sum of (1)66.820 percent of the city's net levy for the year prior to the aid66.9distribution plus (2) its total aid in the previous year before66.10any increases or decreases under sections 16A.711, subdivision66.115, and 477A.0132.66.12 [EFFECTIVE DATE.] This section is effective for aids 66.13 payable in 2002 and future years. 66.14 Sec. 33. Minnesota Statutes 2000, section 477A.03, 66.15 subdivision 2, is amended to read: 66.16 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 66.17 discharge the duties imposed by sections 477A.011 to 477A.014 is 66.18 annually appropriated from the general fund to the commissioner 66.19 of revenue. 66.20 (b) Aid payments to counties under section 477A.0121 are 66.21 limited to $20,265,000 in 1996. Aid payments to counties under 66.22 section 477A.0121 are limited to $27,571,625 in 1997. For aid 66.23 payable in 1998 and thereafter, the total aids paid under 66.24 section 477A.0121 are the amounts certified to be paid in the 66.25 previous year, adjusted for inflation as provided under 66.26 subdivision 3. 66.27 (c)(i) For aids payable in 1998 and thereafter, the total 66.28 aids paid to counties under section 477A.0122 are the amounts 66.29 certified to be paid in the previous year, adjusted for 66.30 inflation as provided under subdivision 3. 66.31 (ii) Aid payments to counties under section 477A.0122 in 66.32 2000 are further increased by an additional $20,000,000 in 2000. 66.33 (d) Aid payments to cities in19992002 under section 66.34 477A.013, subdivision 9, are limited 66.35 to$380,565,489$505,000,000.For aids payable in 2000, the66.36total aids paid under section 477A.013, subdivision 9, are the67.1amounts certified to be paid in the previous year, adjusted for67.2inflation as provided in subdivision 3, and increased by the67.3amount necessary to effectuate Laws 1999, chapter 243, article67.45, section 48, paragraph (b).For aids payable in2001 through67.5 2003, the total aids paid under section 477A.013, subdivision 9, 67.6 are the amounts certified to be paid in the previous year, 67.7 adjusted for inflation as provided under subdivision 3, and 67.8 increased by an amount equal to the amounts calculated under 67.9 sections 477A.011, subdivision 36, paragraph (q), and 477A.07, 67.10 subdivision 3, for 2003. For aids payable in 2004, the total 67.11 aids paid under section 477A.013, subdivision 9, are the amounts 67.12 certified to be paid in the previous year, adjusted for 67.13 inflation as provided under subdivision 3, and increased by the 67.14 amount certified to be paid in 2003 under section 477A.06, and 67.15 increased by an amount equal to the amounts calculated under 67.16 section 477A.07, subdivision 3, for 2004. For aids payable in 67.17 2005 and thereafter, the total aids paid under section 477A.013, 67.18 subdivision 9, are the amounts certified to be paid in the 67.19 previous year, adjusted for inflation as provided under 67.20 subdivision 3. The additional amount authorized under 67.21 subdivision 4 is not included when calculating the appropriation 67.22 limits under this paragraph. 67.23 [EFFECTIVE DATE.] This section is effective for aids 67.24 payable in 2002 and future years. 67.25 Sec. 34. [477A.07] [RENTAL HOUSING TAX BASE REPLACEMENT 67.26 AID.] 67.27 Subdivision 1. [AID AMOUNT.] Each county and city is 67.28 eligible for aid equal to the amount by which (i) 0.25 percent 67.29 of the assessment year 2001 taxable market value of class 4a, 67.30 class 4b, and that portion of class 4bb property in excess of 67.31 $76,000 in market value, as defined in section 273.13, 67.32 subdivision 25, exceeds (ii) 0.4 percent of the jurisdiction's 67.33 total taxable net tax capacity for taxes payable in 2002, 67.34 multiplied by the jurisdiction's average tax rate for taxes 67.35 payable in 2002. 67.36 Subd. 2. [COUNTY AID.] Each county's aid amount determined 68.1 under subdivision 1 must be permanently added to the county's 68.2 homestead and agricultural credit aid base under section 68.3 273.1398 for aid payable in 2003, and the same amount must be 68.4 permanently added to the county's homestead and agricultural 68.5 credit aid base for aid payable in 2004. 68.6 Subd. 3. [CITY AID.] Each city's aid amount determined 68.7 under subdivision 1 must be permanently added to its city aid 68.8 base under section 477A.011, subdivision 36, for aid payable in 68.9 2003, and the same amount must be permanently added to its city 68.10 aid base for aid payable in 2004. 68.11 Subd. 4. [APPROPRIATION INCREASE.] The total aid amount 68.12 payable to cities under section 477A.03, subdivision 2, 68.13 paragraph (d), is permanently increased by the total amount 68.14 payable to all cities under subdivision 3 for aid payable in 68.15 2003 and increased again by the same amount for aid payable in 68.16 2004. 68.17 [EFFECTIVE DATE.] This section is effective for aids 68.18 payable in 2003 and subsequent years. 68.19 Sec. 35. [ELECTRIC GENERATION TAX BASE REPLACEMENT AID.] 68.20 For taxes payable in 2002 only, the county auditor shall 68.21 compute all local tax rates as if the class rate for class 3(4) 68.22 property under Minnesota Statutes, section 273.13, subdivision 68.23 24, was two percent. In determining the actual property tax due 68.24 and payable on class 3(4) property, the actual class rate must 68.25 be used. Each local taxing jurisdiction is entitled to aid 68.26 equal to the difference between the property tax levied upon 68.27 class 3(4) property and the amount that would have been levied 68.28 had the class rate been two percent. 68.29 The auditor shall report the amount of aid to which each 68.30 local jurisdiction is entitled under this subdivision to the 68.31 commissioner of revenue in a manner prescribed by the 68.32 commissioner. The commissioner shall verify the accuracy of the 68.33 amounts reported and shall make payments to local governments 68.34 other than school districts in two equal installments in 2002 on 68.35 the dates prescribed in Minnesota Statutes, section 477A.015. 68.36 Payments to school districts must be certified to the 69.1 commissioner of children, families, and learning and paid under 69.2 Minnesota Statutes, section 273.1392. 69.3 [EFFECTIVE DATE.] This section is effective for taxes 69.4 payable in 2002. 69.5 Sec. 36. [TIF GRANTS; APPROPRIATIONS.] 69.6 Subdivision 1. [TIF GRANTS.] (a) The commissioner of 69.7 revenue shall pay grants to municipalities in calendar years 69.8 2003, 2004, and 2005 for deficits in tax increment financing 69.9 districts caused by the changes in class rates and the 69.10 elimination of the state-determined general education property 69.11 tax levy under this article. To qualify for a grant under this 69.12 section, a municipality must impose the special tax under 69.13 Minnesota Statutes, section 469.1791, to the extent permitted by 69.14 law. Municipalities must submit applications for the grants in 69.15 a form prescribed by the commissioner no later than August 1 for 69.16 grants payable during the calendar year. The maximum grant 69.17 equals the lesser of: 69.18 (1) for taxes payable in the year before the grant is paid, 69.19 the reduction in the tax increment financing district's revenues 69.20 derived from increment resulting from the class rate changes and 69.21 the elimination of the state-determined general education 69.22 property tax levy under this article; or 69.23 (2) the amount due during the calendar year to pay: 69.24 (i) bonds issued before June 2, 2001, and 69.25 (ii) binding contracts entered into before June 2, 2001, 69.26 less 69.27 (iii) the municipality's total tax increments, including 69.28 unspent increments from previous years; and less 69.29 (iv) the amount of the special tax imposed under Minnesota 69.30 Statutes, section 469.1791. 69.31 (b) The commissioner of revenue may require applicants for 69.32 grants under this section to provide any information the 69.33 commissioner deems appropriate. The commissioner shall 69.34 calculate the amount under paragraph (a), clause (2), based on 69.35 the reports for the tax increment financing district or 69.36 districts filed with the state auditor on or before August 1 of 70.1 the year before the year in which the grant is to be paid and 70.2 the special tax information provided by the county auditor. 70.3 (c) This section applies only to deficits in tax increment 70.4 districts for which: 70.5 (1) the request for certification was made before June 2, 70.6 2001; and 70.7 (2) all timely reports have been filed with the state 70.8 auditor, as required by Minnesota Statutes, section 469.175. 70.9 (d) The commissioner shall pay the grants under this 70.10 section by December 15 of the year. 70.11 (e) For the purposes of this section, "tax increments" and 70.12 "revenues derived from tax increments" have the meanings given 70.13 in Minnesota Statutes, section 469.174, subdivision 25, except 70.14 that the definition applies to all tax increment districts, 70.15 regardless of when the request for certification was made and 70.16 regardless of when the revenues were received, notwithstanding 70.17 the effective date of Minnesota Statutes, section 469.174, 70.18 subdivision 25. 70.19 Subd. 2. [APPROPRIATION.] $184,000,000 is appropriated 70.20 from the general fund to the commissioner of revenue in fiscal 70.21 year 2002 and $22,000,000 for fiscal year 2003 to make grants 70.22 under this section. The appropriations do not lapse at the end 70.23 of a fiscal year or biennium and are available until the later 70.24 of when expended or when this section expires. If the amount of 70.25 grant entitlements for a year exceeds the amount available for 70.26 grants, the commissioner shall reduce each grant proportionately 70.27 so the total does not exceed the amount available. 70.28 Subd. 3. [EXPIRATION.] This section expires on January 1, 70.29 2006. 70.30 [EFFECTIVE DATE.] This section is effective January 1, 70.31 2002, and thereafter. 70.32 Sec. 37. [ASSESSMENT GUIDELINES.] 70.33 The commissioner of revenue shall develop instructional 70.34 materials and issue guidelines by December 31, 2002, to assist 70.35 assessors in determining the appropriate split between the 70.36 portion of market value attributable to land and the portion 71.1 attributable to buildings, in the case of properties subject to 71.2 the state general tax on commercial-industrial property under 71.3 Minnesota Statutes, section 275.025. 71.4 [EFFECTIVE DATE.] This section is effective July 1, 2001. 71.5 Sec. 38. [APPROPRIATION.] 71.6 (a) $6,000,000 is appropriated from the transit fund to the 71.7 commissioner of transportation to finance nonmetropolitan 71.8 transit systems under Minnesota Statutes, section 174.24, for 71.9 fiscal year 2003. Grants to recipient systems in calendar year 71.10 2002 must include all funding necessary to compensate for the 71.11 elimination of levy authority under section 7. 71.12 (b) $105,200,000 is appropriated from the transit fund to 71.13 the metropolitan council to finance transit operating expenses 71.14 for fiscal year 2003. One-half of the appropriation to the 71.15 council must be paid on July 15, 2002, and the remaining 71.16 one-half must be paid on December 15, 2002. 71.17 [EFFECTIVE DATE.] This section is effective July 1, 2002. 71.18 Sec. 39. [REPEALER.] 71.19 Minnesota Statutes 2000, sections 126C.13, subdivisions 1, 71.20 2, and 3; 273.13, subdivision 24a; 273.1382; and 275.08, 71.21 subdivision 1e, are repealed. 71.22 [EFFECTIVE DATE.] This section is effective for taxes 71.23 payable in 2002 and subsequent years. 71.24 ARTICLE 3 71.25 STATE TAKEOVER OF COUNTY SERVICES 71.26 Section 1. Minnesota Statutes 2000, section 97A.065, 71.27 subdivision 2, is amended to read: 71.28 Subd. 2. [FINES AND FORFEITED BAIL.] (a) Fines and 71.29 forfeited bail collected from prosecutions of violations of: 71.30 the game and fish laws; sections 84.091 to 84.15; sections 84.81 71.31 to 84.91; section 169A.20, when the violation involved an 71.32 off-road recreational vehicle as defined in section 169A.03, 71.33 subdivision 16; chapter 348; and any other law relating to wild 71.34 animals or aquatic vegetation, must be paid to the treasurer of 71.35 the county where the violation is prosecuted. The county 71.36 treasurer shall submit one-half of the receipts to the 72.1 commissioner and credit the balance to the county general 72.2 revenue fund except as provided in paragraphs (b), (c), and 72.3 (d). In a county in a judicial district under section 480.181, 72.4 subdivision 1, paragraph (b),as added in Laws 1999, chapter72.5216, article 7, section 26,the share that would otherwise go to 72.6 the county under this paragraph must be submitted to the state 72.7 treasurer for deposit in the state treasury and credited to the 72.8 general fund. 72.9 (b) The commissioner must reimburse a county, from the game 72.10 and fish fund, for the cost of keeping prisoners prosecuted for 72.11 violations under this section if the county board, by 72.12 resolution, directs: (1) the county treasurer to submit all 72.13 fines and forfeited bail to the commissioner; and (2) the county 72.14 auditor to certify and submit monthly itemized statements to the 72.15 commissioner. 72.16 (c) The county treasurer shall submit one-half of the 72.17 receipts collected under paragraph (a) from prosecutions of 72.18 violations of sections 84.81 to 84.91, and 169A.20, except 72.19 receipts that are surcharges imposed under section 357.021, 72.20 subdivision 6, to the commissioner and credit the balance to the 72.21 county general fund. The commissioner shall credit these 72.22 receipts to the snowmobile trails and enforcement account in the 72.23 natural resources fund. 72.24 (d) The county treasurer shall indicate the amount of the 72.25 receipts that are surcharges imposed under section 357.021, 72.26 subdivision 6, and shall submit all of those receipts to the 72.27 state treasurer. 72.28 [EFFECTIVE DATE.] This section is effective July 1, 2003, 72.29 in the first and fourth districts; July 1, 2004, in the third 72.30 and sixth districts; and July 1, 2005, in the second and tenth 72.31 districts. 72.32 Sec. 2. Minnesota Statutes 2000, section 179A.101, 72.33 subdivision 1, is amended to read: 72.34 Subdivision 1. [COURT EMPLOYEE UNITS.] (a) The state court 72.35 administrator shall meet and negotiate with the exclusive 72.36 representative of each of the units specified in this section. 73.1 The units provided in this section are the only appropriate 73.2 units for court employees. Court employees, unless otherwise 73.3 excluded, are included within the units which include the 73.4 classifications to which they are assigned for purposes of 73.5 compensation. Initial assignment of classifications to 73.6 bargaining units shall be made by the state court administrator 73.7 by August 15, 1999of the year preceding the year in which the 73.8 state assumes the cost of court administration in the judicial 73.9 district in which the bargaining unit is located. An exclusive 73.10 representative may appeal the initial assignment decision of the 73.11 state court administrator by filing a petition with the 73.12 commissioner within 45 days of being certified as the exclusive 73.13 representative for a judicial district. The units in this 73.14 subdivision are the appropriate units of court employees. 73.15 (b) The judicial district unit consists of clerical, 73.16 administrative, and technical employees of a judicial district 73.17 under section 480.181, subdivision 1, paragraph (b), or of two 73.18 or more of these districts that are represented by the same 73.19 employee organization or one or more subordinate bodies of the 73.20 same employee organization. The judicial district unit includes 73.21 individuals, not otherwise excluded, whose work is typically 73.22 clerical or secretarial in nature, including nontechnical data 73.23 recording and retrieval and general office work, and 73.24 individuals, not otherwise excluded, whose work is not typically 73.25 manual and which requires specialized knowledge or skills 73.26 acquired through two-year academic programs or equivalent 73.27 experience or on-the-job training. 73.28 (c) The appellate courts unit consists of clerical, 73.29 administrative, and technical employees of the court of appeals 73.30 and clerical, administrative, and technical employees of the 73.31 supreme court. The appellate courts unit includes individuals, 73.32 not otherwise excluded, whose work is typically clerical or 73.33 secretarial in nature, including nontechnical data recording and 73.34 retrieval and general office work, and individuals, not 73.35 otherwise excluded, whose work is not typically manual and which 73.36 requires specialized knowledge or skills acquired through 74.1 two-year academic programs or equivalent experience or 74.2 on-the-job training. 74.3 (d) The court employees professional employee unit consists 74.4 of professional employees, not otherwise excluded, that are 74.5 employed by the supreme court, the court of appeals, or a 74.6 judicial district under section 480.181, subdivision 1, 74.7 paragraph (b). 74.8 (e) The court employees court reporter unit consists of 74.9 court reporters not otherwise excluded who are employed by a 74.10 judicial district under section 480.181, subdivision 1, 74.11 paragraph (a). 74.12 (f) Notwithstanding any provision of this chapter or any 74.13 other law to the contrary, judges may appoint and remove court 74.14 reporters at their pleasure. 74.15 (g) Copies of collective bargaining agreements entered into 74.16 under this section must be submitted to the legislative 74.17 coordinating commission for the commission's information. 74.18 [EFFECTIVE DATE.] This section is effective July 1, 2003, 74.19 in the first and fourth districts; July 1, 2004, in the third 74.20 and sixth districts; and July 1, 2005, in the second and tenth 74.21 districts. 74.22 Sec. 3. Minnesota Statutes 2000, section 179A.102, 74.23 subdivision 6, is amended to read: 74.24 Subd. 6. [CONTRACT AND REPRESENTATION RESPONSIBILITIES.] 74.25 (a) Notwithstanding the provisions of section 179A.101, the 74.26 exclusive representatives of units of court employees certified 74.27 prior to the effective date of the judicial district coming 74.28 under section 480.181, subdivision 1, paragraph (b), remain 74.29 responsible for administration of their contracts and for other 74.30 contractual duties and have the right to dues and fair share fee 74.31 deduction and other contractual privileges and rights until a 74.32 contract is agreed upon with the state court administrator for a 74.33 new unit established under section 179A.101or until June 30,74.342001, whichever is earlier. Exclusive representatives of court 74.35 employees certified after the effective date of this section in 74.36 the judicial district are immediately upon certification 75.1 responsible for bargaining on behalf of employees within the 75.2 unit. They are also responsible for administering grievances 75.3 arising under previous contracts covering employees included 75.4 within the unit which remain unresolvedon June 30, 2001, or75.5 upon agreement with the state court administrator on a contract 75.6 for a new unit established under section 179A.101, whichever is75.7earlier. Where the employer does not object, these 75.8 responsibilities may be varied by agreement between the outgoing 75.9 and incoming exclusive representatives. All other rights and 75.10 duties of representation begin on July 1, 2001of the year in 75.11 which the state assumes the funding of court administration in 75.12 the judicial district, except that exclusive representatives 75.13 certified after the effective date of this section shall 75.14 immediately, upon certification, have the right to all employer 75.15 information and all forms of access to employees within the 75.16 bargaining unit which would be permitted to the current contract 75.17 holder, including the rights in section 179A.07, subdivision 6. 75.18 This section does not affect an existing collective bargaining 75.19 contract. Incoming exclusive representatives of court employees 75.20 from judicial districts that come under section 480.181, 75.21 subdivision 1, paragraph (b), are immediately, upon 75.22 certification, responsible for bargaining on behalf of all 75.23 previously unrepresented employees assigned to their units. All 75.24 other rights and duties of exclusive representatives begin on 75.25 July 1, 2001of the year in which the state assumes the funding 75.26 of court administration in the judicial district. 75.27 (b) Nothing in this act or Laws 1999, chapter 216, article 75.28 7, sections 3 to 15, prevents an exclusive representative 75.29 certified after the effectivedate of sections 3 to 15dates of 75.30 those provisions from assessing fair share or dues deductions 75.31 immediately upon certification for employees in a unit 75.32 established under section 179A.101 if the employees were 75.33 unrepresented for collective bargaining purposes before that 75.34 certification. 75.35 [EFFECTIVE DATE.] This section is effective July 1, 2003, 75.36 in the first and fourth districts; July 1, 2004, in the third 76.1 and sixth districts; and July 1, 2005, in the second and tenth 76.2 districts. 76.3 Sec. 4. Minnesota Statutes 2000, section 179A.103, 76.4 subdivision 1, is amended to read: 76.5 Subdivision 1. [CONTRACTS.] Contracts for the period 76.6 commencing July 1, 2000,of the year in which the state assumes 76.7 the cost of court administration in the judicial district for 76.8 the judicial district court employeesof judicial districts that76.9are under section 480.181, subdivision 1, paragraph (b),must be 76.10 negotiated with the state court administrator. Negotiations for 76.11 those contracts may begin any time after July 1, 1999of the 76.12 year before the state assumes the cost, and may be initiated by 76.13 either party notifying the other of the desire to begin the 76.14 negotiating process. Negotiations are subject to this chapter. 76.15 [EFFECTIVE DATE.] This section is effective July 1, 2003, 76.16 in the first and fourth districts; July 1, 2004, in the third 76.17 and sixth districts; and July 1, 2005, in the second and tenth 76.18 districts. 76.19 Sec. 5. [245.775] [REIMBURSEMENT OF COUNTY FOR CERTAIN 76.20 OUT-OF-HOME PLACEMENTS.] 76.21 (a) The commissioner of human services shall reimburse a 76.22 county for 30 percent of the nonfederal share of the cost of 76.23 out-of-home placement. For purposes of this section, 76.24 "out-of-home placement" means the placement of a child in a 76.25 child caring institution or shelter licensed under Minnesota 76.26 Rules, parts 9545.0905 to 9545.1125, in a group home licensed 76.27 under Minnesota Rules, parts 9545.1400 to 9545.1500, in family 76.28 foster care or group family foster care licensed under Minnesota 76.29 Rules, parts 9545.0010 to 9545.0260, or a correctional facility 76.30 pursuant to a court order involving a county social services 76.31 agency. For purposes of this section, "out-of-home placement" 76.32 includes voluntary and tribal court-ordered placement of an 76.33 Indian child under sections 260.765 and 260.771. 76.34 (b) The manner for making the reimbursement for costs under 76.35 paragraph (a) to the county is as follows: 76.36 (1) beginning in July 2002, and annually thereafter, the 77.1 commissioner will forecast out-of-home placements for each 77.2 calendar year and make payments as follows: 77.3 (i) in July of each year, the commissioner will make a 77.4 payment to a county to cover 12 percent of the county's 77.5 anticipated nonfederal costs of out-of-home placements for that 77.6 calendar year; 77.7 (ii) in September of each year, the commissioner will make 77.8 an additional payment, if necessary, to a county so that this 77.9 payment and the payment in item (i) reflect 30 percent of the 77.10 actual expenditures by the county of the nonfederal costs of 77.11 out-of-home placements for that county for the period January 77.12 through June of that calendar year; 77.13 (iii) in December of each year, the commissioner will make 77.14 a payment to a county which, when added to the payments in items 77.15 (i) and (ii), reflects 27 percent of the county's anticipated 77.16 nonfederal costs of out-of-home placements for that calendar 77.17 year; and 77.18 (iv) in March of the calendar year following the payments 77.19 made in items (i) to (iii), the commissioner will settle up with 77.20 each county by making an additional payment to or recovering 77.21 money from the county as necessary to reconcile the net amount 77.22 of the payments received by the county under items (i) to (iii) 77.23 with the total reimbursement to be made to the county under 77.24 paragraph (c). 77.25 (c) The total reimbursement to the county under paragraph 77.26 (b) shall be the lesser of: 77.27 (1) 30 percent; or 77.28 (2) a lesser percentage, so that total payments under this 77.29 section and sections 260.765, subdivision 2a, and 260.771, 77.30 subdivision 4a, equal the maximum appropriation allowed under 77.31 section 245.776, 77.32 of the actual expenditures by the county of the nonfederal costs 77.33 of out-of-home placements for the calendar year. 77.34 [EFFECTIVE DATE.] This section is effective beginning with 77.35 out-of-home placement costs incurred in calendar year 2002. 77.36 Sec. 6. [245.776] [ANNUAL APPROPRIATION.] 78.1 A sum sufficient to discharge the duties imposed by 78.2 sections 245.775; 260.765, subdivision 2a; and 260.771, 78.3 subdivision 4a, is annually appropriated from the general fund 78.4 to the commissioner of human services. The payments under these 78.5 sections are limited to $49,400,000 in fiscal year 2003. The 78.6 payments under these sections in fiscal year 2004 and thereafter 78.7 are limited to an amount equal to: 78.8 (1) the maximum allowed appropriation under this section in 78.9 the previous calendar year, multiplied by 78.10 (2) one plus the percentage increase in the implicit price 78.11 deflator for government consumption expenditures and gross 78.12 investment for state and local governments prepared by the 78.13 Bureau of Economic Analysis of the United States Department of 78.14 Commerce for the 12-month period ending March 31 of the previous 78.15 year. 78.16 Sec. 7. Minnesota Statutes 2000, section 260.765, is 78.17 amended by adding a subdivision to read: 78.18 Subd. 2a. [REIMBURSEMENT FOR A PORTION OF COSTS.] When an 78.19 Indian child is voluntarily placed in foster care by a tribal 78.20 social services agency, the commissioner shall reimburse 30 78.21 percent of the nonfederal share of the costs of the placement. 78.22 The mechanism for reimbursement must be the same used for county 78.23 reimbursement of out-of-home placement costs under section 78.24 245.775. 78.25 [EFFECTIVE DATE.] This section is effective beginning with 78.26 foster care costs incurred after January 1, 2002. 78.27 Sec. 8. Minnesota Statutes 2000, section 260.771, is 78.28 amended by adding a subdivision to read: 78.29 Subd. 4a. [REIMBURSEMENT FOR A PORTION OF COSTS.] When an 78.30 Indian child is placed by a tribal social services agency 78.31 according to tribal court order, the commissioner shall 78.32 reimburse 30 percent of the nonfederal share of the costs of the 78.33 placement. The mechanism for reimbursement must be the same 78.34 used for county reimbursement of out-of-home placement costs 78.35 under section 245.775. 78.36 [EFFECTIVE DATE.] This section is effective beginning with 79.1 out-of-home placement costs incurred after January 1, 2002. 79.2 Sec. 9. Minnesota Statutes 2000, section 273.1398, 79.3 subdivision 4a, is amended to read: 79.4 Subd. 4a. [AID OFFSET FOR COURT COSTS.] (a) By July 15,79.51999of the year preceding the year in which the state assumes 79.6 the cost of court administration in the judicial district as 79.7 specified under section 480.183, the supreme court shall 79.8 determine and certify to the commissioner of revenue for each 79.9 county, other than counties located in the eighth judicial79.10district,the county's share of the costs assumed in the 79.11 judicial districts specified underLaws 1999, chapter 216,79.12article 7,section 480.183, subdivision 1, during the succeeding 79.13 fiscal yearbeginning July 1, 2000,. 79.14 (b) The amount certified in paragraph (a) shall be equal to 79.15 the following: 79.16 (i) 103 percent of the required court administration 79.17 expenditures as defined under section 480.183, subdivision 3, 79.18 for calendar year 2003, as determined under subdivision 4b, 79.19 paragraph (a); plus 79.20 (ii) the required mandated court services expenditures as 79.21 defined under section 480.183, subdivision 4, for the calendar 79.22 year in which the court transfer will occur, as determined under 79.23 subdivision 4b, paragraph (b); plus 79.24 (iii) an adjustment for any cumulative percentage increase 79.25 in salary expenditures as defined under section 480.183, 79.26 subdivision 3, in excess of the maintenance of effort percentage 79.27 for the county, as determined under subdivision 4b, paragraph 79.28 (d); less 79.29 (iv) an amount equal to the county's share of transferred 79.30 fines collected by the district courts in the county during the 79.31 calendar year19982003. 79.32 The court and the county may, if both parties agree, 79.33 negotiate and certify an amount higher than the amount 79.34 calculated under this paragraph. 79.35 (c) For purposes of this subdivision, the adjustment in 79.36 paragraph (b), clause (iii), shall be equal to: 80.1 (1) the sum of the court administration expenditures as 80.2 defined under section 480.183, subdivision 4, required under 80.3 subdivision 4b, paragraph (a), plus the temporary aid payment 80.4 under subdivision 4c; multiplied by 80.5 (2) the difference between (i) the cumulative percentage 80.6 increase in actual and anticipated salary settlements for court 80.7 employees from July 1, 2001, until the date of the court 80.8 transfer and (ii) the maintenance of effort percent of the 80.9 county for the year in which the court transfer occurs, as 80.10 determined under subdivision 4b, paragraph (d). 80.11(b)(d) Payments to a county under subdivision 2 or section 80.12 273.166 for the calendar year2000in which the state assumes 80.13 the cost of court administration and mandated services as 80.14 defined under section 480.183, subdivisions 4 and 5, in the 80.15 judicial district must be permanently reduced by an amount equal 80.16 to 75 percent of the net cost to the state for assumption of 80.17 district court costs as certified in paragraph (a). 80.18(c)(e) Payments to a county under subdivision 2 or section 80.19 273.166 for the calendar year2001after the calendar year in 80.20 which the state assumes the cost of court administration and 80.21 mandated services as defined under section 480.183, subdivisions 80.22 4 and 5, in the judicial district must be permanently reduced by 80.23 an amount equal to 25 percent of the net cost to the state for 80.24 assumption of district court costs as certified in paragraph (a). 80.25(d)(f) Payments to a county under subdivision 2 for 80.26 calendar year 2001 are permanently increased by an amount equal 80.27 to 7.5 percent of the county's share of transferred fines 80.28 collected by the district courts in the county during calendar 80.29 year 1998, as determined under paragraph (a). If the amount 80.30 determined in paragraph (a) exceeds the amount of aid a county 80.31 is scheduled to be paid under subdivision 2 in 2000, then the 80.32 county shall not receive an aid increase under this paragraph. 80.33 [EFFECTIVE DATE.] This section is effective the day 80.34 following final enactment. 80.35 Sec. 10. Minnesota Statutes 2000, section 273.1398, is 80.36 amended by adding a subdivision to read: 81.1 Subd. 4b. [COURT EXPENDITURES; MAINTENANCE OF EFFORT.] (a) 81.2 Until the costs of court administration as defined under section 81.3 480.183, subdivision 4, in a county have been transferred to the 81.4 state, each county in a judicial district transferring court 81.5 administration costs to state funding after July 1, 2001, shall 81.6 budget for the funding of these costs an amount at least equal 81.7 to the certified budget amount for calendar year 2001 multiplied 81.8 by the maintenance of effort percent for each year from 2001 to 81.9 2003. The county shall budget, fund, and authorize expenditures 81.10 not less than the amount calculated under this paragraph plus 81.11 the temporary aid amount under subdivision 4c for maintenance of 81.12 effort of administrative costs. 81.13 (b) Until the costs of mandated court services as defined 81.14 under section 480.183, subdivision 4, in a county have been 81.15 transferred to the state, each county in a judicial district 81.16 transferring the costs of mandated court services to state 81.17 funding after July 1, 2001, shall budget for the funding of 81.18 these costs an amount at least equal to the certified budgeted 81.19 amount for calendar year 2001 multiplied by the maintenance of 81.20 effort percent from 2001 to the year of the transfer. The 81.21 county shall budget, fund, and authorize expenditures not less 81.22 than the amount calculated under this paragraph for maintenance 81.23 of effort of mandated services. 81.24 (c) By July 1, 2001, the court shall certify to each county 81.25 in the judicial district its cost of court administration and 81.26 its cost of mandated services as defined under section 480.183, 81.27 subdivisions 4 and 5, based on 2001 certified budgets. In 81.28 making that determination, the court shall exclude the budget 81.29 costs of the county for the following categories: 81.30 (1) rent; 81.31 (2) examiner of titles; 81.32 (3) civil court appointed attorneys for civil matters; and 81.33 (4) hospitalization costs. 81.34 (d) For purposes of this subdivision, a county's 81.35 "maintenance of effort percent" is equal to one plus the average 81.36 annual percent increase in court operating expenditures for all 82.1 counties in that judicial district for the period from 1996 to 82.2 1999, as reported in the annual state auditor reports on 82.3 revenues, expenditures, and debt for Minnesota counties, raised 82.4 to a power equal to the difference between the budget year and 82.5 2001. The annual percentage under this paragraph must be 82.6 rounded to the nearest one-tenth of one percent. 82.7 [EFFECTIVE DATE.] This section is effective the day 82.8 following final enactment. 82.9 Sec. 11. Minnesota Statutes 2000, section 273.1398, is 82.10 amended by adding a subdivision to read: 82.11 Subd. 4c. [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 82.12 calendar years 2004 and 2005, each county in a judicial district 82.13 that has not been transferred to the state by January 1 of that 82.14 year shall receive additional homestead and agricultural credit 82.15 aid. This amount is in addition to the amount calculated under 82.16 subdivision 2 and must not be included in the definition of 82.17 homestead and agricultural credit base under subdivision 1, 82.18 paragraph (j). The amount of additional aid is equal to the 82.19 difference between (1) the amount budgeted for court 82.20 administration costs in 2001 as determined under subdivision 2, 82.21 paragraph (c), multiplied by the maintenance of effort percent 82.22 for the calendar year as determined under subdivision 2, 82.23 paragraph (d), and (2) the amount calculated under subdivision 82.24 4b, paragraph (a), for calendar year 2003. This additional aid 82.25 must be used only to fund court administration expenditures as 82.26 defined in section 480.183, subdivision 2. This amount must be 82.27 added to the state court's base budget in the year when the 82.28 court in that judicial district in which the county is located 82.29 is transferred to the state. 82.30 [EFFECTIVE DATE.] This section is effective the day 82.31 following final enactment. 82.32 Sec. 12. Minnesota Statutes 2000, section 273.1398, is 82.33 amended by adding a subdivision to read: 82.34 Subd. 4d. [JUDICIAL DISTRICT MANDATED COURT SERVICES 82.35 AID.] (a) Mandated court services aid as provided in section 82.36 477A.0121, subdivision 4a, must be used to assist judicial 83.1 districts in the transition from the property tax funding to the 83.2 state funding of mandated court services as defined in section 83.3 480.183, subdivision 3, for the remaining judicial districts. 83.4 (b) The mandated court services aid shall be provided only 83.5 for aids payable in calendar years 2001 to 2004 to the court for 83.6 those judicial districts that have not been transferred to the 83.7 state by January 1 of those calendar years. The mandated court 83.8 services aid will be as follows: 83.9 (1) for the first judicial district, $372,757 for fiscal 83.10 year 2002 and $590,970 for fiscal year 2003; 83.11 (2) for the fourth judicial district, $674,264 for fiscal 83.12 year 2002 and $1,068,975 for fiscal year 2003; 83.13 (3) for the third judicial district, $473,562 for fiscal 83.14 year 2003 and $750,785 for fiscal year 2004; 83.15 (4) for the sixth judicial district, $121,287 for fiscal 83.16 year 2003 and $192,288 for fiscal year 2004; 83.17 (5) for the second judicial district, $277,237 for fiscal 83.18 year 2004 and $439,530 for fiscal year 2005; and 83.19 (6) for the tenth judicial district, $422,891 for fiscal 83.20 year 2004 and $670,453 for fiscal year 2005. 83.21 (c) The mandated court services aid as contained in 83.22 paragraph (b) must be added to the state court's base budget for 83.23 subsequent fiscal years. 83.24 [EFFECTIVE DATE.] This section is effective the day 83.25 following final enactment. 83.26 Sec. 13. Minnesota Statutes 2000, section 273.1398, is 83.27 amended by adding a subdivision to read: 83.28 Subd. 4e. [JUDICIAL DISTRICT STATE TAKEOVER TRANSITION 83.29 AID.] (a) Judicial district state takeover transition aid as 83.30 provided in section 477A.0121, subdivision 4a, must be used to 83.31 assist in the transition from the property tax funding to the 83.32 state funding of district court administration costs for the 83.33 remaining judicial districts. This aid is temporary and is 83.34 intended to finance those costs for accounting and human 83.35 resources which are necessary for the state court to expend to 83.36 prepare for the transfer of districts to the state. 84.1 (b) The transition aid must be provided only for the two 84.2 years prior to the scheduled state takeover under section 84.3 480.183, subdivision 1. The transition aid will be as follows: 84.4 (1) $152,000 for fiscal year 2002; 84.5 (2) $442,000 for fiscal year 2003; 84.6 (3) $428,000 for fiscal year 2004; and 84.7 (4) $276,000 for fiscal year 2005. 84.8 (c) The transition aid in paragraph (b) must not be added 84.9 to the state court's base budget for any subsequent fiscal years. 84.10 [EFFECTIVE DATE.] This section is effective the day 84.11 following final enactment. 84.12 Sec. 14. Minnesota Statutes 2000, section 273.1398, is 84.13 amended by adding a subdivision to read: 84.14 Subd. 4f. [AID OFFSET FOR OUT-OF-HOME PLACEMENT 84.15 COSTS.] For aid payable in 2002, each county's aid under 84.16 subdivision 2 must be permanently reduced by an amount equal to 84.17 30 percent of the county's estimated 2002 nonfederal 84.18 expenditures for out-of-home placements, as defined in section 84.19 245.775. The counties shall provide all information requested 84.20 by the commissioner of human services necessary to allow the 84.21 commissioner to estimate and certify these nonfederal costs to 84.22 the commissioner of revenue by September 1, 2001. The aid 84.23 reduction under this subdivision must be made prior to any aid 84.24 reductions for the state takeover of courts contained in this 84.25 article. 84.26 [EFFECTIVE DATE.] This section is effective the day after 84.27 final enactment, for aids payable beginning in 2002. 84.28 Sec. 15. Minnesota Statutes 2000, section 299D.03, 84.29 subdivision 5, is amended to read: 84.30 Subd. 5. [FINES AND FORFEITED BAIL MONEY.] (a) All fines 84.31 and forfeited bail money, from traffic and motor vehicle law 84.32 violations, collected from persons apprehended or arrested by 84.33 officers of the state patrol, shall be paid by the person or 84.34 officer collecting the fines, forfeited bail money or 84.35 installments thereof, on or before the tenth day after the last 84.36 day of the month in which these moneys were collected, to the 85.1 county treasurer of the county where the violation occurred. 85.2 Three-eighths of these receipts shall be credited to the general 85.3 revenue fund of the county, except that in a county in a 85.4 judicial district under section 480.181, subdivision 1, 85.5 paragraph (b),as added in Laws 1999, chapter 216, article 7,85.6section 26,this three-eighths share must be transmitted to the 85.7 state treasurer for deposit in the state treasury and credited 85.8 to the general fund. The other five-eighths of these receipts 85.9 shall be transmitted by that officer to the state treasurer 85.10 andshall be credited as follows:85.11(1) In the fiscal year ending June 30, 1991, the first85.12$275,000 in money received by the state treasurer after June 4,85.131991, must be credited to the transportation services fund, and85.14the remainder in the fiscal year credited to the trunk highway85.15fund.85.16(2) In fiscal year 1992, the first $215,000 in money85.17received by the state treasurer in the fiscal year must be85.18credited to the transportation services fund, and the remainder85.19credited to the trunk highway fund.85.20(3) In fiscal year 1993 and subsequent years, the entire85.21amount received by the state treasurermust be credited to the 85.22 trunk highway fund. If, however, the violation occurs within a 85.23 municipality and the city attorney prosecutes the offense, and a 85.24 plea of not guilty is entered, one-third of the receipts shall 85.25 be credited to the general revenue fund of the county, one-third 85.26 of the receipts shall be paid to the municipality prosecuting 85.27 the offense, and one-third shall be transmitted to the state 85.28 treasurer as provided in this subdivision. All costs of 85.29 participation in a nationwide police communication system 85.30 chargeable to the state of Minnesota shall be paid from 85.31 appropriations for that purpose. 85.32 (b) Notwithstanding any other provisions of law, all fines 85.33 and forfeited bail money from violations of statutes governing 85.34 the maximum weight of motor vehicles, collected from persons 85.35 apprehended or arrested by employees of the state of Minnesota, 85.36 by means of stationary or portable scales operated by these 86.1 employees, shall be paid by the person or officer collecting the 86.2 fines or forfeited bail money, on or before the tenth day after 86.3 the last day of the month in which the collections were made, to 86.4 the county treasurer of the county where the violation 86.5 occurred. Five-eighths of these receipts shall be transmitted 86.6 by that officer to the state treasurer and shall be credited to 86.7 the highway user tax distribution fund. Three-eighths of these 86.8 receipts shall be credited to the general revenue fund of the 86.9 county, except that in a county in a judicial district under 86.10 section 480.181, subdivision 1, paragraph (b),as added in Laws86.111999, chapter 216, article 7, section 26,this three-eighths 86.12 share must be transmitted to the state treasurer for deposit in 86.13 the state treasury and credited to the general fund. 86.14 [EFFECTIVE DATE.] This section is effective July 1, 2003, 86.15 in the first and fourth districts; July 1, 2004, in the third 86.16 and sixth districts; and July 1, 2005, in the second and tenth 86.17 districts. 86.18 Sec. 16. Minnesota Statutes 2000, section 357.021, 86.19 subdivision 1a, is amended to read: 86.20 Subd. 1a. [TRANSMITTAL OF FEES TO STATE TREASURER.] (a) 86.21 Every person, including the state of Minnesota and all bodies 86.22 politic and corporate, who shall transact any business in the 86.23 district court, shall pay to the court administrator of said 86.24 court the sundry fees prescribed in subdivision 2. Except as 86.25 provided in paragraph (d), the court administrator shall 86.26 transmit the fees monthly to the state treasurer for deposit in 86.27 the state treasury and credit to the general fund. 86.28 (b) In a county which has a screener-collector position, 86.29 fees paid by a county pursuant to this subdivision shall be 86.30 transmitted monthly to the county treasurer, who shall apply the 86.31 fees first to reimburse the county for the amount of the salary 86.32 paid for the screener-collector position. The balance of the 86.33 fees collected shall then be forwarded to the state treasurer 86.34 for deposit in the state treasury and credited to the general 86.35 fund. In a county in a judicial district under section 480.181, 86.36 subdivision 1, paragraph (b),as added in Laws 1999, chapter87.1216, article 7, section 26,which has a screener-collector 87.2 position, the fees paid by a county shall be transmitted monthly 87.3 to the state treasurer for deposit in the state treasury and 87.4 credited to the general fund. A screener-collector position for 87.5 purposes of this paragraph is an employee whose function is to 87.6 increase the collection of fines and to review the incomes of 87.7 potential clients of the public defender, in order to verify 87.8 eligibility for that service. 87.9 (c) No fee is required under this section from the public 87.10 authority or the party the public authority represents in an 87.11 action for: 87.12 (1) child support enforcement or modification, medical 87.13 assistance enforcement, or establishment of parentage in the 87.14 district court, or in a proceeding under section 484.702; 87.15 (2) civil commitment under chapter 253B; 87.16 (3) the appointment of a public conservator or public 87.17 guardian or any other action under chapters 252A and 525; 87.18 (4) wrongfully obtaining public assistance under section 87.19 256.98 or 256D.07, or recovery of overpayments of public 87.20 assistance; 87.21 (5) court relief under chapter 260; 87.22 (6) forfeiture of property under sections 169A.63 and 87.23 609.531 to 609.5317; 87.24 (7) recovery of amounts issued by political subdivisions or 87.25 public institutions under sections 246.52, 252.27, 256.045, 87.26 256.25, 256.87, 256B.042, 256B.14, 256B.15, 256B.37, 260B.331, 87.27 and 260C.331, or other sections referring to other forms of 87.28 public assistance; 87.29 (8) restitution under section 611A.04; or 87.30 (9) actions seeking monetary relief in favor of the state 87.31 pursuant to section 16D.14, subdivision 5. 87.32 (d) The fees collected for child support modifications 87.33 under subdivision 2, clause (13), must be transmitted to the 87.34 county treasurer for deposit in the county general fund. The 87.35 fees must be used by the county to pay for child support 87.36 enforcement efforts by county attorneys. 88.1 [EFFECTIVE DATE.] This section is effective July 1, 2003, 88.2 in the first and fourth districts; July 1, 2004, in the third 88.3 and sixth districts; and July 1, 2005, in the second and tenth 88.4 districts. 88.5 Sec. 17. Minnesota Statutes 2000, section 477A.0121, is 88.6 amended by adding a subdivision to read: 88.7 Subd. 4a. [COURT TAKEOVER; MANDATED SERVICES AND 88.8 TRANSITION COSTS.] For calendar years 2001 to 2004, an amount 88.9 equal to the sum of the additional aid in section 477A.03, 88.10 subdivision 6, shall be retained by the commissioner of revenue 88.11 and transferred to the state court system to fund the mandated 88.12 court services aid in section 273.1398, subdivision 4d, and the 88.13 judicial district state takeover transition aid in section 88.14 273.1398, subdivision 4e. 88.15 [EFFECTIVE DATE.] This section is effective for aids 88.16 payable in calendar years 2001 to 2004. 88.17 Sec. 18. Minnesota Statutes 2000, section 477A.0122, is 88.18 amended by adding a subdivision to read: 88.19 Subd. 4a. [REDUCTIONS FOR INSUFFICIENT HOMESTEAD AND 88.20 AGRICULTURAL CREDIT AID.] If the reductions to a county's aid 88.21 under section 273.1398, subdivisions 4a and 4f, exceed the 88.22 amount of homestead and agricultural credit aid payable to the 88.23 county under section 273.1398, subdivision 2, for the year of 88.24 the reduction, the county's aid under subdivision 4 must be 88.25 permanently reduced by the excess reduction amount in the year 88.26 of the reduction. The aid a county receives under this section 88.27 may not be less than zero. 88.28 [EFFECTIVE DATE.] This section is effective for aids 88.29 payable in 2002 and thereafter. 88.30 Sec. 19. Minnesota Statutes 2000, section 477A.03, 88.31 subdivision 2, is amended to read: 88.32 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 88.33 discharge the duties imposed by sections 477A.011 to 477A.014 is 88.34 annually appropriated from the general fund to the commissioner 88.35 of revenue. 88.36 (b) Aid payments to counties under section 477A.0121 are 89.1 limited to $20,265,000 in 1996. Aid payments to counties under 89.2 section 477A.0121 are limited to $27,571,625 in 1997. For aid 89.3 payable in 1998 and thereafter, the total aids paid under 89.4 section 477A.0121 are the amounts certified to be paid in the 89.5 previous year, adjusted for inflation as provided under 89.6 subdivision 3. The additional amount authorized under 89.7 subdivision 6 is not included when calculating the appropriation 89.8 limits under this paragraph. 89.9 (c)(i) For aids payable in19982002 and thereafter, the 89.10 total aids paid to counties under section 477A.0122 are the 89.11 amounts certified to be paid in the previous year, adjusted for 89.12 inflation as provided under subdivision 3, and less any 89.13 reduction required under section 477A.0122, subdivision 4a, in 89.14 the current year. 89.15 (ii) Aid payments to counties under section 477A.0122 in 89.16 2000 are further increased by an additional $20,000,000 in 2000. 89.17 (d) Aid payments to cities in 1999 under section 477A.013, 89.18 subdivision 9, are limited to $380,565,489. For aids payable in 89.19 2000, the total aids paid under section 477A.013, subdivision 9, 89.20 are the amounts certified to be paid in the previous year, 89.21 adjusted for inflation as provided in subdivision 3, and 89.22 increased by the amount necessary to effectuate Laws 1999, 89.23 chapter 243, article 5, section 48, paragraph (b). For aids 89.24 payable in 2001 through 2003, the total aids paid under section 89.25 477A.013, subdivision 9, are the amounts certified to be paid in 89.26 the previous year, adjusted for inflation as provided under 89.27 subdivision 3. For aids payable in 2004, the total aids paid 89.28 under section 477A.013, subdivision 9, are the amounts certified 89.29 to be paid in the previous year, adjusted for inflation as 89.30 provided under subdivision 3, and increased by the amount 89.31 certified to be paid in 2003 under section 477A.06. For aids 89.32 payable in 2005 and thereafter, the total aids paid under 89.33 section 477A.013, subdivision 9, are the amounts certified to be 89.34 paid in the previous year, adjusted for inflation as provided 89.35 under subdivision 3. The additional amount authorized under 89.36 subdivision 4 is not included when calculating the appropriation 90.1 limits under this paragraph. 90.2 [EFFECTIVE DATE.] Paragraph (b) is effective for aids 90.3 payable in calendar years 2001 to 2004. Paragraph (c) is 90.4 effective for aids payable in 2002 and thereafter. 90.5 Sec. 20. Minnesota Statutes 2000, section 477A.03, is 90.6 amended by adding a subdivision to read: 90.7 Subd. 6. [ADDITIONAL MONEY FOR COUNTY CRIMINAL JUSTICE 90.8 AID.] For the calendar years 2001 to 2004, the limit on the 90.9 appropriation for aids paid under section 477A.0121, as 90.10 determined in subdivision 2, paragraph (b), is increased by: 90.11 (1) $2,494,000 in calendar year 2001; 90.12 (2) $4,155,000 in calendar year 2002; 90.13 (3) $2,481,000 in calendar year 2003; and 90.14 (4) $1,386,000 in calendar year 2004. 90.15 [EFFECTIVE DATE.] This section is effective for aids 90.16 payable in calendar years 2001 to 2004. 90.17 Sec. 21. Minnesota Statutes 2000, section 480.181, 90.18 subdivision 1, is amended to read: 90.19 Subdivision 1. [STATE EMPLOYEES; COMPENSATION.] (a) 90.20 District court referees, judicial officers, court reporters, law 90.21 clerks, district administration staff, other than district 90.22 administration staff in the second and fourth judicial 90.23 districts, guardian ad litem program coordinators and staff, and 90.24 other court employees under paragraph (b), are state employees 90.25 and are governed by the judicial branch personnel rules adopted 90.26 by the supreme court. The supreme court, in consultation with 90.27 the conference of chief judges, shall establish the salary range 90.28 of these employees under the judicial branch personnel rules. 90.29 In establishing the salary ranges, the supreme court shall 90.30 consider differences in the cost of living in different areas of 90.31 the state. 90.32 (b) The court administrator and employees of the court 90.33 administrator who are in the fifth, seventh, eighth, or ninth 90.34 judicial district are state employees. The court administrator 90.35 and employees of the court administrator in the remaining 90.36 judicial districts become state employees as follows: 91.1 (1) effective July 1, 2003, for the first and fourth 91.2 judicial districts; 91.3 (2) effective July 1, 2004, for the third and sixth 91.4 judicial districts; and 91.5 (3) effective July 1, 2005, for the second and tenth 91.6 judicial districts. 91.7 Sec. 22. [480.1811] [POST-RETIREMENT BENEFIT COSTS.] 91.8 Where court administration, guardian ad litem, or 91.9 interpreter employees elect to retain county insurance benefits 91.10 under section 480.181 after July 1, 2001, and the county 91.11 provides those employees post-retirement insurance benefits 91.12 prior to July 1, 2001, the county shall pay the post-retirement 91.13 cost of those benefits. 91.14 [EFFECTIVE DATE.] This section is effective the day 91.15 following final enactment. 91.16 Sec. 23. [480.183] [JUDICIAL DISTRICTS; SCHEDULED DATES OF 91.17 STATE TRANSFER; DEFINITION OF SERVICES.] 91.18 Subdivision 1. [DATE OF STATE TRANSFER.] The mandated 91.19 court services and court administration expenditures as defined 91.20 in this section for the remaining judicial districts shall be 91.21 transferred to the state according to the following schedule: 91.22 (1) effective July 1, 2003, the first and fourth judicial 91.23 districts; 91.24 (2) effective July 1, 2004, the third and sixth judicial 91.25 districts; and 91.26 (3) effective July 1, 2005, the second and tenth judicial 91.27 districts. 91.28 Subd. 2. [DEFINITION; SALARY EXPENDITURES.] "Salary 91.29 expenditures" means the annualized salary of court 91.30 administration employees specified in the judicial branch 91.31 personnel plan on the date of transfer, the annualized cost of 91.32 employee benefits, including, but not limited to, retirement 91.33 plans and employer provided insurance, elected under section 91.34 480.181 for the year of transfer and the budgeted nonpersonnel 91.35 costs for the year of transfer. The salary settlements include 91.36 both collective bargaining agreements and any pay plan that 92.1 applies to all county employees. 92.2 Subd. 3. [DEFINITION; COURT ADMINISTRATION 92.3 EXPENDITURES.] "Court administration expenditures" means the 92.4 total expenditures of (1) salary expenditures as defined under 92.5 subdivision 2 and (2) other related administrative operating 92.6 expenditures. 92.7 Subd. 4. [DEFINITION; MANDATED COURT SERVICES.] "Mandated 92.8 court services" means services for: 92.9 (1) guardian ad litem; 92.10 (2) interpreter; 92.11 (3) Minnesota Rules, parts 9525.0900 to 9525.1020 (rule 92.12 20); 92.13 (4) civil commitment examination, not including 92.14 hospitalization or treatment costs, for mental commitments and 92.15 related proceedings under chapter 253B; and 92.16 (5) in forma pauperis costs. 92.17 [EFFECTIVE DATE.] This section is effective the day 92.18 following final enactment. 92.19 Sec. 24. [484.77] [FACILITIES.] 92.20 The county board in each county shall provide suitable 92.21 facilities for court purposes at the county seat, or at other 92.22 locations agreed upon by the district court and the county. The 92.23 county shall also be responsible for the costs of renting, 92.24 maintaining, operating, remodeling, insuring, and renovating 92.25 those facilities occupied by the court. 92.26 [EFFECTIVE DATE.] This section is effective the day 92.27 following final enactment. 92.28 Sec. 25. Minnesota Statutes 2000, section 487.33, 92.29 subdivision 5, is amended to read: 92.30 Subd. 5. [ALLOCATION.] The court administrator shall 92.31 provide the county treasurer with the name of the municipality 92.32 or other subdivision of government where the offense was 92.33 committed which employed or provided by contract the arresting 92.34 or apprehending officer and the name of the municipality or 92.35 other subdivision of government which employed the prosecuting 92.36 attorney or otherwise provided for prosecution of the offense 93.1 for each fine or penalty and the total amount of fines or 93.2 penalties collected for each municipality or other subdivision 93.3 of government. On or before the last day of each month, the 93.4 county treasurer shall pay over to the treasurer of each 93.5 municipality or subdivision of government within the county all 93.6 fines or penalties for parking violations for which complaints 93.7 and warrants have not been issued and one-third of all fines or 93.8 penalties collected during the previous month for offenses 93.9 committed within the municipality or subdivision of government 93.10 from persons arrested or issued citations by officers employed 93.11 by the municipality or subdivision or provided by the 93.12 municipality or subdivision by contract. An additional 93.13 one-third of all fines or penalties shall be paid to the 93.14 municipality or subdivision of government providing prosecution 93.15 of offenses of the type for which the fine or penalty is 93.16 collected occurring within the municipality or subdivision, 93.17 imposed for violations of state statute or of an ordinance, 93.18 charter provision, rule or regulation of a city whether or not a 93.19 guilty plea is entered or bail is forfeited. Except as provided 93.20 in section 299D.03, subdivision 5, or as otherwise provided by 93.21 law, all other fines and forfeitures and all fees and statutory 93.22 court costs collected by the court administrator shall be paid 93.23 to the county treasurer of the county in which the funds were 93.24 collected who shall dispense them as provided by law. In a 93.25 county in a judicial district under section 480.181, subdivision 93.26 1, paragraph (b),as added in Laws 1999, chapter 216, article 7,93.27section 26,all other fines, forfeitures, fees, and statutory 93.28 court costs must be paid to the state treasurer for deposit in 93.29 the state treasury and credited to the general fund. 93.30 [EFFECTIVE DATE.] This section is effective July 1, 2003, 93.31 in the first and fourth districts; July 1, 2004, in the third 93.32 and sixth districts; and July 1, 2005, in the second and tenth 93.33 districts. 93.34 Sec. 26. Minnesota Statutes 2000, section 574.34, 93.35 subdivision 1, is amended to read: 93.36 Subdivision 1. [GENERAL.] Fines and forfeitures not 94.1 specially granted or appropriated by law shall be paid into the 94.2 treasury of the county where they are incurred, except in a 94.3 county in a judicial district under section 480.181, subdivision 94.4 1, paragraph (b), as added in Laws 1999, chapter 216, article 7, 94.5 section 26, or section 480.181, subdivision 1, the fines and 94.6 forfeitures must be deposited in the state treasury and credited 94.7 to the general fund. 94.8 [EFFECTIVE DATE.] This section is effective July 1, 2003, 94.9 in the first and fourth districts; July 1, 2004, in the third 94.10 and sixth districts; and July 1, 2005, in the second and tenth 94.11 districts. 94.12 Sec. 27. Laws 1999, chapter 216, article 7, section 46, 94.13 subdivision 3, is amended to read: 94.14 Subd. 3. [MISCELLANEOUS COST.] The provisions of sections 94.15 1, 2, and 18 to 45, relating to the state takeover of court 94.16 interpreter costs, guardian ad litem costs, rule 20 and mental 94.17 commitment examination costs, and in forma pauperis costs are 94.18 effective January 1, 2000, in the eighth judicial district; July 94.19 1, 2000, in the fifth, seventh, and ninth judicial districts; 94.20 andJuly 1, 2001,on the date court administration expenditures 94.21 and costs of mandated court services costs as defined under 94.22 Minnesota Statutes, section 480.183, subdivisions 4 and 5, are 94.23 transferred to the state under Minnesota Statutes, section 94.24 480.183, subdivision 1, in the remaining judicial districts. 94.25 [EFFECTIVE DATE.] This section is effective the day 94.26 following final enactment. 94.27 Sec. 28. [TRANSITIONAL PROVISIONS.] 94.28 Subdivision 1. [TRANSFER OF PROPERTY.] The title to 94.29 personal property that is used by employees being transferred to 94.30 state employment under this article in the scope of their 94.31 employment is transferred to the state when they become state 94.32 employees. 94.33 Subd. 2. [RULES.] The supreme court, in consultation with 94.34 the conference of chief judges, may adopt rules to implement 94.35 this article. 94.36 Subd. 3. [BUDGETS.] Notwithstanding any law to the 95.1 contrary, the fiscal year budgets for the year in which the 95.2 state assumes the cost of court administration in the judicial 95.3 district for the court administrators' offices being transferred 95.4 to state employment under this article, including the number of 95.5 complement positions and salaries, must be submitted by the 95.6 court administrators to the supreme court. The budgets must 95.7 include the current levels of funding and positions at the time 95.8 of submission as well as any requests for increases in funding 95.9 and positions. 95.10 [EFFECTIVE DATE.] This section is effective July 1, 2003, 95.11 in the first and fourth districts; July 1, 2004, in the third 95.12 and sixth districts; and July 1, 2005, in the second and tenth 95.13 districts. 95.14 Sec. 29. [APPROPRIATION.] 95.15 The supreme court general fund appropriation base is 95.16 increased by $48,040,000 in fiscal year 2004 and by an 95.17 additional $19,452,000 in fiscal year 2005. In fiscal years 95.18 2006 and 2007 the supreme court may request additional base 95.19 adjustments to reflect the transfer of the remaining judicial 95.20 districts. 95.21 ARTICLE 4 95.22 LEVY LIMITS 95.23 Section 1. Minnesota Statutes 2000, section 275.16, is 95.24 amended to read: 95.25 275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 95.26 If any such municipality shall return to the county auditor 95.27 a levy greater than permitted by chapters 123A, 123B, 126C, 95.28 136C, and 136Dand, sections 275.124 to 275.16, and 275.70 to 95.29 275.74, such county auditor shall extend only such amount of 95.30 taxes as the limitations herein prescribed will permit; 95.31 provided, if such levy shall include any levy for the payment of 95.32 bonded indebtedness or judgments, such levies for bonded 95.33 indebtedness or judgments shall be extended in full, and the 95.34 remainder of the levies shall be reduced so that the total 95.35 thereof, including levies for bonds and judgments, shall not 95.36 exceed such amount as the limitations herein prescribed will 96.1 permit. 96.2 Sec. 2. Minnesota Statutes 2000, section 275.62, 96.3 subdivision 1, is amended to read: 96.4 Subdivision 1. [REPORT ON TAXES LEVIED.] The commissioner 96.5 of revenue shall establish procedures for the annual reporting 96.6 of local government levies. Each local governmental unit shall 96.7 submit a report to the commissioner by December 30 of the year 96.8 in which the tax is levied. A local governmental unit is 96.9 required to file this report only for levy years in which it is 96.10 not subject to levy limits under sections 275.70 to 275.74. The 96.11 report shall include, but is not limited to, information on the 96.12 amount of the tax levied by the governmental unit for the 96.13 following purposes: 96.14 (1)debt, which includes taxes levied for the purposes96.15defined in Minnesota Statutes 1991 Supplement, section 275.50,96.16subdivision 5, clauses (b), (c), (d), and (e);96.17(2) social services and related programs, which include96.18taxes levied for the purposes defined in Minnesota Statutes 199196.19Supplement, section 275.50, subdivision 5, clauses (a), (j), and96.20(v);96.21(3) libraries, which include taxes levied for the purposes96.22defined in Minnesota Statutes 1991 Supplement, section 275.50,96.23subdivision 5, clause (n);96.24(4) for counties only, the amount of levy needed to fund96.25increased county costs associated with the welfare reform under96.26Laws 1997, chapter 85, including increased administration and96.27program costs of the income maintenance programs and also96.28related support services as they relate directly to the welfare96.29reformthe amounts levied for each of the purposes listed in 96.30 section 275.70, subdivision 5; and 96.31(5)(2) other levies, which include the taxes levied for 96.32 all purposes not included in clause (1), (2), (3), or (4). 96.33 Sec. 3. Minnesota Statutes 2000, section 275.70, is 96.34 amended by adding a subdivision to read: 96.35 Subdivision 1. [APPLICATION.] For the purposes of sections 96.36 275.70 to 275.74, the following terms have the meanings given 97.1 them, unless provided otherwise. 97.2 Sec. 4. Minnesota Statutes 2000, section 275.70, is 97.3 amended by adding a subdivision to read: 97.4 Subd. 2. [IMPLICIT PRICE DEFLATOR.] "Implicit price 97.5 deflator" means the implicit price deflator for government 97.6 consumption expenditures and gross investment for state and 97.7 local governments prepared by the bureau of economic analysis of 97.8 the United States Department of Commerce for the 12-month period 97.9 ending March 31 of the levy year. 97.10 Sec. 5. Minnesota Statutes 2000, section 275.70, is 97.11 amended by adding a subdivision to read: 97.12 Subd. 3. [LOCAL GOVERNMENTAL UNIT.] "Local governmental 97.13 unit" means a county, or a statutory or home rule charter city 97.14 with a population greater than 2,500. 97.15 Sec. 6. Minnesota Statutes 2000, section 275.70, is 97.16 amended by adding a subdivision to read: 97.17 Subd. 4. [POPULATION; NUMBER OF HOUSEHOLDS.] "Population" 97.18 or "number of households" means the population or number of 97.19 households for the local governmental unit as established by the 97.20 last federal census, by a census taken under section 275.14, or 97.21 by an estimate made by the metropolitan council or by the state 97.22 demographer under section 4A.02, whichever is most recent as to 97.23 the stated date of the count or estimate up to and including 97.24 June 1 of the current levy year. 97.25 Sec. 7. Minnesota Statutes 2000, section 275.70, 97.26 subdivision 5, is amended to read: 97.27 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 97.28 portions of ad valorem taxes levied by a local governmental unit 97.29 for the following purposes or in the following manner: 97.30 (1) to pay the costs of the principal and interest on 97.31 bonded indebtedness or to reimburse for the amount of liquor 97.32 store revenues used to pay the principal and interest due on 97.33 municipal liquor store bonds in the year preceding the year for 97.34 which the levy limit is calculated; 97.35 (2) to pay the costs of principal and interest on 97.36 certificates of indebtedness issued for any corporate purpose 98.1 except for the following: 98.2 (i) tax anticipation or aid anticipation certificates of 98.3 indebtedness; 98.4 (ii) certificates of indebtedness issued under sections 98.5 298.28 and 298.282; 98.6 (iii) certificates of indebtedness used to fund current 98.7 expenses or to pay the costs of extraordinary expenditures that 98.8 result from a public emergency; or 98.9 (iv) certificates of indebtedness used to fund an 98.10 insufficiency in tax receipts or an insufficiency in other 98.11 revenue sources; 98.12 (3) to provide for the bonded indebtedness portion of 98.13 payments made to another political subdivision of the state of 98.14 Minnesota; 98.15 (4) to fund payments made to the Minnesota state armory 98.16 building commission under section 193.145, subdivision 2, to 98.17 retire the principal and interest on armory construction bonds; 98.18 (5)for unreimbursed expenses related to flooding that98.19occurred during the first half of calendar year 1997, as allowed98.20by the commissioner of revenue under section 275.74, paragraph98.21(b);98.22(6) for local units of government located in an area98.23designated by the Federal Emergency Management Agency pursuant98.24to a major disaster declaration issued for Minnesota by98.25President Clinton after April 1, 1997, and before June 11, 1997,98.26for the amount of tax dollars lost due to abatements authorized98.27under section 273.123, subdivision 7, and Laws 1997, chapter98.28231, article 2, section 64, to the extent that they are related98.29to the major disaster and to the extent that neither the state98.30or federal government reimburses the local government for the98.31amount lost;98.32(7)property taxes approved by voters which are levied 98.33 against the referendum market value as provided under section 98.34 275.61; 98.35(8) to fund matching requirements needed to qualify for98.36federal or state grants or programs to the extent that either99.1(i) the matching requirement exceeds the matching requirement in99.2calendar year 1997, or (ii) it is a new matching requirement99.3that didn't exist prior to 1998;99.4(9)(6) to pay the expenses reasonably and necessarily 99.5 incurred in preparing for or repairing the effects of natural 99.6 disaster including the occurrence or threat of widespread or 99.7 severe damage, injury, or loss of life or property resulting 99.8 from natural causes, in accordance with standards formulated by 99.9 the emergency services division of the state department of 99.10 public safety, as allowed by the commissioner of revenue under 99.11 section 275.74, paragraph (b); 99.12(10) for the amount of tax revenue lost due to abatements99.13authorized under section 273.123, subdivision 7, for damage99.14related to the tornadoes of March 29, 1998, to the extent that99.15neither the state or federal government provides reimbursement99.16for the amount lost;99.17(11)(7) pay amounts required to correct an error in the 99.18 levy certified to the county auditor by a city or county in a 99.19 levy year, but only to the extent that when added to the 99.20 preceding year's levy it is not in excess of an applicable 99.21 statutory, special law or charter limitation, or the limitation 99.22 imposed on the governmental subdivision by sections 275.70 to 99.23 275.74 in the preceding levy year; 99.24(12)(8) to pay an abatement under section 469.1815; 99.25(13) to pay the employer contribution to the local99.26government correctional service retirement plan under section99.27353E.03, subdivision 2, to the extent that the employer99.28contribution exceeds 5.49 percent of total salary;99.29(14) to pay the operating or maintenance costs of a county99.30jail as authorized in section 641.01 or 641.262, or of a99.31correctional facility as defined in section 241.021, subdivision99.321, paragraph (5), to the extent that the county can demonstrate99.33to the commissioner of revenue that the amount has been included99.34in the county budget as a direct result of a rule, minimum99.35requirement, minimum standard, or directive of the department of99.36corrections, or to pay the operating or maintenance costs of a100.1regional jail as authorized in section 641.262. For purposes of100.2this clause, a district court order is not a rule, minimum100.3requirement, minimum standard, or directive of the department of100.4corrections. If the county utilizes this special levy, any100.5amount levied by the county in the previous levy year for the100.6purposes specified under this clause and included in the100.7county's previous year's levy limitation computed under section100.8275.71, shall be deducted from the levy limit base under section100.9275.71, subdivision 2, when determining the county's current100.10year levy limitation. The county shall provide the necessary100.11information to the commissioner of revenue for making this100.12determination;100.13(15)(9) to pay for operation of a lake improvement 100.14 district, as authorized under section 103B.555. If the county 100.15 utilizes this special levy, any amount levied by the county in 100.16 the previous levy year for the purposes specified under this 100.17 clause and included in the county's previous year's levy 100.18 limitation computed under section 275.71 shall be deducted from 100.19 the levy limit base under section 275.71, subdivision 2, when 100.20 determining the county's current year levy limitation. The 100.21 county shall provide the necessary information to the 100.22 commissioner of revenue for making this determination;and100.23(16)(10) to repay a state or federal loan used to fund the 100.24 direct or indirect required spending by the local government due 100.25 to a state or federal transportation project or other state or 100.26 federal capital project. This authority may only be used if the 100.27 project is not a local government initiative; and 100.28 (11) to pay for court administration and mandated court 100.29 services costs as required under section 273.1398, subdivision 100.30 4b; however, for taxes levied to pay for these costs in the year 100.31 in which the court financing is transferred to the state, the 100.32 amount under this section is limited to one-third of the aid 100.33 reduction under section 273.1398, subdivision 4a. 100.34 [EFFECTIVE DATE.] This section is effective beginning with 100.35 taxes levied in 2001, payable in 2002. 100.36 Sec. 8. [275.71] [LEVY LIMITS.] 101.1 Subdivision 1. [LIMIT ON LEVIES.] Notwithstanding any 101.2 other provision of law or municipal charter to the contrary 101.3 which authorize ad valorem taxes in excess of the limits 101.4 established by sections 275.70 to 275.74, the provisions of this 101.5 section apply to local governmental units for all purposes other 101.6 than those for which special levies and special assessments are 101.7 made. 101.8 Subd. 2. [LEVY LIMIT BASE.] (a) The levy limit base for a 101.9 local governmental unit for taxes levied in 2001 is equal to the 101.10 sum of its adjusted levy limit base for taxes levied in 1999 101.11 plus the amount it levied in 1999 under Minnesota Statutes 1999 101.12 Supplement, section 275.70, subdivision 5, clauses (8), (13), 101.13 and (14), multiplied by: 101.14 (1) one plus the percentage growth in the implicit price 101.15 deflator for the 12-month period ending March 30, 2000; and 101.16 (2) one plus a percentage equal to the annual percentage 101.17 increase in the estimated number of households, if any, for the 101.18 most recent 12-month period that was available on July 1, 2000. 101.19 For a county in a judicial district for which financing has 101.20 not been transferred to the state by January 1, 2001, the levy 101.21 limit base for 2001 is reduced by the amount of the county's 101.22 2001 budget for court administration costs and mandated services 101.23 costs, as certified under section 273.1398, subdivision 4b, 101.24 paragraph (c). 101.25 If a governmental unit was not subject to levy limits for 101.26 taxes levied in 1999, the commissioner of revenue shall request 101.27 information from the local governmental unit and calculate a 101.28 1999 adjusted levy limit base equal to the amount it levied for 101.29 nondebt purposes in 1999, plus the amount of aids it was 101.30 certified to receive in calendar year 1999 under sections 101.31 273.1398, 298.28, 298.282, and 477A.011 to 477A.03, prior to any 101.32 aid reductions under section 273.1399, subdivision 5. 101.33 (b) The levy limit base for a local governmental unit for 101.34 taxes levied in 2002 is equal to its adjusted levy limit base in 101.35 the previous year, subject to any adjustments under section 101.36 275.72. 102.1 Subd. 3. [ADJUSTED LEVY LIMIT BASE.] (a) For taxes levied 102.2 in 2001 and 2002, the adjusted levy limit is equal to the levy 102.3 limit base computed under subdivision 2 or section 275.72, 102.4 multiplied by: 102.5 (1) one plus a percentage equal to the percentage growth in 102.6 the implicit price deflator; and 102.7 (2) one plus a percentage equal to the percentage increase 102.8 in number of households, if any, for the most recent 12-month 102.9 period for which data is available. 102.10 (b) For counties only, for taxes levied in 2001, the 102.11 adjusted levy limit base is permanently reduced by an amount 102.12 equal to the aid reduction under section 273.1398, subdivision 102.13 4f. For counties only, for taxes levied in 2001 and 2002, the 102.14 adjusted levy limit base is also reduced by any amount of levy 102.15 reduction required under section 275.07, subdivision 1, 102.16 paragraph (b), clause (ii). 102.17 Subd. 4. [PROPERTY TAX LEVY LIMIT.] Notwithstanding any 102.18 other provision of a municipal charter which limits ad valorem 102.19 taxes to a lesser amount, for taxes levied in 2001 and 2002, the 102.20 property tax levy limit for a local governmental unit is equal 102.21 to the greater of (1) its adjusted levy limit base determined 102.22 under subdivision 3 plus any additional levy authorized under 102.23 section 275.73, which is levied against net tax capacity, 102.24 reduced by the sum of (i) the total amount of aids that the 102.25 local governmental unit is certified to receive under sections 102.26 477A.011 to 477A.014, (ii) homestead and agricultural aids it is 102.27 certified to receive under section 273.1398, (iii) taconite aids 102.28 under sections 298.28 and 298.282 including any aid which was 102.29 required to be placed in a special fund for expenditure in the 102.30 next succeeding year, and (iv) low-income housing aid under 102.31 sections 477A.06 and 477A.065; or (2) the amount the local 102.32 governmental unit levied in 2000 minus the amount of the levy 102.33 used for the purposes listed in section 275.70, subdivision 5, 102.34 as determined by the commissioner of revenue under section 102.35 275.74, subdivision 3. 102.36 Subd. 5. [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy 103.1 made by a city or county exceeds the levy limit provided in 103.2 sections 275.70 to 275.74, except when the excess levy is due to 103.3 the rounding of the rate in accordance with section 275.28, the 103.4 county auditor shall only extend the amount of taxes permitted 103.5 under sections 275.70 to 275.74, as provided for in section 103.6 275.16. 103.7 Sec. 9. [275.72] [LEVY LIMIT ADJUSTMENTS FOR CONSOLIDATION 103.8 AND ANNEXATION.] 103.9 Subdivision 1. [ADJUSTMENTS FOR CONSOLIDATION.] If all of 103.10 the area included in two or more local governmental units is 103.11 consolidated, merged, or otherwise combined to constitute a 103.12 single governmental unit, the levy limit base for the resulting 103.13 governmental unit in the first levy year in which the 103.14 consolidation is effective shall be equal to (1) the highest tax 103.15 rate in any of the merging governmental units in the previous 103.16 year multiplied by the net tax capacity of all the merging 103.17 governmental units in the previous year, minus (2) the sum of 103.18 all levies in the merging governmental units in the previous 103.19 year that qualify as special levies under section 275.70, 103.20 subdivision 5. 103.21 Subd. 2. [ADJUSTMENTS FOR ANNEXATION.] If a local 103.22 governmental unit increases its tax base through annexation of 103.23 an area which is not the area of an entire local governmental 103.24 unit, the levy limit base of the local governmental unit in the 103.25 first year in which the annexation is effective shall be equal 103.26 to its levy limit base established before the adjustment under 103.27 section 275.71, subdivision 3, for the current levy year 103.28 multiplied by the ratio of the net tax capacity in the local 103.29 governmental unit after the annexation compared to its net tax 103.30 capacity before the annexation. 103.31 Subd. 3. [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a 103.32 local governmental unit, as a result of an annexation agreement 103.33 prior to January 1, 1999, has different tax rates in various 103.34 parts of the jurisdiction due to different service levels, it 103.35 may petition the commissioner of revenue to adjust its levy 103.36 limits established under section 275.71. The commissioner shall 104.1 adjust the levy limits to reflect scheduled changes in tax rates 104.2 related to increasing service levels in areas currently 104.3 receiving less city services. The local governmental unit shall 104.4 provide the commissioner with any information the commissioner 104.5 deems necessary in making the levy limit adjustment. 104.6 Subd. 4. [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a 104.7 function or service of one local governmental unit is 104.8 transferred to another local governmental unit, the levy limits 104.9 established under section 275.71 must be adjusted by the 104.10 commissioner of revenue in such manner so as to fairly and 104.11 equitably reflect the reduced or increased property tax burden 104.12 resulting from the transfer. The aggregate of the adjusted 104.13 limitations must not exceed the aggregate of the limitations 104.14 prior to adjustment. 104.15 Subd. 5. [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] 104.16 Annexations, mergers, and shifts in services and functional 104.17 responsibilities that are effective by June 30 of the levy year 104.18 are included in the calculation of the levy limit for that levy 104.19 year. Annexations, mergers, and shifts in services and 104.20 functional responsibilities that are effective after June 30 of 104.21 a levy year are not included in the calculation of the levy 104.22 limit until the subsequent levy year. 104.23 Sec. 10. [275.73] [ELECTIONS FOR ADDITIONAL LEVIES.] 104.24 Subdivision 1. [ADDITIONAL LEVY AUTHORIZATION.] 104.25 Notwithstanding the provisions of sections 275.70 to 275.72, but 104.26 subject to other law or charter provisions establishing other 104.27 limitations on the amount of property taxes a local governmental 104.28 unit may levy, a local governmental unit may levy an additional 104.29 levy in any amount which is approved by the majority of voters 104.30 of the governmental unit voting on the question at a general or 104.31 special election. Notwithstanding section 275.61, any levy 104.32 authorized under this section must be levied against net tax 104.33 capacity unless the levy required voter approval under another 104.34 general or special law or any charter provisions. When the 104.35 governing body of the local governmental unit resolves to 104.36 increase the levy pursuant to this section, it shall provide for 105.1 submission of the proposition of an additional levy at a general 105.2 or special election. Notice of the election must be given in 105.3 the manner required by law. The notice must state the purpose 105.4 and the maximum yearly amount of the additional levy. 105.5 Subd. 2. [LEVY EFFECTIVE DATE.] An additional levy 105.6 approved under subdivision 1 at a general or special election 105.7 held prior to September 1 in any levy year may be levied in that 105.8 same levy year and subsequent levy years. An additional levy 105.9 approved under subdivision 1 at a general or special election 105.10 held after August 31 in any levy year shall not be levied in 105.11 that same levy but may be levied in subsequent levy years. 105.12 Sec. 11. [275.74] [STATE REGULATION OF LEVIES.] 105.13 Subdivision 1. [CALCULATION AND NOTIFICATION.] The 105.14 commissioner of revenue shall make all necessary calculations 105.15 for determining levy limits for local governmental units and 105.16 notify the affected governmental units of their levy limits 105.17 directly by August 1 of each levy year. The local governmental 105.18 units shall, upon request, provide the commissioner with any 105.19 information needed to make the calculations. The local 105.20 governmental unit shall report by September 15, in a manner 105.21 prescribed by the commissioner, the maximum amount of taxes it 105.22 plans to levy for each of the purposes listed under special 105.23 levies and any additional levy authorized under section 275.73, 105.24 along with any necessary documentation. The commissioner shall 105.25 review the proposed special levies and make any adjustments 105.26 needed. The commissioner's decision is final. The final 105.27 allowed special levy amounts and any levy limit adjustments must 105.28 be certified back to the local governments by December 10. In 105.29 addition, the commissioner of revenue shall notify all county 105.30 auditors on or before five working days after December 20 of the 105.31 sum of the levy limit plus the total of allowed special levies 105.32 for each local governmental unit located within their boundaries 105.33 so that they may fix the levies as required in section 275.16. 105.34 The local governmental units shall provide the commissioner of 105.35 revenue with all information that the commissioner deems 105.36 necessary to make the calculations provided for in sections 106.1 275.70 to 275.73. 106.2 Subd. 2. [AUTHORIZATION FOR SPECIAL LEVIES.] A local 106.3 governmental unit may request authorization to levy for 106.4 unreimbursed costs for other natural disasters under section 106.5 275.70, subdivision 5, clause (6). The local governmental unit 106.6 shall submit a request to levy under section 275.70, subdivision 106.7 5, clause (6), to the commissioner of revenue by September 15 of 106.8 the levy year and the request must include information 106.9 documenting the estimated unreimbursed costs. The commissioner 106.10 of revenue may grant levy authority, up to the amount requested 106.11 based on the documentation submitted. All decisions of the 106.12 commissioner are final. 106.13 Subd. 3. [AUTHORIZATION TO USE 2000 LEVY AMOUNT.] A local 106.14 governmental unit may request authorization to levy the amount 106.15 determined under section 275.71, subdivision 4, clause (2). The 106.16 local governmental unit shall submit the request to the 106.17 commissioner by September 15 of the levy year and shall include 106.18 the information required by the commissioner to determine the 106.19 amount of the levy under section 275.71, subdivision 4, clause 106.20 (2). The commissioner may grant levy authority up to the amount 106.21 requested based on the documentation submitted. All decisions 106.22 of the commissioner are final. 106.23 ARTICLE 5 106.24 REVERSE REFERENDA 106.25 TAXES PAYABLE 2004 AND THEREAFTER 106.26 Section 1. Minnesota Statutes 2000, section 275.065, 106.27 subdivision 3, is amended to read: 106.28 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 106.29 county auditor shall prepare and the county treasurer shall 106.30 deliver after November 10 and on or before November2417 each 106.31 year, by first class mail to each taxpayer at the address listed 106.32 on the county's current year's assessment roll, a notice of 106.33 proposed property taxes. 106.34 (b) The commissioner of revenue shall prescribe the form of 106.35 the notice. 106.36 (c) The notice must inform taxpayers that it contains the 107.1 amount of property taxes each taxing authority proposes to 107.2 collect for taxes payable the following year. In the case of a 107.3 town, or in the case of the state determined portion of the 107.4 school district levy, the final tax amount will be its proposed 107.5 tax. The notice must clearly state that each taxing authority, 107.6 including regional library districts established under section 107.7 134.201, and including the metropolitan taxing districts as 107.8 defined in paragraph (i), but excluding all other special taxing 107.9 districts, cities with a population of 500 or less, and towns, 107.10willmust hold a public meeting to receive public testimony on 107.11 the proposed budget and proposed or final property tax levy, or, 107.12 in case of a school district, on the current budget and proposed 107.13 property tax levy.ItIn the case of a county or a city with a 107.14 population over 500, a public hearing is not required if the 107.15 county's or city's proposed property tax levy has not increased 107.16 over the levy amount certified by the county or city under 107.17 section 275.07, subdivision 1, for the previous year. The 107.18 notice must clearly state the time and place of each taxing 107.19 authority's meetingandif one is to be held. It must also 107.20 state an address where comments will be received by mail, 107.21 whether or not a public hearing is held. 107.22 (d) The notice must state for each parcel: 107.23 (1) the market value of the property as determined under 107.24 section 273.11, and used for computing property taxes payable in 107.25 the following year and for taxes payable in the current year as 107.26 each appears in the records of the county assessor on November 1 107.27 of the current year; and, in the case of residential property, 107.28 whether the property is classified as homestead or 107.29 nonhomestead. The notice must clearly inform taxpayers of the 107.30 years to which the market values apply and that the values are 107.31 final values; 107.32 (2) the items listed below, shown separately by county, 107.33 city or town, state determined school tax net of the education 107.34 homestead credit under section 273.1382, voter approved school 107.35 levy, other local school levy, and the sum of the special taxing 107.36 districts, and as a total of all taxing authorities: 108.1 (i) the actual tax for taxes payable in the current year; 108.2 (ii) the tax change due to spending factors, defined as the 108.3 proposed tax minus the constant spending tax amount; 108.4 (iii) the tax change due to other factors, defined as the 108.5 constant spending tax amount minus the actual current year tax; 108.6 and 108.7 (iv) the proposed tax amount. 108.8 In the case of a town or the state determined school tax, 108.9 the final tax shall also be its proposed tax unless the town 108.10 changes its levy at a special town meeting under section 108.11 365.52. If a school district has certified under section 108.12 126C.17, subdivision 9, that a referendum will be held in the 108.13 school district at the November general election, the county 108.14 auditor must note next to the school district's proposed amount 108.15 that a referendum is pending and that, if approved by the 108.16 voters, the tax amount may be higher than shown on the notice. 108.17 In the case of the city of Minneapolis, the levy for the 108.18 Minneapolis library board and the levy for Minneapolis park and 108.19 recreation shall be listed separately from the remaining amount 108.20 of the city's levy. In the case of a parcel where tax increment 108.21 or the fiscal disparities areawide tax under chapter 276A or 108.22 473F applies, the proposed tax levy on the captured value or the 108.23 proposed tax levy on the tax capacity subject to the areawide 108.24 tax must each be stated separately and not included in the sum 108.25 of the special taxing districts; and 108.26 (3) the increase or decrease between the total taxes 108.27 payable in the current year and the total proposed taxes, 108.28 expressed as a percentage. 108.29 For purposes of this section, the amount of the tax on 108.30 homesteads qualifying under the senior citizens' property tax 108.31 deferral program under chapter 290B is the total amount of 108.32 property tax before subtraction of the deferred property tax 108.33 amount. 108.34 (e) The notice must clearly state that the proposed or 108.35 final taxes do not include the following: 108.36 (1) special assessments; 109.1 (2) levies approved by the voters after the date the 109.2 proposed taxes are certified, including bond referenda, school 109.3 district levy referenda, and levy limit increase referenda; 109.4 (3) amounts necessary to pay cleanup or other costs due to 109.5 a natural disaster occurring after the date the proposed taxes 109.6 are certified; 109.7 (4) amounts necessary to pay tort judgments against the 109.8 taxing authority that become final after the date the proposed 109.9 taxes are certified; and 109.10 (5) the contamination tax imposed on properties which 109.11 received market value reductions for contamination. 109.12 (f) Except as provided in subdivision 7, failure of the 109.13 county auditor to prepare or the county treasurer to deliver the 109.14 notice as required in this section does not invalidate the 109.15 proposed or final tax levy or the taxes payable pursuant to the 109.16 tax levy. 109.17 (g) If the notice the taxpayer receives under this section 109.18 lists the property as nonhomestead, and satisfactory 109.19 documentation is provided to the county assessor by the 109.20 applicable deadline, and the property qualifies for the 109.21 homestead classification in that assessment year, the assessor 109.22 shall reclassify the property to homestead for taxes payable in 109.23 the following year. 109.24 (h) In the case of class 4 residential property used as a 109.25 residence for lease or rental periods of 30 days or more, the 109.26 taxpayer must either: 109.27 (1) mail or deliver a copy of the notice of proposed 109.28 property taxes to each tenant, renter, or lessee; or 109.29 (2) post a copy of the notice in a conspicuous place on the 109.30 premises of the property. 109.31 The notice must be mailed or posted by the taxpayer by 109.32 November2718 or within three days of receipt of the notice, 109.33 whichever is later. A taxpayer may notify the county treasurer 109.34 of the address of the taxpayer, agent, caretaker, or manager of 109.35 the premises to which the notice must be mailed in order to 109.36 fulfill the requirements of this paragraph. 110.1 (i) For purposes of this subdivision, subdivisions 5a and 110.2 6, "metropolitan special taxing districts" means the following 110.3 taxing districts in the seven-county metropolitan area that levy 110.4 a property tax for any of the specified purposes listed below: 110.5 (1) metropolitan council under section 473.132, 473.167, 110.6 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 110.7 (2) metropolitan airports commission under section 473.667, 110.8 473.671, or 473.672; and 110.9 (3) metropolitan mosquito control commission under section 110.10 473.711. 110.11 For purposes of this section, any levies made by the 110.12 regional rail authorities in the county of Anoka, Carver, 110.13 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 110.14 398A shall be included with the appropriate county's levy and 110.15 shall be discussed at that county's public hearing, if held. 110.16 (j) If a statutory or home rule charter city or a town has 110.17 exercised the local levy option provided by section 473.388, 110.18 subdivision 7, it may include in the notice of its proposed 110.19 taxes the amount of its proposed taxes attributable to its 110.20 exercise of the option. In the first year of the city or town's 110.21 exercise of this option, the statement shall include an estimate 110.22 of the reduction of the metropolitan council's tax on the parcel 110.23 due to exercise of that option. The metropolitan council's levy 110.24 shall be adjusted accordingly. 110.25 [EFFECTIVE DATE.] This section is effective for notices 110.26 prepared in 2003 and thereafter. 110.27 Sec. 2. Minnesota Statutes 2000, section 275.065, 110.28 subdivision 5a, is amended to read: 110.29 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 110.30 population of more than 2,500, county, a metropolitan special 110.31 taxing district as defined in subdivision 3, paragraph (i), a 110.32 regional library district established under section 134.201, or 110.33 school district shall advertise in a newspaper a notice of its 110.34 intent to adopt a budget and property tax levy or, in the case 110.35 of a school district, to review its current budget and proposed 110.36 property taxes payable in the following year, at a public 111.1 hearing. In the case of a county or city that has a population 111.2 over 2,500, if its proposed property tax levy has not increased 111.3 over its levy amount certified under section 275.07, subdivision 111.4 1, for the previous year, no public hearing is required. The 111.5 notice must be published not less than two business days nor 111.6 more than six business days before the hearing, if required due 111.7 to a levy increase. Even if a hearing is not required, counties 111.8 and cities must continue to place an advertisement in the 111.9 newspaper informing taxpayers of the proposed budget and levy 111.10 amounts. 111.11 The advertisement must be at least one-eighth page in size 111.12 of a standard-size or a tabloid-size newspaper. The 111.13 advertisement must not be placed in the part of the newspaper 111.14 where legal notices and classified advertisements appear. The 111.15 advertisement must be published in an official newspaper of 111.16 general circulation in the taxing authority. The newspaper 111.17 selected must be one of general interest and readership in the 111.18 community, and not one of limited subject matter. The 111.19 advertisement must appear in a newspaper that is published at 111.20 least once per week. 111.21 For purposes of this section, the metropolitan special 111.22 taxing district's advertisement must only be published in the 111.23 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 111.24 (b) The advertisement for school districts, metropolitan 111.25 special taxing districts, and regional library districts must be 111.26 in the following form, except that the notice for a school 111.27 district may include references to the current budget in regard 111.28 to proposed property taxes. 111.29 "NOTICE OF 111.30 PROPOSED PROPERTY TAXES 111.31 (School District/Metropolitan 111.32 Special Taxing District/Regional 111.33 Library District) of ......... 111.34 The governing body of ........ will soon hold budget hearings 111.35 and vote on the property taxes for (metropolitan special taxing 111.36 district/regional library district services that will be 112.1 provided in (year)/school district services that will be 112.2 provided in (year) and (year)). 112.3 NOTICE OF PUBLIC HEARING: 112.4 All concerned citizens are invited to attend a public hearing 112.5 and express their opinions on the proposed (school 112.6 district/metropolitan special taxing district/regional library 112.7 district) budget and property taxes, or in the case of a school 112.8 district, its current budget and proposed property taxes, 112.9 payable in the following year. The hearing will be held on 112.10 (Month/Day/Year) at (Time) at (Location, Address)." 112.11 (c)(1) If the city's or county's proposed property tax levy 112.12 has increased over its previous year's certified levy, the 112.13 advertisementfor cities and countiesmust be in the following 112.14 form. 112.15 "NOTICE OF PROPOSED 112.16 TOTAL BUDGET AND PROPERTY TAXES 112.17 The (city/county) governing body or board of commissioners will 112.18 hold a public hearing to discuss the budget and to vote on the 112.19 amount of property taxes to collect for services the 112.20 (city/county) will provide in (year). 112.21 112.22 SPENDING: The total budget amounts below compare 112.23 (city's/county's) (year) total actual budget with the amount the 112.24 (city/county) proposes to spend in (year). 112.25 112.26 (Year) Total Proposed (Year) Change from 112.27 Actual Budget Budget (Year)-(Year) 112.28 112.29 $....... $....... ...% 112.30 112.31 TAXES: The property tax amounts below compare that portion of 112.32 the current budget levied in property taxes in (city/county) for 112.33 (year) with the property taxes the (city/county) proposes to 112.34 collect in (year). 112.35 112.36 (Year) Property Proposed (Year) Change from 113.1 Taxes Property Taxes (Year)-(Year) 113.2 113.3 $....... $....... ...% 113.4 113.5 ATTEND THE PUBLIC HEARING 113.6 All (city/county) residents are invited to attend the public 113.7 hearing of the (city/county) to express your opinions on the 113.8 budget and the proposed amount of (year) property taxes. The 113.9 hearing will be held on: 113.10 (Month/Day/Year/Time) 113.11 (Location/Address) 113.12 If the discussion of the budget cannot be completed, a time and 113.13 place for continuing the discussion will be announced at the 113.14 hearing. You are also invited to send your written comments to: 113.15 (City/County) 113.16 (Location/Address)" 113.17 (2) If no hearing is required under this section for the 113.18 city or county, its advertisement must be in the following 113.19 form. The advertisement must clearly state that because the 113.20 proposed property tax levy amount is equal to or less than the 113.21 taxing authority's previous year's actual property tax levy, no 113.22 public hearing is required by law. 113.23 "NOTICE OF PROPOSED 113.24 TOTAL BUDGET AND PROPERTY TAXES 113.25 Although no public hearing will be held, the (city/county) 113.26 governing body or board of commissioners is planning to adopt 113.27 the following budget and property tax levy. 113.28 113.29 SPENDING: The total budget amounts below compare 113.30 (city's/county's) (year) total actual budget with the amount 113.31 (city/county) proposes to spend in (year). 113.32 113.33 (Year) Total Proposed (Year) Change from 113.34 Actual Budget Budget (Year)-(Year) 113.35 113.36 $....... $....... ...% 114.1 114.2 TAXES: The property tax amounts below compare that portion of 114.3 the current budget levied in property taxes in (city/county) for 114.4 (year) with the property taxes (city/county) proposes to collect 114.5 in (year). 114.6 114.7 (Year) Property Proposed (Year) Change from 114.8 Taxes Property Taxes (Year)-(Year) 114.9 114.10 $....... $....... ...% 114.11 Although no public hearing will be held, you are invited to 114.12 send any written comments to: 114.13 (City/County) 114.14 (Location/Address)" 114.15 (3) If the city's governing body or county board of 114.16 commissioners decides to hold a public hearing on the proposed 114.17 budget and levy, even though the proposed levy is equal to or 114.18 less than the previous year's certified levy amount, the 114.19 advertisement format in clause (2) must be used. 114.20 (d) For purposes of this subdivision, the budget amounts 114.21 listed on the advertisement mean: 114.22 (1) for cities, the total government fund expenditures, as 114.23 defined by the state auditor under section 471.6965, less any 114.24 expenditures for improvements or services that are specially 114.25 assessed or charged under chapter 429, 430, 435, or the 114.26 provisions of any other law or charter; and 114.27 (2) for counties, the total government fund expenditures, 114.28 as defined by the state auditor under section 375.169, less any 114.29 expenditures for direct payments to recipients or providers for 114.30 the human service aids listed below: 114.31 (i) Minnesota family investment program under chapters 256J 114.32 and 256K; 114.33 (ii) medical assistance under sections 256B.041, 114.34 subdivision 5, and 256B.19, subdivision 1; 114.35 (iii) general assistance medical care under section 114.36 256D.03, subdivision 6; 115.1 (iv) general assistance under section 256D.03, subdivision 115.2 2; 115.3 (v) emergency assistance under section 256J.48; 115.4 (vi) Minnesota supplemental aid under section 256D.36, 115.5 subdivision 1; 115.6 (vii) preadmission screening under section 256B.0911, and 115.7 alternative care grants under section 256B.0913; 115.8 (viii) general assistance medical care claims processing, 115.9 medical transportation and related costs under section 256D.03, 115.10 subdivision 4; 115.11 (ix) medical transportation and related costs under section 115.12 256B.0625, subdivisions 17 to 18a; 115.13 (x) group residential housing under section 256I.05, 115.14 subdivision 8, transferred from programs in clauses (iv) and 115.15 (vi); or 115.16 (xi) any successor programs to those listed in clauses (i) 115.17 to (x). 115.18 (e) A city with a population of over 500 but not more than 115.19 2,500 must advertise by posted notice as defined in section 115.20 645.12, subdivision 1. The advertisement must be posted at the 115.21 time provided in paragraph (a). It must be in the form required 115.22 in paragraph (b). 115.23 (f) For purposes of this subdivision, the population of a 115.24 city is the most recent population as determined by the state 115.25 demographer under section 4A.02. 115.26 (g) The commissioner of revenue, subject to the approval of 115.27 the chairs of the house and senate tax committees, shall 115.28 prescribe the form and format of the advertisement. 115.29 [EFFECTIVE DATE.] This section is effective for newspaper 115.30 advertisements in 2003 and thereafter. 115.31 Sec. 3. Minnesota Statutes 2000, section 275.065, 115.32 subdivision 6, is amended to read: 115.33 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 115.34 (a) For purposes of this section, the following terms shall have 115.35 the meanings given: 115.36 (1) "Initial hearing" means the first and primary hearing 116.1 held to discuss the taxing authority's proposed budget and 116.2 proposed property tax levy for taxes payable in the following 116.3 year, or, for school districts, the current budget and the 116.4 proposed property tax levy for taxes payable in the following 116.5 year. 116.6 (2) "Continuation hearing" means a hearing held to complete 116.7 the initial hearing, if the initial hearing is not completed on 116.8 its scheduled date. 116.9 (3) "Subsequent hearing" means the hearing held to adopt 116.10 the taxing authority's final property tax levy, and, in the case 116.11 of taxing authorities other than school districts, the final 116.12 budget, for taxes payable in the following year. 116.13 (b) Between November2919 and December2010, the 116.14 governing bodies of a city that has a population over 500, 116.15 county, metropolitan special taxing districts as defined in 116.16 subdivision 3, paragraph (i), and regional library districts 116.17 shall each hold an initial public hearing to discuss and seek 116.18 public comment on its final budget and property tax levy for 116.19 taxes payable in the following year, and the governing body of 116.20 the school district shall hold an initial public hearing to 116.21 review its current budget and proposed property tax levy for 116.22 taxes payable in the following year. The metropolitan special 116.23 taxing districts shall be required to hold only a single joint 116.24 initial public hearing, the location of which will be determined 116.25 by the affected metropolitan agencies. 116.26 (c) The initial hearing must be held after 5:00 p.m. if 116.27 scheduled on a day other than Saturday. No initial hearing may 116.28 be held on a Sunday. 116.29 (d) At the initial hearing under this subdivision, the 116.30 percentage increase in property taxes proposed by the taxing 116.31 authority, if any, and the specific purposes for which property 116.32 tax revenues are being increased must be discussed. During the 116.33 discussion, the governing body shall hear comments regarding a 116.34 proposed increase and explain the reasons for the proposed 116.35 increase. The public shall be allowed to speak and to ask 116.36 questions. At the public hearing, the school district must also 117.1 provide and discuss information on the distribution of its 117.2 revenues by revenue source, and the distribution of its spending 117.3 by program area. 117.4 (e) If the initial hearing is not completed on its 117.5 scheduled date, the taxing authority must announce, prior to 117.6 adjournment of the hearing, the date, time, and place for the 117.7 continuation of the hearing. The continuation hearing must be 117.8 held at least five business days but no more than14ten 117.9 business days after the initial hearing. A continuation hearing 117.10 may not be held later than December2010 except as provided in 117.11 paragraphs (f) and (g). A continuation hearing must be held 117.12 after 5:00 p.m. if scheduled on a day other than Saturday. No 117.13 continuation hearing may be held on a Sunday. 117.14 (f) The governing body of a county shall hold its initial 117.15 hearing on the firstThursdayTuesday in December each year, and 117.16 may hold additional initial hearings on other dates before 117.17 December2010 if necessary for the convenience of county 117.18 residents. If the county needs a continuation of its hearing, 117.19 the continuation hearing shall be held on thethirdsecond 117.20 Tuesday in December even if that second Tuesday is after 117.21 December 10.If the third Tuesday in December falls on December117.2221, the county's continuation hearing shall be held on Monday,117.23December 20.117.24 (g) The metropolitan special taxing districts shall hold a 117.25 joint initial public hearing on the first Wednesday of 117.26 December. A continuation hearing, if necessary, shall be held 117.27 on the second Wednesday of December even if that second 117.28 Wednesday is after December 10. 117.29 (h) The county auditor shall provide for the coordination 117.30 of initial and continuation hearing dates for all school 117.31 districts and cities within the county to prevent conflicts 117.32 under clauses (i) and (j). 117.33 (i) By August 10, each school board and the board of the 117.34 regional library district shall certify to the county auditors 117.35 of the counties in which the school district or regional library 117.36 district is located the dates on which it elects to hold its 118.1 initial hearing and any continuation hearing. If a school board 118.2 or regional library district does not certify these dates by 118.3 August 10, the auditor will assign the initial and continuation 118.4 hearing dates. The dates elected or assigned must not conflict 118.5 with the initial and continuation hearing dates of the county or 118.6 the metropolitan special taxing districts. 118.7 (j) By August 20, the county auditor shall notify the 118.8 clerks of the cities within the county of the dates on which 118.9 school districts and regional library districts have elected to 118.10 hold their initial and continuation hearings. At the time a 118.11 city certifies its proposed levy under subdivision 1 it shall 118.12 certify the dates on which it elects to hold its initial hearing 118.13 and any continuation hearing. Until September 15, the first and 118.14 second Mondays of December are reserved for the use of the 118.15 cities. If a city does not certify its hearing dates by 118.16 September 15, the auditor shall assign the initial and 118.17 continuation hearing dates. The dates elected or assigned for 118.18 the initial hearing must not conflict with the initial hearing 118.19 dates of the county, metropolitan special taxing districts, 118.20 regional library districts, or school districts within which the 118.21 city is located. To the extent possible, the dates of the 118.22 city's continuation hearing should not conflict with the 118.23 continuation hearing dates of the county, metropolitan special 118.24 taxing districts, regional library districts, or school 118.25 districts within which the city is located. This paragraph does 118.26 not apply to cities of 500 population or less. 118.27 (k) The county initial hearing date and the city, 118.28 metropolitan special taxing district, regional library district, 118.29 and school district initial hearing dates must be designated on 118.30 the notices required under subdivision 3. The continuation 118.31 hearing dates need not be stated on the notices. 118.32 (l) At a subsequent hearing, each county, school district, 118.33 city over 500 population, and metropolitan special taxing 118.34 district may amend its proposed property tax levy and must adopt 118.35 a final property tax levy. Each county, city over 500 118.36 population, and metropolitan special taxing district may also 119.1 amend its proposed budget and must adopt a final budget at the 119.2 subsequent hearing. The final property tax levy must be adopted 119.3 prior to adopting the final budget. A school district is not 119.4 required to adopt its final budget at the subsequent hearing. 119.5 The subsequent hearing of a taxing authority must be held on a 119.6 date subsequent to the date of the taxing authority's initial 119.7 public hearing. If a continuation hearing is held, the 119.8 subsequent hearing must be held either immediately following the 119.9 continuation hearing or on a date subsequent to the continuation 119.10 hearing. The subsequent hearing may be held at a regularly 119.11 scheduled board or council meeting or at a special meeting 119.12 scheduled for the purposes of the subsequent hearing. The 119.13 subsequent hearing of a taxing authority does not have to be 119.14 coordinated by the county auditor to prevent a conflict with an 119.15 initial hearing, a continuation hearing, or a subsequent hearing 119.16 of any other taxing authority. All subsequent hearings must be 119.17 held prior to five working days after December 20 of the levy 119.18 year. The date, time, and place of the subsequent hearing must 119.19 be announced at the initial public hearing or at the 119.20 continuation hearing. 119.21 (m) The property tax levy certified under section 275.07 by 119.22 a city of any population, county, metropolitan special taxing 119.23 district, regional library district, or school district must not 119.24 exceed the proposed levy determined under subdivision 1, except 119.25 by an amount up to the sum of the following amounts: 119.26 (1) the amount of a school district levy whose voters 119.27 approved a referendum to increase taxes under section 123B.63, 119.28 subdivision 3, or 126C.17, subdivision 9, after the proposed 119.29 levy was certified; 119.30 (2) the amount of a city or county levy approved by the 119.31 voters after the proposed levy was certified; 119.32 (3) the amount of a levy to pay principal and interest on 119.33 bonds approved by the voters under section 475.58 after the 119.34 proposed levy was certified; 119.35 (4) the amount of a levy to pay costs due to a natural 119.36 disaster occurring after the proposed levy was certified, if 120.1 that amount is approved by the commissioner of revenue under 120.2 subdivision 6a; 120.3 (5) the amount of a levy to pay tort judgments against a 120.4 taxing authority that become final after the proposed levy was 120.5 certified, if the amount is approved by the commissioner of 120.6 revenue under subdivision 6a; 120.7 (6) the amount of an increase in levy limits certified to 120.8 the taxing authority by the commissioner of children, families, 120.9 and learning or the commissioner of revenue after the proposed 120.10 levy was certified; and 120.11 (7) the amount required under section 126C.55. 120.12 (n) This subdivision does not apply to townsand, special 120.13 taxing districts other than regional library districts and 120.14 metropolitan special taxing districts, cities with a population 120.15 of 500 or less, and counties or cities with a population over 120.16 500 whose proposed property tax levy is less than or equal to 120.17 its levy certified under section 275.07, subdivision 1, for the 120.18 previous year. 120.19 (o) Notwithstanding the requirements of this section, the 120.20 employer is required to meet and negotiate over employee 120.21 compensation as provided for in chapter 179A. 120.22 [EFFECTIVE DATE.] This section is effective for hearings 120.23 held in 2003 and thereafter. 120.24 Sec. 4. Minnesota Statutes 2000, section 275.065, 120.25 subdivision 8, is amended to read: 120.26 Subd. 8. [HEARING.] Notwithstanding any other provision of 120.27 law, Ramsey county, the city of St. Paul, and independent school 120.28 district No. 625 are authorized to and shall hold their initial 120.29 public hearing jointly. The hearing must be held on thesecond120.30 first Tuesday of December each year. The advertisement required 120.31 in subdivision 5a may be a joint advertisement. The hearing is 120.32 otherwise subject to the requirements of this section. 120.33 Ramsey county is authorized to hold an additional initial 120.34 hearing or hearings as provided under this section, provided 120.35 that any additional hearings must not conflict with the initial 120.36 or continuation hearing dates of the other taxing districts. 121.1 However, if Ramsey county elects not to hold such additional 121.2 initial hearing or hearings, the joint initial hearing required 121.3 by this subdivision must be held in a St. Paul location 121.4 convenient to residents of Ramsey county. 121.5 [EFFECTIVE DATE.] This section is effective for hearings 121.6 held in 2003 and thereafter. 121.7 Sec. 5. Minnesota Statutes 2000, section 275.065, is 121.8 amended by adding a subdivision to read: 121.9 Subd. 9. [REVERSE REFERENDUM.] The reverse referendum 121.10 procedure in this subdivision applies only in the case of a 121.11 county, or a city that has a population of more than 2,500, that 121.12 has adopted a property tax levy increase over the levy amount 121.13 certified under section 275.07, subdivision 1, for the previous 121.14 year. The levy subject to the provisions of this subdivision 121.15 does not include the levy under section 475.61 or another 121.16 similar provision providing a levy for general obligation bonds. 121.17 If, within 21 days after the public hearing and adoption of 121.18 a levy under subdivision 6, a petition signed by voters equal in 121.19 number to five percent of the votes cast in the county or city 121.20 in the last general election requesting a referendum on the levy 121.21 increase is filed with the county auditor or the city clerk, the 121.22 levy increase shall not be effective until it has been submitted 121.23 to the voters at a special election to be held on the fourth 121.24 Tuesday in January, and a majority of votes cast on the question 121.25 of approving the levy increase are in the affirmative. The 121.26 commissioner of revenue shall prepare the form of the question 121.27 to be presented at the referendum, which shall reference only 121.28 the amount of the property tax levy increase over the previous 121.29 year. 121.30 The county or city shall notify the county auditor of the 121.31 results of the referendum. If the majority of the votes cast on 121.32 the question are in the affirmative, the levy adopted under 121.33 subdivision 6 shall be certified to the county auditor under 121.34 section 275.07, subdivision 1. If the majority of the votes 121.35 cast on the question are in the negative, an amount equal to the 121.36 preceding year's levy shall be certified to the county auditor 122.1 for purposes of section 275.07, subdivision 1. 122.2 [EFFECTIVE DATE.] This section is effective for taxes 122.3 levied in 2003 and thereafter, for taxes payable in 2004 and 122.4 thereafter. 122.5 Sec. 6. Minnesota Statutes 2000, section 275.07, 122.6 subdivision 1, is amended to read: 122.7 Subdivision 1. [CERTIFICATION OF LEVY.] Except as 122.8 otherwise provided in this subdivision, the taxes voted by 122.9 cities, counties, school districts, and special districts shall 122.10 be certified by the proper authorities to the county auditor on 122.11 or before five working days after December 20 in each year. A 122.12 county or city to which the reverse referendum provisions under 122.13 section 275.065, subdivision 9, apply shall certify the taxes to 122.14 the county auditor by January 5, except that any county or city 122.15 for which a petition has been filed under section 275.065, 122.16 subdivision 9, must certify the day immediately following the 122.17 election under that section. A town must certify the levy 122.18 adopted by the town board to the county auditor by September 15 122.19 each year. If the town board modifies the levy at a special 122.20 town meeting after September 15, the town board must recertify 122.21 its levy to the county auditor on or before five working days 122.22 after December 20. The taxes certified shall not be reduced by 122.23 the county auditor by the aid received under section 273.1398, 122.24 subdivision 2, but shall be reduced by the county auditor by the 122.25 aid received under section 273.1398, subdivision 3. If a city, 122.26 town, county, school district, or special district fails to 122.27 certify its levy by that date, its levy shall be the amount 122.28 levied by it for the preceding year. 122.29 [EFFECTIVE DATE.] This section is effective for taxes 122.30 levied in 2003 and thereafter, for taxes payable in 2004 and 122.31 thereafter. 122.32 ARTICLE 6 122.33 HEALTH CARE TAXES 122.34 Section 1. [16A.78] [HEALTH CARE ACCESS FUND RESERVE.] 122.35 Subdivision 1. [ESTABLISH RESERVE.] A reserve is 122.36 established within the health care access fund for uses 123.1 necessary to preserve access to basic health care services. 123.2 Subd. 2. [RESERVE FINANCING.] The funds in the reserve are 123.3 equal to 15 percent of the expenditures for the MinnesotaCare 123.4 program in the immediately prior fiscal year. 123.5 Subd. 3. [RESERVE USE.] The reserve is established to 123.6 protect access to basic health care services that are publicly 123.7 funded. 123.8 [EFFECTIVE DATE.] This section is effective July 1, 2001. 123.9 Sec. 2. Minnesota Statutes 2000, section 62J.041, 123.10 subdivision 1, is amended to read: 123.11 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 123.12 section, the following definitions apply. 123.13 (b) "Health plan company" has the definition provided in 123.14 section 62Q.01. 123.15 (c) "Total expenditures" means incurred claims or 123.16 expenditures on health care services, administrative expenses, 123.17 charitable contributions, and all other payments made by health 123.18 plan companies out of premium revenues. 123.19 (d) "Net expenditures" means total expenditures minus 123.20 exempted taxes and assessments and payments or allocations made 123.21 to establish or maintain reserves. 123.22 (e) "Exempted taxes and assessments" means direct payments 123.23 for taxes to government agencies, contributions to the Minnesota 123.24 comprehensive health association, the medical assistance 123.25 provider's surcharge under section 256.9657, the MinnesotaCare 123.26 provider tax under Minnesota Statutes 2000, section 295.52, 123.27 assessments by the health coverage reinsurance association, 123.28 assessments by the Minnesota life and health insurance guaranty 123.29 association, assessments by the Minnesota risk adjustment 123.30 association, and any new assessments imposed by federal or state 123.31 law. 123.32 (f) "Consumer cost-sharing or subscriber liability" means 123.33 enrollee coinsurance, copayment, deductible payments, and 123.34 amounts in excess of benefit plan maximums. 123.35 [EFFECTIVE DATE.] This section is effective January 1, 2002. 123.36 Sec. 3. Minnesota Statutes 2000, section 62Q.095, 124.1 subdivision 6, is amended to read: 124.2 Subd. 6. [EXEMPTION.] A health plan company, to the extent 124.3 that it operates as a staff model health plan companyas defined124.4in section 295.50, subdivision 12b,by employing allied 124.5 independent health care providers to deliver health care 124.6 services to enrollees, is exempt from this section. For 124.7 purposes of this subdivision, "staff model health plan company" 124.8 means a health plan company as defined in section 62Q.01, 124.9 subdivision 4, that employs one or more types of health care 124.10 provider to deliver health care services to the health plan 124.11 company's enrollees. 124.12 [EFFECTIVE DATE.] This section is effective January 1, 2002. 124.13 Sec. 4. [62Q.671] [PASS-THROUGH OF SAVINGS TO CONSUMERS.] 124.14 Subdivision 1. [REDUCED PREMIUMS.] All health plan 124.15 companies must pass on to consumers, in the form of reduced 124.16 premium rates, all savings resulting from: 124.17 (1) the repeal of the MinnesotaCare provider taxes imposed 124.18 under Minnesota Statutes 2000, section 295.52, and the resulting 124.19 reduction in the transfer of additional expenses generated by 124.20 Minnesota Statutes 2000, section 295.52, obligations to 124.21 third-party contracts under Minnesota Statutes 2000, section 124.22 295.582; and 124.23 (2) the repeal of the one percent premium tax for health 124.24 maintenance organizations, nonprofit health service plan 124.25 corporations, and community integrated service networks imposed 124.26 under Minnesota Statutes 2000, section 297I.05, subdivision 5. 124.27 Subd. 2. [DOCUMENTING COMPLIANCE.] Each health plan 124.28 company must include with its annual renewal for certification 124.29 of authority or licensure documentation indicating compliance 124.30 with subdivision 1. 124.31 Subd. 3. [ENFORCEMENT.] If the appropriate commissioner 124.32 finds that a health plan company has not complied with 124.33 subdivision 1, the commissioner may take enforcement action 124.34 against that health plan company. The commissioner may, by 124.35 order, fine, or censure the health plan company or revoke or 124.36 suspend the certificate of authority or license of the health 125.1 plan company to do business in this state if the commissioner 125.2 finds that the health plan company has not complied with this 125.3 section. The health plan company may appeal the commissioner's 125.4 order through a contested case hearing in accordance with 125.5 chapter 14. 125.6 [EFFECTIVE DATE.] This section is effective January 1, 125.7 2002, and applies to premium rates for health plans issued or 125.8 renewed after that date. 125.9 Sec. 5. Minnesota Statutes 2000, section 214.16, 125.10 subdivision 2, is amended to read: 125.11 Subd. 2. [BOARD COOPERATION REQUIRED.] The board shall 125.12 assist the commissioner of health in data collection activities 125.13 required under Laws 1992, chapter 549, article 7, and shall125.14assist the commissioner of revenue in activities related to125.15collection of the health care provider tax required under Laws125.161992, chapter 549, article 9. Upon the request of the 125.17 commissioneror the commissioner of revenue, the board shall 125.18 make available names and addresses of current licensees and 125.19 provide other information or assistance as needed. 125.20 [EFFECTIVE DATE.] This section is effective January 1, 2002. 125.21 Sec. 6. Minnesota Statutes 2000, section 214.16, 125.22 subdivision 3, is amended to read: 125.23 Subd. 3. [GROUNDS FOR DISCIPLINARY ACTION.] The board 125.24 shall take disciplinary action, which may include license 125.25 revocation, against a regulated person for: 125.26 (1) intentional failure to provide the commissioner of 125.27 health with the data required under chapter 62J; and 125.28 (2)intentional failure to provide the commissioner of125.29revenue with data on gross revenue and other information125.30required for the commissioner to implement sections 295.50 to125.31295.58;125.32(3) intentional failure to pay the health care provider tax125.33required under section 295.52; and125.34(4)entering into a contract or arrangement that is 125.35 prohibited under sections 62J.70 to 62J.73. 125.36 [EFFECTIVE DATE.] This section is effective January 1, 2002. 126.1 Sec. 7. [256L.021] [USE OF TOBACCO SETTLEMENT PROCEEDS.] 126.2 (a) The commissioner of finance shall deposit the following 126.3 amounts of the annual payments due under the terms of the 126.4 tobacco settlement on December 31 of each year into the health 126.5 care access fund established under section 16A.724: 126.6 (1) the first $112,000,000 of the payment due December 31, 126.7 2001; 126.8 (2) the first $126,000,000 of the payment due December 31, 126.9 2003; and 126.10 (3) all payments due after January 1, 2004. 126.11 (b) The commissioner of finance shall credit to the health 126.12 care access fund the one-time tobacco settlement payment due on 126.13 January 2, 2002. 126.14 (c) For purposes of this section, "tobacco settlement" 126.15 means the consent judgment entered in the case of State v. 126.16 Philip Morris Inc., No. C1-94-8565 (Minnesota District Court, 126.17 Second Judicial District). 126.18 [EFFECTIVE DATE.] This section is effective the day 126.19 following final enactment. 126.20 Sec. 8. Minnesota Statutes 2000, section 270B.01, 126.21 subdivision 8, is amended to read: 126.22 Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this 126.23 chapter only, unless expressly stated otherwise, "Minnesota tax 126.24 laws" means the taxes, refunds, and fees administered by or paid 126.25 to the commissioner under chapters 115B (except taxes imposed 126.26 under sections 115B.21 to 115B.24), 289A (except taxes imposed 126.27 under sections 298.01, 298.015, and 298.24), 290, 290A, 291, 126.28 297A, and 297Hand sections 295.50 to 295.59, or any similar 126.29 Indian tribal tax administered by the commissioner pursuant to 126.30 any tax agreement between the state and the Indian tribal 126.31 government, and includes any laws for the assessment, 126.32 collection, and enforcement of those taxes, refunds, and fees. 126.33 [EFFECTIVE DATE.] This section is effective January 1, 2002. 126.34 Sec. 9. Minnesota Statutes 2000, section 270B.14, 126.35 subdivision 1, is amended to read: 126.36 Subdivision 1. [DISCLOSURE TO COMMISSIONER OF HUMAN 127.1 SERVICES.] (a) On the request of the commissioner of human 127.2 services, the commissioner shall disclose return information 127.3 regarding taxes imposed by chapter 290, and claims for refunds 127.4 under chapter 290A, to the extent provided in paragraph (b) and 127.5 for the purposes set forth in paragraph (c). 127.6 (b) Data that may be disclosed are limited to data relating 127.7 to the identity, whereabouts, employment, income, and property 127.8 of a person owing or alleged to be owing an obligation of child 127.9 support. 127.10 (c) The commissioner of human services may request data 127.11 only for the purposes of carrying out the child support 127.12 enforcement program and to assist in the location of parents who 127.13 have, or appear to have, deserted their children. Data received 127.14 may be used only as set forth in section 256.978. 127.15 (d) The commissioner shall provide the records and 127.16 information necessary to administer the supplemental housing 127.17 allowance to the commissioner of human services. 127.18 (e) At the request of the commissioner of human services, 127.19 the commissioner of revenue shall electronically match the 127.20 social security numbers and names of participants in the 127.21 telephone assistance plan operated under sections 237.69 to 127.22 237.711, with those of property tax refund filers, and determine 127.23 whether each participant's household income is within the 127.24 eligibility standards for the telephone assistance plan. 127.25 (f) The commissioner may provide records and information 127.26 collected under Minnesota Statutes 2000, sections 295.50 to 127.27 295.59 to the commissioner of human services for purposes of the 127.28 Medicaid Voluntary Contribution and Provider-Specific Tax 127.29 Amendments of 1991, Public Law Number 102-234. Upon the written 127.30 agreement by the United States Department of Health and Human 127.31 Services to maintain the confidentiality of the data, the 127.32 commissioner may provide records and information collected under 127.33 Minnesota Statutes 2000, sections 295.50 to 295.59 to the Health 127.34 Care Financing Administration section of the United States 127.35 Department of Health and Human Services for purposes of meeting 127.36 federal reporting requirements. 128.1 (g) The commissioner may provide records and information to 128.2 the commissioner of human services as necessary to administer 128.3 the early refund of refundable tax credits. 128.4 (h) The commissioner may disclose information to the 128.5 commissioner of human services necessary to verify income for 128.6 eligibility and premium payment under the MinnesotaCare program, 128.7 under section 256L.05, subdivision 2. 128.8 (i) The commissioner may disclose information to the 128.9 commissioner of human services necessary to verify whether 128.10 applicants or recipients for the Minnesota family investment 128.11 program, general assistance, food stamps, and Minnesota 128.12 supplemental aid program have claimed refundable tax credits 128.13 under chapter 290 and the property tax refund under chapter 128.14 290A, and the amounts of the credits. 128.15 [EFFECTIVE DATE.] This section is effective January 1, 2002. 128.16 Sec. 10. Minnesota Statutes 2000, section 297F.10, 128.17 subdivision 1, is amended to read: 128.18 Subdivision 1. [TAX AND USE TAX ON CIGARETTES.] Revenue 128.19 received from cigarette taxes, as well as related penalties, 128.20 interest, license fees, and miscellaneous sources of revenue 128.21 shall be deposited by the commissioner in the state treasury and 128.22 credited as follows: 128.23 (a) first to the general obligation special tax bond debt 128.24 service account in each fiscal year the amount required to 128.25 increase the balance on hand in the account on each December 1 128.26 to an amount equal to the full amount of principal and interest 128.27 to come due on all outstanding bonds whose debt service is 128.28 payable primarily from the proceeds of the tax to and including 128.29 the second following July 1; and 128.30 (b) after the requirements of paragraph (a) have been met: 128.31 (1) the revenue produced by one mill of the tax on 128.32 cigarettes weighing not more than three pounds a thousand and 128.33 two mills of the tax on cigarettes weighing more than three 128.34 pounds a thousand must be credited to the Minnesota future 128.35 resources fund;and128.36 (2) the amount of revenue specified under paragraph (c) 129.1 must be credited to the health care access fund; and 129.2 (3) the balance of the revenues derived from taxes, 129.3 penalties, and interest (under this chapter) and from license 129.4 fees and miscellaneous sources of revenue shall be credited to 129.5 the general fund. 129.6 (c) For fiscal year 2004, $120,000,000 of the revenue under 129.7 paragraph (b) must be credited to the health care access fund. 129.8 For each fiscal year after 2004, the amount credited to the 129.9 health care access fund equals: 129.10 (1) the amount certified to be paid in the previous year, 129.11 plus 129.12 (2) the percentage increase in the medical care of personal 129.13 consumption expenditures, published by the Bureau of Economic 129.14 Affairs of the United States Department of Commerce, for the 129.15 most recent 12-month period available May 31 of the previous 129.16 fiscal year multiplied by the sum of the amount under clause (1) 129.17 and the amount of the ongoing tobacco settlement payments 129.18 deposited in the health care access fund under section 256L.021, 129.19 paragraph (a), clause (3), for the previous fiscal year. 129.20 [EFFECTIVE DATE.] This section is effective beginning with 129.21 fiscal year 2004. 129.22 Sec. 11. Minnesota Statutes 2000, section 297I.15, is 129.23 amended by adding a subdivision to read: 129.24 Subd. 11. [HEALTH PLAN PREMIUMS.] Premiums received for 129.25 health plans as defined in section 62A.011, subdivision 3, and 129.26 premiums received for coverage described in section 62A.011, 129.27 subdivision 3, clauses (6), (7), (9), (10), and (12), are exempt 129.28 from the taxes imposed under this chapter. 129.29 [EFFECTIVE DATE.] This section is effective January 1, 129.30 2002, and applies to tax years beginning on or after that date. 129.31 Sec. 12. [REPEALER.] 129.32 Subdivision 1. [MINNESOTACARE PROVIDER TAX.] Minnesota 129.33 Statutes 2000, sections 295.50; 295.51; 295.52; 295.53; 295.54; 129.34 295.55; 295.56; 295.57; 295.58; 295.582; and 295.59, are 129.35 repealed. 129.36 Subd. 2. [FEDERAL RESERVE; FINANCIAL MANAGEMENT.] 130.1 Minnesota Statutes 2000, sections 16A.76; and 256L.02, 130.2 subdivision 3, are repealed. 130.3 Subd. 3. [NONPROFIT HEALTH PLAN COMPANY PREMIUM 130.4 TAX.] Minnesota Statutes 2000, section 297I.05, subdivision 5, 130.5 is repealed. 130.6 Subd. 4. [CONFORMING PROVISIONS.] Minnesota Statutes 2000, 130.7 sections 13.4967, subdivision 3; 62T.10; and 144.1484, 130.8 subdivision 2, are repealed. 130.9 [EFFECTIVE DATE.] This section is effective January 1, 130.10 2002, and applies to tax years beginning on or after that date. 130.11 ARTICLE 7 130.12 INCOME AND FRANCHISE TAXES 130.13 Section 1. [116J.885] [BIOMEDICAL INNOVATION AND 130.14 COMMERCIALIZATION INITIATIVE.] 130.15 Subdivision 1. [ESTABLISHED.] The commissioner shall 130.16 establish the biomedical innovation and commercialization 130.17 initiative (BICI) as a collaborative economic development 130.18 initiative between the University of Minnesota, Minnesota's 130.19 medical technology industry, and investors. BICI is not a state 130.20 agency. 130.21 The board established in subdivision 2 shall organize and 130.22 operate BICI as a for-profit entity and in a manner and form 130.23 that the board determines best allows BICI to carry out its 130.24 objectives. Total cash investment may not exceed $40,000,000. 130.25 Any distribution from BICI must be returned to all investors, 130.26 including the state, in the same proportion as funds were 130.27 invested. The amount of credits granted is the amount of the 130.28 state cash investment and is a reduction in the investor's cash 130.29 investment for participation in any distribution under this 130.30 subdivision. 130.31 Subd. 2. [BOARD.] BICI is governed by a board of 130.32 directors, appointed to six-year terms, comprised of: 130.33 (1) a representative chosen by the governor; 130.34 (2) a representative chosen by the University of Minnesota; 130.35 and 130.36 (3) five representatives from the state's medical 131.1 technology industry, chosen by private sector investors. 131.2 The board may use up to five percent of its total 131.3 capitalization to establish a management and administrative 131.4 budget, including the hiring of staff and for professional 131.5 management expenses. Members of the staff are not state 131.6 employees. 131.7 Subd. 3. [DUTIES OF BICI.] BICI shall: 131.8 (1) add business and financial expertise to technologies 131.9 that are being developed by University of Minnesota faculty and 131.10 staff to enhance commercial value; 131.11 (2) promote the depth, breadth, and value of technologies 131.12 being developed by the biomedical academic community; 131.13 (3) catalyze the development of functional, mutually 131.14 advantageous relationships between industry, faculty, staff, the 131.15 university, and extended research community; 131.16 (4) provide a financial return on commercialization efforts 131.17 to the stakeholders in BICI; 131.18 (5) directly commercialize technologies through the startup 131.19 of new Minnesota companies or enhance the marketing of 131.20 technologies to existing companies creating expanded economic 131.21 development opportunities in Minnesota; and 131.22 (6) adopt corporate bylaws and make them available to the 131.23 public. 131.24 Subd. 4. [STATEWIDE FOCUS.] BICI may contract and 131.25 collaborate with higher education and other research 131.26 institutions located throughout the state. 131.27 Subd. 5. [POWERS OF BOARD.] The board has the power to do 131.28 all things reasonable and necessary to carry out the duties of 131.29 BICI including, without limitation, the power to: 131.30 (1) enter into contracts; 131.31 (2) sue and be sued; 131.32 (3) acquire, hold, lease, and transfer any interest in real 131.33 and personal property; 131.34 (4) accept appropriations, gifts, grants, and bequests; 131.35 (5) hire employees for BICI; and 131.36 (6) delegate any of its powers. 132.1 Subd. 6. [BOARD COMPENSATION.] Compensation and expense 132.2 reimbursement of board members is as provided in section 132.3 15.0575, subdivision 1. 132.4 [EFFECTIVE DATE.] This section is effective the day 132.5 following final enactment. 132.6 Sec. 2. Minnesota Statutes 2000, section 270A.03, 132.7 subdivision 5, is amended to read: 132.8 Subd. 5. [DEBT.] (a) "Debt" means a legal obligation of a 132.9 natural person to pay a fixed and certain amount of money, which 132.10 equals or exceeds $25 and which is due and payable to a claimant 132.11 agency. The term includes criminal fines imposed under section 132.12 609.10 or 609.125 and restitution. A debt may arise under a 132.13 contractual or statutory obligation, a court order, or other 132.14 legal obligation, but need not have been reduced to judgment. 132.15 (b) A debt includes any legal obligation of a current 132.16 recipient of assistance which is based on overpayment of an 132.17 assistance grant where that payment is based on a client waiver 132.18 or an administrative or judicial finding of an intentional 132.19 program violation; or where the debt is owed to a program 132.20 wherein the debtor is not a client at the time notification is 132.21 provided to initiate recovery under this chapter and the debtor 132.22 is not a current recipient of food stamps, transitional child 132.23 care, or transitional medical assistance. 132.24 (c) A debt does not include any legal obligation to pay a 132.25 claimant agency for medical care, including hospitalization if 132.26 the income of the debtor at the time when the medical care was 132.27 rendered does not exceed the following amount: 132.28 (1) for an unmarried debtor, an income of$6,400$8,800 or 132.29 less; 132.30 (2) for a debtor with one dependent, an income 132.31 of$8,200$11,270 or less; 132.32 (3) for a debtor with two dependents, an income 132.33 of$9,700$13,330 or less; 132.34 (4) for a debtor with three dependents, an income of 132.35$11,000$15,120 or less; 132.36 (5) for a debtor with four dependents, an income 133.1 of$11,600$15,950 or less; and 133.2 (6) for a debtor with five or more dependents, an income of 133.3$12,100$16,630 or less. 133.4 The income amounts in this subdivision shall be adjusted 133.5 for inflation for debts incurred in calendar years19912001 and 133.6 thereafter. The dollar amount of each income level that applied 133.7 to debts incurred in the prior year shall be increased in the 133.8 same manner as provided in section290.06, subdivision 2d, for133.9the expansion of the tax rate brackets1f of the Internal 133.10 Revenue Code of 1986, as amended through December 31, 2000, 133.11 except that for the purposes of this subdivision the percentage 133.12 increase shall be determined from the year starting September 1, 133.13 1999, and ending August 31, 2000, as the base year for adjusting 133.14 for inflation for debts incurred after December 31, 2000. 133.15 (d) Debt also includes an agreement to pay a MinnesotaCare 133.16 premium, regardless of the dollar amount of the premium 133.17 authorized under section 256L.15, subdivision 1a. 133.18 [EFFECTIVE DATE.] This section is effective for debts 133.19 incurred after December 31, 2000. 133.20 Sec. 3. Minnesota Statutes 2000, section 289A.12, 133.21 subdivision 3, is amended to read: 133.22 Subd. 3. [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 133.23 AND S CORPORATIONS.] (a) Partnerships must file a return with 133.24 the commissioner for each taxable year. The return must conform 133.25 to the requirements of section290.31290.311, and must include 133.26 the names and addresses of the partners entitled to a 133.27 distributive share in their taxable net income, gain, loss, or 133.28 credit, and the amount of the distributive share to which each 133.29 is entitled. A partnership required to file a return for a 133.30 partnership taxable year must furnish a copy of the information 133.31 required to be shown on the return to a person who is a partner 133.32 at any time during the taxable year, on or before the day on 133.33 which the return for the taxable year was filed. 133.34 (b) The fiduciary of an estate or trust making the return 133.35 required to be filed under section 289A.08, subdivision 2, for a 133.36 taxable year must give a beneficiary who receives a distribution 134.1 from the estate or trust with respect to the taxable year or to 134.2 whom any item with respect to the taxable year is allocated, a 134.3 statement containing the information required to be shown on the 134.4 return, on or before the date on which the return was filed. 134.5 (c) An S corporation must file a return with the 134.6 commissioner for a taxable year during which an election under 134.7 section 290.9725 is in effect, stating specifically the names 134.8 and addresses of the persons owning stock in the corporation at 134.9 any time during the taxable year, the number of shares of stock 134.10 owned by a shareholder at all times during the taxable year, the 134.11 shareholder's pro rata share of each item of the corporation for 134.12 the taxable year, and other information the commissioner 134.13 requires. An S corporation required to file a return under this 134.14 paragraph for any taxable year must furnish a copy of the 134.15 information shown on the return to the person who is a 134.16 shareholder at any time during the taxable year, on or before 134.17 the day on which the return for the taxable year was filed. 134.18 (d) The partnership or S corporation return must be signed 134.19 by someone designated by the partnership or S corporation. 134.20 [EFFECTIVE DATE.] This section is effective for taxable 134.21 years beginning after December 31, 2000. 134.22 Sec. 4. Minnesota Statutes 2000, section 290.01, 134.23 subdivision 7, is amended to read: 134.24 Subd. 7. [RESIDENT.] The term "resident" means (1) any 134.25 individual domiciled in Minnesota, except that an individual is 134.26 not a "resident" for the period of time that the individual is a 134.27 "qualified individual" as defined in section 911(d)(1) of the 134.28 Internal Revenue Code, if the qualified individual notifies the 134.29 county within three months of moving out of the country that 134.30 homestead status be revoked for the Minnesota residence of the 134.31 qualified individual, and the property is not classified as a 134.32 homestead while the individual remains a qualified individual; 134.33 and (2) any individual domiciled outside the state who maintains 134.34 a place of abode in the state and spends in the aggregate more 134.35 than one-half of the tax year in Minnesota, unless the 134.36 individual or the spouse of the individual is in the armed 135.1 forces of the United States, or the individual is covered under 135.2 the reciprocity provisions in section 290.081. 135.3 For purposes of this subdivision, presence within the state 135.4 for any part of a calendar day constitutes a day spent in the 135.5 state. Individuals shall keep adequate records to substantiate 135.6 the days spent outside the state. 135.7 The term "abode" means a dwelling maintained by an 135.8 individual, whether or not owned by the individual and whether 135.9 or not occupied by the individual, and includes a dwelling place 135.10 owned or leased by the individual's spouse. 135.11 In determining if the individual is domiciled in Minnesota, 135.12 neither the commissioner nor any courtshallmay consider: 135.13 (1) charitable contributions made byanthe individual 135.14 within or without the statein determining if the individual is135.15domiciled in Minnesota; or 135.16 (2) the location of a bank, other financial institution, 135.17 broker-dealer, as defined in section 80A.14, subdivision 4, or 135.18 investment adviser, as defined in section 80A.14, subdivision 9, 135.19 with which the individual has an account, loan, or other 135.20 contractual relationship. 135.21 [EFFECTIVE DATE.] This section is effective the day 135.22 following final enactment. 135.23 Sec. 5. Minnesota Statutes 2000, section 290.01, 135.24 subdivision 19b, is amended to read: 135.25 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 135.26 individuals, estates, and trusts, there shall be subtracted from 135.27 federal taxable income: 135.28 (1) interest income on obligations of any authority, 135.29 commission, or instrumentality of the United States to the 135.30 extent includable in taxable income for federal income tax 135.31 purposes but exempt from state income tax under the laws of the 135.32 United States; 135.33 (2) if included in federal taxable income, the amount of 135.34 any overpayment of income tax to Minnesota or to any other 135.35 state, for any previous taxable year, whether the amount is 135.36 received as a refund or as a credit to another taxable year's 136.1 income tax liability; 136.2 (3) the amount paid to others, less the credit allowed 136.3 under section 290.0674, not to exceed $1,625 for each qualifying 136.4 child in grades kindergarten to 6 and $2,500 for each qualifying 136.5 child in grades 7 to 12, for tuition, textbooks, and 136.6 transportation of each qualifying child in attending an 136.7 elementary or secondary school situated in Minnesota, North 136.8 Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 136.9 this state may legally fulfill the state's compulsory attendance 136.10 laws, which is not operated for profit, and which adheres to the 136.11 provisions of the Civil Rights Act of 1964 and chapter 363. For 136.12 the purposes of this clause, "tuition" includes fees or tuition 136.13 as defined in section 290.0674, subdivision 1,clause136.14 clauses (1), (6), and (7). As used in this clause, "textbooks" 136.15 includes books and other instructional materials and equipment 136.16 used in elementary and secondary schools in teaching only those 136.17 subjects legally and commonly taught in public elementary and 136.18 secondary schools in this state. Equipment expenses qualifying 136.19 for deduction includes expenses as defined and limited in 136.20 section 290.0674, subdivision 1,clauseclauses (3) and (5). 136.21 "Textbooks" does not include instructional books and materials 136.22 used in the teaching of religious tenets, doctrines, or worship, 136.23 the purpose of which is to instill such tenets, doctrines, or 136.24 worship, nor does it include books or materials for, or 136.25 transportation to, extracurricular activities including sporting 136.26 events, musical or dramatic events, speech activities, driver's 136.27 education, or similar programs. For purposes of the subtraction 136.28 provided by this clause, "qualifying child" has the meaning 136.29 given in section 32(c)(3) of the Internal Revenue Code; 136.30 (4) contributions made in taxable years beginning after 136.31 December 31, 1981, and before January 1, 1985, to a qualified 136.32 governmental pension plan, an individual retirement account, 136.33 simplified employee pension, or qualified plan covering a 136.34 self-employed person that were included in Minnesota gross 136.35 income in the taxable year for which the contributions were made 136.36 but were deducted or were not included in the computation of 137.1 federal adjusted gross income, less any amount allowed to be 137.2 subtracted as a distribution under this subdivision or a 137.3 predecessor provision in taxable years that began before January 137.4 1, 2000. This subtraction applies only for taxable years 137.5 beginning after December 31, 1999, and before January 1, 2001. 137.6 If an individual's subtraction under this clause exceeds the 137.7 individual's taxable income, the excess may be carried forward 137.8 to taxable years beginning after December 31, 2000, and before 137.9 January 1, 2002; 137.10 (5) income as provided under section 290.0802; 137.11(6) the amount of unrecovered accelerated cost recovery137.12system deductions allowed under subdivision 19g;137.13(7)(6) to the extent included in federal adjusted gross 137.14 income, income realized on disposition of property exempt from 137.15 tax under section 290.491; 137.16(8)(7) to the extent not deducted in determining federal 137.17 taxable income or used to claim the long-term care insurance 137.18 credit under section 290.0672, the amount paid for health 137.19 insurance of self-employed individuals as determined under 137.20 section 162(l) of the Internal Revenue Code, except that the 137.21 percent limit does not apply. If the individual deducted 137.22 insurance payments under section 213 of the Internal Revenue 137.23 Code of 1986, the subtraction under this clause must be reduced 137.24 by the lesser of: 137.25 (i) the total itemized deductions allowed under section 137.26 63(d) of the Internal Revenue Code, less state, local, and 137.27 foreign income taxes deductible under section 164 of the 137.28 Internal Revenue Code and the standard deduction under section 137.29 63(c) of the Internal Revenue Code; or 137.30 (ii) the lesser of (A) the amount of insurance qualifying 137.31 as "medical care" under section 213(d) of the Internal Revenue 137.32 Code to the extent not deducted under section 162(1) of the 137.33 Internal Revenue Code or excluded from income or (B) the total 137.34 amount deductible for medical care under section 213(a); 137.35(9)(8) the exemption amount allowed under Laws 1995, 137.36 chapter 255, article 3, section 2, subdivision 3; 138.1(10)(9) to the extent included in federal taxable income, 138.2 postservice benefits for youth community service under section 138.3 124D.42 for volunteer service under United States Code, title 138.4 42, sections 12601 to 12604; 138.5(11)(10) to the extent not deducted in determining federal 138.6 taxable income by an individual who does not itemize deductions 138.7 for federal income tax purposes for the taxable year, an amount 138.8 equal to50100 percent of the excess of charitable 138.9 contributions allowable as a deduction for the taxable year 138.10 under section 170(a) of the Internal Revenue Code over $500; 138.11(12)(11) to the extent included in federal taxable income, 138.12 holocaust victims' settlement payments for any injury incurred 138.13 as a result of the holocaust, if received by an individual who 138.14 was persecuted for racial or religious reasons by Nazi Germany 138.15 or any other Axis regime or an heir of such a person;and138.16(13)(12) for taxable years beginning before January 1, 138.17 2008, the amount of the federal small ethanol producer credit 138.18 allowed under section 40(a)(3) of the Internal Revenue Code 138.19 which is included in gross income under section 87 of the 138.20 Internal Revenue Code.; 138.21 (13) to the extent included in federal taxable income, the 138.22 compensation received for active duty in the armed forces of the 138.23 United States or the United Nations for personal services wholly 138.24 performed outside of the state of Minnesota; 138.25 (14) to the extent included in federal taxable income, the 138.26 first $3,000 of compensation received for (i) personal services 138.27 in the Minnesota national guard or armed forces reserves, or (ii) 138.28 active duty in the armed forces of the United States or the 138.29 United Nations for personal services wholly performed inside the 138.30 state of Minnesota; 138.31 (15) for individuals who are allowed a federal foreign tax 138.32 credit for taxes that do not qualify for a credit under section 138.33 290.06, subdivision 22, an amount equal to the carryover of 138.34 subnational foreign taxes for the taxable year, but not to 138.35 exceed the total subnational foreign taxes reported in claiming 138.36 the foreign tax credit. For purposes of this clause, "federal 139.1 foreign tax credit" means the credit allowed under section 27 of 139.2 the Internal Revenue Code, and "carryover of subnational foreign 139.3 taxes" equals the carryover allowed under section 904(c) of the 139.4 Internal Revenue Code minus national level foreign taxes to the 139.5 extent they exceed the federal foreign tax credit; and 139.6 (16) to the extent the gain was included in federal taxable 139.7 income, the capital gain exclusion under section 290.0803. 139.8 [EFFECTIVE DATE.] This section is effective for taxable 139.9 years beginning after December 31, 2000. 139.10 Sec. 6. Minnesota Statutes 2000, section 290.01, 139.11 subdivision 19c, is amended to read: 139.12 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 139.13 INCOME.] For corporations, there shall be added to federal 139.14 taxable income: 139.15 (1) the amount of any deduction taken for federal income 139.16 tax purposes for income, excise, or franchise taxes based on net 139.17 income or related minimum taxes, including but not limited to 139.18 the tax imposed under section 290.0922, paid by the corporation 139.19 to Minnesota, another state, a political subdivision of another 139.20 state, the District of Columbia, or any foreign country or 139.21 possession of the United States; 139.22 (2) interest not subject to federal tax upon obligations 139.23 of: the United States, its possessions, its agencies, or its 139.24 instrumentalities; the state of Minnesota or any other state, 139.25 any of its political or governmental subdivisions, any of its 139.26 municipalities, or any of its governmental agencies or 139.27 instrumentalities; the District of Columbia; or Indian tribal 139.28 governments; 139.29 (3) exempt-interest dividends received as defined in 139.30 section 852(b)(5) of the Internal Revenue Code; 139.31 (4) the amount of any net operating loss deduction taken 139.32 for federal income tax purposes under section 172 or 832(c)(10) 139.33 of the Internal Revenue Code or operations loss deduction under 139.34 section 810 of the Internal Revenue Code; 139.35 (5) the amount of any special deductions taken for federal 139.36 income tax purposes under sections 241 to 247 of the Internal 140.1 Revenue Code; 140.2 (6) losses from the business of mining, as defined in 140.3 section 290.05, subdivision 1, clause (a), that are not subject 140.4 to Minnesota income tax; 140.5 (7) the amount of any capital losses deducted for federal 140.6 income tax purposes under sections 1211 and 1212 of the Internal 140.7 Revenue Code; 140.8(8) the amount of any charitable contributions deducted for140.9federal income tax purposes under section 170 of the Internal140.10Revenue Code;140.11(9)(8) the exempt foreign trade income of a foreign sales 140.12 corporation under sections 921(a) and 291 of the Internal 140.13 Revenue Code; 140.14(10) the amount of percentage depletion deducted under140.15sections 611 through 614 and 291 of the Internal Revenue Code;140.16(11) for certified pollution control facilities placed in140.17service in a taxable year beginning before December 31, 1986,140.18and for which amortization deductions were elected under section140.19169 of the Internal Revenue Code of 1954, as amended through140.20December 31, 1985, the amount of the amortization deduction140.21allowed in computing federal taxable income for those140.22facilities;140.23(12)(9) the amount of any deemed dividend from a foreign 140.24 operating corporation determined pursuant to section 290.17, 140.25 subdivision 4, paragraph (g); 140.26(13) the amount of any environmental tax paid under section140.2759(a) of the Internal Revenue Code; and140.28(14)(10) the amount of a partner's pro rata share of net 140.29 income which does not flow through to the partner because the 140.30 partnership elected to pay the tax on the income under section 140.31 6242(a)(2) of the Internal Revenue Code. 140.32 [EFFECTIVE DATE.] This section is effective for taxable 140.33 years beginning after December 31, 2000. 140.34 Sec. 7. Minnesota Statutes 2000, section 290.01, 140.35 subdivision 19d, is amended to read: 140.36 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 141.1 TAXABLE INCOME.] For corporations, there shall be subtracted 141.2 from federal taxable income after the increases provided in 141.3 subdivision 19c: 141.4 (1) the amount of foreign dividend gross-up added to gross 141.5 income for federal income tax purposes under section 78 of the 141.6 Internal Revenue Code; 141.7 (2) the amount of salary expense not allowed for federal 141.8 income tax purposes due to claiming the federal jobs credit 141.9 under section 51 of the Internal Revenue Code; 141.10 (3) any dividend (not including any distribution in 141.11 liquidation) paid within the taxable year by a national or state 141.12 bank to the United States, or to any instrumentality of the 141.13 United States exempt from federal income taxes, on the preferred 141.14 stock of the bank owned by the United States or the 141.15 instrumentality; 141.16 (4) amounts disallowed for intangible drilling costs due to 141.17 differences between this chapter and the Internal Revenue Code 141.18 in taxable years beginning before January 1, 1987, as follows: 141.19 (i) to the extent the disallowed costs are represented by 141.20 physical property, an amount equal to the allowance for 141.21 depreciation under Minnesota Statutes 1986, section 290.09, 141.22 subdivision 7, subject to the modifications contained in 141.23 subdivision 19e; and 141.24 (ii) to the extent the disallowed costs are not represented 141.25 by physical property, an amount equal to the allowance for cost 141.26 depletion under Minnesota Statutes 1986, section 290.09, 141.27 subdivision 8; except that 141.28 (iii) this subtraction is permitted for the tax year ending 141.29 before December 31, 2002. Disallowed amounts remaining after 141.30 the tax year ending December 31, 2000, must be subtracted from 141.31 federal taxable income under this subdivision in two equal 141.32 portions in tax years 2001 and 2002; 141.33 (5) the deduction for capital losses pursuant to sections 141.34 1211 and 1212 of the Internal Revenue Code, except that: 141.35 (i) for capital losses incurred in taxable years beginning 141.36 after December 31, 1986, capital loss carrybacks shall not be 142.1 allowed; and 142.2 (ii) for capital losses incurred in taxable years beginning 142.3 after December 31, 1986, a capital loss carryover to each of the 142.4 15 taxable years succeeding the loss year shall be allowed; 142.5(iii) for capital losses incurred in taxable years142.6beginning before January 1, 1987, a capital loss carryback to142.7each of the three taxable years preceding the loss year, subject142.8to the provisions of Minnesota Statutes 1986, section 290.16,142.9shall be allowed; and142.10(iv) for capital losses incurred in taxable years beginning142.11before January 1, 1987, a capital loss carryover to each of the142.12five taxable years succeeding the loss year to the extent such142.13loss was not used in a prior taxable year and subject to the142.14provisions of Minnesota Statutes 1986, section 290.16, shall be142.15allowed;142.16 (6) an amount for interest and expenses relating to income 142.17 not taxable for federal income tax purposes, if (i) the income 142.18 is taxable under this chapter and (ii) the interest and expenses 142.19 were disallowed as deductions under the provisions of section 142.20 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 142.21 federal taxable income; 142.22(7) in the case of mines, oil and gas wells, other natural142.23deposits, and timber for which percentage depletion was142.24disallowed pursuant to subdivision 19c, clause (11), a142.25reasonable allowance for depletion based on actual cost. In the142.26case of leases the deduction must be apportioned between the142.27lessor and lessee in accordance with rules prescribed by the142.28commissioner. In the case of property held in trust, the142.29allowable deduction must be apportioned between the income142.30beneficiaries and the trustee in accordance with the pertinent142.31provisions of the trust, or if there is no provision in the142.32instrument, on the basis of the trust's income allocable to142.33each;142.34(8) for(7) certified pollution control facilitiesplaced142.35in service in a taxable year beginning before December 31, 1986,142.36and for which amortization deductions were elected under section143.1169 of the Internal Revenue Code of 1954, as amended through143.2December 31, 1985, an amount equal to the allowance for143.3depreciation under Minnesota Statutes 1986, section 290.09,143.4subdivision 7amortization deduction amounts remaining after the 143.5 tax year ending December 31, 2000, must be subtracted from 143.6 federal taxable income under this subdivision in two equal 143.7 portions in tax years 2001 and 2002; 143.8(9) the amount included in federal taxable income143.9attributable to the credits provided in Minnesota Statutes 1986,143.10section 273.1314, subdivision 9, or Minnesota Statutes, section143.11469.171, subdivision 6;143.12(10)(8) amounts included in federal taxable income that 143.13 are due to refunds of income, excise, or franchise taxes based 143.14 on net income or related minimum taxes paid by the corporation 143.15 to Minnesota, another state, a political subdivision of another 143.16 state, the District of Columbia, or a foreign country or 143.17 possession of the United States to the extent that the taxes 143.18 were added to federal taxable income under section 290.01, 143.19 subdivision 19c, clause (1), in a prior taxable year; 143.20(11)(9) 80 percent of royalties, fees, or other like 143.21 income accrued or received from a foreign operating corporation 143.22 or a foreign corporation which is part of the same unitary 143.23 business as the receiving corporation; 143.24(12)(10) income or gains from the business of mining as 143.25 defined in section 290.05, subdivision 1, clause (a), that are 143.26 not subject to Minnesota franchise tax; 143.27(13)(11) the amount of handicap access expenditures in the 143.28 taxable year which are not allowed to be deducted or capitalized 143.29 under section 44(d)(7) of the Internal Revenue Code; 143.30(14)(12) the amount of qualified research expenses not 143.31 allowed for federal income tax purposes under section 280C(c) of 143.32 the Internal Revenue Code, but only to the extent that the 143.33 amount exceeds the amount of the credit allowed under section 143.34 290.068; 143.35(15)(13) the amount of salary expenses not allowed for 143.36 federal income tax purposes due to claiming the Indian 144.1 employment credit under section 45A(a) of the Internal Revenue 144.2 Code; 144.3(16)(14) the amount of any refund of environmental taxes 144.4 paid under section 59A of the Internal Revenue Code; and 144.5(17)(15) for taxable years beginning before January 1, 144.6 2008, the amount of the federal small ethanol producer credit 144.7 allowed under section 40(a)(3) of the Internal Revenue Code 144.8 which is included in gross income under section 87 of the 144.9 Internal Revenue Code. 144.10 [EFFECTIVE DATE.] This section is effective for taxable 144.11 years beginning after December 31, 2000. 144.12 Sec. 8. Minnesota Statutes 2000, section 290.01, 144.13 subdivision 22, is amended to read: 144.14 Subd. 22. [TAXABLE NET INCOME.] For tax years beginning 144.15 after December 31, 1986, the term "taxable net income" means: 144.16 (1) for resident individuals the same as net income; 144.17 (2) for individuals who were not residents of Minnesota for 144.18 the entire year, the same as net income except that the tax is 144.19 imposed only on the Minnesota apportioned share of that income 144.20 as determined pursuant to section 290.06, subdivision 2c, 144.21 paragraph (e); 144.22 (3) for all other taxpayers, the part of net income that is 144.23 allocable to Minnesota by assignment or apportionment under one 144.24 or more of sections 290.17, 290.191, 290.20,290.35,and 290.36. 144.25 For tax years beginning before January 1, 1987, the term 144.26 "taxable net income" means the net income assignable to this 144.27 state pursuant to sections 290.17 to 290.20. For corporations, 144.28 taxable net income is then reduced by the deductions contained 144.29 in section 290.21. 144.30 [EFFECTIVE DATE.] This section is effective for taxable 144.31 years beginning after December 31, 2000. 144.32 Sec. 9. Minnesota Statutes 2000, section 290.01, 144.33 subdivision 29, is amended to read: 144.34 Subd. 29. [TAXABLE INCOME.]For tax years beginning after144.35December 31, 1986,The term "taxable income" means: 144.36 (1) for individuals, estates, and trusts, the same as 145.1 taxable net income; 145.2 (2) for corporations,including insurance companies,the 145.3 taxable net income less 145.4 (i) the net operating loss deduction under section 290.095; 145.5 and 145.6 (ii) the dividends received deduction under section 290.21, 145.7 subdivision 4; and145.8(iii) the charitable contribution deduction under section145.9290.21, subdivision 3. 145.10 [EFFECTIVE DATE.] This section is effective for taxable 145.11 years beginning after December 31, 2000. 145.12 Sec. 10. Minnesota Statutes 2000, section 290.014, 145.13 subdivision 5, is amended to read: 145.14 Subd. 5. [CORPORATIONS.] Except as provided in section 145.15 290.015, corporations are subject to the return filing 145.16 requirements and to tax as provided in this chapter if the 145.17 corporation so exercises its franchise as to engage in such 145.18 contacts with this state as to cause part of the income of the 145.19 corporation to be: 145.20 (1) allocable to this state under section 290.17, 290.191, 145.21 290.20,290.35,or 290.36; 145.22 (2) taxed to the corporation under the Internal Revenue 145.23 Code (or not taxed under the Internal Revenue Code by reason of 145.24 its character but of a character which is taxable under this 145.25 chapter) in its capacity as a beneficiary of an estate with 145.26 income allocable to this state under section 290.17, 290.191, or 145.27 290.20 and the income, taking into account the income character 145.28 provisions of section 662(b) of the Internal Revenue Code, would 145.29 be allocable to this state under section 290.17, 290.191, or 145.30 290.20 if realized by the corporation directly from the source 145.31 from which realized by the estate; 145.32 (3) taxed to the corporation under the Internal Revenue 145.33 Code (or not taxed under the Internal Revenue Code by reason of 145.34 its character but of a character which is taxable under this 145.35 chapter) in its capacity as a beneficiary or grantor or other 145.36 person treated as a substantial owner of a trust with income 146.1 allocable to this state under section 290.17, 290.191, or 290.20 146.2 and the income, taking into account the income character 146.3 provisions of section 652(b), 662(b), or 664(b) of the Internal 146.4 Revenue Code, would be allocable to this state under section 146.5 290.17, 290.191, or 290.20 if realized by the corporation 146.6 directly from the source from which realized by the trust; or 146.7 (4) taxed to the corporation under the Internal Revenue 146.8 Code (or not taxed under the Internal Revenue Code by reason of 146.9 its character but of a character which is taxable under this 146.10 chapter) in its capacity as a limited or general partner in a 146.11 partnership with income allocable to this state under section 146.12 290.17, 290.191, or 290.20 and the income, taking into account 146.13 the income character provisions of section 702(b) of the 146.14 Internal Revenue Code, would be allocable to this state under 146.15 section 290.17, 290.191, or 290.20 if realized by the 146.16 corporation directly from the source from which realized by the 146.17 partnership. 146.18 [EFFECTIVE DATE.] This section is effective for taxable 146.19 years beginning after December 31, 2000. 146.20 Sec. 11. Minnesota Statutes 2000, section 290.05, 146.21 subdivision 1, is amended to read: 146.22 Subdivision 1. [EXEMPT ENTITIES.] The following 146.23 corporations, individuals, estates, trusts, and organizations 146.24 shall be exempted from taxation under this chapter, provided 146.25 that every such person or corporation claiming exemption under 146.26 this chapter, in whole or in part, must establish to the 146.27 satisfaction of the commissioner the taxable status of any 146.28 income or activity: 146.29 (a) corporations, individuals, estates, and trusts engaged 146.30 in the business of mining or producing iron ore and other ores 146.31 the mining or production of which is subject to the occupation 146.32 tax imposed by section 298.01; but if any such corporation, 146.33 individual, estate, or trust engages in any other business or 146.34 activity or has income from any property not used in such 146.35 business it shall be subject to this tax computed on the net 146.36 income from such property or such other business or activity. 147.1 Royalty shall not be considered as income from the business of 147.2 mining or producing iron ore within the meaning of this section; 147.3 (b) the United States of America, the state of Minnesota or 147.4 any political subdivision of either agencies or 147.5 instrumentalities, whether engaged in the discharge of 147.6 governmental or proprietary functions; and 147.7 (c) any insurance companythat is domiciled in a state or147.8country other than Minnesota that imposes retaliatory taxes,147.9fines, deposits, penalties, licenses, or fees and that does not147.10grant, on a reciprocal basis, exemption from such retaliatory147.11taxes to insurance companies or their agents domiciled in147.12Minnesota. "Retaliatory taxes" means taxes imposed on insurance147.13companies organized in another state or country that result from147.14the fact that an insurance company organized in the taxing147.15jurisdiction and doing business in the other jurisdiction is147.16subject to taxes, fines, deposits, penalties, licenses, or fees147.17in an amount exceeding that imposed by the taxing jurisdiction147.18upon an insurance company organized in the other state or147.19country and doing business to the same extent in the taxing147.20jurisdiction; and147.21(d) town and farmers' mutual insurance companies and mutual147.22property and casualty insurance companies, other than those (1)147.23writing life insurance or (2) whose total assets on December 31,147.241989, exceeded $1,600,000,000. 147.25 [EFFECTIVE DATE.] This section is effective for taxable 147.26 years beginning after December 31, 2000. 147.27 Sec. 12. Minnesota Statutes 2000, section 290.06, 147.28 subdivision 2c, is amended to read: 147.29 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 147.30 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 147.31 married individuals filing joint returns and surviving spouses 147.32 as defined in section 2(a) of the Internal Revenue Code must be 147.33 computed by applying to their taxable net income the following 147.34 schedule of rates: 147.35 (1) On the first $25,680, 5.35 percent; 147.36 (2) On all over $25,680, but not over $102,030, 7.05 148.1 percent; 148.2 (3) On all over $102,030, 7.85 percent. 148.3 Married individuals filing separate returns, estates, and 148.4 trusts must compute their income tax by applying the above rates 148.5 to their taxable income, except that the income brackets will be 148.6 one-half of the above amounts. 148.7 (b) The income taxes imposed by this chapter upon unmarried 148.8 individuals must be computed by applying to taxable net income 148.9 the following schedule of rates: 148.10 (1) On the first $17,570, 5.35 percent; 148.11 (2) On all over $17,570, but not over $57,710, 7.05 148.12 percent; 148.13 (3) On all over $57,710, 7.85 percent. 148.14 (c) The income taxes imposed by this chapter upon unmarried 148.15 individuals qualifying as a head of household as defined in 148.16 section 2(b) of the Internal Revenue Code must be computed by 148.17 applying to taxable net income the following schedule of rates: 148.18 (1) On the first $21,630, 5.35 percent; 148.19 (2) On all over $21,630, but not over $86,910, 7.05 148.20 percent; 148.21 (3) On all over $86,910, 7.85 percent. 148.22 (d) In lieu of a tax computed according to the rates set 148.23 forth in this subdivision, the tax of any individual taxpayer 148.24 whose taxable net income for the taxable year is less than an 148.25 amount determined by the commissioner must be computed in 148.26 accordance with tables prepared and issued by the commissioner 148.27 of revenue based on income brackets of not more than $100. The 148.28 amount of tax for each bracket shall be computed at the rates 148.29 set forth in this subdivision, provided that the commissioner 148.30 may disregard a fractional part of a dollar unless it amounts to 148.31 50 cents or more, in which case it may be increased to $1. 148.32 (e) An individual who is not a Minnesota resident for the 148.33 entire year must compute the individual's Minnesota income tax 148.34 as provided in this subdivision. After the application of the 148.35 nonrefundable credits provided in this chapter, the tax 148.36 liability must then be multiplied by a fraction in which: 149.1 (1) the numerator is the individual's Minnesota source 149.2 federal adjusted gross income as defined in section 62 of the 149.3 Internal Revenue Code and increased by the additions required 149.4 under section 290.01, subdivision 19a, clauses (1) and (6), and 149.5 reduced by the Minnesota assignable portion of the subtraction 149.6 for United States government interest under section 290.01, 149.7 subdivision 19b, clause (1), after applying the allocation and 149.8 assignability provisions of section 290.081, clause (a), or 149.9 290.17; and 149.10 (2) the denominator is the individual's federal adjusted 149.11 gross income as defined in section 62 of the Internal Revenue 149.12 Code of 1986, increased by the amounts specified in section 149.13 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 149.14 amounts specified in section 290.01, subdivision 19b, clause (1). 149.15 [EFFECTIVE DATE.] This section is effective for taxable 149.16 years beginning after December 31, 2000. 149.17 Sec. 13. Minnesota Statutes 2000, section 290.06, 149.18 subdivision 22, is amended to read: 149.19 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 149.20 taxpayer who is liable for taxes on or measured by net income to 149.21 another stateor province or territory of Canada, as provided in 149.22 paragraphs (b) through (f), upon income allocated or apportioned 149.23 to Minnesota, is entitled to a credit for the tax paid to 149.24 another stateor province or territory of Canadaif the tax is 149.25 actually paid in the taxable year or a subsequent taxable year. 149.26 A taxpayer who is a resident of this state pursuant to section 149.27 290.01, subdivision 7, clause (2), and who is subject to income 149.28 tax as a resident in the state of the individual's domicile is 149.29 not allowed this credit unless the state of domicile does not 149.30 allow a similar credit. 149.31 (b) For an individual, estate, or trust, the credit is 149.32 determined by multiplying the tax payable under this chapter by 149.33 the ratio derived by dividing the income subject to tax in the 149.34 other stateor province or territory of Canadathat is also 149.35 subject to tax in Minnesota while a resident of Minnesota by the 149.36 taxpayer's federal adjusted gross income, as defined in section 150.1 62 of the Internal Revenue Code, modified by the addition 150.2 required by section 290.01, subdivision 19a, clause (1), and the 150.3 subtraction allowed by section 290.01, subdivision 19b, clause 150.4 (1), to the extent the income is allocated or assigned to 150.5 Minnesota under sections 290.081 and 290.17. 150.6 (c) If the taxpayer is an athletic team that apportions all 150.7 of its income under section 290.17, subdivision 5, the credit is 150.8 determined by multiplying the tax payable under this chapter by 150.9 the ratio derived from dividing the total net income subject to 150.10 tax in the other stateor province or territory of Canadaby the 150.11 taxpayer's Minnesota taxable income. 150.12 (d) The credit determined under paragraph (b) or (c) shall 150.13 not exceed the amount of tax so paid to the other stateor150.14province or territory of Canadaon the gross income earned 150.15 within the other stateor province or territory of Canada150.16 subject to tax under this chapter, nor shall the allowance of 150.17 the credit reduce the taxes paid under this chapter to an amount 150.18 less than what would be assessed if such income amount was 150.19 excluded from taxable net income. 150.20 (e) In the case of the tax assessed on a lump sum 150.21 distribution under section 290.032, the credit allowed under 150.22 paragraph (a) is the tax assessed by the other stateor province150.23or territory of Canadaon the lump sum distribution that is also 150.24 subject to tax under section 290.032, and shall not exceed the 150.25 tax assessed under section 290.032. To the extent the total 150.26 lump sum distribution defined in section 290.032, subdivision 1, 150.27 includes lump sum distributions received in prior years or is 150.28 all or in part an annuity contract, the reduction to the tax on 150.29 the lump sum distribution allowed under section 290.032, 150.30 subdivision 2, includes tax paid to another state that is 150.31 properly apportioned to that distribution. 150.32 (f) If a Minnesota resident reported an item of income to 150.33 Minnesota and is assessed tax in such other stateor province or150.34territory of Canadaon that same income after the Minnesota 150.35 statute of limitations has expired, the taxpayer shall receive a 150.36 credit for that year under paragraph (a), notwithstanding any 151.1 statute of limitations to the contrary. The claim for the 151.2 credit must be submitted within one year from the date the taxes 151.3 were paid to the other stateor province or territory of151.4Canada. The taxpayer must submit sufficient proof to show 151.5 entitlement to a credit. 151.6 (g) For the purposes of this subdivision, a resident 151.7 shareholder of a corporation treated as an "S" corporation under 151.8 section 290.9725, must be considered to have paid a tax imposed 151.9 on the shareholder in an amount equal to the shareholder's pro 151.10 rata share of any net income tax paid by the S corporation to 151.11 another state. For the purposes of the preceding sentence, the 151.12 term "net income tax" means any tax imposed on or measured by a 151.13 corporation's net income. 151.14 (h) For the purposes of this subdivision, a resident 151.15 partner of an entity taxed as a partnership under the Internal 151.16 Revenue Code must be considered to have paid a tax imposed on 151.17 the partner in an amount equal to the partner's pro rata share 151.18 of any net income tax paid by the partnership to another state. 151.19 For purposes of the preceding sentence, the term "net income" 151.20 tax means any tax imposed on or measured by a partnership's net 151.21 income. 151.22 (i) For the purposes of this subdivision, "another state": 151.23 (1) includes: 151.24 (i) the District of Columbia, but does not include; and 151.25 (ii) a province or territory of Canada; but 151.26 (2) excludes Puerto Ricoorand the several territories 151.27 organized by Congress. 151.28 (j) The limitations on the credit in paragraphs (b), (c), 151.29 and (d), are imposed on a state by state basis. 151.30 (k) For a tax imposed by a province or territory of Canada, 151.31 the tax for purposes of this subdivision is the excess of the 151.32 tax over the amount of the foreign tax credit allowed under 151.33 section 27 of the Internal Revenue Code. In determining the 151.34 amount of the foreign tax credit allowed, the net income taxes 151.35 imposed by Canada on the income are deducted first. Any 151.36 remaining amount of the allowable foreign tax credit reduces the 152.1 provincial or territorial tax that qualifies for the credit 152.2 under this subdivision. 152.3 [EFFECTIVE DATE.] This section is effective for taxable 152.4 years beginning after December 31, 2000. 152.5 Sec. 14. Minnesota Statutes 2000, section 290.067, 152.6 subdivision 1, is amended to read: 152.7 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 152.8 as a credit against the tax due from the taxpayer and a spouse, 152.9 if any, under this chapter an amount equal to the dependent care 152.10 credit for which the taxpayer is eligible pursuant to the 152.11 provisions of section 21 of the Internal Revenue Code subject to 152.12 the limitations provided in subdivision 2 except that in 152.13 determining whether the child qualified as a dependent, income 152.14 received as a Minnesota family investment program grant or 152.15 allowance to or on behalf of the child must not be taken into 152.16 account in determining whether the child received more than half 152.17 of the child's support from the taxpayer, and the provisions of 152.18 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 152.19 (b) If a child who has not attained the age of six years at 152.20 the close of the taxable year is cared for at a licensed family 152.21 day care home operated by the child's parent, the taxpayer is 152.22 deemed to have paid employment-related expenses. If the child 152.23 is 16 months old or younger at the close of the taxable year, 152.24 the amount of expenses deemed to have been paid equals the 152.25 maximum limit for one qualified individual under section 21(c) 152.26 and (d) of the Internal Revenue Code. If the child is older 152.27 than 16 months of age but has not attained the age of six years 152.28 at the close of the taxable year, the amount of expenses deemed 152.29 to have been paid equals the amount the licensee would charge 152.30 for the care of a child of the same age for the same number of 152.31 hours of care. 152.32 (c) If a married couple: 152.33 (1) has a child who has not attained the age of one year at 152.34 the close of the taxable year; 152.35 (2) files a joint tax return for the taxable year; and 152.36 (3) does not participate in a dependent care assistance 153.1 program as defined in section 129 of the Internal Revenue Code, 153.2 in lieu of the actual employment related expenses paid for that 153.3 child under paragraph (a) or the deemed amount under paragraph 153.4 (b), the lesser of (i) the combined earned income of the couple 153.5 or (ii) $2,400 will be deemed to be the employment related 153.6 expense paid for that child. The earned income limitation of 153.7 section 21(d) of the Internal Revenue Code shall not apply to 153.8 this deemed amount. These deemed amounts apply regardless of 153.9 whether any employment-related expenses have been paid. 153.10 (d) An individual who: 153.11 (1) incurs employment-related expenses for the care of one 153.12 or more dependents who have attained the age of 13 years but not 153.13 attained the age of 15 years at the close of the taxable year; 153.14 and 153.15 (2) is not eligible for a credit under section 21 of the 153.16 Internal Revenue Code for the employment-related expenses 153.17 incurred after the dependent or dependents attained the age of 153.18 13 years; 153.19 is eligible for a credit under this paragraph only. 153.20 The credit under this paragraph equals the credit that would 153.21 have been allowed under this section if the dependent or 153.22 dependents had not attained the age of 13 years at the close of 153.23 the taxable year. The credit under this paragraph in 153.24 combination with any other credits allowed under this section is 153.25 subject to the limitations in subdivision 2. 153.26(d)(e) If the taxpayer is not required and does not file a 153.27 federal individual income tax return for the tax year, no credit 153.28 is allowed for any amount paid to any person unless: 153.29 (1) the name, address, and taxpayer identification number 153.30 of the person are included on the return claiming the credit; or 153.31 (2) if the person is an organization described in section 153.32 501(c)(3) of the Internal Revenue Code and exempt from tax under 153.33 section 501(a) of the Internal Revenue Code, the name and 153.34 address of the person are included on the return claiming the 153.35 credit. 153.36 In the case of a failure to provide the information required 154.1 under the preceding sentence, the preceding sentence does not 154.2 apply if it is shown that the taxpayer exercised due diligence 154.3 in attempting to provide the information required. 154.4 In the case of a nonresident, part-year resident, or a 154.5 person who has earned income not subject to tax under this 154.6 chapter, the credit determined under section 21 of the Internal 154.7 Revenue Code must be allocated based on the ratio by which the 154.8 earned income of the claimant and the claimant's spouse from 154.9 Minnesota sources bears to the total earned income of the 154.10 claimant and the claimant's spouse. 154.11 [EFFECTIVE DATE.] This section is effective for taxable 154.12 years beginning after December 31, 2000. 154.13 Sec. 15. Minnesota Statutes 2000, section 290.067, 154.14 subdivision 2, is amended to read: 154.15 Subd. 2. [LIMITATIONS.] The credit for expenses incurred 154.16 for the care of each dependent shall not exceed $720 in any 154.17 taxable year, and the total credit for all dependents of a 154.18 claimant shall not exceed $1,440 in a taxable year. The maximum 154.19 total credit shall be reduced according to the amount of the 154.20 income of the claimant and a spouse, if any, minus the earned 154.21 income of the lesser-earning spouse, as follows: 154.22 income up to$13,350$18,040, $720 maximum for one 154.23 dependent, $1,440 for all dependents; 154.24 income over$13,350$18,040, the maximum credit for one 154.25 dependent shall be reduced by $18 for every $350 of additional 154.26 income, $36 for all dependents. 154.27 The commissioner shall construct and make available to 154.28 taxpayers tables showing the amount of the credit at various 154.29 levels of income and expenses. The tables shall follow the 154.30 schedule contained in this subdivision, except that the 154.31 commissioner may graduate the transitions between expenses and 154.32 income brackets. 154.33 For purposes of this section, "earned income of the 154.34 lesser-earning spouse" has the meaning given in section 154.35 290.0675, subdivision 1, paragraph (d). 154.36 [EFFECTIVE DATE.] This section is effective for taxable 155.1 years beginning after December 31, 1999. 155.2 Sec. 16. Minnesota Statutes 2000, section 290.067, 155.3 subdivision 2b, is amended to read: 155.4 Subd. 2b. [INFLATION ADJUSTMENT.] The dollar amount of the 155.5 income threshold at which the maximum credit begins to be 155.6 reduced under subdivision 2 must be adjusted for inflation. The 155.7 commissioner shalladjust the threshold amount by the percentage155.8determined under section 290.06, subdivision 2d, for the taxable155.9year.make the inflation adjustments in accordance with section 155.10 1f of the Internal Revenue Code except that for the purposes of 155.11 this subdivision the percentage increase must be determined from 155.12 the year starting September 1, 1999, and ending August 31, 2000, 155.13 as the base year for adjusting for inflation for the tax year 155.14 beginning after December 31, 2000. The determination of the 155.15 commissioner under this subdivision is not a rule under the 155.16 Administrative Procedure Act. 155.17 [EFFECTIVE DATE.] This section is effective for taxable 155.18 years beginning after December 31, 2000. 155.19 Sec. 17. Minnesota Statutes 2000, section 290.0671, 155.20 subdivision 1, is amended to read: 155.21 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 155.22 allowed a credit against the tax imposed by this chapter equal 155.23 to a percentage of earned income. To receive a credit, a 155.24 taxpayer must be eligible for a credit under section 32 of the 155.25 Internal Revenue Code. An individual who would have been 155.26 eligible for a credit under section 32 of the Internal Revenue 155.27 Code if the phaseout in section 32(b) were calculated based on 155.28 the individual's earned income or modified adjusted gross 155.29 income, whichever is greater, minus the earned income of the 155.30 lesser-earning spouse, is also eligible for a credit under this 155.31 section. 155.32 (b) For individuals with no qualifying children, the credit 155.33 equals 1.9125 percent of the first$4,460$4,620 of earned 155.34 income. The credit is reduced by 1.9125 percent of earned 155.35 income or modified adjusted gross income, whichever is 155.36 greater, minus the earned income of the lesser-earning spouse, 156.1 in excess of$5,570$5,770, but in no case is the credit less 156.2 than zero. 156.3 (c) For individuals with one qualifying child, the credit 156.4 equals 8.5 percent of the first$6,680$6,920 of earned income 156.5 and 8.5 percent of earned income over$11,650$12,080 but less 156.6 than$12,990$13,450. The credit is reduced by 5.73 percent of 156.7 earned income or modified adjusted gross income, whichever is 156.8 greater, minus the earned income of the lesser-earning spouse, 156.9 in excess of$14,560$15,080, but in no case is the credit less 156.10 than zero. 156.11 (d) For individuals with two or more qualifying children, 156.12 the credit equals ten percent of the first$9,390$9,720 of 156.13 earned income and 20 percent of earned income 156.14 over$14,350$14,860 but less than$16,230$16,800. The credit 156.15 is reduced by 10.3 percent of earned income or modified adjusted 156.16 gross income, whichever is greater, minus the earned income of 156.17 the lesser-earning spouse, in excess of$17,280$17,890, but in 156.18 no case is the credit less than zero. 156.19 (e) For a nonresident or part-year resident, the credit 156.20 must be allocated based on the percentage calculated under 156.21 section 290.06, subdivision 2c, paragraph (e). 156.22 (f) For a person who was a resident for the entire tax year 156.23 and has earned income not subject to tax under this chapter, the 156.24 credit must be allocated based on the ratio of federal adjusted 156.25 gross income reduced by the earned income not subject to tax 156.26 under this chapter over federal adjusted gross income. 156.27 (g) The commissioner shall construct tables showing the 156.28 amount of the credit at various income levels and make them 156.29 available to taxpayers. The tables shall follow the schedule 156.30 contained in this subdivision, except that the commissioner may 156.31 graduate the transition between income brackets. 156.32 [EFFECTIVE DATE.] This section is effective for taxable 156.33 years beginning after December 31, 2000. 156.34 Sec. 18. Minnesota Statutes 2000, section 290.0671, 156.35 subdivision 1a, is amended to read: 156.36 Subd. 1a. [DEFINITIONS.] For purposes of this section, the 157.1 terms "qualifying child," "earned income," and "modified 157.2 adjusted gross income" have the meanings given in section 32(c) 157.3 of the Internal Revenue Code. "Earned income of the 157.4 lesser-earning spouse" has the meaning given in section 157.5 290.0675, subdivision 1, paragraph (d). 157.6 [EFFECTIVE DATE.] This section is effective for taxable 157.7 years beginning after December 31, 2000. 157.8 Sec. 19. Minnesota Statutes 2000, section 290.0671, 157.9 subdivision 7, is amended to read: 157.10 Subd. 7. [INFLATION ADJUSTMENT.] The earned income amounts 157.11 used to calculate the credit and the income thresholds at which 157.12 the maximum credit begins to be reduced in subdivision 1 must be 157.13 adjusted for inflation. The commissioner shalladjust the157.14earned income and threshold amounts by the percentage determined157.15under section 290.06, subdivision 2d, for the taxable year.make 157.16 the inflation adjustments in accordance with section 1f of the 157.17 Internal Revenue Code except that for the purposes of this 157.18 subdivision the percentage increase shall be determined from the 157.19 year starting September 1, 1999, and ending August 31, 2000, as 157.20 the base year for adjusting for inflation for the tax year 157.21 beginning after December 31, 2000. The determination of the 157.22 commissioner under this subdivision is not a rule under the 157.23 Administrative Procedure Act. 157.24 [EFFECTIVE DATE.] This section is effective for taxable 157.25 years beginning after December 31, 2000. 157.26 Sec. 20. Minnesota Statutes 2000, section 290.0674, 157.27 subdivision 1, is amended to read: 157.28 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed 157.29 a credit against the tax imposed by this chapter in an amount 157.30 equal to the amount paid for education-related expenses for a 157.31 qualifying child in kindergarten through grade 12. For purposes 157.32 of this section, "education-related expenses" means: 157.33 (1) fees or tuition for instruction by an instructorunder157.34 who meets one of the requirements of section 120A.22, 157.35 subdivision 10, clause (1), (2), (3), (4), or (5), orbywho is 157.36 a member of the Minnesota music teachers association, and is not 158.1 a lineal ancestor or sibling of the dependent for instruction 158.2 outside the regular school day or school year, including 158.3 tutoring, driver's education offered as part of school 158.4 curriculum, regardless of whether it is taken from a public or 158.5 private entity or summer camps, in grade or age appropriate 158.6 curricula that supplement curricula and instruction available 158.7 during the regular school year, that assists a dependent to 158.8 improve knowledge of core curriculum areas or to expand 158.9 knowledge and skills under the graduation rule under section 158.10 120B.02, paragraph (e), clauses (1) to (7), (9), and (10), and 158.11 that do not include the teaching of religious tenets, doctrines, 158.12 or worship, the purpose of which is to instill such tenets, 158.13 doctrines, or worship; 158.14 (2) expenses for textbooks, including books and other 158.15 instructional materials and equipment used in elementary and 158.16 secondary schools in teaching only those subjects legally and 158.17 commonly taught in public elementary and secondary schools in 158.18 this state. "Textbooks" does not include instructional books 158.19 and materials used in the teaching of religious tenets, 158.20 doctrines, or worship, the purpose of which is to instill such 158.21 tenets, doctrines, or worship, nor does it include books or 158.22 materials for extracurricular activities including sporting 158.23 events, musical or dramatic events, speech activities, driver's 158.24 education, or similar programs; 158.25 (3) a maximum expense of $200 per family for personal 158.26 computer hardware, excluding single purpose processors, and 158.27 educational software that assists a dependent to improve 158.28 knowledge of core curriculum areas or to expand knowledge and 158.29 skills under the graduation rule under section 120B.02, 158.30 paragraph (e), clauses (1) to (7), (9), and (10), purchased for 158.31 use in the taxpayer's home and not used in a trade or business 158.32 regardless of whether the computer is required by the 158.33 dependent's school;and158.34 (4) the amount paid to others for transportation of a 158.35 qualifying child attending an elementary or secondary school 158.36 situated in Minnesota, North Dakota, South Dakota, Iowa, or 159.1 Wisconsin, wherein a resident of this state may legally fulfill 159.2 the state's compulsory attendance laws, which is not operated 159.3 for profit, and which adheres to the provisions of the Civil 159.4 Rights Act of 1964 and chapter 363.; 159.5 (5) expenses for the purchase or lease of musical 159.6 instruments used in classes offered as part of the school 159.7 curriculum; 159.8 (6) the amount paid to a public school for participation in 159.9 extracurricular activities for which fees are authorized under 159.10 section 123B.36, subdivision 1, paragraph (b), clauses (2), (7), 159.11 and (10); and 159.12 (7) the amount paid to a nonpublic school for participation 159.13 in activities listed in section 123B.36, subdivision 1, 159.14 paragraph (b), clauses (2), (7), and (10). 159.15 For purposes of this section, "qualifying child" has the 159.16 meaning given in section 32(c)(3) of the Internal Revenue Code. 159.17 [EFFECTIVE DATE.] This section is effective for taxable 159.18 years beginning after December 31, 2000. 159.19 Sec. 21. Minnesota Statutes 2000, section 290.0674, 159.20 subdivision 2, is amended to read: 159.21 Subd. 2. [LIMITATIONS.] (a) For claimants with income not 159.22 greater than $33,500, the maximum credit allowed is $1,000 per 159.23 qualifying childand $2,000 per family.No credit is allowed159.24for education-related expenses for claimants with income greater159.25than $37,500.The maximum credit for each claimant is $1,000 159.26 multiplied by the number of qualifying children for whom the 159.27 individual claims the credit. The maximum creditper childfor 159.28 a claimant is reduced by $1 for each $4 of household income over 159.29 $33,500, and the maximum credit per family is reduced by $2 for159.30each $4 of household income over $33,500for claimants with one 159.31 qualifying child, and by $1 for each $3 of household income over 159.32 $33,500 for all other claimants, but in no case is the credit 159.33 less than zero. 159.34 For purposes of this section "income" has the meaning given 159.35 in section 290.067, subdivision 2a. In the case of a married 159.36 claimant, a credit is not allowed unless a joint income tax 160.1 return is filed. 160.2 (b) For a nonresident or part-year resident, the credit 160.3 determined under subdivision 1 and the maximum credit amount in 160.4 paragraph (a) must be allocated using the percentage calculated 160.5 in section 290.06, subdivision 2c, paragraph (e). 160.6 (c) For taxable years beginning after December 31, 2001, 160.7 the dollar amount of the income threshold at which the maximum 160.8 credit begins to be reduced must be adjusted for inflation. The 160.9 commissioner shall make the inflation adjustments in accordance 160.10 with section 1f of the Internal Revenue Code except that for the 160.11 purposes of this subdivision the percentage increase shall be 160.12 determined from the year starting September 1, 2000, and ending 160.13 August 31, 2001, as the base year for adjusting for inflation 160.14 for the tax year beginning after December 31, 2001. The 160.15 determination of the commissioner under this subdivision is not 160.16 a rule under the Administrative Procedure Act. 160.17 [EFFECTIVE DATE.] This section is effective for taxable 160.18 years beginning after December 31, 2000. 160.19 Sec. 22. Minnesota Statutes 2000, section 290.0675, 160.20 subdivision 1, is amended to read: 160.21 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 160.22 section the following terms have the meanings given. 160.23 (b) "Earned income" means the sum of the following, to the 160.24 extent included in Minnesota taxable income: 160.25 (1) earned income as defined in section 32(c)(2) of the 160.26 Internal Revenue Code; 160.27 (2)to the extent included in Minnesota taxable income,160.28 income received from a retirement pension, profit-sharing, stock 160.29 bonus, or annuity plan; and 160.30 (3)to the extent included in Minnesota taxable income,160.31 social security benefits as defined in section 86(d)(1) of the 160.32 Internal Revenue Code. 160.33 (c) "Taxable income" means net income as defined in section 160.34 290.01, subdivision 19. 160.35 (d) "Earned income of lesser-earning spouse" means the 160.36 earned income of the spouse with the lesser amount of earned 161.1 income as defined in paragraph (b) for the taxable year. 161.2 [EFFECTIVE DATE.] This section is effective for taxable 161.3 years beginning after December 31, 2000. 161.4 Sec. 23. Minnesota Statutes 2000, section 290.0675, 161.5 subdivision 3, is amended to read: 161.6 Subd. 3. [CREDIT AMOUNT.] The credit amount isas shown in161.7the table in this subdivision, based on the couple's taxable161.8income for the tax year and on the earned income of the161.9lesser-earning spousethe difference between the tax on the 161.10 couple's joint Minnesota taxable income under the rates in 161.11 section 290.06, subdivision 2c, paragraph (a), and the sum of 161.12 the tax under the rates of section 290.06, subdivision 2c, 161.13 paragraph (b), on the earned income of the lesser-earning 161.14 spouse, and the tax under the rates of section 290.06, 161.15 subdivision 2c, paragraph (b), on the couple's joint Minnesota 161.16 taxable income, minus the earned income of the lesser-earning 161.17 spouse. 161.18Credit ForCredit For161.19Earned Income ofTaxable IncomeTaxable Income161.20Lesser Earning Spouse$25,680-$102,029$102,030-over161.21$14,250 - $15,249$7$0161.22$15,250 - $16,249$24$0161.23$16,250 - $17,249$41$0161.24$17,250 - $18,249$58$0161.25$18,250 - $19,249$75$0161.26$19,250 - $20,249$92$0161.27$20,250 - $21,249$109$0161.28$21,250 - $22,249$126$0161.29$22,250 - $23,249$143$0161.30$23,250 - $24,249$160$0161.31$24,250 - $25,249$161$0161.32$25,250 - $26,249$161$0161.33$26,250 - $27,249$161$0161.34$27,250 - $28,249$161$0161.35$28,250 - $29,249$161$0161.36$29,250 - $30,249$161$0162.1$30,250 - $31,249$161$0162.2$31,250 - $32,249$161$6162.3$32,250 - $33,249$161$14162.4$33,250 - $34,249$161$22162.5$34,250 - $35,249$161$30162.6$35,250 - $36,249$161$38162.7$36,250 - $37,249$161$46162.8$37,250 - $38,249$161$54162.9$38,250 - $39,249$161$62162.10$39,250 - $40,249$161$70162.11$40,250 - $41,249$161$78162.12$41,250 - $42,249$161$86162.13$42,250 - $43,249$161$94162.14$43,250 - $44,249$161$102162.15$44,250 - $45,249$161$110162.16$45,250 - $46,249$161$118162.17$46,250 - $47,249$161$126162.18$47,250 - $48,249$161$134162.19$48,250 - $49,249$161$142162.20$49,250 - $50,249$161$150162.21$50,250 - $51,249$161$158162.22$51,250 - $52,249$161$166162.23$52,250 - $53,249$161$174162.24$53,250 - $54,249$161$182162.25$54,250 - $55,249$161$190162.26$55,250 - $56,249$161$198162.27$56,250 - $57,249$161$206162.28$57,250 - $58,249$161$214162.29$58,250 - $59,249$161$222162.30$59,250 - $60,249$161$230162.31$60,250 - $61,249$161$238162.32$61,250 - $62,249$161$246162.33$62,250 - $63,249$161$254162.34$63,250 - $64,249$161$262162.35$64,250 and over$161$268162.36 For taxable years beginning after December 31, 2001, the 163.1 commissioner of revenue shall prepare and make available to 163.2 taxpayers a comprehensive table showing the credit under this 163.3 section at brackets of earnings of the lesser-earning spouse and 163.4 joint taxable income. The brackets of earnings shall not be 163.5 more than $2,000. 163.6 For taxable years beginning after December 31,20002002, 163.7 the commissioner shall update the table as necessary to provide 163.8 a credit that reflects the relationship between the marginal tax 163.9 rates imposed under section 290.06, subdivision 2c. 163.10 [EFFECTIVE DATE.] This section is effective for taxable 163.11 years beginning after December 31, 2000. 163.12 Sec. 24. [290.0676] [CREDIT FOR LAND DONATED FOR 163.13 CONSERVATION PURPOSES.] 163.14 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 163.15 section, the following terms have the meanings given. 163.16 (b) "Interest in real property" means fee title or 163.17 qualified real property interest as defined in section 170(h) of 163.18 the Internal Revenue Code and the United States Treasury 163.19 Regulations promulgated thereunder. 163.20 (c) "Fair market value" of an interest in real property 163.21 means the value as determined by a "qualified appraisal" 163.22 prepared by a "qualified appraiser" as those terms are defined 163.23 in United States Treasury Regulations, section 1.170A-13, as 163.24 amended through December 31, 2000. If the taxpayer does not 163.25 obtain an appraisal, "fair market value" means the estimated 163.26 market value of the property as determined by the assessor for 163.27 property tax purposes. 163.28 (d) "Discount of the sale price" means the difference 163.29 between the fair market value of an interest in real property at 163.30 the time of sale and the sale price, if the price the property 163.31 is sold for is lower. 163.32 (e) "Conservation purposes" means the conservation purposes 163.33 as defined in section 170(h)(4)(A)(i), (ii), and (iii) of the 163.34 Internal Revenue Code. 163.35 Subd. 2. [CREDIT ALLOWED.] A taxpayer who donates an 163.36 interest in real property in this state for conservation 164.1 purposes to a qualified organization described in subdivision 3, 164.2 paragraph (a), may take a credit against the tax imposed by this 164.3 chapter in an amount equal to 50 percent of the fair market 164.4 value of the interest in real property. A taxpayer who sells an 164.5 interest in real property at a discount for conservation 164.6 purposes may take a credit against the tax imposed by this 164.7 chapter in an amount equal to 50 percent of the value of the 164.8 discount of the sale price in the interest in real property. 164.9 Subd. 3. [QUALIFICATION.] (a) To qualify for a credit 164.10 under this section, the taxpayer must convey the interest in 164.11 real property to: 164.12 (1) the state of Minnesota, a local government conservation 164.13 agency, or a special purpose unit of government; or 164.14 (2) a private organization as provided in section 501(c) of 164.15 the Internal Revenue Code that: 164.16 (i) meets the requirements of section 170(h)(3) of the 164.17 Internal Revenue Code; and 164.18 (ii) is organized and operated for one of the conservation 164.19 purposes specified in section 170(h)(4)(A)(i), (ii), and (iii) 164.20 of the Internal Revenue Code. 164.21 (b) A taxpayer claiming the credit under this section shall 164.22 attach the following to the tax returns on which the credit is 164.23 claimed: 164.24 (1) a certificate of acceptance from an organization 164.25 described in paragraph (a) verifying that the organization has 164.26 accepted the contribution; and 164.27 (2) a copy of a qualified appraisal by a qualified 164.28 appraiser as those terms are defined in United States Treasury 164.29 Regulations, section 1.170A-13, as amended through December 31, 164.30 2000, or a copy of the most recent notice of estimated market 164.31 value provided by the assessor. 164.32 (c) Conveyances of real property for open space for the 164.33 purpose of fulfilling density requirements or other requirements 164.34 to obtain subdivision or building permits are not eligible for a 164.35 credit under this section. 164.36 Subd. 4. [LIMITATION; CARRYOVER.] (a) The credit for the 165.1 taxable year may not exceed the taxpayer's liability for tax 165.2 before the credit under this section or $100,000, whichever is 165.3 less. 165.4 (b) If the amount of the credit determined under this 165.5 section for any taxable year exceeds the limitation in paragraph 165.6 (a), the excess is a carryover to each of the five succeeding 165.7 taxable years. All of the excess unused credit for the taxable 165.8 year must be carried first to the earliest of the taxable years 165.9 to which the credit may be carried and then to each successive 165.10 year to which the credit may be carried. The unused credit that 165.11 may be added under this paragraph in any year may not exceed the 165.12 lesser of the taxpayer's liability for tax less the land 165.13 donation credit for the taxable year or $100,000. 165.14 Subd. 5. [EXPIRATION.] The credit under this section 165.15 expires for contributions made after December 31, 2004. 165.16 [EFFECTIVE DATE.] This section is effective for 165.17 contributions made after the day following final enactment in 165.18 taxable years beginning after December 31, 2000. 165.19 Sec. 25. [290.0679] [ASSIGNMENT OF REFUND.] 165.20 Subdivision 1. [DEFINITIONS.] (a) "Qualifying taxpayer" 165.21 means a taxpayer who has a child in kindergarten through grade 165.22 12 in the current tax year and who met all other eligibility 165.23 requirements for receiving the education credit in the tax year 165.24 preceding the assignment of the taxpayer's refund. 165.25 (b) "Education credit" means the credit allowed under 165.26 section 290.0674. 165.27 (c) "Refund" means an individual income tax refund or 165.28 political contribution refund under this chapter, or a property 165.29 tax refund under chapter 290A. 165.30 (d) "Financial institution" means a state or federally 165.31 chartered bank, savings bank, savings association, or credit 165.32 union. 165.33 (e) "Qualifying organization" means a tax-exempt 165.34 organization under section 501(c)(3) of the Internal Revenue 165.35 Code. 165.36 (f) "Assignee" means a financial institution or qualifying 166.1 organization that is entitled to receive payment of a refund 166.2 assigned under this section. 166.3 Subd. 2. [CONDITIONS FOR ASSIGNMENT.] A qualifying 166.4 taxpayer may assign all or part of a refund for the current and 166.5 future taxable years to a financial institution or a qualifying 166.6 organization. The amount assigned may not exceed the maximum 166.7 allowed education credit. Both the taxpayer and spouse must 166.8 consent to the assignment of a refund from a joint return. 166.9 Subd. 3. [CONSENT FOR DISCLOSURE.] When the taxpayer 166.10 applies to the financial institution or the qualifying 166.11 organization for a loan to be secured by the assignment under 166.12 subdivision 2, the taxpayer must sign a written consent on a 166.13 form prescribed by the commissioner. The consent must authorize 166.14 the commissioner to disclose to the financial institution or 166.15 qualifying organization the taxpayer's household income in the 166.16 previous tax year, the number of qualifying children claimed by 166.17 the taxpayer in the previous tax year, the total amount of state 166.18 taxes owed or revenue recapture claims filed under chapter 270A 166.19 against the taxpayer, and the total amount of outstanding 166.20 assignments made by the taxpayer under this section. For a 166.21 refund from a joint return, the consent must also authorize the 166.22 disclosure of taxes, revenue recapture claims, and assignments 166.23 relating to the taxpayer's spouse, and must be signed by the 166.24 spouse. 166.25 Subd. 4. [FILING OF ASSIGNMENT.] The commissioner shall 166.26 prescribe the form of and manner for filing an assignment of a 166.27 refund under this section. 166.28 Subd. 5. [EFFECT OF ASSIGNMENT.] The taxpayer may not 166.29 revoke an assignment after it has been filed. The assignee must 166.30 notify the commissioner if the loan secured by the assignment 166.31 has been paid in full, in which case the assignment is 166.32 canceled. An assignment is in effect until the amount assigned 166.33 is refunded in full to the assignee, or until the assignee 166.34 cancels the assignment. 166.35 Subd. 6. [PAYMENT OF REFUND.] When a refund assigned under 166.36 this section is issued by the commissioner, the proceeds of the 167.1 refund must be distributed in the following order: 167.2 (1) to satisfy any delinquent tax obligations of the 167.3 taxpayer which are owed to the commissioner; 167.4 (2) to claimant agencies to satisfy any revenue recapture 167.5 claims filed against the taxpayer, in the order of priority of 167.6 the claims set forth in section 270A.10; 167.7 (3) to assignees to satisfy assignments under this section, 167.8 based on the order in time in which the commissioner received 167.9 the assignments; and 167.10 (4) to the taxpayer. 167.11 Subd. 7. [LEGAL ACTION.] If there is a dispute between the 167.12 taxpayer and the assignee after the commissioner has remitted 167.13 the taxpayer's refund to the assignee, the taxpayer's only 167.14 remedy is to bring an action against the assignee in court to 167.15 recover the refund. The action must be brought within two years 167.16 after the commissioner remits the refund to the assignee. The 167.17 commissioner may not be a party to the proceeding. 167.18 Subd. 8. [ASSIGNMENTS PRIVATE DATA.] Information regarding 167.19 assignments under this section is classified as private data on 167.20 individuals. 167.21 [EFFECTIVE DATE.] This section is effective for assignment 167.22 of refunds for taxable years beginning after December 31, 2000. 167.23 The commissioner may begin accepting assignments after August 1, 167.24 2000. 167.25 Sec. 26. Minnesota Statutes 2000, section 290.068, 167.26 subdivision 1, is amended to read: 167.27 Subdivision 1. [CREDIT ALLOWED.] Acorporation, other than167.28a corporation treated as an "S" corporation under section167.29290.9725,taxpayer is allowed a credit against theportion of167.30the franchisetax computed under section 290.06, subdivision 1,167.31 for the taxable year equal to: 167.32 (a) 5 percent of the first $2,000,000 of the excess (if 167.33 any) of: 167.34 (1) the qualified research expenses for the taxable year, 167.35 over 167.36 (2) the base amount; and 168.1 (b)2.54 percent on all of such excess expenses over 168.2 $2,000,000. 168.3 [EFFECTIVE DATE.] This section is effective for taxable 168.4 years beginning after December 31, 2000. 168.5 Sec. 27. Minnesota Statutes 2000, section 290.068, 168.6 subdivision 3, is amended to read: 168.7 Subd. 3. [LIMITATION; CARRYOVER.] (a)(1) The credit for 168.8 the taxable yearshallmay not exceed the liability for tax. 168.9 "Liability for tax" for purposes of this section means the tax 168.10 imposed underthis chaptersection 290.06 for the taxable year 168.11 reduced by the sum of the nonrefundable credits allowed under 168.12 this chapter. 168.13 (2)In the case of a corporation which isFor a partner in 168.14 a partnership, the credit allowed for the taxable yearshallmay 168.15 not exceed the lesser of the amount determined under clause (1) 168.16 for the taxable year or an amount (separately computed with 168.17 respect to thecorporation'staxpayer's interest in the trade or 168.18 business or entity) equal to the amount of tax attributable to 168.19 that portion of taxable income which is allocable or 168.20 apportionable to thecorporation'staxpayer's interest in the 168.21 trade or business or entity. 168.22 (b) If the amount of the credit determined under this 168.23 section for any taxable year exceeds the limitation under clause 168.24 (a), the excessshall beis a research credit carryover to each 168.25 of the 15 succeeding taxable years. The entire amount of the 168.26 excess unused credit for the taxable yearshallmust be carried 168.27 first to the earliest of the taxable years to which the credit 168.28 may be carried and then to each successive year to which the 168.29 credit may be carried. The amount of the unused credit which 168.30 may be added under this clauseshallmay not exceed the 168.31 taxpayer's liability for tax less the research credit for the 168.32 taxable year. 168.33 [EFFECTIVE DATE.] This section is effective for taxable 168.34 years beginning after December 31, 2000. 168.35 Sec. 28. Minnesota Statutes 2000, section 290.068, 168.36 subdivision 4, is amended to read: 169.1 Subd. 4. [PARTNERSHIPS.] In the case ofpartnerships169.2 taxpayers other than corporations, the creditshall be allocated169.3in the same manner provided by sectionis subject to sections 169.4 41(f)(2) and 41(g) of the Internal Revenue Code. 169.5 [EFFECTIVE DATE.] This section is effective for taxable 169.6 years beginning after December 31, 2000. 169.7 Sec. 29. [290.0692] [BIOMEDICAL INNOVATION AND 169.8 COMMERCIALIZATION INITIATIVE CREDIT.] 169.9 (a) A tax credit is allowed for cash investments in the 169.10 biomedical innovation and commercialization initiative pursuant 169.11 to section 116J.885. A credit is allowed against the tax 169.12 imposed by sections 290.03 and 290.06 equal to 25 percent of the 169.13 amount of the investment by the taxpayer for the year of the 169.14 investment. 169.15 (b) The amount of tax credits for a taxable year shall not 169.16 exceed the liability for tax. For purposes of this section, 169.17 "liability for tax," means the tax imposed by sections 290.03 169.18 and 290.06 for the taxable year reduced by the amount of 169.19 nonrefundable credits allowed under this chapter. The unused 169.20 portion of the credits shall be a biomedical innovation and 169.21 commercialization credit carryover for the tax year and each of 169.22 the subsequent nine succeeding taxable years. The commissioner 169.23 shall prescribe the manner in which the credit may be claimed. 169.24 This may include allowing the credit only as a separately 169.25 processed claim for refund. 169.26 (c) The biomedical innovation and commercialization 169.27 initiative or any for-profit entity that is formed under section 169.28 116J.885, subdivision 3, clause (5), must file, in writing, an 169.29 information return with the commissioner no later than February 169.30 15 of each year. The information return must contain the total 169.31 amount of investments in the biomedical innovation and 169.32 commercialization initiative or the for-profit entity, the 169.33 amount of investment made by each taxpayer, and the taxpayer's 169.34 name and Minnesota tax identification number. 169.35 [EFFECTIVE DATE.] This section is effective for tax years 169.36 beginning after December 31, 2000. 170.1 Sec. 30. [290.0803] [GAIN ON QUALIFIED STOCK.] 170.2 (a) An individual is allowed a subtraction for 50 percent 170.3 of any gain from the sale or exchange of qualified stock held 170.4 for more than five years. To qualify for the subtraction under 170.5 this section, the stock must be: 170.6 (1) acquired after the day following final enactment of 170.7 this section; 170.8 (2) in a business that was a qualified business for the 170.9 taxable year in which the individual acquired the stock and for 170.10 the taxable year prior to the year in which the individual sold 170.11 or exchanged the stock. 170.12 (b) Stock means common or preferred stock or an ownership 170.13 interest in an entity taxed as a partnership. 170.14 (c) A business is a qualified business only if it: 170.15 (1) meets the active business requirements of section 170.16 1202(e) of the Internal Revenue Code, except the business need 170.17 not be a C corporation; 170.18 (2) meets the jurisdiction requirements of section 297A.66 170.19 or agrees voluntarily to collect tax under chapter 297A; and 170.20 (3) has filed a certification with the commissioner of 170.21 trade and economic development for the taxable year under 170.22 paragraph (d). 170.23 (d) To be a qualified business for a taxable year, the 170.24 business must file a certification with the commissioner of 170.25 trade and economic development that it meets the requirements of 170.26 paragraph (c), clauses (1) and (2), by 15 days before the start 170.27 of a taxable year. The certification must be made in the form 170.28 prescribed by the commissioner of trade and economic development 170.29 and must be annually renewed, in the manner prescribed by the 170.30 commissioner of trade and economic development, to be in effect 170.31 for a taxable year. The commissioner of trade and economic 170.32 development shall make available to the public, through the 170.33 Internet or in any other way the commissioner determines 170.34 appropriate, a list of the qualifying businesses for each 170.35 taxable year. 170.36 Sec. 31. Minnesota Statutes 2000, section 290.091, 171.1 subdivision 2, is amended to read: 171.2 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 171.3 this section, the following terms have the meanings given: 171.4 (a) "Alternative minimum taxable income" means the sum of 171.5 the following for the taxable year: 171.6 (1) the taxpayer's federal alternative minimum taxable 171.7 income as defined in section 55(b)(2) of the Internal Revenue 171.8 Code; 171.9 (2) the taxpayer's itemized deductions allowed in computing 171.10 federal alternative minimum taxable income, but excluding: 171.11 (i) theMinnesotacharitable contribution deduction; 171.12 (ii) the medical expense deduction; 171.13 (iii) the casualty, theft, and disaster loss deduction; 171.14 (iv) the impairment-related work expenses of a disabled 171.15 person; and 171.16 (v) holocaust victims' settlement payments to the extent 171.17 allowed under section 290.01, subdivision 19b; 171.18 (3) for depletion allowances computed under section 613A(c) 171.19 of the Internal Revenue Code, with respect to each property (as 171.20 defined in section 614 of the Internal Revenue Code), to the 171.21 extent not included in federal alternative minimum taxable 171.22 income, the excess of the deduction for depletion allowable 171.23 under section 611 of the Internal Revenue Code for the taxable 171.24 year over the adjusted basis of the property at the end of the 171.25 taxable year (determined without regard to the depletion 171.26 deduction for the taxable year); 171.27 (4) to the extent not included in federal alternative 171.28 minimum taxable income, the amount of the tax preference for 171.29 intangible drilling cost under section 57(a)(2) of the Internal 171.30 Revenue Code determined without regard to subparagraph (E); and 171.31 (5) to the extent not included in federal alternative 171.32 minimum taxable income, the amount of interest income as 171.33 provided by section 290.01, subdivision 19a, clause (1); 171.34 less the sum of the amounts determined under the following: 171.35 (1) interest income as defined in section 290.01, 171.36 subdivision 19b, clause (1); 172.1 (2) an overpayment of state income tax as provided by 172.2 section 290.01, subdivision 19b, clause (2), to the extent 172.3 included in federal alternative minimum taxable income; 172.4 (3) the amount of investment interest paid or accrued 172.5 within the taxable year on indebtedness to the extent that the 172.6 amount does not exceed net investment income, as defined in 172.7 section 163(d)(4) of the Internal Revenue Code. Interest does 172.8 not include amounts deducted in computing federal adjusted gross 172.9 income;and172.10 (4) amounts subtracted from federal taxable income as 172.11 provided by section 290.01, subdivision 19b,clausesclause (4); 172.12 and(6)172.13 (5) to the extent the gain was included in federal taxable 172.14 income, the capital gains exclusion under section 290.0803. 172.15 In the case of an estate or trust, alternative minimum 172.16 taxable income must be computed as provided in section 59(c) of 172.17 the Internal Revenue Code. 172.18 (b) "Investment interest" means investment interest as 172.19 defined in section 163(d)(3) of the Internal Revenue Code. 172.20 (c) "Tentative minimum tax" equals 6.4 percent of 172.21 alternative minimum taxable income after subtracting the 172.22 exemption amount determined under subdivision 3. 172.23 (d) "Regular tax" means the tax that would be imposed under 172.24 this chapter (without regard to this section and section 172.25 290.032), reduced by the sum of the nonrefundable credits 172.26 allowed under this chapter. 172.27 (e) "Net minimum tax" means the minimum tax imposed by this 172.28 section. 172.29(f) "Minnesota charitable contribution deduction" means a172.30charitable contribution deduction under section 170 of the172.31Internal Revenue Code to or for the use of an entity described172.32in section 290.21, subdivision 3, clauses (a) to (e). When the172.33federal deduction for charitable contributions is limited under172.34section 170(b) of the Internal Revenue Code, the allowable172.35contributions in the year of contribution are deemed to be first172.36contributions to entities described in section 290.21,173.1subdivision 3, clauses (a) to (e).173.2 Sec. 32. Minnesota Statutes 2000, section 290.091, 173.3 subdivision 3, is amended to read: 173.4 Subd. 3. [EXEMPTION AMOUNT.] For purposes of computing the 173.5 alternative minimum tax, the exemption amount is the exemption 173.6 determined under section 55(d) of the Internal Revenue Code, as 173.7 amended through December 31, 1992, except that (i) for married 173.8 couples filing joint returns, the exemption amount equals two 173.9 times the amount allowed in section 55(d)(1)(B) of the Internal 173.10 Revenue Code as amended through December 31, 1992, and the 173.11 phaseout threshold equals two times the amount provided in 173.12 section 55(d)(3)(B) of the Internal Revenue Code as amended 173.13 through December 31, 1992; (ii) for married couples filing 173.14 separate returns, the exemption amount and phaseout threshold 173.15 equal one-half the amounts provided for married couples filing 173.16 joint returns; and (iii) for all filers, alternative minimum 173.17 taxable income as determined under this section must be 173.18 substituted in the computation of the phase out under section 173.19 55(d)(3). 173.20 [EFFECTIVE DATE.] This section is effective for taxable 173.21 years beginning after December 31, 2000. 173.22 Sec. 33. Minnesota Statutes 2000, section 290.0921, 173.23 subdivision 1, is amended to read: 173.24 Subdivision 1. [TAX IMPOSED.] In addition to the taxes 173.25 computed under this chapter without regard to this section, the 173.26 franchise tax imposed on corporations includes a tax equal to 173.27 the excess, if any, for the taxable year of: 173.28 (1) 5.8 percent of Minnesota alternative minimum taxable 173.29 incomeless the credit allowed under section 290.35, subdivision173.303; over 173.31 (2) the tax imposed under section 290.06, subdivision 1, 173.32 without regard to this section. 173.33 [EFFECTIVE DATE.] This section is effective for taxable 173.34 years beginning after December 31, 2000. 173.35 Sec. 34. Minnesota Statutes 2000, section 290.0921, 173.36 subdivision 2, is amended to read: 174.1 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 174.2 the following terms have the meanings given them. 174.3 (b) "Alternative minimum taxable net income" is alternative 174.4 minimum taxable income, 174.5 (1) less the exemption amount, and 174.6 (2) apportioned or allocated to Minnesota under section 174.7 290.17, 290.191, or 290.20. 174.8 (c) The "exemption amount" is $40,000, reduced, but not 174.9 below zero, by 25 percent of the excess of alternative minimum 174.10 taxable income over $150,000. 174.11 (d) "Minnesota alternative minimum taxable income" is 174.12 alternative minimum taxable net income, less the deductions for 174.13 alternative tax net operating loss under subdivision 4; 174.14 charitable contributions under subdivision 5; and dividends 174.15 received under subdivision 6. The sum of the deductions under 174.16 this paragraph may not exceed 90 percent of alternative minimum 174.17 taxable net income. This limitation does not apply to a 174.18 deduction for dividends paid to or received from a corporation 174.19 which is subject to tax under section290.35 or290.36 and which 174.20 is a member of an affiliated group of corporations as defined by 174.21 the Internal Revenue Code. 174.22 [EFFECTIVE DATE.] This section is effective for taxable 174.23 years beginning after December 31, 2000. 174.24 Sec. 35. Minnesota Statutes 2000, section 290.0921, 174.25 subdivision 3, is amended to read: 174.26 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.] 174.27 "Alternative minimum taxable income" is Minnesota net income as 174.28 defined in section 290.01, subdivision 19, and includes the 174.29 adjustments and tax preference items in sections 56, 57, 58, and 174.30 59(d), (e), (f), and (h) of the Internal Revenue Code. If a 174.31 corporation files a separate company Minnesota tax return, the 174.32 minimum tax must be computed on a separate company basis. If a 174.33 corporation is part of a tax group filing a unitary return, the 174.34 minimum tax must be computed on a unitary basis. The following 174.35 adjustments must be made. 174.36 (1) For purposes of the depreciation adjustments under 175.1 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 175.2 the basis for depreciable property placed in service in a 175.3 taxable year beginning before January 1, 1990, is the adjusted 175.4 basis for federal income tax purposes, including any 175.5 modification made in a taxable year under section 290.01, 175.6 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 175.7 subdivision 7, paragraph (c). 175.8 (2) For taxable years beginning after December 31, 2000, 175.9 the amount of any remaining modification made under section 175.10 290.01, subdivision 19e, or Minnesota Statutes 1986, section 175.11 290.09, subdivision 7, paragraph (c), not previously deducted is 175.12 a depreciation allowance in the first taxable year after 175.13 December 31, 2000. 175.14 (3) The alternative tax net operating loss deduction under 175.15 sections 56(a)(4) and 56(d) of the Internal Revenue Code does 175.16 not apply. 175.17(3)(4) The special rule for certain dividends under 175.18 section 56(g)(4)(C)(ii) of the Internal Revenue Code does not 175.19 apply. 175.20(4)(5) The special rule for dividends from section 936 175.21 companies under section 56(g)(4)(C)(iii) does not apply. 175.22(5)(6) The tax preference for depletion under section 175.23 57(a)(1) of the Internal Revenue Code does not apply. 175.24(6)(7) The tax preference for intangible drilling costs 175.25 under section 57(a)(2) of the Internal Revenue Code must be 175.26 calculated without regard to subparagraph (E) and the 175.27 subtraction under section 290.01, subdivision 19d, clause (4). 175.28(7)(8) The tax preference for tax exempt interest under 175.29 section 57(a)(5) of the Internal Revenue Code does not apply. 175.30(8)(9) The tax preference for charitable contributions of 175.31 appreciated property under section 57(a)(6) of the Internal 175.32 Revenue Code does not apply. 175.33(9)(10) For purposes of calculating the tax preference for 175.34 accelerated depreciation or amortization on certain property 175.35 placed in service before January 1, 1987, under section 57(a)(7) 175.36 of the Internal Revenue Code, the deduction allowable for the 176.1 taxable year is the deduction allowed under section 290.01, 176.2 subdivision 19e. 176.3 (11) For taxable years beginning after December 31, 2000, 176.4 the amount of any remaining modification made under section 176.5 290.01, subdivision 19e, not previously deducted is a 176.6 depreciation or amortization allowance in the first taxable year 176.7 after December 31, 2000. 176.8(10)(12) For purposes of calculating the adjustment for 176.9 adjusted current earnings in section 56(g) of the Internal 176.10 Revenue Code, the term "alternative minimum taxable income" as 176.11 it is used in section 56(g) of the Internal Revenue Code, means 176.12 alternative minimum taxable income as defined in this 176.13 subdivision, determined without regard to the adjustment for 176.14 adjusted current earnings in section 56(g) of the Internal 176.15 Revenue Code. 176.16(11)(13) For purposes of determining the amount of 176.17 adjusted current earnings under section 56(g)(3) of the Internal 176.18 Revenue Code, no adjustment shall be made under section 56(g)(4) 176.19 of the Internal Revenue Code with respect to (i) the amount of 176.20 foreign dividend gross-up subtracted as provided in section 176.21 290.01, subdivision 19d, clause (1), (ii) the amount of refunds 176.22 of income, excise, or franchise taxes subtracted as provided in 176.23 section 290.01, subdivision 19d, clause (10), or (iii) the 176.24 amount of royalties, fees or other like income subtracted as 176.25 provided in section 290.01, subdivision 19d, clause (11). 176.26 Items of tax preference must not be reduced below zero as a 176.27 result of the modifications in this subdivision. 176.28 [EFFECTIVE DATE.] This section is effective the day 176.29 following final enactment. 176.30 Sec. 36. Minnesota Statutes 2000, section 290.0921, 176.31 subdivision 6, is amended to read: 176.32 Subd. 6. [DIVIDENDS RECEIVED.] (a) A deduction is allowed 176.33 from alternative minimum taxable net income equal to the 176.34 deduction for dividends received under section 290.21, 176.35 subdivision 4, for purposes of calculating taxable income under 176.36 section 290.01, subdivision 29. 177.1 (b) The amount of the deduction must not exceed 90 percent 177.2 of alternative minimum taxable net income. This limitation does 177.3 not apply to dividends paid to or received from a corporation 177.4 which is subject to tax under section290.35 or290.36 and which 177.5 is a member of an affiliated group of corporations as defined by 177.6 the Internal Revenue Code. 177.7 [EFFECTIVE DATE.] This section is effective for taxable 177.8 years beginning after December 31, 2000. 177.9 Sec. 37. Minnesota Statutes 2000, section 290.0922, 177.10 subdivision 2, is amended to read: 177.11 Subd. 2. [EXEMPTIONS.] The following entities are exempt 177.12 from the tax imposed by this section: 177.13 (1) corporations exempt from tax under section 290.05other177.14than insurance companies exempt under subdivision 1, paragraph177.15(d); 177.16 (2) real estate investment trusts; 177.17 (3) regulated investment companies or a fund thereof; and 177.18 (4) entities having a valid election in effect under 177.19 section 860D(b) of the Internal Revenue Code; 177.20 (5) town and farmers' mutual insurance companies; and 177.21 (6) cooperatives organized under chapter 308A that provide 177.22 housing exclusively to persons age 55 and over and are 177.23 classified as homesteads under section 273.124, subdivision 3. 177.24 Entities not specifically exempted by this subdivision are 177.25 subject to tax under this section, notwithstanding section 177.26 290.05. 177.27 [EFFECTIVE DATE.] This section is effective for taxable 177.28 years beginning after December 31, 2000. 177.29 Sec. 38. Minnesota Statutes 2000, section 290.093, is 177.30 amended to read: 177.31 290.093 [TAX COMPUTATION FOR MUTUAL SAVINGS BANKS 177.32 CONDUCTING LIFE INSURANCE BUSINESS.] 177.33 Mutual savings banks as defined in section 594 of the 177.34 Internal Revenue Code are subject to a taxconsisting of the sum177.35of the taxes determined under clauses (1) and (2):177.36(1) a taxcomputed on the taxable income determined without 178.1 regard to any items of gross income or deductions properly 178.2 allocable to the business of the life insurance department, at 178.3 the rates and in the manneras if this section did not apply;178.4and178.5(2) a tax computed on the income of the life insurance178.6department determined without regard to any items of gross178.7income or deductions not properly allocable to the department178.8computed in the manner provided in section 290.35 and at the178.9rate provided in section 290.06for a corporation not engaged in 178.10 the business of issuing life insurance contracts. 178.11 This section applies only if the life insurance department 178.12 would, if it were treated as a separate corporation, qualify as 178.13 a life insurance company under section 816 of the Internal 178.14 Revenue Code. 178.15 [EFFECTIVE DATE.] This section is effective for taxable 178.16 years beginning after December 31, 2000. 178.17 Sec. 39. Minnesota Statutes 2000, section 290.095, 178.18 subdivision 2, is amended to read: 178.19 Subd. 2. [DEFINED AND LIMITED.] (a) The term "net 178.20 operating loss" as used in this section shall mean a net 178.21 operating loss as defined in section 172(c)or 810(a), in the178.22case of life insurance companies,of the Internal Revenue Code, 178.23 with the modifications specified in subdivision 4. The 178.24 deductions provided in section 290.21 and the modification 178.25 provided in section 290.01, subdivision 19d, clause(11)(9), 178.26 cannot be used in the determination of a net operating loss. 178.27 (b) The term "net operating loss deduction" as used in this 178.28 section means the aggregate of the net operating loss carryovers 178.29 to the taxable year, computed in accordance with subdivision 3. 178.30 The provisions of section 172(b)or 810(b), in the case of life178.31insurance companies,of the Internal Revenue Code relating to 178.32 the carryback of net operating losses, do not apply. 178.33 [EFFECTIVE DATE.] This section is effective for taxable 178.34 years beginning after December 31, 2000. 178.35 Sec. 40. Minnesota Statutes 2000, section 290.17, 178.36 subdivision 1, is amended to read: 179.1 Subdivision 1. [SCOPE OF ALLOCATION RULES.] (a) The income 179.2 of resident individuals is not subject to allocation outside 179.3 this state. The allocation rules apply to nonresident 179.4 individuals, estates, trusts, nonresident partners of 179.5 partnerships, nonresident shareholders of corporations treated 179.6 as "S" corporations under section 290.9725, and all corporations 179.7 not having such an election in effect. If a partnership or 179.8 corporation would not otherwise be subject to the allocation 179.9 rules, but conducts a trade or business that is part of a 179.10 unitary business involving another legal entity that is subject 179.11 to the allocation rules, the partnership or corporation is 179.12 subject to the allocation rules. 179.13 (b) Expenses, losses, and other deductions (referred to 179.14 collectively in this paragraph as "deductions") must be 179.15 allocated along with the item or class of gross income to which 179.16 they are definitely related for purposes of assignment under 179.17 this section or apportionment under section 290.191, 290.20, 179.18290.35,or 290.36. Deductions not definitely related to any 179.19 item or class of gross income are assigned to the taxpayer's 179.20 domicile. 179.21 (c) In the case of an individual who is a resident for only 179.22 part of a taxable year, the individual's income, gains, losses, 179.23 and deductions from the distributive share of a partnership, S 179.24 corporation, trust, or estate are not subject to allocation 179.25 outside this state to the extent of the distributive share 179.26 multiplied by a ratio, the numerator of which is the number of 179.27 days the individual was a resident of this state during the tax 179.28 year of the partnership, S corporation, trust, or estate, and 179.29 the denominator of which is the number of days in the taxable 179.30 year of the partnership, S corporation, trust, or estate. 179.31 [EFFECTIVE DATE.] This section is effective for taxable 179.32 years beginning after December 31, 2000. 179.33 Sec. 41. Minnesota Statutes 2000, section 290.17, 179.34 subdivision 4, is amended to read: 179.35 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 179.36 business conducted wholly within this state or partly within and 180.1 partly without this state is part of a unitary business, the 180.2 entire income of the unitary business is subject to 180.3 apportionment pursuant to section 290.191. Notwithstanding 180.4 subdivision 2, paragraph (c), none of the income of a unitary 180.5 business is considered to be derived from any particular source 180.6 and none may be allocated to a particular place except as 180.7 provided by the applicable apportionment formula. The 180.8 provisions of this subdivision do not apply to business income 180.9 subject to subdivision 5, income of an insurance company 180.10determined under section 290.35, or income of an investment 180.11 company determined under section 290.36. 180.12 (b) The term "unitary business" means business activities 180.13 or operations which result in a flow of value between them. The 180.14 term may be applied within a single legal entity or between 180.15 multiple entities and without regard to whether each entity is a 180.16 sole proprietorship, a corporation, a partnership or a trust. 180.17 (c) Unity is presumed whenever there is unity of ownership, 180.18 operation, and use, evidenced by centralized management or 180.19 executive force, centralized purchasing, advertising, 180.20 accounting, or other controlled interaction, but the absence of 180.21 these centralized activities will not necessarily evidence a 180.22 nonunitary business. Unity is also presumed when business 180.23 activities or operations are of mutual benefit, dependent upon 180.24 or contributory to one another, either individually or as a 180.25 group. 180.26 (d) Where a business operation conducted in Minnesota is 180.27 owned by a business entity that carries on business activity 180.28 outside the state different in kind from that conducted within 180.29 this state, and the other business is conducted entirely outside 180.30 the state, it is presumed that the two business operations are 180.31 unitary in nature, interrelated, connected, and interdependent 180.32 unless it can be shown to the contrary. 180.33 (e) Unity of ownership is not deemed to exist when a 180.34 corporation is involved unless that corporation is a member of a 180.35 group of two or more business entities and more than 50 percent 180.36 of the voting stock of each member of the group is directly or 181.1 indirectly owned by a common owner or by common owners, either 181.2 corporate or noncorporate, or by one or more of the member 181.3 corporations of the group. For this purpose, the term "voting 181.4 stock" shall include membership interests of mutual insurance 181.5 holding companies formed under section 60A.077. 181.6 (f) The net income and apportionment factors under section 181.7 290.191 or 290.20 of foreign corporations and other foreign 181.8 entities which are part of a unitary business shall not be 181.9 included in the net income or the apportionment factors of the 181.10 unitary business. A foreign corporation or other foreign entity 181.11 which is required to file a return under this chapter shall file 181.12 on a separate return basis. The net income and apportionment 181.13 factors under section 290.191 or 290.20 of foreign operating 181.14 corporations shall not be included in the net income or the 181.15 apportionment factors of the unitary business except as provided 181.16 in paragraph (g). 181.17 (g) The adjusted net income of a foreign operating 181.18 corporation shall be deemed to be paid as a dividend on the last 181.19 day of its taxable year to each shareholder thereof, in 181.20 proportion to each shareholder's ownership, with which such 181.21 corporation is engaged in a unitary business. Such deemed 181.22 dividend shall be treated as a dividend under section 290.21, 181.23 subdivision 4. 181.24 Dividends actually paid by a foreign operating corporation 181.25 to a corporate shareholder which is a member of the same unitary 181.26 business as the foreign operating corporation shall be 181.27 eliminated from the net income of the unitary business in 181.28 preparing a combined report for the unitary business. The 181.29 adjusted net income of a foreign operating corporation shall be 181.30 its net income adjusted as follows: 181.31 (1) any taxes paid or accrued to a foreign country, the 181.32 commonwealth of Puerto Rico, or a United States possession or 181.33 political subdivision of any of the foregoing shall be a 181.34 deduction; and 181.35 (2) the subtraction from federal taxable income for 181.36 payments received from foreign corporations or foreign operating 182.1 corporations under section 290.01, subdivision 19d, 182.2 clause(11)(9), shall not be allowed. 182.3 If a foreign operating corporation incurs a net loss, 182.4 neither income nor deduction from that corporation shall be 182.5 included in determining the net income of the unitary business. 182.6 (h) For purposes of determining the net income of a unitary 182.7 business and the factors to be used in the apportionment of net 182.8 income pursuant to section 290.191 or 290.20, there must be 182.9 included only the income and apportionment factors of domestic 182.10 corporations or other domestic entities other than foreign 182.11 operating corporations that are determined to be part of the 182.12 unitary business pursuant to this subdivision, notwithstanding 182.13 that foreign corporations or other foreign entities might be 182.14 included in the unitary business. 182.15 (i) Deductions for expenses, interest, or taxes otherwise 182.16 allowable under this chapter that are connected with or 182.17 allocable against dividends, deemed dividends described in 182.18 paragraph (g), or royalties, fees, or other like income 182.19 described in section 290.01, subdivision 19d, clause(11)(9), 182.20 shall not be disallowed. 182.21 (j) Each corporation or other entity, except a sole 182.22 proprietorship, that is part of a unitary business must file 182.23 combined reports as the commissioner determines. On the 182.24 reports, all intercompany transactions between entities included 182.25 pursuant to paragraph (h) must be eliminated and the entire net 182.26 income of the unitary business determined in accordance with 182.27 this subdivision is apportioned among the entities by using each 182.28 entity's Minnesota factors for apportionment purposes in the 182.29 numerators of the apportionment formula and the total factors 182.30 for apportionment purposes of all entities included pursuant to 182.31 paragraph (h) in the denominators of the apportionment formula. 182.32 (k) If a corporation has been divested from a unitary 182.33 business and is included in a combined report for a fractional 182.34 part of the common accounting period of the combined report: 182.35 (1) its income includable in the combined report is its 182.36 income incurred for that part of the year determined by 183.1 proration or separate accounting; and 183.2 (2) its sales, property, and payroll included in the 183.3 apportionment formula must be prorated or accounted for 183.4 separately. 183.5 [EFFECTIVE DATE.] This section is effective for taxable 183.6 years beginning after December 31, 2000. 183.7 Sec. 42. Minnesota Statutes 2000, section 290.191, 183.8 subdivision 2, is amended to read: 183.9 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 183.10 Except for those trades or businesses required to use a 183.11 different formula under subdivision 3 or section290.35 or183.12 290.36, and for those trades or businesses that receive 183.13 permission to use some other method under section 290.20 or 183.14 under subdivision 4, a trade or business required to apportion 183.15 its net income must apportion its income to this state on the 183.16 basis of: 183.17 (1) for taxable years beginning after December 31, 2000, 183.18 and before January 1, 2004, the percentage obtained by taking 183.19 the sum of: 183.20(1) 75(i) 90 percent of the percentage which the sales 183.21 made within this state in connection with the trade or business 183.22 during the tax period are of the total sales wherever made in 183.23 connection with the trade or business during the tax period; 183.24(2) 12.5(ii) five percent of the percentage which the 183.25 total tangible property used by the taxpayer in this state in 183.26 connection with the trade or business during the tax period is 183.27 of the total tangible property, wherever located, used by the 183.28 taxpayer in connection with the trade or business during the tax 183.29 period; and 183.30(3) 12.5(iii) five percent of the percentage which the 183.31 taxpayer's total payrolls paid or incurred in this state or paid 183.32 in respect to labor performed in this state in connection with 183.33 the trade or business during the tax period are of the 183.34 taxpayer's total payrolls paid or incurred in connection with 183.35 the trade or business during the tax period; and 183.36 (2) for taxable years beginning after December 31, 2003, 184.1 the percentage that the sales made within this state in 184.2 connection with the trade or business during the tax period are 184.3 of the total sales wherever made in connection with the trade or 184.4 business during the tax period. 184.5 [EFFECTIVE DATE.] This section is effective for taxable 184.6 years beginning after December 31, 2000. 184.7 Sec. 43. Minnesota Statutes 2000, section 290.191, 184.8 subdivision 3, is amended to read: 184.9 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL 184.10 INSTITUTIONS.] Except for an investment company required to 184.11 apportion its income under section 290.36, a financial 184.12 institution that is required to apportion its net income must 184.13 apportion its net income to this state on the basis of: 184.14 (1) for taxable years beginning after December 31, 2000, 184.15 and before January 1, 2004, the percentage obtained by taking 184.16 the sum of: 184.17(1) 75(i) 90 percent of the percentage which the receipts 184.18 from within this state in connection with the trade or business 184.19 during the tax period are of the total receipts in connection 184.20 with the trade or business during the tax period, from wherever 184.21 derived; 184.22(2) 12.5(ii) five percent of the percentage which the sum 184.23 of the total tangible property used by the taxpayer in this 184.24 state and the intangible property owned by the taxpayer and 184.25 attributed to this state in connection with the trade or 184.26 business during the tax period is of the sum of the total 184.27 tangible property, wherever located, used by the taxpayer and 184.28 the intangible property owned by the taxpayer and attributed to 184.29 all states in connection with the trade or business during the 184.30 tax period; and 184.31(3) 12.5(iii) five percent of the percentage which the 184.32 taxpayer's total payrolls paid or incurred in this state or paid 184.33 in respect to labor performed in this state in connection with 184.34 the trade or business during the tax period are of the 184.35 taxpayer's total payrolls paid or incurred in connection with 184.36 the trade or business during the tax period; and 185.1 (2) for taxable years beginning after December 31, 2003, 185.2 the percentage that the receipts from within this state in 185.3 connection with the trade or business during the tax period are 185.4 of the total receipts in connection with the trade or business 185.5 during the tax period, from wherever derived. 185.6 [EFFECTIVE DATE.] This section is effective for taxable 185.7 years beginning after December 31, 2000. 185.8 Sec. 44. Minnesota Statutes 2000, section 290.21, 185.9 subdivision 4, is amended to read: 185.10 Subd. 4. (a)(1) Eighty percent of dividends received by a 185.11 corporation during the taxable year from another corporation, in 185.12 which the recipient owns 20 percent or more of the stock, by 185.13 vote and value, not including stock described in section 185.14 1504(a)(4) of the Internal Revenue Code when the corporate stock 185.15 with respect to which dividends are paid does not constitute the 185.16 stock in trade of the taxpayer or would not be included in the 185.17 inventory of the taxpayer, or does not constitute property held 185.18 by the taxpayer primarily for sale to customers in the ordinary 185.19 course of the taxpayer's trade or business, or when the trade or 185.20 business of the taxpayer does not consist principally of the 185.21 holding of the stocks and the collection of the income and gains 185.22 therefrom; and 185.23 (2)(i) The remaining 20 percent of dividends if the 185.24 dividends received are the stock in an affiliated company 185.25 transferred in an overall plan of reorganization and the 185.26 dividend is eliminated in consolidation under Treasury 185.27 Department Regulation 1.1502-14(a), as amended through December 185.28 31, 1989; or 185.29 (ii) The remaining 20 percent of dividends if the dividends 185.30 are received from a corporation which is subject to tax under 185.31 section290.35 or290.36 and which is a member of an affiliated 185.32 group of corporations as defined by the Internal Revenue Code 185.33 and the dividend is eliminated in consolidation under Treasury 185.34 Department Regulation 1.1502-14(a), as amended through December 185.35 31, 1989, or is deducted under an election under section 243(b) 185.36 of the Internal Revenue Code. 186.1 (b) Seventy percent of dividends received by a corporation 186.2 during the taxable year from another corporation in which the 186.3 recipient owns less than 20 percent of the stock, by vote or 186.4 value, not including stock described in section 1504(a)(4) of 186.5 the Internal Revenue Code when the corporate stock with respect 186.6 to which dividends are paid does not constitute the stock in 186.7 trade of the taxpayer, or does not constitute property held by 186.8 the taxpayer primarily for sale to customers in the ordinary 186.9 course of the taxpayer's trade or business, or when the trade or 186.10 business of the taxpayer does not consist principally of the 186.11 holding of the stocks and the collection of income and gain 186.12 therefrom. 186.13 (c) The dividend deduction provided in this subdivision 186.14 shall be allowed only with respect to dividends that are 186.15 included in a corporation's Minnesota taxable net income for the 186.16 taxable year. 186.17 The dividend deduction provided in this subdivision does 186.18 not apply to a dividend from a corporation which, for the 186.19 taxable year of the corporation in which the distribution is 186.20 made or for the next preceding taxable year of the corporation, 186.21 is a corporation exempt from tax under section 501 of the 186.22 Internal Revenue Code. 186.23 The dividend deduction provided in this subdivision applies 186.24 to the amount of regulated investment company dividends only to 186.25 the extent determined under section 854(b) of the Internal 186.26 Revenue Code. 186.27 The dividend deduction provided in this subdivision shall 186.28 not be allowed with respect to any dividend for which a 186.29 deduction is not allowed under the provisions of section 246(c) 186.30 of the Internal Revenue Code. 186.31 (d) If dividends received by a corporation that does not 186.32 have nexus with Minnesota under the provisions of Public Law 186.33 Number 86-272 are included as income on the return of an 186.34 affiliated corporation permitted or required to file a combined 186.35 report under section 290.34, subdivision 2, then for purposes of 186.36 this subdivision the determination as to whether the trade or 187.1 business of the corporation consists principally of the holding 187.2 of stocks and the collection of income and gains therefrom shall 187.3 be made with reference to the trade or business of the 187.4 affiliated corporation having a nexus with Minnesota. 187.5 (e) The deduction provided by this subdivision does not 187.6 apply if the dividends are paid by a FSC as defined in section 187.7 922 of the Internal Revenue Code. 187.8 (f) If one or more of the members of the unitary group 187.9 whose income is included on the combined report received a 187.10 dividend, the deduction under this subdivision for each member 187.11 of the unitary business required to file a return under this 187.12 chapter is the product of: (1) 100 percent of the dividends 187.13 received by members of the group; (2) the percentage allowed 187.14 pursuant to paragraph (a) or (b); and (3) the percentage of the 187.15 taxpayer's business income apportionable to this state for the 187.16 taxable year under section 290.191 or 290.20. 187.17 [EFFECTIVE DATE.] This section is effective for taxable 187.18 years beginning after December 31, 2000. 187.19 Sec. 45. Minnesota Statutes 2000, section 290.9725, is 187.20 amended to read: 187.21 290.9725 [S CORPORATION.] 187.22 For purposes of this chapter, the term "S corporation" 187.23 means any corporation having a valid election in effect for the 187.24 taxable year under section 1362 of the Internal Revenue Code. 187.25 An S corporation shall not be subject to the taxes imposed by 187.26 this chapter, except:187.27(1)the taxes imposed under sections 290.0922, 290.92, 187.28 290.9727, 290.9728, and 290.9729; and187.29(2) the tax under sections 290.06, subdivision 1, and187.30290.0921 apply to a financial institution to which either187.31section 585 or 593 of the Internal Revenue Code applies or that187.32has a wholly owned subsidiary as described in section187.331361(b)(3)(B) of the Internal Revenue Code which is a financial187.34institution under section 585 or 593 of the Internal Revenue187.35Code. 187.36 [EFFECTIVE DATE.] This section is effective for taxable 188.1 years beginning after December 31, 2000. 188.2 Sec. 46. Minnesota Statutes 2000, section 297I.20, is 188.3 amended to read: 188.4 297I.20 [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] 188.5 (a) An insurance company may offset against its premium tax 188.6 liability to this state any amount paid for assessments made for 188.7 insolvencies which occur after July 31, 1994, under sections 188.8 60C.01 to 60C.22; and any amount paid for assessments made after 188.9 July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 188.10 61B.16, or under sections 61B.18 to 61B.32 as follows: 188.11 (1) Each such assessment shall give rise to an amount of 188.12 offset equal to 20 percent of the amount of the assessment for 188.13 each of the five calendar years following the year in which the 188.14 assessment was paid. 188.15 (2) The amount of offset initially determined for each 188.16 taxable year is the sum of the amounts determined under clause 188.17 (1) for that taxable year. 188.18 (b)(1) Each year the commissioner shall compare total 188.19 guaranty association assessments levied over the preceding five 188.20 calendar years to the sum of all premium tax and corporate 188.21 franchise tax revenues collected from insurance companies, 188.22 without reduction for any guaranty association assessment offset 188.23 in the preceding calendar year, referred to in this subdivision 188.24 as "preceding year insurance tax revenues." 188.25 (2) If total guaranty association assessments levied over 188.26 the preceding five years exceed the preceding year insurance tax 188.27 revenues, insurance companies must be allowed only a 188.28 proportionate part of the premium tax offset calculated under 188.29 paragraph (a) for the current calendar year. 188.30 (3) The proportionate part of the premium tax offset 188.31 allowed in the current calendar year is determined by 188.32 multiplying the amount calculated under paragraph (a) by a 188.33 fraction. The numerator of the fraction equals the preceding 188.34 year insurance tax revenues, and its denominator equals total 188.35 guaranty association assessments levied over the preceding 188.36 five-year period. 189.1 (4) The proportionate part of the premium tax offset that 189.2 is not allowed must be carried forward to subsequent tax years 189.3 and added to the amount of premium tax offset calculated under 189.4 paragraph (a) prior to application of the limitation imposed by 189.5 this paragraph. 189.6 (5) Any amount carried forward from prior years must be 189.7 allowed before allowance of the offset for the current year 189.8 calculated under paragraph (a). 189.9 (6) The premium tax offset limitation must be calculated 189.10 separately for (i) insurance companies subject to assessment 189.11 under sections 60C.01 to 60C.22, and (ii) insurance companies 189.12 subject to assessment under Minnesota Statutes 1992, sections 189.13 61B.01 to 61B.16, or 61B.18 to 61B.32. 189.14 (7) When the premium tax offset is limited by this 189.15 provision, the commissioner shall notify affected insurance 189.16 companies on a timely basis for purposes of completing premium 189.17 and corporate franchise tax returns. 189.18 (8) The guaranty associations created under sections 60C.01 189.19 to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 189.20 and 61B.18 to 61B.32, shall provide the commissioner with the 189.21 necessary information on guaranty association assessments. 189.22 (c)(1) If the offset determined by the application of 189.23 paragraphs (a) and (b) exceeds thegreater of theinsurance 189.24 company's premium tax liability under this sectionor its189.25corporate franchise tax liability under chapter 290prior to 189.26 allowance of the credit for premium taxes, then the insurance 189.27 company may carry forward the excess, referred to in this 189.28 subdivision as the "carryforward credit" to subsequent taxable 189.29 years. 189.30 (2) The carryforward credit is allowed as an offset against 189.31 premium tax liability for the first succeeding year to the 189.32 extent that the premium tax liability for that year exceeds the 189.33 amount of the allowable offset for the year determined under 189.34 paragraphs (a) and (b). 189.35 (3) The carryforward credit must be reduced, but not below 189.36 zero, by thegreater of theamount of the carryforward credit 190.1 allowed as an offset against the premium tax under this 190.2 paragraphor the amount of the carryforward credit allowed as an190.3offset against the insurance company's corporate franchise tax190.4liability under section 290.35, subdivision 6, paragraph (d). 190.5 The remainder, if any, of the carryforward credit must be 190.6 carried forward to succeeding taxable years until the entire 190.7 carryforward credit has been credited against the insurance 190.8 company's liability for premium tax under this chapterand190.9corporate franchise tax under chapter 290if applicable for that 190.10 taxable year. 190.11 (d) When an insurer has offset against taxes its payment of 190.12 an assessment of the Minnesota life and health guaranty 190.13 association, and the association pays the insurer a refund with 190.14 respect to the assessment under Minnesota Statutes 1992, section 190.15 61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 190.16 reduces the insurer's carryforward credit under paragraph (c). 190.17 If the refund exceeds the amount of the carryforward credit, the 190.18 excess amount must be repaid to the state by the insurers to the 190.19 extent of the offset in the manner the commissioner requires. 190.20 [EFFECTIVE DATE.] This section is effective for taxable 190.21 years beginning after December 31, 2000. 190.22 Sec. 47. Minnesota Statutes 2000, section 298.01, 190.23 subdivision 3b, is amended to read: 190.24 Subd. 3b. [DEDUCTIONS.] (a) For purposes of determining 190.25 taxable income under subdivision 3, the deductions from gross 190.26 income include only those expenses necessary to convert raw ores 190.27 to marketable quality. Such expenses include costs associated 190.28 with refinement but do not include expenses such as 190.29 transportation, stockpiling, marketing, or marine insurance that 190.30 are incurred after marketable ores are produced, unless the 190.31 expenses are included in gross income. 190.32 (b) The provisions of section 290.01, subdivisions 19c, 190.33clauses (7) and (11)clause (7), and 19d,clauses (7) and190.34(12)clause (10), are not used to determine taxable income. 190.35 [EFFECTIVE DATE.] This section is effective for taxes 190.36 payable May 1, 2002, and thereafter. 191.1 Sec. 48. Minnesota Statutes 2000, section 298.01, 191.2 subdivision 4c, is amended to read: 191.3 Subd. 4c. [SPECIAL DEDUCTIONSDEDUCTION FOR DEPRECIATION; 191.4 NET OPERATING LOSS.] (a) For purposes of determining taxable 191.5 income under subdivision 4,the following modifications are191.6allowed:191.7(1)the provisions of section 290.01, subdivisions 19c, 191.8clauses (7) and (11)clause (7), and 19d,clauses (7) and191.9(12)clause (10), are not used to determine taxable income; and. 191.10(2) for assets placed in service before January 1, 1990,191.11the deduction for depreciation will be the same amount allowed191.12under chapter 290, except that after an asset has been fully191.13depreciated for federal income tax purposes any remaining191.14depreciable basis is allowed as a deduction using the191.15straight-line method over the following number of years:191.16(i) three-year property, one year;191.17(ii) five- and seven-year property, two years;191.18(iii) ten-year property, five years; and191.19(iv) all other property, seven years.191.20No deduction is allowed if an asset is fully depreciated191.21for occupation tax purposes before January 1990.191.22(b) For purposes of determining the deduction allowed under191.23paragraph (a), clause (2), the remaining depreciable basis of191.24property placed in service before January 1, 1990, is calculated191.25as follows:191.26(1) the adjusted basis of the property on December 31,191.271989, which was used to calculate the hypothetical corporate191.28franchise tax under Minnesota Statutes 1988, section 298.40,191.29including salvage value; less191.30(2) deductions for depreciation allowed under section191.31290.01, subdivision 19e.191.32(c) The basis for determining gain or loss on sale or191.33disposition of assets placed in service before January 1, 1990,191.34is the basis determined under paragraph (b), less the deductions191.35allowed under paragraph (a), clause (2).191.36(d)(b) The amount of net operating loss incurred in a 192.1 taxable year beginning before January 1, 1990, that may be 192.2 carried over to a taxable year beginning after December 31, 192.3 1989, is the amount of net operating loss carryover determined 192.4 in the calculation of the hypothetical corporate franchise tax 192.5 under Minnesota Statutes 1988, sections 298.40 and 298.402. 192.6 [EFFECTIVE DATE.] This section is effective for taxes 192.7 payable May 1, 2002, and thereafter. 192.8 Sec. 49. Minnesota Statutes 2000, section 469.1732, 192.9 subdivision 1, is amended to read: 192.10 Subdivision 1. [AUTHORITY.] A business that conducts 192.11 business activity within a border city development zone 192.12 designated under section 469.1731 may qualify for the property 192.13 tax exemption under section 272.0212, the corporate franchise192.14tax credit under subdivision 2,and the sales tax exemption 192.15 under section 469.1734, subdivision 6. 192.16 [EFFECTIVE DATE.] This section is effective the day 192.17 following final enactment. 192.18 Sec. 50. [REPORT ON INCOME TAX RECIPROCITY WITH 192.19 WISCONSIN.] 192.20 By March 1, 2002, the commissioner of revenue must report 192.21 to house and senate committees dealing with taxes on the 192.22 advisability of terminating individual income tax reciprocity 192.23 with the state of Wisconsin under Minnesota Statutes, section 192.24 290.081. 192.25 [EFFECTIVE DATE.] This section is effective the day 192.26 following final enactment. 192.27 Sec. 51. [APPROPRIATION; TAXPAYER ASSISTANCE.] 192.28 (a) $150,000 is appropriated from the general fund to the 192.29 commissioner of revenue to make grants to one or more nonprofit 192.30 organizations, qualifying under section 501(c)(3) of the 192.31 Internal Revenue Code of 1986, to coordinate, facilitate, 192.32 encourage, and aid in the provision of taxpayer assistance 192.33 services. This appropriation is available for fiscal years 2002 192.34 and 2003 and does not become a part of the base. 192.35 (b) For purposes of this section, "taxpayer assistance 192.36 services" means accounting and tax preparation services provided 193.1 by volunteers to low-income and disadvantaged Minnesota 193.2 residents to help them file federal and state income tax returns 193.3 and Minnesota property tax refund claims and to provide personal 193.4 representation before the department of revenue and Internal 193.5 Revenue Service. 193.6 Sec. 52. [REPEALER.] 193.7 (a) Minnesota Statutes 2000, sections 290.06, subdivision 193.8 25; and 290.0673, are repealed. 193.9 (b) Minnesota Statutes 2000, sections 290.06, subdivision 193.10 26; 290.095, subdivision 1a; 290.21, subdivision 3; 290.35; and 193.11 290.9726, subdivision 7, are repealed. 193.12 (c) Minnesota Statutes 2000, sections 469.1732, subdivision 193.13 2; and 469.1734, subdivision 4, are repealed. 193.14 (d) Minnesota Statutes 2000, sections 290.095, subdivision 193.15 7; 290.23; 290.25; and 290.31, subdivisions 2, 2a, 3, 4, 5, and 193.16 19, are repealed. 193.17 (e) Minnesota Statutes 2000, section 290.191, subdivision 193.18 4, is repealed. 193.19 [EFFECTIVE DATE.] Paragraph (a) of this section is 193.20 effective for taxable years beginning after December 31, 2001. 193.21 Paragraphs (b) and (d) of this section are effective for taxable 193.22 years beginning after December 31, 2000. Paragraph (c) of this 193.23 section is effective the day following final enactment. 193.24 Paragraph (e) of this section is effective for tax years 193.25 beginning after December 31, 2003. 193.26 ARTICLE 8 193.27 SALES AND USE TAXES 193.28 Section 1. Minnesota Statutes 2000, section 84.922, is 193.29 amended by adding a subdivision to read: 193.30 Subd. 11. [PROOF OF SALES TAX PAYMENT.] A person applying 193.31 for initial registration in Minnesota of an all-terrain vehicle 193.32 shall provide a purchaser's certificate showing a complete 193.33 description of the all-terrain vehicle, the seller's name and 193.34 address, the full purchase price of the all-terrain vehicle, and 193.35 the trade-in allowance, if any. The certificate also must 193.36 include information showing either that (1) the sales and use 194.1 tax under chapter 297A was paid, or (2) the purchase was exempt 194.2 from tax under chapter 297A. The certificate is not required if 194.3 the applicant provides a receipt, invoice, or other document 194.4 that shows the all-terrain vehicle was purchased from a retailer 194.5 maintaining a place of business in this state as defined in 194.6 section 297A.66, subdivision 1. 194.7 [EFFECTIVE DATE.] This section is effective for 194.8 registrations occurring on or after July 1, 2001. 194.9 Sec. 2. Minnesota Statutes 2000, section 289A.18, 194.10 subdivision 4, is amended to read: 194.11 Subd. 4. [SALES AND USE TAX RETURNS.] (a) Sales and use 194.12 tax returns must be filed on or before the 20th day of the month 194.13 following the close of the preceding reporting period, except 194.14 that annual use tax returns provided for under section 289A.11, 194.15 subdivision 1, must be filed by April 15 following the close of 194.16 the calendar year, in the case of individuals. Annual use tax 194.17 returns of businesses, including sole proprietorships, and 194.18 annual sales tax returns must be filed by February 5 following 194.19 the close of the calendar year. 194.20 (b)Except for the return for the June reporting period,194.21which is due on the following August 25,Returns filed by 194.22 retailers required to remit liabilities by means of funds 194.23 transfer under section 289A.20, subdivision 4, 194.24 paragraph(d)(b), are due on or before the 25th day of the 194.25 month following the close of the preceding reporting period. 194.26 (c) If a retailer has an average sales and use tax 194.27 liability, including local sales and use taxes administered by 194.28 the commissioner, equal to or less than $500 per month in any 194.29 quarter of a calendar year, and has substantially complied with 194.30 the tax laws during the preceding four calendar quarters, the 194.31 retailer may request authorization to file and pay the taxes 194.32 quarterly in subsequent calendar quarters. The authorization 194.33 remains in effect during the period in which the retailer's 194.34 quarterly returns reflect sales and use tax liabilities of less 194.35 than $1,500 and there is continued compliance with state tax 194.36 laws. 195.1 (d) If a retailer has an average sales and use tax 195.2 liability, including local sales and use taxes administered by 195.3 the commissioner, equal to or less than $100 per month during a 195.4 calendar year, and has substantially complied with the tax laws 195.5 during that period, the retailer may request authorization to 195.6 file and pay the taxes annually in subsequent years. The 195.7 authorization remains in effect during the period in which the 195.8 retailer's annual returns reflect sales and use tax liabilities 195.9 of less than $1,200 and there is continued compliance with state 195.10 tax laws. 195.11 (e) The commissioner may also grant quarterly or annual 195.12 filing and payment authorizations to retailers if the 195.13 commissioner concludes that the retailers' future tax 195.14 liabilities will be less than the monthly totals identified in 195.15 paragraphs (c) and (d). An authorization granted under this 195.16 paragraph is subject to the same conditions as an authorization 195.17 granted under paragraphs (c) and (d). 195.18 (f) A taxpayer who is a materials supplier may report gross 195.19 receipts either on: 195.20 (1) the cash basis as the consideration is received; or 195.21 (2) the accrual basis as sales are made. 195.22 As used in this paragraph, "materials supplier" means a person 195.23 who provides materials for the improvement of real property; who 195.24 is primarily engaged in the sale of lumber and building 195.25 materials-related products to owners, contractors, 195.26 subcontractors, repairers, or consumers; who is authorized to 195.27 file a mechanics lien upon real property and improvements under 195.28 chapter 514; and who files with the commissioner an election to 195.29 file sales and use tax returns on the basis of this paragraph. 195.30 [EFFECTIVE DATE.] This section is effective beginning with 195.31 returns filed after January 1, 2002. 195.32 Sec. 3. Minnesota Statutes 2000, section 289A.20, 195.33 subdivision 4, is amended to read: 195.34 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 195.35 chapter 297A are due and payable to the commissioner monthly on 195.36 or before the 20th day of the month following the month in which 196.1 the taxable event occurred, or following another reporting 196.2 period as the commissioner prescribes or as allowed under 196.3 section 289A.18, subdivision 4, paragraph (f), except that use 196.4 taxes due on an annual use tax return as provided under section 196.5 289A.11, subdivision 1, are payable by April 15 following the 196.6 close of the calendar year. 196.7 (b)A vendor having a liability of $120,000 or more during196.8a fiscal year ending June 30 must remit the June liability for196.9the next year in the following manner:196.10(1) Two business days before June 30 of the year, the196.11vendor must remit 62 percent of the estimated June liability to196.12the commissioner.196.13(2) On or before August 14 of the year, the vendor must pay196.14any additional amount of tax not remitted in June.196.15(c)A vendor having a liability of $120,000 or more during 196.16 a fiscal year ending June 30 must remit all liabilities on 196.17 returns due for periods beginning in the subsequent calendar 196.18 year by means of a funds transfer as defined in section 196.19 336.4A-104, paragraph (a). The funds transfer payment date, as 196.20 defined in section 336.4A-401, must be on or before the 14th day 196.21 of the month following the month in which the taxable event 196.22 occurred, or on or before the 14th day of the month following 196.23 the month in which the sale is reported under section 289A.18, 196.24 subdivision 4, except for 62 percent of the estimated June196.25liability, which is due two business days before June 30. The196.26remaining amount of the June liability is due on August 14. If 196.27 the date the tax is due is not a funds transfer business day, as 196.28 defined in section 336.4A-105, paragraph (a), clause (4), the 196.29 payment date must be on or before the funds transfer business 196.30 day next following the date the tax is due. 196.31(d)(c) If the vendor required to remit by electronic funds 196.32 transfer as provided in paragraph(c)(b) is unable due to 196.33 reasonable cause to determine the actual sales and use tax due 196.34 on or before the due date for payment, the vendor may remit an 196.35 estimate of the tax owed using one of the following options: 196.36 (1) 100 percent of the tax reported on the previous month's 197.1 sales and use tax return; 197.2 (2) 100 percent of the tax reported on the sales and use 197.3 tax return for the same month in the previous calendar year; or 197.4 (3) 95 percent of the actual tax due. 197.5 Any additional amount of tax that is not remitted on or 197.6 before the due date for payment, must be remitted with the 197.7 return. If a vendor fails to remit the actual liability or does 197.8 not remit using one of the estimate options by the due date for 197.9 payment, the vendor must remit actual liability as provided in 197.10 paragraph(c)(b) in all subsequent periods.This paragraph197.11does not apply to the June sales and use tax liability.197.12 [EFFECTIVE DATE.] This section is effective beginning with 197.13 returns filed after January 1, 2002. 197.14 Sec. 4. Minnesota Statutes 2000, section 289A.50, 197.15 subdivision 2a, is amended to read: 197.16 Subd. 2a. [REFUND OF SALES TAX TO PURCHASERS.] If a vendor 197.17 has collected from a purchaser a tax on a transaction that is 197.18 not subject to the tax imposed by chapter 297A, the purchaser 197.19 may apply directly to the commissioner for a refund under this 197.20 section if: 197.21 (a) the purchaser is currently registered to collect and 197.22 remit the salesandtax or to remit the use tax; and 197.23 (b) the amount of the refund applied for exceeds $500. 197.24 The purchaser may not file more than two applications for 197.25 refund under this subdivision in a calendar year. 197.26 [EFFECTIVE DATE.] This section is effective the day 197.27 following final enactment. 197.28 Sec. 5. Minnesota Statutes 2000, section 297A.01, 197.29 subdivision 3, is amended to read: 197.30 Subd. 3. A "sale" and a "purchase" includes, but is not 197.31 limited to, each of the following transactions: 197.32 (a) Any transfer of title or possession, or both, of 197.33 tangible personal property, whether absolutely or conditionally, 197.34 and the leasing of or the granting of a license to use or 197.35 consume tangible personal property other than manufactured homes 197.36 used for residential purposes for a continuous period of 30 days 198.1 or more, for a consideration in money or by exchange or barter; 198.2 (b) The production, fabrication, printing, or processing of 198.3 tangible personal property for a consideration for consumers who 198.4 furnish either directly or indirectly the materials used in the 198.5 production, fabrication, printing, or processing; 198.6 (c) The furnishing, preparing, or serving for a 198.7 consideration of food, meals, or drinks. "Sale" or "purchase" 198.8 does not include: 198.9 (1) meals or drinks served to patients, inmates, or persons 198.10 residing at hospitals, sanitariums, nursing homes, senior 198.11 citizens homes, and correctional, detention, and detoxification 198.12 facilities; 198.13 (2) meals or drinks purchased for and served exclusively to 198.14 individuals who are 60 years of age or over and their spouses or 198.15 to the handicapped and their spouses by governmental agencies, 198.16 nonprofit organizations, agencies, or churches or pursuant to 198.17 any program funded in whole or part through 42 USCA sections 198.18 3001 through 3045, wherever delivered, prepared or served; or 198.19 (3) meals and lunches served at public and private schools, 198.20 universities, or colleges. 198.21 Notwithstanding section 297A.25, subdivision 2, taxable food or 198.22 meals include, but are not limited to, the following: 198.23 (i) food or drinks sold by the retailer for immediate 198.24 consumption on the retailer's premises. Food and drinks sold 198.25 within a building or grounds which require an admission charge 198.26 for entrance are presumed to be sold for consumption on the 198.27 premises; 198.28 (ii) food or drinks prepared by the retailer for immediate 198.29 consumption either on or off the retailer's premises. For 198.30 purposes of this subdivision, "food or drinks prepared for 198.31 immediate consumption" includes any food product upon which an 198.32 act of preparation including, but not limited to, cooking, 198.33 mixing, sandwich making, blending, heating, or pouring has been 198.34 performed by the retailer so the food product may be immediately 198.35 consumed by the purchaser; 198.36 (iii) ice cream, ice milk, frozen yogurt products, or 199.1 frozen novelties sold in single or individual servings including 199.2 cones, sundaes, and snow cones. For purposes of this 199.3 subdivision, "single or individual servings" does not include 199.4 products when sold in bulk containers or bulk packaging; 199.5 (iv) soft drinks and other beverages including all 199.6 carbonated and noncarbonated beverages or drinks sold in liquid 199.7 form except nonalcoholic beverages or drinks which contain milk 199.8 or milk products, nonalcoholic beverages or drinks containing 15 199.9 or more percent fruit juice, and noncarbonated and 199.10 noneffervescent bottled water sold in individual containers of 199.11 one-half gallon or more in size; 199.12 (v) gum, candy, and candy products, except when sold for 199.13 fundraising purposes by a nonprofit organization that provides 199.14 educational and social activities primarily for young people 18 199.15 years of age and under; 199.16 (vi) ice; 199.17 (vii) all food sold from vending machines; 199.18 (viii) all food for immediate consumption sold from 199.19 concession stands and vehicles; 199.20 (ix) party trays; 199.21 (x) all meals and single servings of packaged snack food 199.22 sold in restaurants and bars; and 199.23 (xi) bakery products: 199.24 (A) prepared by the retailer for consumption on the 199.25 retailer's premises; 199.26 (B) sold at a place that charges admission; 199.27 (C) sold from vending machines; or 199.28 (D) sold in single or individual servings from concession 199.29 stands, vehicles, bars, and restaurants. For purposes of this 199.30 subdivision, "single or individual servings" does not include 199.31 products when sold in bulk containers or bulk packaging. 199.32 For purposes of this subdivision, "premises" means the 199.33 total space and facilities, including buildings, grounds, and 199.34 parking lots that are made available or that are available for 199.35 use by the retailer or customer for the purpose of sale or 199.36 consumption of prepared food and drinks. The premises of a 200.1 caterer is the place where the catered food or drinks are 200.2 served; 200.3 (d) The granting of the privilege of admission to places of 200.4 amusement, recreational areas, or athletic events, except a 200.5 world championship football game sponsored by the national 200.6 football league, and the privilege of having access to and the 200.7 use of amusement devices, tanning facilities, reducing salons, 200.8 steam baths, turkish baths, health clubs, and spas or athletic 200.9 facilities; 200.10 (e) The furnishing for a consideration of lodging and 200.11 related services by a hotel, rooming house, tourist court, motel 200.12 or trailer camp and of the granting of any similar license to 200.13 use real property other than the renting or leasing thereof for 200.14 a continuous period of 30 days or more; 200.15 (f) The furnishing for a consideration of electricity, gas, 200.16 water, or steam for use or consumption within this state, or 200.17 local exchange telephone service, intrastate toll service, and 200.18 interstate toll service, if that service originates from and is 200.19 charged to a telephone located in this state. Telephone service 200.20 does not include services purchased with prepaid telephone 200.21 calling cards. Telephone service includes paging services and 200.22 private communication service, as defined in United States Code, 200.23 title 26, section 4252(d), as amended through December 31, 1991, 200.24 except for private communication service purchased by an agent 200.25 acting on behalf of the state lottery. The furnishing for a 200.26 consideration of access to telephone services by a hotel to its 200.27 guests is a sale under this clause. Sales by municipal 200.28 corporations in a proprietary capacity are included in the 200.29 provisions of this clause. The furnishing of water and sewer 200.30 services for residential use shall not be considered a sale. 200.31 The sale of natural gas to be used as a fuel in vehicles 200.32 propelled by natural gas shall not be considered a sale for the 200.33 purposes of this section; 200.34 (g) The furnishing for a consideration of cable television 200.35 services, including charges for basic service, charges for 200.36 premium service, and any other charges for any other 201.1 pay-per-view, monthly, or similar television services; 201.2 (h) The furnishing for a consideration of parking services, 201.3 whether on a contractual, hourly, or other periodic basis, 201.4 except for parking at a meter; 201.5 (i) The furnishing for a consideration of services listed 201.6 in this paragraph: 201.7 (i) laundry and dry cleaning services including cleaning, 201.8 pressing, repairing, altering, and storing clothes, linen 201.9 services and supply, cleaning and blocking hats, and carpet, 201.10 drapery, upholstery, and industrial cleaning. Laundry and dry 201.11 cleaning services do not include services provided by coin 201.12 operated facilities operated by the customer; 201.13 (ii) motor vehicle washing, waxing, and cleaning services, 201.14 including services provided by coin-operated facilities operated 201.15 by the customer, and rustproofing, undercoating, and towing of 201.16 motor vehicles; 201.17 (iii) building and residential cleaning, maintenance, and 201.18 disinfecting and exterminating services; 201.19 (iv) detective services, security services, burglar, fire 201.20 alarm, and armored car services; but not including services 201.21 performed within the jurisdiction they serve by off-duty 201.22 licensed peace officers as defined in section 626.84, 201.23 subdivision 1, or services provided by a nonprofit organization 201.24 for monitoring and electronic surveillance of persons placed on 201.25 in-home detention pursuant to court order or under the direction 201.26 of the Minnesota department of corrections; 201.27 (v) pet grooming services; 201.28 (vi) lawn care, fertilizing, mowing, spraying and sprigging 201.29 services; garden planting and maintenance; tree, bush, and shrub 201.30 pruning, bracing, spraying, and surgery; indoor plant care; 201.31 tree, bush, shrub and stump removal; and tree trimming for 201.32 public utility lines. Services performed under a construction 201.33 contract for the installation of shrubbery, plants, sod, trees, 201.34 bushes, and similar items are not taxable; 201.35 (vii) massages, except when provided by a licensed health 201.36 care facility or professional or upon written referral from a 202.1 licensed health care facility or professional for treatment of 202.2 illness, injury, or disease; and 202.3 (viii) the furnishing for consideration of lodging, board 202.4 and care services for animals in kennels and other similar 202.5 arrangements, but excluding veterinary and horse boarding 202.6 services. 202.7 The services listed in this paragraph are taxable under section 202.8 297A.02 if the service is performed wholly within Minnesota or 202.9 if the service is performed partly within and partly without 202.10 Minnesota and the greater proportion of the service is performed 202.11 in Minnesota, based on the cost of performance. In applying the 202.12 provisions of this chapter, the terms "tangible personal 202.13 property" and "sales at retail" include taxable services and the 202.14 provision of taxable services, unless specifically provided 202.15 otherwise. Services performed by an employee for an employer 202.16 are not taxable under this paragraph. Services performed by a 202.17 partnership or association for another partnership or 202.18 association are not taxable under this paragraph if one of the 202.19 entities owns or controls more than 80 percent of the voting 202.20 power of the equity interest in the other entity. Services 202.21 performed between members of an affiliated group of corporations 202.22 are not taxable. For purposes of this section, "affiliated 202.23 group of corporations" includes those entities that would be 202.24 classified as a member of an affiliated group under United 202.25 States Code, title 26, section 1504, as amended through December 202.26 31, 1987, and who are eligible to file a consolidated tax return 202.27 for federal income tax purposes; 202.28 (j) A "sale" and a "purchase" includes the transfer of 202.29 computer software, meaning information and directions that 202.30 dictate the function performed by data processing equipment. A 202.31 "sale" and a "purchase" does not include the design, 202.32 development, writing, translation, fabrication, lease, or 202.33 transfer for a consideration of title or possession of a custom 202.34 computer program; and 202.35 (k) The granting of membership in a club, association, or 202.36 other organization if: 203.1 (1) the club, association, or other organization makes 203.2 available for the use of its members sports and athletic 203.3 facilities (without regard to whether a separate charge is 203.4 assessed for use of the facilities); and 203.5 (2) use of the sports and athletic facilities is not made 203.6 available to the general public on the same basis as it is made 203.7 available to members. 203.8 Granting of membership includes both one-time initiation fees 203.9 and periodic membership dues. Sports and athletic facilities 203.10 include golf courses, tennis, racquetball, handball and squash 203.11 courts, basketball and volleyball facilities, running tracks, 203.12 exercise equipment, swimming pools, and other similar athletic 203.13 or sports facilities. The provisions of this paragraph do not 203.14 apply to camps or other recreation facilities owned and operated 203.15 by an exempt organization under section 501(c)(3) of the 203.16 Internal Revenue Code of 1986, as amended through December 31, 203.17 1992, for educational and social activities for young people 203.18 primarily age 18 and under. 203.19 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 203.20 effective the day following final enactment. In the next 203.21 edition of Minnesota Statutes, the revisor of statutes shall 203.22 codify the amendment in this section in Minnesota Statutes, 203.23 section 297A.61, subdivision 3. 203.24 Sec. 6. Minnesota Statutes 2000, section 297A.07, 203.25 subdivision 3, is amended to read: 203.26 Subd. 3. [NEW PERMITS AFTER REVOCATION.] The commissioner 203.27 shall not issue a new permit or reinstate a revoked permit after 203.28 revocation unless the taxpayer applies for a permit and provides 203.29 reasonable evidence of intention to comply with the sales and 203.30 use tax laws and rules. The commissioner may require the 203.31 applicant to supply security, in addition to that authorized by 203.32 section 297A.28, as is reasonably necessary to insure compliance 203.33 with the sales and use tax laws and rules. If the commissioner 203.34 issues or reinstates a permit not in conformance with the 203.35 requirements of this subdivision or applicable rules, the 203.36 commissioner may cancel the permit upon notice to the permit 204.1 holder. The notice must be served by first class and certified 204.2 mail at the permit holder's last known address. The 204.3 cancellation shall be effective immediately, subject to the 204.4 right of the permit holder to show that the permit was issued in 204.5 conformance with the requirements of this subdivision and 204.6 applicable rules. Upon such showing, the permit must be 204.7 reissued. 204.8 If a taxpayer has had a permit or permits revoked three 204.9 times in a five-year period, the commissioner shall not issue a 204.10 new permit or reinstate the revoked permit until 24 months have 204.11 elapsed after revocation and the taxpayer has satisfied the 204.12 conditions for reinstatement of a revoked permit or issuance of 204.13 a new permit imposed by this section and rules adopted hereunder. 204.14 For purposes of this subdivision, the term "taxpayer" means 204.15 an individual, if a revoked permit was issued to or in the name 204.16 of an individual, or a corporation or partnership, if a revoked 204.17 permit was issued to or in the name of a corporation or 204.18 partnership. Taxpayer also means an officer of a corporation, a 204.19 member of a partnership, or an individual who is liable for 204.20 delinquent sales taxes, either for the entity for which the new 204.21 or reinstated permit is at issue, or for another entity for 204.22 which a permit was previously revoked, or personally as a permit 204.23 holder. 204.24 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] (a) This section 204.25 is effective the day following final enactment. 204.26 (b) In the next edition of Minnesota Statutes, the revisor 204.27 shall codify the amendments to this section in Minnesota 204.28 Statutes, section 297A.86, subdivision 2. 204.29 Sec. 7. Minnesota Statutes 2000, section 297A.25, 204.30 subdivision 3, is amended to read: 204.31 Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts 204.32 from the sale of and storage, use, or consumption of prescribed 204.33 drugs, prescribed medicine and insulin, intended for use, 204.34 internal or external, in the cure, mitigation, treatment or 204.35 prevention of illness or disease in human beings are exempt, 204.36 together with prescription glasses, fever thermometers, 205.1 therapeutic, and prosthetic devices. "Prescribed drugs" or 205.2 "prescribed medicine" includes over-the-counter drugs or 205.3 medicine prescribed by a licensedphysicianhealth care 205.4 professional. "Therapeutic devices" includes reusable finger 205.5 pricking devices for the extraction of blood, blood glucose 205.6 monitoring machines, and other diagnostic agents used in 205.7 diagnosing, monitoring, or treating diabetes. Nonprescription 205.8 analgesics consisting principally (determined by the weight of 205.9 all ingredients) of acetaminophen, acetylsalicylic acid, 205.10 ibuprofen, ketoprofen, naproxen, and other nonprescription 205.11 analgesics that are approved by the United States Food and Drug 205.12 Administration for internal use by human beings, or a 205.13 combination thereof, are exempt. 205.14 Medical supplies purchased by a licensed health care 205.15 facility or licensed health care professional to provide medical 205.16 treatment to residents or patients are exempt. The exemption 205.17 does not apply to medical equipment or components of medical 205.18 equipment, laboratory supplies, radiological supplies, and other 205.19 items used in providing medical services. For purposes of this 205.20 subdivision, "medical supplies" means adhesive and nonadhesive 205.21 bandages, gauze pads and strips, cotton applicators, 205.22 antiseptics, nonprescription drugs, eye solution, and other 205.23 similar supplies used directly on the resident or patient in 205.24 providing medical services. 205.25 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 205.26 effective the day following final enactment. In the next 205.27 edition of Minnesota Statutes, the revisor of statutes shall 205.28 codify the amendment in this section in Minnesota Statutes, 205.29 section 297A.67, subdivision 6. 205.30 Sec. 8. Minnesota Statutes 2000, section 297A.25, 205.31 subdivision 11, is amended to read: 205.32 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 205.33 all sales, including sales in which title is retained by a 205.34 seller or a vendor or is assigned to a third party under an 205.35 installment sale or lease purchase agreement under section 205.36 465.71, of tangible personal property to, and all storage, use 206.1 or consumption of such property by, the United States and its 206.2 agencies and instrumentalities, the University of Minnesota, 206.3 state universities, community colleges, technical colleges, 206.4 state academies, the Perpich center for arts education, an 206.5 instrumentality of a political subdivision that is accredited as 206.6 an optional/special function school by the North Central 206.7 Association of Colleges and Schools, school districts, public 206.8 libraries, public library systems, multicounty, multitype 206.9 library systems as defined in section 134.001, county law 206.10 libraries under chapter 134A, state agency libraries, the state 206.11 library under section 480.09, and the legislative reference 206.12 library are exempt. 206.13 As used in this subdivision, "school districts" means 206.14 public school entities and districts of every kind and nature 206.15 organized under the laws of the state of Minnesota, including, 206.16 without limitation, school districts, intermediate school 206.17 districts, education districts, service cooperatives, secondary 206.18 vocational cooperative centers, special education cooperatives, 206.19 joint purchasing cooperatives, telecommunication cooperatives, 206.20 regional management information centers, and any instrumentality 206.21 of a school district, as defined in section 471.59. 206.22 Sales exempted by this subdivision include sales under 206.23 section 297A.01, subdivision 3, paragraph (f). 206.24 Sales to hospitals and nursing homes owned and operated by 206.25 political subdivisions of the state of tangible personal 206.26 property and taxable services used at or by the hospitals and 206.27 nursing homes are exempt under this subdivision. 206.28 Sales of supplies and equipment used in the operation of an 206.29 ambulance service owned and operated by a political subdivision 206.30 of the state are exempt under this subdivision provided that the 206.31 supplies and equipment are used in the course of providing 206.32 medical care. Sales to a political subdivision of repair and 206.33 replacement parts for emergency rescue vehicles and fire trucks 206.34 and apparatus are exempt under this subdivision. 206.35 Sales to a political subdivision of machinery and 206.36 equipment, except for motor vehicles, used directly for mixed 207.1 municipal solid waste management services at a solid waste 207.2 disposal facility as defined in section 115A.03, subdivision 10, 207.3 are exempt under this subdivision. 207.4 Sales to political subdivisions of chore and homemaking 207.5 services to be provided to elderly or disabled individuals are 207.6 exempt. 207.7 Sales to a town of gravel and of machinery, equipment, and 207.8 accessories, except motor vehicles, used exclusively for road 207.9 and bridge maintenance, and leases of motor vehicles exempt from 207.10 tax under section 297B.03, clause (10), are exempt. 207.11 Sales of telephone services to the department of 207.12 administration that are used to provide telecommunications 207.13 services through the intertechnologies revolving fund are exempt 207.14 under this subdivision. 207.15 This exemption shall not apply to building, construction or 207.16 reconstruction materials purchased by a contractor or a 207.17 subcontractor as a part of a lump-sum contract or similar type 207.18 of contract with a guaranteed maximum price covering both labor 207.19 and materials for use in the construction, alteration, or repair 207.20 of a building or facility. This exemption does not apply to 207.21 construction materials purchased by tax exempt entities or their 207.22 contractors to be used in constructing buildings or facilities 207.23 which will not be used principally by the tax exempt entities. 207.24 This exemption does not apply to the leasing of a motor 207.25 vehicle as defined in section 297B.01, subdivision 5, except for 207.26 leases entered into by the United States or its agencies or 207.27 instrumentalities. 207.28 The tax imposed on sales to political subdivisions of the 207.29 state under this section applies to all political subdivisions 207.30 other than those explicitly exempted under this subdivision, 207.31 notwithstanding section 115A.69, subdivision 6, 116A.25, 207.32 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 207.33 469.127, 473.448, 473.545, or 473.608 or any other law to the 207.34 contrary enacted before 1992. 207.35 Sales exempted by this subdivision include sales made to 207.36 other states or political subdivisions of other states, if the 208.1 sale would be exempt from taxation if it occurred in that state, 208.2 but do not include sales under section 297A.01, subdivision 3, 208.3 paragraphs (c) and (e). 208.4 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 208.5 effective the day following final enactment. In the next 208.6 edition of Minnesota Statutes, the revisor of statutes shall 208.7 codify the amendment in this section in Minnesota Statutes, 208.8 section 297A.70, section 1. 208.9 Sec. 9. Minnesota Statutes 2000, section 297A.25, 208.10 subdivision 28, is amended to read: 208.11 Subd. 28. [WASTE PROCESSING EQUIPMENT.] The gross receipts 208.12 from the sale of and storage, use, or consumption of equipment 208.13 used for processing solid or hazardous waste at a resource 208.14 recovery facility, as defined in section 115A.03, subdivision 208.15 28, are exempt, including pollution control equipment at a 208.16 resource recovery facility that burns refuse-derived fuel or 208.17 mixed municipal solid waste as its primary fuel. An electric 208.18 generation facility that processes and utilizes waste tires as 208.19 its primary fuel is a resource recovery facility for the 208.20 purposes of this section. 208.21 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 208.22 effective for purchases and sales made on or after June 1, 2001. 208.23 In the next edition of Minnesota Statutes, the revisor of 208.24 statutes shall codify the amendment to this section in section 208.25 297A.68, subdivision 24. 208.26 Sec. 10. Minnesota Statutes 2000, section 297A.61, 208.27 subdivision 3, is amended to read: 208.28 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 208.29 include, but are not limited to, each of the transactions listed 208.30 in this subdivision. 208.31 (b) Sale and purchase include any transfer of title or 208.32 possession, or both, of tangible personal property, whether 208.33 absolutely or conditionally, and the leasing of or the granting 208.34 of a license to use or consume, for a consideration, tangible 208.35 personal property, other than a manufactured home used for 208.36 residential purposes for a continuous period of 30 days or more. 209.1 (c) Sale and purchase include the production, fabrication, 209.2 printing, or processing of tangible personal property for a 209.3 consideration for consumers who furnish either directly or 209.4 indirectly the materials used in the production, fabrication, 209.5 printing, or processing. 209.6 (d) Sale and purchase include the furnishing, preparing, or 209.7 serving for a consideration of food or drinks. Notwithstanding 209.8 section 297A.67, subdivision 2, taxable food or drinks include, 209.9 but are not limited to, the following: 209.10 (1) food or drinks sold by the retailer for immediate 209.11 consumption on the retailer's premises. Food and drinks sold 209.12 within a building or grounds that require an admission charge 209.13 for entrance are presumed to be sold for consumption on the 209.14 premises; 209.15 (2) food or drinks prepared by the retailer for immediate 209.16 consumption either on or off the retailer's premises. For 209.17 purposes of this subdivision, "food or drinks prepared for 209.18 immediate consumption" means any food product upon which an act 209.19 of preparation including, but not limited to, cooking, mixing, 209.20 sandwich making, blending, heating, or pouring has been 209.21 performed by the retailer so the food product may be immediately 209.22 consumed by the purchaser; 209.23 (3) ice cream, ice milk, frozen yogurt products, or frozen 209.24 novelties sold in single or individual servings including, but 209.25 not limited to, cones, sundaes, and snow cones; 209.26 (4) soft drinks and other beverages, including all 209.27 carbonated and noncarbonated beverages or drinks sold in liquid 209.28 form, but not including beverages or drinks which contain milk 209.29 or milk products, beverages or drinks containing 15 or more 209.30 percent fruit juice, and noncarbonated and noneffervescent 209.31 bottled water sold in individual containers of one-half gallon 209.32 or more in size; 209.33 (5) gum, candy, and candy products; 209.34 (6) ice; 209.35 (7) all food sold from vending machines; 209.36 (8) all food for immediate consumption sold from concession 210.1 stands and vehicles; 210.2 (9) party trays; 210.3 (10) all meals and single servings of packaged snack food 210.4 sold in restaurants and bars; and 210.5 (11) bakery products that are: 210.6 (i) prepared by the retailer for consumption on the 210.7 retailer's premises; 210.8 (ii) sold at a place that charges admission; 210.9 (iii) sold from vending machines; or 210.10 (iv) sold in single or individual servings from concession 210.11 stands, vehicles, bars, and restaurants. 210.12 For purposes of this paragraph, "single or individual 210.13 servings" does not include products when sold in bulk containers 210.14 or bulk packaging. 210.15 For purposes of this paragraph, "premises" means the total 210.16 space and facilities, including buildings, grounds, and parking 210.17 lots that are made available or that are available for use by 210.18 the retailer or customer for the purpose of sale or consumption 210.19 of prepared food and drinks. The premises of a caterer is the 210.20 place where the catered food or drinks are served. 210.21 (e) A sale and a purchase includes the furnishing for a 210.22 consideration of electricity, gas, water, or steam for use or 210.23 consumption within this stateor local exchange telephone210.24service, intrastate toll service, and interstate toll service,210.25if that service originates from and is charged to a telephone210.26located in this state. Telephone service includes (1) paging210.27services, and (2) private communication service, as defined in210.28United States Code, title 26, section 4252(d), except for210.29private communication service purchased by an agent acting on210.30behalf of the state lottery. Telephone service does not include210.31services purchased with a prepaid telephone calling card. The210.32furnishing for a consideration of access to telephone services210.33by a hotel to its guests is a sale. The furnishing for a210.34consideration of items listed in this paragraph by a municipal210.35corporation is a sale. 210.36 (f) A sale and a purchase includes the transfer for a 211.1 consideration of computer software. 211.2 (g) A sale and a purchase includes the furnishing for a 211.3 consideration of taxable services as defined in subdivision 16. 211.4 (h) A sale and a purchase includes the furnishing for a 211.5 consideration of tangible personal property or taxable services 211.6 by the United States or any of its agencies or 211.7 instrumentalities, or the state of Minnesota, its agencies, 211.8 instrumentalities, or political subdivisions. 211.9 (i) A sale and a purchase includes the furnishing for a 211.10 consideration of telecommunications services, including cable 211.11 television services and direct satellite services. 211.12 Telecommunications services are taxed to the extent allowed 211.13 under federal law if those services: 211.14 (1) either (i) originate and terminate in this state; or 211.15 (ii) originate in this state and terminate outside the state and 211.16 the service is charged to a telephone number customer located in 211.17 this state or to the account of any transmission instrument in 211.18 this state; or (iii) originate outside this state and terminate 211.19 in this state and the service is charged to a telephone number 211.20 customer located in this state or to the account of any 211.21 transmission instrument in this state; or 211.22 (2) are rendered by providing a private communications 211.23 service for which the customer has one or more locations within 211.24 Minnesota connected to the service and the service is charged to 211.25 a telephone number customer located in this state or to the 211.26 account of any transmission instrument in this state. 211.27 [EFFECTIVE DATE.] This section is effective for sales and 211.28 purchases made after June 30, 2001. 211.29 Sec. 11. Minnesota Statutes 2000, section 297A.61, 211.30 subdivision 12, is amended to read: 211.31 Subd. 12. [FARM MACHINERY.] (a) "Farm machinery" means new 211.32 or used machinery, equipment, implements, accessories, and 211.33 contrivances used directly and principally in the production for 211.34 sale, but not including the processing, of livestock, dairy 211.35 animals, dairy products, poultry and poultry products, fruits, 211.36 vegetables, trees and shrubs, nursery stock, forage, grains, and 212.1 bees and apiary products. 212.2 (b) Farm machinery includes: 212.3 (1) machinery for the preparation, seeding, or cultivation 212.4 of soil for growing agricultural crops and sod, for the 212.5 harvesting and threshing of agricultural products, or for the 212.6 harvesting or mowing of sod; 212.7 (2) barn cleaners, milking systems, grain dryers,automatic212.8 feeding systems including stationary feed bunks, and similar 212.9 installations, whether or not the equipment is installed by the 212.10 seller and becomes part of the real property; 212.11 (3) irrigation equipment sold for exclusively agricultural 212.12 use, including pumps, pipe fittings, valves, sprinklers, and 212.13 other equipment necessary to the operation of an irrigation 212.14 system when sold as part of an irrigation system, whether or not 212.15 the equipment is installed by the seller and becomes part of the 212.16 real property; 212.17 (4) logging equipment, including chain saws used for 212.18 commercial logging; 212.19 (5) fencing used for the containment of farmed cervidae, as 212.20 defined in section 17.451, subdivision 2; 212.21 (6) primary and backup generator units used to generate 212.22 electricity for the purpose of operating farm machinery, as 212.23 defined in this subdivision, or providing light or space heating 212.24 necessary for the production of livestock, dairy animals, dairy 212.25 products, or poultry and poultry products; 212.26 (7) aquaculture production equipment as defined in 212.27 subdivision 13; and 212.28 (8) equipment used for maple syrup harvesting. 212.29 (c) Farm machinery does not include: 212.30 (1) repair or replacement parts; 212.31 (2) tools, shop equipment, grain bins, feed bunks, fencing 212.32 material except fencing material covered by paragraph (b), 212.33 clause (5), communication equipment, and other farm supplies; 212.34 (3) motor vehicles taxed under chapter 297B; 212.35 (4) snowmobiles or snow blowers; or 212.36 (5) lawn mowers except those used in the production of sod 213.1 for sale, or garden-type tractors or garden tillers. 213.2 [EFFECTIVE DATE.] This section is effective for sales and 213.3 purchases made after June 30, 2001. 213.4 Sec. 12. Minnesota Statutes 2000, section 297A.61, 213.5 subdivision 16, is amended to read: 213.6 Subd. 16. [TAXABLE SERVICES.] (a) "Taxable services" means 213.7 the services listed in this subdivision and other services 213.8 listed in subdivision 3. 213.9 (b) Taxable services includes the granting of the privilege 213.10 of admission to places of amusement, recreational areas, or 213.11 athletic events, and the making available of amusement devices, 213.12 tanning facilities, reducing salons, steam baths, turkish baths, 213.13 health clubs, and spas or athletic facilities. 213.14 (c) Taxable services includes the furnishing of lodging and 213.15 related services by a hotel, rooming house, resort, campground, 213.16 motel, or trailer camp and the granting of any similar license 213.17 to use real property other than the renting or leasing thereof 213.18 for a continuous period of 30 days or more. 213.19 (d)Taxable services includes the furnishing of cable213.20television services or similar television services, including,213.21but not limited to, charges for basic, premium, pay-per-view,213.22and any other similar service.213.23(e)Taxable services includes the furnishing of parking 213.24 services, whether on a contractual, hourly, or other periodic 213.25 basis, except for parking at a meter. 213.26(f)(e) Taxable services includes the granting of 213.27 membership in a club, association, or other organization if: 213.28 (1) the club, association, or other organization makes 213.29 available for the use of its members sports and athletic 213.30 facilities, without regard to whether a separate charge is 213.31 assessed for use of the facilities; and 213.32 (2) use of the sports and athletic facility is not made 213.33 available to the general public on the same basis as it is made 213.34 available to members. 213.35 Granting of membership means both one-time initiation fees and 213.36 periodic membership dues. Sports and athletic facilities 214.1 include golf courses; tennis, racquetball, handball, and squash 214.2 courts; basketball and volleyball facilities; running tracks; 214.3 exercise equipment; swimming pools; and other similar athletic 214.4 or sports facilities. 214.5(g)(f) Taxable services includes the furnishing of the 214.6 following services as provided in this paragraph: 214.7 (1) laundry and dry cleaning services including cleaning, 214.8 pressing, repairing, altering, and storing clothes, linen 214.9 services and supply, cleaning and blocking hats, and carpet, 214.10 drapery, upholstery, and industrial cleaning. Laundry and dry 214.11 cleaning services do not include services provided by coin 214.12 operated facilities operated by the customer; 214.13 (2) motor vehicle washing, waxing, and cleaning services, 214.14 including services provided by coin operated facilities operated 214.15 by the customer, and rustproofing, undercoating, and towing of 214.16 motor vehicles; 214.17 (3) building and residential cleaning, maintenance, and 214.18 disinfecting and exterminating services; 214.19 (4) detective, security, burglar, fire alarm, and armored 214.20 car services; but not including services performed within the 214.21 jurisdiction they serve by off-duty licensed peace officers as 214.22 defined in section 626.84, subdivision 1, or services provided 214.23 by a nonprofit organization for monitoring and electronic 214.24 surveillance of persons placed on in-home detention pursuant to 214.25 court order or under the direction of the Minnesota department 214.26 of corrections; 214.27 (5) pet grooming services; 214.28 (6) lawn care, fertilizing, mowing, spraying and sprigging 214.29 services; garden planting and maintenance; tree, bush, and shrub 214.30 pruning, bracing, spraying, and surgery; indoor plant care; 214.31 tree, bush, shrub, and stump removal; and tree trimming for 214.32 public utility lines. Services performed under a construction 214.33 contract for the installation of shrubbery, plants, sod, trees, 214.34 bushes, and similar items are not taxable; 214.35 (7) massages, except when provided by a licensed health 214.36 care facility or professional or upon written referral from a 215.1 licensed health care facility or professional for treatment of 215.2 illness, injury, or disease; and 215.3 (8) the furnishing of lodging, board, and care services for 215.4 animals in kennels and other similar arrangements, but excluding 215.5 veterinary and horse boarding services. 215.6 The services listed in this paragraph are taxable under 215.7 section 297A.62 if the service is performed wholly within 215.8 Minnesota or if the service is performed partly within and 215.9 partly outside Minnesota and the greater proportion of the 215.10 service is performed in Minnesota, based on the cost of 215.11 performance. In applying the provisions of this chapter, the 215.12 terms "tangible personal property" and "sales at retail" include 215.13 taxable services and the provision of taxable services, unless 215.14 specifically provided otherwise. Services performed by an 215.15 employee for an employer are not taxable. Services performed by 215.16 a partnership or association for another partnership or 215.17 association are not taxable if one of the entities owns or 215.18 controls more than 80 percent of the voting power of the equity 215.19 interest in the other entity. Services performed between 215.20 members of an affiliated group of corporations are not taxable. 215.21 For purposes of this section, "affiliated group of corporations" 215.22 includes those entities that would be classified as members of 215.23 an affiliated group under United States Code, title 26, section 215.24 1504, and that are eligible to file a consolidated tax return 215.25 for federal income tax purposes. 215.26 [EFFECTIVE DATE.] This section is effective for sales and 215.27 purchases made after June 30, 2001. 215.28 Sec. 13. Minnesota Statutes 2000, section 297A.61, is 215.29 amended by adding a subdivision to read: 215.30 Subd. 24. [TELECOMMUNICATIONS SERVICES.] (a) 215.31 "Telecommunications services" means the transmission, 215.32 conveyance, or routing of voice, data, audio, video, or any 215.33 other information or signals to a point, or between or among 215.34 points, by or through any electronic, satellite, optical, 215.35 microwave, or other medium or method now in existence or 215.36 hereafter devised, regardless of the protocol used for such 216.1 transmission, conveyance, or routing. 216.2 (b) Telecommunications services includes the furnishing for 216.3 consideration of access to telephone services by a hotel to its 216.4 guests. 216.5 (c) Telecommunications services do not include: 216.6 (1) services purchased with a prepaid telephone calling 216.7 card; 216.8 (2) private communication service purchased by an agent 216.9 acting on behalf of the state lottery; 216.10 (3) information services; and 216.11 (4) purchases of telecommunications when the purchaser uses 216.12 the purchased services as a component part of or integrates such 216.13 service into another telecommunications service that is sold by 216.14 the purchaser in the normal course of business. 216.15 (d) For purposes of this subdivision, "information 216.16 services" means the offering of the capability for generating, 216.17 acquiring, storing, transforming, processing, retrieving, 216.18 utilizing, or making available information. 216.19 [EFFECTIVE DATE.] This section is effective for sales and 216.20 purchases occurring after June 30, 2001. 216.21 Sec. 14. Minnesota Statutes 2000, section 297A.61, is 216.22 amended by adding a subdivision to read: 216.23 Subd. 25. [CABLE TELEVISION SERVICE.] "Cable television 216.24 service" means the transmission of video, audio, or other 216.25 programming service to purchasers, and the subscriber 216.26 interaction, if any, required for the selection or use of the 216.27 programming service, regardless of whether the programming is 216.28 transmitted over facilities owned or operated by the cable 216.29 service provider or over facilities owned or operated by one or 216.30 more dealers of communications services. The term includes 216.31 point-to-multipoint distribution services by which programming 216.32 is transmitted or broadcast by microwave or other equipment 216.33 directly to the subscriber's premises. The term includes basic, 216.34 extended, premium, pay-per-view, digital, and music services. 216.35 [EFFECTIVE DATE.] This section is effective for sales and 216.36 purchases occurring after June 30, 2001. 217.1 Sec. 15. Minnesota Statutes 2000, section 297A.61, is 217.2 amended by adding a subdivision to read: 217.3 Subd. 26. [PRIVATE COMMUNICATION SERVICE.] "Private 217.4 communication service" means a communication service furnished 217.5 to a subscriber which entitles the subscriber to: 217.6 (1) exclusive or priority use of any communication channel 217.7 or group of channels; 217.8 (2) the use of an intercommunication system for the 217.9 subscriber's stations, or regardless of whether the channel, 217.10 group of channels, or intercommunication system may be connected 217.11 through switching; 217.12 (3) the switching capacity, extension lines and stations, 217.13 or other associated services that are provided in connection 217.14 with, and are necessary or unique to the use of, channels or 217.15 systems described in clause (1); or 217.16 (4) any combination of tunneling, encryption, 217.17 authentication, and access control technologies and services 217.18 used to carry traffic over the Internet, a managed Internet 217.19 provider network or provider's backbone. 217.20 [EFFECTIVE DATE.] This section is effective for sales and 217.21 purchases occurring after June 30, 2001. 217.22 Sec. 16. Minnesota Statutes 2000, section 297A.61, is 217.23 amended by adding a subdivision to read: 217.24 Subd. 27. [DIRECT SATELLITE SERVICE.] "Direct satellite 217.25 service" means programming transmitted or broadcast by satellite 217.26 directly to the subscriber's premises without the use of ground 217.27 receiving or distribution equipment, except at the subscriber's 217.28 premises or in the uplink process to the satellite. 217.29 [EFFECTIVE DATE.] This section is effective for sales and 217.30 purchases occurring after June 30, 2001. 217.31 Sec. 17. Minnesota Statutes 2000, section 297A.62, 217.32 subdivision 3, is amended to read: 217.33 Subd. 3. [MANUFACTURED HOUSINGAND; PARK TRAILERS; 217.34 PREFABRICATED HOMES.] (a) For retail sales of manufactured homes 217.35 as defined in section 327.31, subdivision 6, for residential 217.36 uses, the sales tax under subdivision 1 is imposed on 65 percent 218.1 of the dealer's cost of the manufactured home. 218.2 (b) For retail sales of new or used park trailers, as 218.3 defined in section 168.011, subdivision 8, paragraph (b), the 218.4 sales tax under subdivision 1 is imposed on 65 percent of the 218.5 sales price of the park trailer. 218.6 (c) For retail sales of prefabricated homes, the sales tax 218.7 under subdivision 1 is imposed on 65 percent of the 218.8 manufacturer's wholesale list price of the prefabricated home 218.9 for sales to dealers. As used in this paragraph, a 218.10 "prefabricated home" is a prefabricated building subject to 218.11 Minnesota Rules, chapter 1360 or 1361, that is intended for use 218.12 as a single-family or multifamily dwelling. 218.13 [EFFECTIVE DATE.] This section is effective for sales made 218.14 after June 30, 2001. 218.15 Sec. 18. Minnesota Statutes 2000, section 297A.67, 218.16 subdivision 25, is amended to read: 218.17 Subd. 25. [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 218.18 related services used in the maintenance of cemetery grounds are 218.19 exempt. For purposes of this subdivision, "lawn care and 218.20 related services" means the services listed in section 297A.61, 218.21 subdivision 16, paragraph(g)(f), clause (6), and "cemetery" 218.22 means a cemetery for human burial. 218.23 [EFFECTIVE DATE.] This section is effective for sales and 218.24 purchases made after June 30, 2001. 218.25 Sec. 19. Minnesota Statutes 2000, section 297A.67, is 218.26 amended by adding a subdivision to read: 218.27 Subd. 26. [AMBULANCE SUPPLIES, PARTS, AND EQUIPMENT.] The 218.28 following sales to or use by an ambulance service licensed under 218.29 section 144E.10 are exempt: 218.30 (1) supplies and equipment used to provide medical care; 218.31 and 218.32 (2) repair and replacement parts for ambulances. 218.33 [EFFECTIVE DATE.] This section is effective for sales and 218.34 purchases made after June 30, 2001. 218.35 Sec. 20. Minnesota Statutes 2000, section 297A.67, is 218.36 amended by adding a subdivision to read: 219.1 Subd. 27. [ENERGY EFFICIENT PRODUCTS.] (a) A residential 219.2 lighting fixture or a compact fluorescent bulb is exempt if it 219.3 has an energy star label. 219.4 (b) The following products are exempt if they have an 219.5 energyguide label that indicates that the product meets or 219.6 exceeds the standards listed below: 219.7 (1) an electric heat pump hot water heater with an energy 219.8 factor of at least 1.9; 219.9 (2) a natural gas water heater with an energy factor of at 219.10 least 0.62; 219.11 (3) a window air conditioner with an energy efficiency 219.12 rating greater than 11.0; 219.13 (4) a clothes washer that uses less than 250 kilowatt-hours 219.14 per year or any horizontal axis washer; and 219.15 (5) a central air conditioner with a seasonal energy 219.16 efficiency rating greater than 14.0. 219.17 (c) For purposes of this subdivision, "energy star label" 219.18 means the label granted to certain products that meet United 219.19 States Environmental Protection Agency and United States 219.20 Department of Energy criteria for energy efficiency. For 219.21 purposes of this subdivision, "energyguide label" means the 219.22 label that the United State Federal Trade Commissioner requires 219.23 manufacturers to apply to certain appliances under United States 219.24 Code, title 16, part 305. 219.25 [EFFECTIVE DATE.] This section is effective for sales and 219.26 purchases made after June 30, 2001, and before January 1, 2005. 219.27 Sec. 21. Minnesota Statutes 2000, section 297A.68, 219.28 subdivision 3, is amended to read: 219.29 Subd. 3. [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 219.30 SERVICES.] (a) Materials stored, used, or consumed in providing 219.31 a taxable service listed in section 297A.61, subdivision 16, 219.32 paragraph(g)(f), intended to be sold ultimately at retail are 219.33 exempt. 219.34 (b) This exemption includes, but is not limited to: 219.35 (1) chemicals, lubricants, packaging materials, seeds, 219.36 trees, fertilizers, and herbicides, if these items are used or 220.1 consumed in providing the taxable service; 220.2 (2) chemicals used to treat waste generated as a result of 220.3 providing the taxable service; 220.4 (3) accessory tools, equipment, and other items that are 220.5 separate detachable units used in providing the service and that 220.6 have an ordinary useful life of less than 12 months; and 220.7 (4) fuel, electricity, gas, and steam used or consumed in 220.8 the production process, except that electricity, gas, or steam 220.9 used for space heating or lighting is exempt only if it is 220.10 necessary to produce that particular taxable service. 220.11 (c) This exemption does not include machinery, equipment, 220.12 implements, tools, accessories, appliances, contrivances, 220.13 furniture, and fixtures used in providing the taxable service. 220.14 [EFFECTIVE DATE.] This section is effective for sales and 220.15 purchases made after June 30, 2001. 220.16 Sec. 22. Minnesota Statutes 2000, section 297A.68, 220.17 subdivision 5, is amended to read: 220.18 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 220.19 exempt.The tax must be imposed and collected as if the rate220.20under section 297A.62, subdivision 1, applied, and then refunded220.21in the manner provided in section 297A.75.220.22 "Capital equipment" means machinery and equipment purchased 220.23 or leased and used in this state by the purchaser or lessee 220.24 primarily for manufacturing, fabricating, mining, or refining 220.25 tangible personal property to be sold ultimately at retail. 220.26 Capital equipment means machinery and equipment essential 220.27 to the integrated production process. Capital equipment also 220.28 includes machinery and equipment used to electronically transmit 220.29 results retrieved by a customer of an online computerized data 220.30 retrieval system. 220.31 (b) Capital equipment includes, but is not limited to: 220.32 (1) machinery and equipment used to operate, control, or 220.33 regulate the production equipment; 220.34 (2) machinery and equipment used for research and 220.35 development, design, quality control, and testing activities; 220.36 (3) environmental control devices that are used to maintain 221.1 conditions such as temperature, humidity, light, or air pressure 221.2 when those conditions are essential to and are part of the 221.3 production process; 221.4 (4) materials and supplies used to construct and install 221.5 machinery or equipment; 221.6 (5) repair and replacement parts, including accessories, 221.7 whether purchased as spare parts, repair parts, or as upgrades 221.8 or modifications to machinery or equipment; 221.9 (6) materials used for foundations that support machinery 221.10 or equipment; 221.11 (7) materials used to construct and install special purpose 221.12 buildings used in the production process; and 221.13 (8) ready-mixed concrete trucks in which the ready-mixed 221.14 concrete is mixed as part of the delivery process. 221.15 (c) Capital equipment does not include the following: 221.16 (1) motor vehicles taxed under chapter 297B; 221.17 (2) machinery or equipment used to receive or store raw 221.18 materials; 221.19 (3) building materials, except for materials included in 221.20 paragraph (b), clauses (6) and (7); 221.21 (4) machinery or equipment used for nonproduction purposes, 221.22 including, but not limited to, the following: plant security,; 221.23 fire prevention,; first aid,and hospital stations; support 221.24 operations or administration; pollution control;andplant 221.25 cleaning,; disposal of scrap and waste,; plant communications 221.26,; space heating,and lighting, or; and safety; 221.27 (5) farm machinery and aquaculture production equipment as 221.28 defined by section 297A.61, subdivisions 12 and 13; 221.29 (6) machinery or equipment purchased and installed by a 221.30 contractor as part of an improvement to real property; or 221.31 (7) any other item that is not essential to the integrated 221.32 process of manufacturing, fabricating, mining, or refining. 221.33 (d) For purposes of this subdivision: 221.34 (1) "Machinery" means mechanical, electronic, or electrical 221.35 devices, including computers and computer software, that are 221.36 purchased or constructed to be used for the activities set forth 222.1 in paragraph (a). 222.2 (2) "Equipment" means independent devices or tools separate 222.3 from machinery, including computers and computer software, used 222.4 in operating, controlling, or regulating machinery and 222.5 equipment; and any subunit or assembly comprising a component of 222.6 any machinery or accessory or attachment parts of machinery, 222.7 such as tools, dies, jigs, patterns, and molds. 222.8 (3) "Primarily" means machinery and equipment used 50 222.9 percent or more of the time in an activity described in 222.10 paragraph (a). 222.11 (4) "Manufacturing" means an operation or series of 222.12 operations where raw materials are changed in form, composition, 222.13 or condition by machinery and equipment and which results in the 222.14 production of a new article of tangible personal property. For 222.15 purposes of this subdivision, "manufacturing" includes the 222.16 generation of electricity or steam to be sold at retail. 222.17 (5) "Fabricating" means to make, build, create, produce, or 222.18 assemble components or property to work in a new or different 222.19 manner. 222.20 (6) "Mining" means the extraction of minerals, ores, stone, 222.21 or peat. 222.22 (7) "Refining" means the process of converting a natural 222.23 resource to a product, including the treatment of water to be 222.24 sold at retail. 222.25 (8) "Integrated production process" means a process 222.26 beginning with the removal of raw materials from inventory 222.27 through the completion of the product, including packaging of 222.28 the product. 222.29 (9) "Online data retrieval system" means a system whose 222.30 cumulation of information is equally available and accessible to 222.31 all its customers. 222.32 (10) "Machinery and equipment used for pollution control" 222.33 means machinery and equipment used solely to eliminate, prevent, 222.34 or reduce pollution resulting from an activity described in 222.35 paragraph (a). 222.36 [EFFECTIVE DATE.] This section is effective for purchases 223.1 made after June 30, 2001. 223.2 Sec. 23. Minnesota Statutes 2000, section 297A.68, is 223.3 amended by adding a subdivision to read: 223.4 Subd. 35. [TELECOMMUNICATIONS EQUIPMENT.] (a) 223.5 Telecommunications machinery and equipment purchased or leased 223.6 for use directly by a telecommunications service provider 223.7 primarily in the provision of telecommunications services that 223.8 are ultimately to be sold at retail are exempt, regardless of 223.9 whether purchased by the owner, a contractor, or a subcontractor. 223.10 (b) For purposes of this subdivision, "telecommunications 223.11 machinery and equipment" includes, but is not limited to: 223.12 (1) machinery, equipment, and fixtures utilized in 223.13 receiving, initiating, amplifying, processing, transmitting, 223.14 retransmitting, recording, switching, or monitoring 223.15 telecommunications services, such as computers, transformers, 223.16 amplifiers, routers, bridges, repeaters, multiplexers, and other 223.17 items performing comparable functions; 223.18 (2) machinery, equipment, and fixtures used in the 223.19 transportation of telecommunications services, radio 223.20 transmitters and receivers, satellite equipment, microwave 223.21 equipment, and other transporting media, but not wire, cable, 223.22 fiber, poles, or conduit; 223.23 (3) ancillary machinery, equipment, and fixtures that 223.24 regulate, control, protect, or enable the machinery in clauses 223.25 (1) and (2) to accomplish its intended function, such as 223.26 auxiliary power supply, test equipment, towers, heating, 223.27 ventilating and air conditioning equipment necessary to the 223.28 operation of the telecommunications equipment; and software 223.29 necessary to the operation of the telecommunications equipment; 223.30 and 223.31 (4) repair and replacement parts, including accessories, 223.32 whether purchased as spare parts, repair parts, or as upgrades 223.33 or modifications to qualified machinery or equipment. 223.34 (c) For purposes of this subdivision, "telecommunications 223.35 services" means telecommunications services as defined in 223.36 section 297A.61, subdivision 24, paragraph (a), only. 224.1 [EFFECTIVE DATE.] This section is effective for purchases 224.2 and lease payments, including payments made on existing leases, 224.3 made after June 30, 2001. 224.4 Sec. 24. Minnesota Statutes 2000, section 297A.68, is 224.5 amended by adding a subdivision to read: 224.6 Subd. 36. [RESEARCH SUPPLIES AND EQUIPMENT.] Tangible 224.7 personal property and taxable services are exempt if: 224.8 (1) the purchase was made by or to be used by a person 224.9 engaged in a trade or business; 224.10 (2) the expenditure by the person qualified as a deductible 224.11 expense under section 174 of the Internal Revenue Code or the 224.12 expenditures would have qualified as a deductible expense under 224.13 section 174, if the disallowance of items subject to allowance 224.14 under section 167 or 611 of the Internal Revenue Code were not 224.15 in effect; and 224.16 (3) the items purchased or used do not constitute an 224.17 improvement to real property. 224.18 [EFFECTIVE DATE.] This section is effective for sales made 224.19 after June 30, 2001. 224.20 Sec. 25. Minnesota Statutes 2000, section 297A.68, is 224.21 amended by adding a subdivision to read: 224.22 Subd. 37. [COIN-OPERATED AMUSEMENT DEVICES.] Coin, 224.23 currency, and token-operated amusement devices are exempt if 224.24 they are purchased or leased by a person for the purpose of 224.25 making the device available to the general public for a fee. 224.26 [EFFECTIVE DATE.] This section is effective for sales and 224.27 purchases made after June 30, 2001. 224.28 Sec. 26. Minnesota Statutes 2000, section 297A.70, 224.29 subdivision 2, is amended to read: 224.30 Subd. 2. [SALES TO GOVERNMENT.] (a) All sales, except 224.31 those listed in paragraph (b), to the following governments and 224.32 political subdivisions, or to the listed agencies or 224.33 instrumentalities of governments and political subdivisions, are 224.34 exempt: 224.35 (1) the United States and its agencies and 224.36 instrumentalities; 225.1 (2) school districts, the University of Minnesota, state 225.2 universities, community colleges, technical colleges, state 225.3 academies, the Perpich Minnesota center for arts education, and 225.4 an instrumentality of a political subdivision that is accredited 225.5 as an optional/special function school by the North Central 225.6 Association of Colleges and Schools; 225.7 (3) hospitals and nursing homes owned and operated by 225.8 political subdivisions of the state; 225.9 (4) other states or political subdivisions of other states, 225.10 if the sale would be exempt from taxation if it occurred in that 225.11 state; and 225.12 (5) sales to public libraries, public library systems, 225.13 multicounty, multitype library systems as defined in section 225.14 134.001, county law libraries under chapter 134A, state agency 225.15 libraries, the state library under section 480.09, and the 225.16 legislative reference library. 225.17 (b) This exemption does not apply to the sales of the 225.18 following products and services: 225.19 (1) building, construction, or reconstruction materials 225.20 purchased by a contractor or a subcontractor as a part of a 225.21 lump-sum contract or similar type of contract with a guaranteed 225.22 maximum price covering both labor and materials for use in the 225.23 construction, alteration, or repair of a building or facility, 225.24 except for correctional facilities for which construction 225.25 materials are exempt under section 297A.71, subdivision 3; 225.26 (2) construction materials purchased by tax exempt entities 225.27 or their contractors to be used in constructing buildings or 225.28 facilities which will not be used principally by the tax exempt 225.29 entities; 225.30 (3) the leasing of a motor vehicle as defined in section 225.31 297B.01, subdivision 5, except for leases entered into by the 225.32 United States or its agencies or instrumentalities; or 225.33 (4) meals and lodging as defined under section 297A.61, 225.34 subdivisions 3, paragraph (d), and 16, paragraph (c), except for 225.35 meals and lodging purchased directly by the United States or its 225.36 agencies or instrumentalities. 226.1 (c) As used in this subdivision, "school districts" means 226.2 public school entities and districts of every kind and nature 226.3 organized under the laws of the state of Minnesota, and any 226.4 instrumentality of a school district, as defined in section 226.5 471.59. 226.6 [EFFECTIVE DATE.] This section is effective for sales and 226.7 purchases occurring after June 30, 2001. 226.8 Sec. 27. Minnesota Statutes 2000, section 297A.70, 226.9 subdivision 3, is amended to read: 226.10 Subd. 3. [SALES OF CERTAIN GOODS AND SERVICES TO 226.11 GOVERNMENT.] (a) The following sales to or use by the specified 226.12 governments and political subdivisions of the state are exempt: 226.13 (1)supplies and equipment used to provide medical care in226.14the operation of an ambulance service owned and operated by a226.15political subdivision of the state;226.16(2)repair and replacement parts for emergency rescue 226.17 vehicles, fire trucks, and fire apparatus to a political 226.18 subdivision; 226.19(3)(2) machinery and equipment, except for motor vehicles, 226.20 used directly for mixed municipal solid waste management 226.21 services at a solid waste disposal facility as defined in 226.22 section 115A.03, subdivision 10; 226.23(4)(3) chore and homemaking services to a political 226.24 subdivision of the state to be provided to elderly or disabled 226.25 individuals; 226.26(5)(4) telephone services to the department of 226.27 administration that are used to provide telecommunications 226.28 services through the intertechnologies revolving fund; 226.29(6)(5) firefighter personal protective equipment as 226.30 defined in paragraph (b), if purchased or authorized by and for 226.31 the use of an organized fire department, fire protection 226.32 district, or fire company regularly charged with the 226.33 responsibility of providing fire protection to the state or a 226.34 political subdivision; 226.35(7)(6) bullet-resistant body armor that provides the 226.36 wearer with ballistic and trauma protection, if purchased by a 227.1 law enforcement agency of the state or a political subdivision 227.2 of the state, or a licensed peace officer, as defined in section 227.3 626.84, subdivision 1; 227.4(8)(7) motor vehicles purchased or leased by political 227.5 subdivisions of the state if the vehicles are exempt from 227.6 registration under section 168.012, subdivision 1, paragraph 227.7 (b), or exempt from taxation under section 473.448; 227.8(9)(8) equipment designed to process, dewater, and 227.9 recycle biosolids for wastewater treatment facilities of 227.10 political subdivisions, and materials incidental to installation 227.11 of that equipment; and materials used to construct buildings to 227.12 house the equipment, if the materials are purchased after June 227.13 30, 1998, and before July 1, 2001; and 227.14(10)(9) sales to a town of gravel and of machinery, 227.15 equipment, and accessories, except motor vehicles, used 227.16 exclusively for road and bridge maintenance, and leases by a 227.17 town of motor vehicles exempt from tax under section 297B.03, 227.18 clause (10). 227.19 (b) For purposes of this subdivision, "firefighters 227.20 personal protective equipment" means helmets, including face 227.21 shields, chin straps, and neck liners; bunker coats and pants, 227.22 including pant suspenders; boots; gloves; head covers or hoods; 227.23 wildfire jackets; protective coveralls; goggles; self-contained 227.24 breathing apparatus; canister filter masks; personal alert 227.25 safety systems; spanner belts; optical or thermal imaging search 227.26 devices; and all safety equipment required by the Occupational 227.27 Safety and Health Administration. 227.28 [EFFECTIVE DATE.] This section is effective for sales and 227.29 purchases made after June 30, 2001. 227.30 Sec. 28. Minnesota Statutes 2000, section 297A.70, 227.31 subdivision 4, is amended to read: 227.32 Subd. 4. [SALES TO NONPROFIT GROUPS.] (a) All sales, 227.33 except those listed in paragraph (b), to the following 227.34 "nonprofit organizations" are exempt: 227.35 (1) an entity organized and operated exclusively for 227.36 charitable, religious, or educational purposes if the item 228.1 purchased is used in the performance of charitable, religious, 228.2 or educational functions; 228.3 (2) any senior citizen group or association of groups that: 228.4 (i) in general limits membership to persons who are either 228.5 age 55 or older, or physically disabled; and 228.6 (ii) is organized and operated exclusively for pleasure, 228.7 recreation, and other nonprofit purposes, no part of the net 228.8 earnings of which inures to the benefit of any private 228.9 shareholders; and 228.10 (3) an entity organized and operated exclusively to 228.11 maintain a cemetery owned by a religious organization. 228.12 (b) This exemption does not apply to the following sales: 228.13 (1) building, construction, or reconstruction materials 228.14 purchased by a contractor or a subcontractor as a part of a 228.15 lump-sum contract or similar type of contract with a guaranteed 228.16 maximum price covering both labor and materials for use in the 228.17 construction, alteration, or repair of a building or facility; 228.18 (2) construction materials purchased by tax-exempt entities 228.19 or their contractors to be used in constructing buildings or 228.20 facilities that will not be used principally by the tax-exempt 228.21 entities; and 228.22 (3) meals and lodging as defined under section 297A.61, 228.23 subdivisions 3, paragraph (d), and 16, paragraph (c); and 228.24 (4) leasing of a motor vehicle as defined in section 228.25 297B.01, subdivision 5, except as provided in paragraph (c). 228.26 (c) This exemption applies to the leasing of a motor 228.27 vehicle as defined in section 297B.01, subdivision 5, only if 228.28 the vehicle is: 228.29 (1) a truck, as defined in section 168.011, a bus, as 228.30 defined in section 168.011, or a passenger automobile, as 228.31 defined in section 168.011, if the automobile is designed and 228.32 used for carrying more than nine persons including the driver; 228.33 and 228.34 (2) intended to be used primarily to transport tangible 228.35 personal property or individuals, other than employees, to whom 228.36 the organization provides service in performing its charitable, 229.1 religious, or educational purpose. 229.2 (d) A limited liability company also qualifies for 229.3 exemption under this subdivision if (1) it consists of a sole 229.4 member that would qualify for the exemption, and (2) the items 229.5 purchased qualify for the exemption. 229.6 Sec. 29. Minnesota Statutes 2000, section 297A.70, 229.7 subdivision 7, is amended to read: 229.8 Subd. 7. [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 229.9 Sales, except for those listed in paragraph (c), to a hospital 229.10 are exempt, if the items purchased are used in providing 229.11 hospital services. For purposes of this subdivision, "hospital" 229.12 means a hospital organized and operated for charitable purposes 229.13 within the meaning of section 501(c)(3) of the Internal Revenue 229.14 Code, and licensed under chapter 144 or by any other 229.15 jurisdiction, and "hospital services" are services authorized or 229.16 required to be performed by a "hospital" under chapter 144. 229.17 (b) Sales, except for those listed in paragraph (c), to an 229.18 outpatient surgical center are exempt, if the items purchased 229.19 are used in providing outpatient surgical services. For 229.20 purposes of this subdivision, "outpatient surgical center" means 229.21 an outpatient surgical center organized and operated for 229.22 charitable purposes within the meaning of section 501(c)(3) of 229.23 the Internal Revenue Code, and licensed under chapter 144 or by 229.24 any other jurisdiction. For the purposes of this subdivision, 229.25 "outpatient surgical services" means: (1) services authorized 229.26 or required to be performed by an outpatient surgical center 229.27 under chapter 144 or under the applicable licensure law of any 229.28 other jurisdiction; and (2) urgent care. For purposes of this 229.29 subdivision, "urgent care" means health services furnished to a 229.30 person whose medical condition is sufficiently acute to require 229.31 treatment unavailable through, or inappropriate to be provided 229.32 by, a clinic or physician's office, but not so acute as to 229.33 require treatment in a hospital emergency room. 229.34 (c) This exemption does not apply to the following products 229.35 and services: 229.36 (1) purchases made by a clinic, physician's office, or any 230.1 other medical facility not operating as a hospital or outpatient 230.2 surgical center, even though the clinic, office, or facility may 230.3 be owned and operated by a hospital or outpatient surgical 230.4 center; 230.5 (2) sales under section 297A.61, subdivisions 3, paragraph 230.6 (d), and 16, paragraph (c); 230.7 (3) building and construction materials used in 230.8 constructing buildings or facilities that will not be used 230.9 principally by the hospital or outpatient surgical center; 230.10 (4) building, construction, or reconstruction materials 230.11 purchased by a contractor or a subcontractor as a part of a 230.12 lump-sum contract or similar type of contract with a guaranteed 230.13 maximum price covering both labor and materials for use in the 230.14 construction, alteration, or repair of a hospital or outpatient 230.15 surgical center; or 230.16 (5) the leasing of a motor vehicle as defined in section 230.17 297B.01, subdivision 5. 230.18 (d) A limited liability company also qualifies for 230.19 exemption under this subdivision if (1) it consists of a sole 230.20 member that would qualify for the exemption, and (2) the items 230.21 purchased qualify for the exemption. 230.22 Sec. 30. Minnesota Statutes 2000, section 297A.70, 230.23 subdivision 10, is amended to read: 230.24 Subd. 10. [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 230.25 admissions tothe premises of or events sponsored by an230.26organization that providesan event are exempt if all the gross 230.27 receipts are recorded as such, in accordance with generally 230.28 accepted accounting principles, on the books of one or more 230.29 organizations that provide an opportunity for citizens of the 230.30 state to participate in the creation, performance, or 230.31 appreciation of the artsare exempt if the, and provided that 230.32 each organization is either: 230.33 (1)a tax-exemptan organizationwithin the meaning of230.34Minnesota Statutes 1980, section 290.05, subdivision 1, clause230.35(i),described in section 501(c)(3) of the Internal Revenue Code 230.36 and at least five percent of the organization's annual revenue 231.1 in its most recently completed 12-month fiscal year, or in the 231.2 current year if the organization has not completed a 12-month 231.3 fiscal year, consisted of voluntary contributions; or 231.4 (2) a municipal board that promotes cultural and arts 231.5 activities.The exemption provided with respect to a municipal231.6board applies only to tickets and admissions to events sponsored231.7by the board.231.8 The exemption only applies if the entire proceeds, after 231.9 reasonable expenses, are used solely to provide opportunities 231.10 for citizens of the state to participate in the creation, 231.11 performance, or appreciation of the arts. 231.12 [EFFECTIVE DATE.] This section is effective for tickets and 231.13 admissions to events held after June 30, 2001, but does not 231.14 apply to events for which sales of tickets or admissions were 231.15 made prior to July 1, 2001. 231.16 Sec. 31. Minnesota Statutes 2000, section 297A.70, 231.17 subdivision 13, is amended to read: 231.18 Subd. 13. [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 231.19 (a) The following sales by the specified organizations for 231.20 fundraising purposes are exempt, subject to the limitations 231.21 listed in paragraph (b): 231.22 (1) all sales made by an organization that exists solely 231.23 for the purpose of providing educational or social activities 231.24 for young people primarily age 18 and under; 231.25 (2) all sales made by an organization that is a senior 231.26 citizen group or association of groups if (i) in general it 231.27 limits membership to persons age 55 or older; (ii) it is 231.28 organized and operated exclusively for pleasure, recreation, and 231.29 other nonprofit purposes; and (iii) no part of its net earnings 231.30 inures to the benefit of any private shareholders; 231.31 (3) the sale or use of tickets or admissions to a golf 231.32 tournament held in Minnesota if the beneficiary of the 231.33 tournament's net proceeds qualifies as a tax-exempt organization 231.34 under section 501(c)(3) of the Internal Revenue Code; and 231.35 (4) sales of gum, candy, and candy products sold for 231.36 fundraising purposes by a nonprofit organization that provides 232.1 educational and social activities primarily for young people 18 232.2 years of age and under. 232.3 (b) The exemptions listed in paragraph (a) are limited in 232.4 the following manner: 232.5 (1) the exemption under paragraph (a), clauses (1) and (2), 232.6 applies only if the gross annual receipts of the organization 232.7 from fundraising do not exceed $10,000; and 232.8 (2) the exemption under paragraph (a), clause (1), does not 232.9 apply if the sales are derived from admission charges or from 232.10 activities for which the money must be deposited with the school 232.11 district treasurer under section 123B.49, subdivision 2, or be 232.12 recorded in the same manner as other revenues or expenditures of 232.13 the school district under section 123B.49, subdivision 4. 232.14 (c) Sales of tangible personal property are exempt if the 232.15 entire proceeds, less the necessary expenses for obtaining the 232.16 property, will be contributed to a registered combined 232.17 charitable organization described in section 309.501, to be used 232.18 exclusively for charitable, religious, or educational purposes, 232.19 and the registered combined charitable organization has given 232.20 its written permission for the sale. Sales that occur over a 232.21 period of more than 24 days per year are not exempt under this 232.22 paragraph. 232.23 (d) For purposes of this subdivision, a club, association, 232.24 or other organization of elementary or secondary school students 232.25 organized for the purpose of carrying on sports, educational, or 232.26 other extracurricular activities is a separate organization from 232.27 the school district or school for purposes of applying the 232.28 $10,000 limit. 232.29 [EFFECTIVE DATE.] This section is effective for sales and 232.30 purchases made after June 30, 2001. 232.31 Sec. 32. Minnesota Statutes 2000, section 297A.70, 232.32 subdivision 14, is amended to read: 232.33 Subd. 14. [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 232.34 GROUPS.] (a) Sales of tangible personal property at, and 232.35 admission charges for fundraising events sponsored by, a 232.36 nonprofit organization are exempt if the entire proceeds, less 233.1 the necessary expenses for the event, will be used solely and 233.2 exclusively for charitable, religious, or educational purposes. 233.3 Exempt sales include the sale of food, meals, drinks, and 233.4 taxable services at the fundraising event. 233.5 (b) This exemption is limited in the following manner: 233.6 (1) it does not apply to admission charges for events 233.7 involving bingo or other gambling activities or to charges for 233.8 use of amusement devices involving bingo or other gambling 233.9 activities; 233.10 (2) all gross receipts are taxable if the profits are not 233.11 used solely and exclusively for charitable, religious, or 233.12 educational purposes; 233.13 (3) it does not apply unlessthe organization keeps a233.14separate accounting record, including receipts and disbursements233.15from each fundraising event thatall the gross receipts and 233.16 disbursements from the event are recorded as such, in accordance 233.17 with generally accepted accounting principles, on the books of 233.18 the sponsoring organization, and the organization documents all 233.19 deductions from gross receipts with receipts and other records; 233.20 (4) it does not apply to any sale made by or in the name of 233.21 a nonprofit corporation as the active or passive agent of a 233.22 person that is not a nonprofit corporation; 233.23 (5) all gross receipts are taxable if fundraising events 233.24 exceed 24 days per year; and 233.25 (6) it does not apply to fundraising events conducted on 233.26 premises leased for more than five days but less than 30 days. 233.27 (c) For purposes of this subdivision, a "nonprofit 233.28 organization" means any unit of government, corporation, 233.29 society, association, foundation, or institution organized and 233.30 operated for charitable, religious, educational, civic, 233.31 fraternal, and senior citizens' or veterans' purposes, no part 233.32 of the net earnings of which inures to the benefit of a private 233.33 individual. 233.34 [EFFECTIVE DATE.] This section is effective for tickets and 233.35 admissions to events held after June 30, 2001. 233.36 Sec. 33. Minnesota Statutes 2000, section 297A.71, 234.1 subdivision 3, is amended to read: 234.2 Subd. 3. [CORRECTIONAL FACILITIES.] Building materials and 234.3 supplies for constructing or improving an adult or juvenile 234.4 correctional facility by a county, home rule charter city, or 234.5 statutory city are exempt if the project is mandated by state or 234.6 federal law, rule, or regulation.The tax must be imposed and234.7collected as if the rate under section 297A.62, subdivision 1,234.8applied and then refunded in the manner provided in section234.9297A.75.234.10 [EFFECTIVE DATE.] This section is effective for sales and 234.11 purchases occurring after June 30, 2001. 234.12 Sec. 34. Minnesota Statutes 2000, section 297A.71, 234.13 subdivision 6, is amended to read: 234.14 Subd. 6. [BUSINESS INCUBATOR AND INDUSTRIAL PARK.] 234.15 Building materials and supplies for construction of a facility 234.16 that includes a business incubator and industrial park are 234.17 exempt if the facility: 234.18 (1) is owned and operated by a nonprofit charitable 234.19 organization that qualifies for tax exemption under section 234.20 501(c)(3) of the Internal Revenue Code; 234.21 (2) is used for the development of nonretail businesses, 234.22 offering access to equipment, space, services, and advice to the 234.23 tenant businesses, for the purpose of encouraging economic 234.24 development and job creation in the area served by the 234.25 organization, and emphasizes development of businesses that 234.26 manufacture products from materials found in the waste stream, 234.27 or manufacture alternative energy and conservation systems, or 234.28 make use of emerging environmental technologies; 234.29 (3) includes in its structure systems of material and 234.30 energy exchanges that use waste products from one industrial 234.31 process as sources of energy and material for other processes; 234.32 and 234.33 (4) makes use of solar and wind energy technology and 234.34 incorporates salvaged materials in its construction. 234.35 A limited liability company also qualifies for exemption 234.36 under this subdivision if (1) it consists of a sole member that 235.1 would qualify for the exemption, and (2) the items purchased 235.2 qualify for the exemption. 235.3 Sec. 35. Minnesota Statutes 2000, section 297A.71, is 235.4 amended by adding a subdivision to read: 235.5 Subd. 23. [CONSTRUCTION MATERIALS AND EQUIPMENT; 235.6 AGRICULTURAL PROCESSING MATERIALS.] Materials and supplies used 235.7 or consumed in, and machinery and equipment incorporated into 235.8 the construction, improvement, or expansion of an agricultural 235.9 processing facility are exempt if: 235.10 (1) the facility is owned and operated by a cooperative 235.11 organized under chapter 308A; and 235.12 (2) the total capital investment in the processing facility 235.13 is at least $1,000,000 but no more than $100,000,000. 235.14 The tax must be imposed and collected as if the rate under 235.15 section 297A.62, subdivision 1, applied, and then refunded in 235.16 the manner provided in section 297A.75. 235.17 [EFFECTIVE DATE.] This section is effective for sales and 235.18 purchases made after June 30, 2001. 235.19 Sec. 36. Minnesota Statutes 2000, section 297A.71, is 235.20 amended by adding a subdivision to read: 235.21 Subd. 24. [CONSTRUCTION MATERIALS; YELLOW MEDICINE COUNTY 235.22 LAW ENFORCEMENT AND FAMILY SERVICE CENTER.] Materials and 235.23 supplies used or consumed in, and fixtures, furnishings, and 235.24 equipment incorporated into, the construction, improvement, or 235.25 expansion of the Yellow Medicine county law enforcement and 235.26 family service center are exempt. The tax must be imposed and 235.27 collected as if the rate under section 297A.62, subdivision 1, 235.28 applied and then refunded in the manner prescribed for refunds 235.29 in section 297A.75. 235.30 [EFFECTIVE DATE.] This section is effective for sales and 235.31 purchases made after June 30, 2000, and before January 1, 2003. 235.32 Sec. 37. Minnesota Statutes 2000, section 297A.71, is 235.33 amended by adding a subdivision to read: 235.34 Subd. 25. [POULTRY LITTER BIOMASS GENERATION FACILITY 235.35 CONSTRUCTION MATERIALS AND EQUIPMENT.] Materials and supplies 235.36 used or consumed in, and equipment incorporated into, the 236.1 construction, improvement, or expansion of a facility using 236.2 biomass to generate electricity are exempt if: 236.3 (1) the facility is designed to utilize poultry litter 236.4 biomass as a primary fuel source; and 236.5 (2) the facility generates power under a contract approved 236.6 by the public utilities commission in accordance with the 236.7 biomass mandate imposed under section 216B.2424. 236.8 [EFFECTIVE DATE.] This section is effective for purchases 236.9 and sales after June 30, 2001, and before January 1, 2003. 236.10 Sec. 38. Minnesota Statutes 2000, section 297A.71, is 236.11 amended by adding a subdivision to read: 236.12 Subd. 26. [CONSTRUCTION MATERIALS AND EQUIPMENT; WASTE 236.13 TIRES COGENERATION ELECTRIC GENERATING FACILITY.] Materials and 236.14 supplies used or consumed in, and equipment incorporated into, 236.15 the construction, improvement, or expansion of a facility using 236.16 waste tires to generate electricity are exempt if: 236.17 (1) the facility utilizes waste tires as a primary fuel in 236.18 generating electricity; 236.19 (2) the facility is a cogeneration facility; and 236.20 (3) the installed capacity of the facility is 1 to 25 236.21 megawatts. 236.22 [EFFECTIVE DATE.] This section is effective for purchases 236.23 and sales made on or after June 1, 2001. 236.24 Sec. 39. Minnesota Statutes 2000, section 297A.75, is 236.25 amended to read: 236.26 297A.75 [REFUND; APPROPRIATION.] 236.27 Subdivision 1. [TAX COLLECTED.] The tax on the gross 236.28 receipts from the sale of the following exempt items must be 236.29 imposed and collected as if the sale were taxable and the rate 236.30 under section 297A.62, subdivision 1, applied. The exempt items 236.31 include: 236.32 (1)capital equipment exempt under section 297A.68,236.33subdivision 5;236.34(2)building materials for an agricultural processing 236.35 facility exempt under section 297A.71, subdivision 13; 236.36(3)(2) building materials for mineral production 237.1 facilities exempt under section 297A.71, subdivision 14; 237.2(4) building materials for correctional facilities under237.3section 297A.71, subdivision 3;237.4(5)(3) building materials used in a residence for disabled 237.5 veterans exempt under section 297A.71, subdivision 11;and237.6(6)(4) chair lifts, ramps, elevators, and associated 237.7 building materials exempt under section 297A.71, subdivision 12; 237.8 (5) building materials, supplies, machinery, and equipment 237.9 for an agricultural processing facility under section 297A.71, 237.10 subdivision 23; and 237.11 (6) materials, supplies, fixtures, furnishings, and 237.12 equipment for a county law enforcement and family service center 237.13 under section 297A.71, subdivision 24. 237.14 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 237.15 forms prescribed by the commissioner, a refund equal to the tax 237.16 paid on the gross receipts of the exempt items must be paid to 237.17 the applicant. Only the following persons may apply for the 237.18 refund: 237.19 (1) for subdivision 1, clauses (1)to (3)and (2), the 237.20 applicant must be the purchaser; 237.21 (2) for subdivision 1, clause(4)(6), the applicant must 237.22 be the governmental subdivision; 237.23 (3) for subdivision 1, clause(5)(3), the applicant must 237.24 be the recipient of the benefits provided in United States Code, 237.25 title 38, chapter 21;and237.26 (4) for subdivision 1, clause(6)(4), the applicant must 237.27 be the owner of the homestead property; and 237.28 (5) for subdivision 1, clause (5), the applicant must be 237.29 the owner of the agricultural processing facility. 237.30 Subd. 3. [APPLICATION.](a)The application must include 237.31 sufficient information to permit the commissioner to verify the 237.32 tax paid. If the tax was paid by a contractor, subcontractor, 237.33 or builder, under subdivision 1, clause (3), (4), (5), or (6), 237.34 the contractor, subcontractor, or builder must furnish to the 237.35 refund applicant a statement including the cost of the exempt 237.36 items and the taxes paid on the items unless otherwise 238.1 specifically provided by this subdivision. The provisions of 238.2 sections 289A.40 and 289A.50 apply to refunds under this section. 238.3(b) An applicant may not file more than two applications238.4per calendar year for refunds for taxes paid on capital238.5equipment exempt under section 297A.68, subdivision 5.238.6 Subd. 4. [INTEREST.] Interest must be paid on the refund 238.7 at the rate in section 270.76 from the date the refund claim is 238.8 filed for taxes paid under subdivision 1, clauses (1)to, 238.9 (2), (3), and (5), and from 60 days after the date the refund 238.10 claim is filed with the commissioner for claims filed under 238.11 subdivision 1, clauses (4) and (6). 238.12 Subd. 5. [APPROPRIATION.] The amount required to make the 238.13 refunds is annually appropriated to the commissioner. 238.14 [EFFECTIVE DATE.] This section is effective for sales and 238.15 purchases made after June 30, 2001, except that clause (6) and 238.16 references to clause (6) are effective June 30, 2001, for 238.17 purchases made after June 30, 2000, and before January 1, 2003. 238.18 Sec. 40. Minnesota Statutes 2000, section 297A.80, is 238.19 amended to read: 238.20 297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE TAX.] 238.21 If an article of tangible personal property or an item 238.22 listed in section 297A.63 has already been taxed by another 238.23 state and any subdivision thereof for its sale, storage, use, or 238.24 other consumption in an amount less than the tax imposed by this 238.25 chapter, then as to the person who paid the tax in the other 238.26 state or any subdivision thereof, section 297A.63 applies only 238.27 at a rate measured by the difference between the rate imposed 238.28 under section 297A.62 and the rate by which the previous tax was 238.29 computed. If the tax imposed in the other state or any 238.30 subdivision thereof is equal to or greater than the tax imposed 238.31 in this state, then no tax is due from that person under section 238.32 297A.63. The credit shall be applied first against the amount 238.33 of any use tax due the state, and any unused portion of the 238.34 credit shall then be applied against any use tax due a 238.35 subdivision. 238.36 [EFFECTIVE DATE.] This section is effective for sales and 239.1 purchases occurring after December 31, 2001. 239.2 Sec. 41. Minnesota Statutes 2000, section 297A.82, 239.3 subdivision 3, is amended to read: 239.4 Subd. 3. [PAYMENT OF TAXTO COMMISSIONER.] If the aircraft 239.5 is purchased from a person who is not the holder of a valid 239.6 sales and use tax permit under this chapter, the purchaser shall 239.7 pay the taxto the commissioner of revenueprior to registering 239.8 or licensing the aircraft in this state.The commissioner of239.9revenue shall issue a certificate stating that the sales and use239.10tax in respect to the transaction has been paid.239.11 [EFFECTIVE DATE.] This section is effective for sales and 239.12 purchases occurring after the day following final enactment. 239.13 Sec. 42. Minnesota Statutes 2000, section 297A.82, is 239.14 amended by adding a subdivision to read: 239.15 Subd. 7. [AGREEMENT WITH COMMISSIONER OF 239.16 TRANSPORTATION.] Notwithstanding subdivisions 1 to 4, the 239.17 commissioner may enter into an agreement with the commissioner 239.18 of transportation whereby, upon approval of both commissioners, 239.19 the commissioner of transportation will collect the sales tax on 239.20 aircraft from persons required to register or license aircraft 239.21 in this state. For purposes of collecting the tax, the 239.22 commissioner of transportation shall act as agent of the 239.23 commissioner of revenue and shall be subject to all rules not 239.24 inconsistent with the provisions of this chapter, that may be 239.25 prescribed by the commissioner. 239.26 [EFFECTIVE DATE.] This section is effective the day 239.27 following final enactment. 239.28 Sec. 43. Minnesota Statutes 2000, section 297A.94, is 239.29 amended to read: 239.30 297A.94 [DEPOSIT OF REVENUES.] 239.31 (a) Except as provided in this section, the commissioner 239.32 shall deposit the revenues, including interest and penalties, 239.33 derived from the taxes imposed by this chapter in the state 239.34 treasury and credit them to the general fund. 239.35 (b) The commissioner shall deposit taxes in the Minnesota 239.36 agricultural and economic account in the special revenue fund if: 240.1 (1) the taxes are derived from sales and use of property 240.2 and services purchased for the construction and operation of an 240.3 agricultural resource project; and 240.4 (2) the purchase was made on or after the date on which a 240.5 conditional commitment was made for a loan guaranty for the 240.6 project under section 41A.04, subdivision 3. 240.7 The commissioner of finance shall certify to the commissioner 240.8 the date on which the project received the conditional 240.9 commitment. The amount deposited in the loan guaranty account 240.10 must be reduced by any refunds and by the costs incurred by the 240.11 department of revenue to administer and enforce the assessment 240.12 and collection of the taxes. 240.13 (c) The commissioner shall deposit the revenues, including 240.14 interest and penalties, derived from the taxes imposed on sales 240.15 and purchases included in section 297A.61, subdivision 16, 240.16 paragraphs (b) and(f)(e), in the state treasury, and credit 240.17 them as follows: 240.18 (1) first to the general obligation special tax bond debt 240.19 service account in each fiscal year the amount required by 240.20 section 16A.661, subdivision 3, paragraph (b); and 240.21 (2) after the requirements of clause (1) have been met, the 240.22 balance to the general fund. 240.23 (d) The commissioner shall deposit the revenues, including 240.24 interest and penalties, collected under section 297A.64, 240.25 subdivision 5, in the state treasury and credit them to the 240.26 general fund. By July 15 of each year the commissioner shall 240.27 transfer to the highway user tax distribution fund an amount 240.28 equal to the excess fees collected under section 297A.64, 240.29 subdivision 5, for the previous calendar year. 240.30 (e) For fiscal year 2001, 97 percent, and for fiscal year 240.31 2002 and thereafter, 87 percent of the revenues, including 240.32 interest and penalties, transmitted to the commissioner under 240.33 section 297A.65, must be deposited by the commissioner in the 240.34 state treasury as follows: 240.35 (1) 50 percent of the receipts must be deposited in the 240.36 heritage enhancement account in the game and fish fund, and may 241.1 be spent only on activities that improve, enhance, or protect 241.2 fish and wildlife resources, including conservation, 241.3 restoration, and enhancement of land, water, and other natural 241.4 resources of the state; 241.5 (2) 22.5 percent of the receipts must be deposited in the 241.6 natural resources fund, and may be spent only for state parks 241.7 and trails; 241.8 (3) 22.5 percent of the receipts must be deposited in the 241.9 natural resources fund, and may be spent only on metropolitan 241.10 park and trail grants; 241.11 (4) three percent of the receipts must be deposited in the 241.12 natural resources fund, and may be spent only on local trail 241.13 grants; and 241.14 (5) two percent of the receipts must be deposited in the 241.15 natural resources fund, and may be spent only for the Minnesota 241.16 zoological garden, the Como park zoo and conservatory, and the 241.17 Duluth zoo. 241.18 (f) The revenue dedicated under paragraph (e) may not be 241.19 used as a substitute for traditional sources of funding for the 241.20 purposes specified, but the dedicated revenue shall supplement 241.21 traditional sources of funding for those purposes. Land 241.22 acquired with money deposited in the game and fish fund under 241.23 paragraph (e) must be open to public hunting and fishing during 241.24 the open season. At least 87 percent of the money deposited in 241.25 the game and fish fund for improvement, enhancement, or 241.26 protection of fish and wildlife resources under paragraph (e) 241.27 must be allocated for field operations. 241.28 [EFFECTIVE DATE.] This section is effective for sales and 241.29 purchases made after June 30, 2001. 241.30 Sec. 44. Minnesota Statutes 2000, section 297B.03, is 241.31 amended to read: 241.32 297B.03 [EXEMPTIONS.] 241.33 There is specifically exempted from the provisions of this 241.34 chapter and from computation of the amount of tax imposed by it 241.35 the following: 241.36 (1) purchase or use, including use under a lease purchase 242.1 agreement or installment sales contract made pursuant to section 242.2 465.71, of any motor vehicle by the United States and its 242.3 agencies and instrumentalities and by any person described in 242.4 and subject to the conditions provided in section 297A.25, 242.5 subdivision 18; 242.6 (2) purchase or use of any motor vehicle by any person who 242.7 was a resident of another state or country at the time of the 242.8 purchase and who subsequently becomes a resident of Minnesota, 242.9 provided the purchase occurred more than 60 days prior to the 242.10 date such person began residing in the state of Minnesota and 242.11 the motor vehicle was registered in the person's name in the 242.12 other state or country; 242.13 (3) purchase or use of any motor vehicle by any person 242.14 making a valid election to be taxed under the provisions of 242.15 section 297A.211; 242.16 (4) purchase or use of any motor vehicle previously 242.17 registered in the state of Minnesota when such transfer 242.18 constitutes a transfer within the meaning of section 118, 331, 242.19 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 242.20 1563(a) of the Internal Revenue Code of 1986, as amended through 242.21 December 31, 1999; 242.22 (5) purchase or use of any vehicle owned by a resident of 242.23 another state and leased to a Minnesota based private or for 242.24 hire carrier for regular use in the transportation of persons or 242.25 property in interstate commerce provided the vehicle is titled 242.26 in the state of the owner or secured party, and that state does 242.27 not impose a sales tax or sales tax on motor vehicles used in 242.28 interstate commerce; 242.29 (6) purchase or use of a motor vehicle by a private 242.30 nonprofit or public educational institution for use as an 242.31 instructional aid in automotive training programs operated by 242.32 the institution. "Automotive training programs" includes motor 242.33 vehicle body and mechanical repair courses but does not include 242.34 driver education programs; 242.35 (7) purchase of a motor vehicle for use as an ambulance by 242.36 an ambulance service licensed under section 144E.10; 243.1 (8) purchase of a motor vehicle by or for a public library, 243.2 as defined in section 134.001, subdivision 2, as a bookmobile or 243.3 library delivery vehicle; 243.4 (9) purchase of a ready-mixed concrete truck; 243.5 (10) purchase or use of a motor vehicle by a town for use 243.6 exclusively for road maintenance, including snowplows and dump 243.7 trucks, but not including automobiles, vans, or pickup trucks; 243.8 (11) purchase or use of a motor vehicle by a corporation, 243.9 society, association, foundation, or institution organized and 243.10 operated exclusively for charitable, religious, or educational 243.11 purposes, except a public school, university, or library, but 243.12 only if the vehicle is: 243.13 (i) a truck, as defined in section 168.011, a bus, as 243.14 defined in section 168.011, or a passenger automobile, as 243.15 defined in section 168.011, if the automobile is designed and 243.16 used for carrying more than nine persons including the driver; 243.17 and 243.18 (ii) intended to be used primarily to transport tangible 243.19 personal property or individuals, other than employees, to whom 243.20 the organization provides service in performing its charitable, 243.21 religious, or educational purpose.; and 243.22 (12) a purchase or use of a motor vehicle that draws its 243.23 propulsion energy either: 243.24 (i) solely from an alternative fuel source; or 243.25 (ii) from a rechargeable energy storage system and either 243.26 unleaded gasoline, diesel fuel, or an alternative fuel or a 243.27 mixture of two or more of these fuels. 243.28 For purposes of this clause, "alternative fuel source" 243.29 means a fuel that the United States Department of Energy 243.30 recognizes and classifies as an alternative fuel, including, but 243.31 not limited to: 243.32 (1) alcohol fuels where the fuel mixture consists of at 243.33 least 70 percent by volume of an alcohol product such as 243.34 methanol or denatured alcohol; 243.35 (2) natural gas, whether compressed or liquefied; 243.36 (3) liquefied petroleum gas; 244.1 (4) hydrogen; 244.2 (5) coal-derived liquid fuels; 244.3 (6) fuels derived from biological materials; and 244.4 (7) electricity, including solar power. 244.5 [EFFECTIVE DATE.] This section is effective the day 244.6 following final enactment, except that the amendment to clause 244.7 (11) is effective for sales and purchases occurring after June 244.8 30, 2000, and except that clause (12) is effective for sales and 244.9 purchases made after June 30, 2001, and before January 1, 2005. 244.10 Sec. 45. Laws 1986, chapter 396, section 5, is amended to 244.11 read: 244.12 Sec. 5. [LIQUOR, LODGING, AND RESTAURANT TAXES.] 244.13 The city may, by resolution, levy in addition to taxes 244.14 authorized by other law: 244.15 (1) a sales tax of not more than three percent on the gross 244.16 receipts on retail on-sales of intoxicating liquor and fermented 244.17 malt beverages described in section 473.592 occurring in the 244.18 downtown taxing area, provided that this tax may not be imposed 244.19 if sales of intoxicating liquor and fermented malt beverages are 244.20 exempt from taxation under chapter 297A; 244.21 (2) a sales tax of not more than three percent on the gross 244.22 receipts from the furnishing for consideration of lodging 244.23 described in section 473.592 by a hotel or motel which has more 244.24 than 50 rooms available for lodging; the tax imposed under this 244.25 clause shall be at a rate that, when added to the sum of the 244.26 rate of the sales tax imposed under Minnesota Statutes, chapter 244.27 297A, the rate of the sales tax imposed under section 4, and the 244.28 rate of any other taxes on lodging in the city of Minneapolis, 244.29 equals1213 percent; and 244.30 (3) a sales tax of not more than three percent on the gross 244.31 receipts on all sales of food primarily for consumption on or 244.32 off the premises by restaurants and places of refreshment as 244.33 defined by resolution of the city that occur within the downtown 244.34 taxing area. 244.35 These taxes shall be applied solely to pay costs of collection 244.36 and to pay or secure the payment of any principal of, premium 245.1 and interest on any bonds or any costs referred to in section 4, 245.2 subdivision 3. The commissioner of revenue may enter into 245.3 appropriate agreements with the city to provide for the 245.4 collection of these taxes by the state on behalf of the city. 245.5 The commissioner may charge the city a reasonable fee for its 245.6 collection from the proceeds of any taxes. These taxes shall be 245.7 subject to the same interest penalties and enforcement 245.8 provisions as the taxes imposed under section 473.592. 245.9 Sec. 46. Laws 1999, chapter 243, article 4, section 19, is 245.10 amended to read: 245.11 Sec. 19. [EFFECTIVE DATES.] 245.12 Sections 1, 2, 5, 7, 9, and 11 are effective for sales and 245.13 purchases made after June 30, 1999. 245.14 Section 3 is effective for amended returns and refund 245.15 claims filed on or after July 1, 1999. 245.16 Section 4 is effective the day following final enactment 245.17 and applies retroactively to all open tax years and to 245.18 assessments and appeals under Minnesota Statutes, sections 245.19 289A.38 and 289A.65, for which the time limits have not expired 245.20 on the date of final enactment of this act. The provisions of 245.21 Minnesota Statutes, section 289A.50, apply to refunds claimed 245.22 under section 4. Refunds claimed under section 4 must be filed 245.23 by the later of December 31, 1999, or the time limit under 245.24 Minnesota Statutes, section 289A.40, subdivision 1. 245.25 Section 6 is effective retroactively for sales and 245.26 purchases made after June 30, 1998. 245.27 Section 8 is effective for purchases and sales made after 245.28 the date of final enactment. 245.29 Section 10 is effective for purchases made after the date 245.30 of final enactment and before July 1,20012003. 245.31 Section 12 is effective the day after final enactment. 245.32 Section 12, paragraphs (a) to (c), apply to all local sales 245.33 taxes enacted after July 1, 1999. Section 12, paragraph (d), 245.34 applies to all local sales taxes in effect at the time of, or 245.35 imposed after the day of, the enactment of this section. 245.36 Section 13 is effective the day following final enactment. 246.1 [EFFECTIVE DATE.] This section is effective the day after 246.2 final enactment. 246.3 Sec. 47. Laws 2000, chapter 490, article 8, section 17, 246.4 the effective date, is amended to read: 246.5 EFFECTIVE DATE: This section is effective for sales and 246.6 purchases made after January 1, 2000, and before December 246.7 31,20002001. 246.8 [EFFECTIVE DATE.] This section is effective the day 246.9 following final enactment and applies retroactively to sales and 246.10 purchases made on or after December 31, 2000. 246.11 Sec. 48. [REPORT.] 246.12 By December 1, 2004, the commissioner of commerce, in 246.13 consultation with the commissioner of revenue, shall report to 246.14 the legislative committees over energy and efficiency and tax 246.15 issues, the impact and effectiveness of the exemptions 246.16 authorized in Minnesota Statutes, sections 297A.67, subdivision 246.17 27 and 297B.03, clause (12). This report shall include an 246.18 estimate of the revenue loss to the state as well as an estimate 246.19 on changes in energy consumption. The commissioner shall 246.20 include in the report legislative recommendations as to whether 246.21 and how to reform or extend these exemptions. 246.22 Sec. 49. [REPEALER.] 246.23 (a) Minnesota Statutes 2000, section 289A.60, subdivision 246.24 15, is repealed effective beginning with returns filed after 246.25 January 1, 2002. 246.26 (b) Minnesota Statutes 2000, section 297A.71, subdivisions 246.27 2, 15, and 16, are repealed effective for sales and purchases 246.28 made after June 30, 2002. 246.29 (c) Minnesota Statutes 2000, section 297B.032, is repealed 246.30 effective the day following final enactment. 246.31 ARTICLE 9 246.32 PROPERTY TAXES 246.33 Section 1. [3.99] [LEGISLATIVE COMMISSION ON METROPOLITAN 246.34 GOVERNMENT.] 246.35 Subdivision 1. [ESTABLISHED.] The legislative commission 246.36 on metropolitan government is established to oversee the 247.1 metropolitan council's operating and capital budgets, work 247.2 program, and capital improvement program. 247.3 Subd. 2. [MEMBERSHIP.] The commission consists of four 247.4 senators appointed by the senate subcommittee on committees of 247.5 the committee on rules and administration, three senators 247.6 appointed by the senate minority leader, four state 247.7 representatives appointed by the speaker of the house, and three 247.8 state representatives appointed by the house minority leader. 247.9 All members must reside in or represent a portion of the 247.10 seven-county metropolitan area. The appointing authorities must 247.11 ensure balanced geographic representation. Each appointing 247.12 authority must make appointments as soon as possible after the 247.13 opening of the next regular session of the legislature in each 247.14 odd-numbered year. 247.15 Subd. 3. [TERMS; VACANCIES.] Members of the commission 247.16 serve for a two-year term beginning upon appointment and 247.17 expiring upon appointment of a successor after the opening of 247.18 the next regular session of the legislature in the odd-numbered 247.19 year. A vacancy in the membership of the commission must be 247.20 filled for the unexpired term in a manner that will preserve the 247.21 representation established by this section. 247.22 Subd. 4. [CHAIR.] The commission must meet as soon as 247.23 practicable after members are appointed in each odd-numbered 247.24 year to elect its chair and other officers as it may determine 247.25 necessary. A chair serves a two-year term, expiring in the 247.26 odd-numbered year after a successor is elected. The chair 247.27 alternates biennially between the senate and the house. 247.28 Subd. 5. [COMPENSATION.] Members serve without 247.29 compensation but may be reimbursed for their reasonable expenses 247.30 as members of the legislature. 247.31 Subd. 6. [STAFF.] Legislative staff must provide 247.32 administrative and research assistance to the commission. 247.33 Subd. 7. [MEETINGS; PROCEDURES.] The commission must meet 247.34 at the call of the chair. If there is a quorum, the commission 247.35 may take action by a simple majority vote of commission members 247.36 present. 248.1 Subd. 8. [POWERS; DUTIES; METROPOLITAN COUNCIL LEVY, 248.2 BUDGET OVERSIGHT.] The commission must monitor, review, and make 248.3 recommendations to the metropolitan council and to the 248.4 legislature for the following calendar year on: 248.5 (1) the tax rate and dollar amount of the metropolitan 248.6 council's property tax levies and any proposed increases in the 248.7 rate or dollar amount of tax; 248.8 (2) any request for an increase in the debt of the 248.9 metropolitan council; 248.10 (3) the overall work and role of the metropolitan council; 248.11 (4) the metropolitan council's proposed operating and 248.12 capital budgets, work program, and capital improvement program; 248.13 and 248.14 (5) the metropolitan council's implementation of the 248.15 operating and capital budgets, work program, and capital 248.16 improvement program. 248.17 Subd. 9. [POWERS; DUTIES; METROPOLITAN COUNCIL 248.18 APPOINTMENTS OVERSIGHT.] The commission must monitor 248.19 appointments to the metropolitan council and may make 248.20 recommendations on appointments to the nominating committee 248.21 under section 473.123, subdivision 3, or to the governor before 248.22 the governor makes the appointments. The commission may also 248.23 make recommendations to the senate before appointments are 248.24 presented to the senate for its advice and consent. 248.25 Subd. 10. [EXPIRATION.] This section expires July 1, 2007. 248.26 [EFFECTIVE DATE.] This section is effective July 1, 2001. 248.27 Sec. 2. [103B.253] [COUNTY LEVY AUTHORITY.] 248.28 Notwithstanding any other law to the contrary, a county 248.29 levying a tax under section 103B.241, 103B.245, or 103B.251 248.30 shall not include any taxes levied under those authorities in 248.31 the levy certified under section 275.07, subdivision 1, 248.32 paragraph (a). A county levying under section 103B.241, 248.33 103B.245, or 103B.251 shall separately certify that amount and 248.34 the auditor shall extend that levy as a special taxing district 248.35 levy under sections 275.066 and 275.07, subdivision 1, paragraph 248.36 (b). 249.1 [EFFECTIVE DATE.] This section is effective for taxes 249.2 levied in 2001, payable in 2002, and thereafter. 249.3 Sec. 3. Minnesota Statutes 2000, section 103D.905, 249.4 subdivision 3, is amended to read: 249.5 Subd. 3. [ADMINISTRATIVEGENERAL FUND.]An administrative249.6 A general fund, consisting of an ad valorem tax levy, may not 249.7 exceed0.024180.048 percent of taxable market value, or 249.8$125,000$250,000, whichever is less. The money in the fund 249.9 shall be used for general administrative expenses and for the 249.10 construction or implementation and maintenance of projects of 249.11 common benefit to the watershed district. The managers may make 249.12 an annual levy for theadministrativegeneral fund as provided 249.13 in section 103D.911. In addition to the annualadministrative249.14 general levy, the managers may annually levy a tax not to exceed 249.15 0.00798 percent of taxable market value for a period not to 249.16 exceed 15 consecutive years to pay the cost attributable to the 249.17 basic water management features of projects initiated by 249.18 petition of amunicipality ofpolitical subdivision within the 249.19 watershed district or by petition of at least 50 resident owners 249.20 whose property is within the watershed district. 249.21 [EFFECTIVE DATE.] This section is effective for taxes 249.22 levied in 2001, payable in 2002, and thereafter. 249.23 Sec. 4. [144F.01] [EMERGENCY MEDICAL SERVICES SPECIAL 249.24 TAXING DISTRICTS.] 249.25 Subdivision 1. [POLITICAL SUBDIVISION DEFINED.] In this 249.26 section, "political subdivision" means a county, a statutory or 249.27 home rule charter city, or a township organized to provide town 249.28 government. 249.29 Subd. 2. [WHO MAY ESTABLISH.] Two or more political 249.30 subdivisions, or parts of them, may establish by resolution of 249.31 their governing bodies a special taxing district for emergency 249.32 medical services. The participating territory of a 249.33 participating political subdivision need not abut any other 249.34 participating territory to be in the special taxing district. 249.35 Subd. 3. [BOARD.] The special taxing district under this 249.36 section is governed by a board made up initially of 250.1 representatives of each participating political subdivision in 250.2 the proportions set out in the establishing resolution, subject 250.3 to change as provided in the district's charter, if any, or in 250.4 the district's bylaws. Each participant's representative serves 250.5 at the pleasure of that participant's governing body. 250.6 Subd. 4. [PROPERTY TAX LEVY AUTHORITY.] The district's 250.7 board may levy a tax on the taxable real and personal property 250.8 in the district. The ad valorem tax levy may not exceed 0.048 250.9 percent of the taxable market value of the district or $250,000, 250.10 whichever is less. The proceeds of the levy must be used as 250.11 provided in subdivision 5. The board shall certify the levy at 250.12 the times as provided under section 275.07. The board shall 250.13 provide the county with whatever information is necessary to 250.14 identify the property that is located within the district. If 250.15 the boundaries include a part of a parcel, the entire parcel 250.16 shall be included in the district. The county auditors must 250.17 spread, collect, and distribute the proceeds of the tax at the 250.18 same time and in the same manner as provided by law for all 250.19 other property taxes. 250.20 Subd. 5. [USE OF LEVY PROCEEDS.] The proceeds of property 250.21 taxes levied under this section must be used to support the 250.22 providing of out-of-hospital emergency medical services 250.23 including, but not limited to, first responder or rescue squads 250.24 recognized by the district, ambulance services licensed under 250.25 chapter 144E and recognized by the district, medical control 250.26 functions set out in chapter 144E, communications equipment and 250.27 systems, and programs of regional emergency medical services 250.28 authorized by regional boards described in section 144E.52. 250.29 Subd. 6. [ADVISORY COMMITTEE.] A special taxing district 250.30 board under this section must have an advisory committee to 250.31 advise the board on issues involving emergency medical services 250.32 and EMS communications. The committee's membership must be 250.33 comprised of representatives of first responders, ambulance 250.34 services, ambulance medical directors, and EMS communication 250.35 experts. The advisory committee members serve at the pleasure 250.36 of the appointing board. 251.1 Subd. 7. [POWERS.] (a) In addition to authority expressly 251.2 granted in this section, a special taxing district under this 251.3 section may exercise any power that may be exercised by any of 251.4 its participating political subdivisions, except that the board 251.5 may not incur debt. The special taxing district may only use 251.6 the power to do what is necessary or reasonable to support the 251.7 services set out in subdivision 5. 251.8 (b) Notwithstanding paragraph (a), the district may only 251.9 levy the taxes authorized in this section. 251.10 Subd. 8. [ADDITIONS AND WITHDRAWALS.] (a) Additional 251.11 eligible political subdivisions may be added to a special taxing 251.12 district under this section as provided by the board of the 251.13 district and agreed to in a resolution of the governing body of 251.14 the political subdivision proposed to be added. 251.15 (b) A political subdivision may withdraw from a special 251.16 taxing district under this section by resolution of its 251.17 governing body. The political subdivision must notify the board 251.18 of the special taxing district of the withdrawal by providing a 251.19 copy of the resolution at least one year in advance of the 251.20 proposed withdrawal. The taxable property of the withdrawing 251.21 member is subject to the property tax levy under subdivision 4 251.22 for the taxes payable year following the notice of the 251.23 withdrawal, unless the board and the withdrawing member agree 251.24 otherwise by action of their governing bodies. 251.25 (c) Notwithstanding subdivision 2, if the district is 251.26 comprised of only two political subdivisions and one of the 251.27 political subdivisions withdraws, the district can continue to 251.28 exist. 251.29 Subd. 9. [DISSOLUTION.] If the special taxing district is 251.30 dissolved, the assets and liabilities may be assigned to a 251.31 successor entity, if any, or otherwise disposed of for public 251.32 purposes as provided by law. 251.33 [EFFECTIVE DATE.] This section is effective for taxes 251.34 levied in 2002, payable in 2003, through taxes levied in 2007, 251.35 payable in 2008. 251.36 Sec. 5. Minnesota Statutes 2000, section 270.11, is 252.1 amended by adding a subdivision to read: 252.2 Subd. 8. [SPECIALIZED ASSISTANCE TO ASSESSORS.] Upon 252.3 request of a county assessor, the commissioner of revenue shall, 252.4 through the commissioner's regional representatives, advise and 252.5 assist the assessor in assessing commercial and industrial 252.6 single-use property, preparing for tax court proceedings, and 252.7 performing other functions or duties requiring specialized 252.8 knowledge or experience. 252.9 Sec. 6. Minnesota Statutes 2000, section 271.01, 252.10 subdivision 5, is amended to read: 252.11 Subd. 5. [JURISDICTION.] The tax court shall have 252.12 statewide jurisdiction. Except for an appeal to the supreme 252.13 court or any other appeal allowed under this subdivision, the 252.14 tax court shall be the sole, exclusive, and final authority for 252.15 the hearing and determination of all questions of law and fact 252.16 arising under the tax laws of the state, as defined in this 252.17 subdivision, in those cases that have been appealed to the tax 252.18 court and in any case that has been transferred by the district 252.19 court to the tax court. The tax court shall have no 252.20 jurisdiction in any case that does not arise under the tax laws 252.21 of the state or in any criminal case or in any case determining 252.22 or granting title to real property or in any case that is under 252.23 the probate jurisdiction of the district court. The small 252.24 claims division of the tax court shall have no jurisdiction in 252.25 any case dealing with property valuation or assessment for 252.26 property tax purposes until the taxpayer has appealed the 252.27 valuation or assessment to the county board of equalization, and 252.28 in those towns and cities which have not transferred their 252.29 duties to the county, the town or city board of equalization, 252.30 except for: (i) those taxpayers whose original assessments are 252.31 determined by the commissioner of revenue;and(ii) those 252.32 taxpayers appealing a denial of a current year application for 252.33 the homestead classification for their property and the denial 252.34 was not reflected on a valuation notice issued in the year; and 252.35 (iii) any case dealing with property valuation, assessment, or 252.36 taxation for property tax purposes and meeting the 253.1 jurisdictional requirements of section 271.21, subdivision 2, 253.2 paragraph (c). The tax court shall have no jurisdiction in any 253.3 case involving an order of the state board of equalization 253.4 unless a taxpayer contests the valuation of property. Laws 253.5 governing taxes, aids, and related matters administered by the 253.6 commissioner of revenue, laws dealing with property valuation, 253.7 assessment or taxation of property for property tax purposes, 253.8 and any other laws that contain provisions authorizing review of 253.9 taxes, aids, and related matters by the tax court shall be 253.10 considered tax laws of this state subject to the jurisdiction of 253.11 the tax court. This subdivision shall not be construed to 253.12 prevent an appeal, as provided by law, to an administrative 253.13 agency, board of equalization, review under section 274.13, 253.14 subdivision 1c, or to the commissioner of revenue. Wherever 253.15 used in this chapter, the term commissioner shall mean the 253.16 commissioner of revenue, unless otherwise specified. 253.17 Sec. 7. Minnesota Statutes 2000, section 271.21, 253.18 subdivision 2, is amended to read: 253.19 Subd. 2. [JURISDICTION.] At the election of the taxpayer, 253.20 the small claims division shall have jurisdiction only in the 253.21 following matters: 253.22 (a) cases involving valuation, assessment, or taxation of 253.23 real or personal property, if the taxpayer has satisfied the 253.24 requirements of section 271.01, subdivision 5, and: (i) the 253.25 issue is a denial of a current year application for the 253.26 homestead classification for the taxpayer's property and the 253.27 denial was not reflected on a valuation notice issued in the 253.28 year; or (ii) in the case of nonhomestead property, the 253.29 assessor's estimated market value is less than $100,000;or253.30 (b) any other case concerning the tax laws as defined in 253.31 section 271.01, subdivision 5, in which the amount in 253.32 controversy does not exceed $5,000, including penalty and 253.33 interest; or 253.34 (c) cases involving valuation, assessment, or taxation of 253.35 real or personal property if: 253.36 (i) the issue is a denial of a current year application for 254.1 the homestead classification for the taxpayer's property; 254.2 (ii) only one parcel is included in the petition, the 254.3 entire parcel is classified as homestead 1a or 1b pursuant to 254.4 section 273.13, and the parcel contains no more than one 254.5 dwelling unit; or 254.6 (iii) the assessor's estimated market value of the property 254.7 included in the petition is less than $300,000. 254.8 Sec. 8. Minnesota Statutes 2000, section 272.02, 254.9 subdivision 9, is amended to read: 254.10 Subd. 9. [PERSONAL PROPERTY; EXCEPTIONS.] Except for the 254.11 taxable personal property enumerated below, all personal 254.12 property and the property described insectionsections 272.03, 254.13 subdivision 1, paragraphs (c) and (d), and 272.028 shall be 254.14 exempt. 254.15 The following personal property shall be taxable: 254.16 (a) except as provided in section 272.028, personal 254.17 property which is part of an electric generating, transmission, 254.18 or distribution system or a pipeline system transporting or 254.19 distributing water, gas, crude oil, or petroleum products or 254.20 mains and pipes used in the distribution of steam or hot or 254.21 chilled water for heating or cooling buildings and structures; 254.22 (b) railroad docks and wharves which are part of the 254.23 operating property of a railroad company as defined in section 254.24 270.80; 254.25 (c) personal property defined in section 272.03, 254.26 subdivision 2, clause (3); 254.27 (d) leasehold or other personal property interests which 254.28 are taxed pursuant to section 272.01, subdivision 2; 273.124, 254.29 subdivision 7; or 273.19, subdivision 1; or any other law 254.30 providing the property is taxable as if the lessee or user were 254.31 the fee owner; 254.32 (e) manufactured homes and sectional structures, including 254.33 storage sheds, decks, and similar removable improvements 254.34 constructed on the site of a manufactured home, sectional 254.35 structure, park trailer or travel trailer as provided in section 254.36 273.125, subdivision 8, paragraph (f); and 255.1 (f) flight property as defined in section 270.071. 255.2 [EFFECTIVE DATE.] This section is effective for the 2001 255.3 assessment and thereafter. 255.4 Sec. 9. Minnesota Statutes 2000, section 272.02, 255.5 subdivision 10, is amended to read: 255.6 Subd. 10. [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 255.7 Personal property used primarily for the abatement and control 255.8 of air, water, or land pollution is exempt to the extent that it 255.9 is so used, and real property is exempt if it is used primarily 255.10 for abatement and control of air, water, or land pollution as 255.11 part of an agricultural operation, as a part of a centralized 255.12 treatment and recovery facility operating under a permit issued 255.13 by the Minnesota pollution control agency pursuant to chapters 255.14 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 255.15 and 7045.0020 to 7045.1260, as a wastewater treatment facility 255.16 and for the treatment, recovery, and stabilization of metals, 255.17 oils, chemicals, water, sludges, or inorganic materials from 255.18 hazardous industrial wastes, or as part of an electric 255.19 generation system. For purposes of this subdivision, personal 255.20 property includes ponderous machinery and equipment used in a 255.21 business or production activity that at common law is considered 255.22 real property. 255.23 Any taxpayer requesting exemption of all or a portion of 255.24 any real property or any equipment or device, or part thereof, 255.25 operated primarily for the control or abatement of airor, 255.26 water, or land pollution shall file an application with the 255.27 commissioner of revenue.The equipment or device shall meet255.28standards, rules, or criteria prescribed by the Minnesota255.29pollution control agency, and must be installed or operated in255.30accordance with a permit or order issued by that agency.The 255.31 Minnesota pollution control agency shall upon request of the 255.32 commissioner furnish informationorand advice to the 255.33 commissioner. 255.34 The information and advice furnished by the Minnesota 255.35 pollution control agency must include statements as to whether 255.36 the equipment, device, or real property meets a standard, rule, 256.1 criteria, guideline, policy, or order of the Minnesota pollution 256.2 control agency, and whether the equipment, device, or real 256.3 property is installed or operated in accordance with it. On 256.4 determining that property qualifies for exemption, the 256.5 commissioner shall issue an order exempting the property from 256.6 taxation. The equipmentor, device, or real property shall 256.7 continue to be exempt from taxation as long as thepermitorder 256.8 issued by theMinnesota pollution control agencycommissioner 256.9 remains in effect. 256.10 [EFFECTIVE DATE.] This section is effective for exemption 256.11 applications received on or after July 1, 2001. 256.12 Sec. 10. Minnesota Statutes 2000, section 272.02, 256.13 subdivision 22, is amended to read: 256.14 Subd. 22. [WIND ENERGY CONVERSION SYSTEMS.] (a) Small 256.15 scale wind energy conversion systems installed after January 1, 256.16 1991, and used as an electric power source are exempt. 256.17 "Small scale wind energy conversion systems" are wind 256.18 energy conversion systems, as defined in section 216C.06, 256.19 subdivision 12, including the foundation or support pad, which 256.20 (i) are used as an electric power source; (ii) are located 256.21 within one county and owned by the same owner; and (iii) produce 256.22 two megawatts or less of electricity as measured by nameplate 256.23 ratings. 256.24 (b) Medium scale wind energy conversion systems installed 256.25 after January 1, 1991, are treated as follows: (i) the 256.26 foundation and support pad are taxable; (ii) the associated 256.27 supporting and protective structures are exempt for the first 256.28 five assessment years after they have been constructed, and 256.29 thereafter, 30 percent of the market value of the associated 256.30 supporting and protective structures are taxable; and (iii) the 256.31 turbines, blades, transformers, and its related equipment, are 256.32 exempt. "Medium scale wind energy conversion systems" are wind 256.33 energy conversion systems as defined in section 216C.06, 256.34 subdivision 12, including the foundation or support pad, which: 256.35 (i) are used as an electric power source; (ii) are located 256.36 within one county and owned by the same owner; and (iii) produce 257.1 more than two but equal to or less than 12 megawatts of energy 257.2 as measured by nameplate ratings. 257.3 (c) Large scale wind energy conversion systems installed 257.4 after January 1, 1991, are treated as follows: 25 percent of 257.5 the market value of all property is taxable, including (i) the 257.6 foundation and support pad; (ii) the associated supporting and 257.7 protective structures; and (iii) the turbines, blades, 257.8 transformers, and its related equipment. "Large scale wind 257.9 energy conversion systems" are wind energy conversion systems as 257.10 defined in section 216C.06, subdivision 12, including the 257.11 foundation or support pad, which (i) are used as an electric 257.12 power source; and (ii) produce more than 12 megawatts of energy 257.13 as measured by nameplate ratings. 257.14 (d) The total size of a wind energy conversion system under 257.15 this subdivision shall be determined according to this paragraph. 257.16 Unless the systems are interconnected with different 257.17 distribution systems, the nameplate capacity of one wind energy 257.18 conversion system shall be combined with the nameplate capacity 257.19 of any other wind energy conversion system that is: 257.20 (1) located within five miles of the wind energy conversion 257.21 system; 257.22 (2) constructed within the same calendar year as the wind 257.23 energy conversion system; and 257.24 (3) under common ownership. 257.25 In the case of a dispute, the commissioner of commerce 257.26 shall determine the total size of the system, and shall draw all 257.27 reasonable inferences in favor of combining the systems. 257.28 (e) In making a determination under paragraph (d), the 257.29 commissioner of commerce may determine that two wind energy 257.30 conversion systems are under common ownership when the 257.31 underlying ownership structure contains similar persons or 257.32 entities, even if the ownership shares differ between the two 257.33 systems. Wind energy conversion systems are not under common 257.34 ownership solely because the same person or entity provided 257.35 equity financing for the systems. 257.36 [EFFECTIVE DATE.] This section is effective for wind energy 258.1 conversion systems installed after January 1, 2001. 258.2 Sec. 11. Minnesota Statutes 2000, section 272.02, is 258.3 amended by adding a subdivision to read: 258.4 Subd. 45. [PUBLICLY OWNED PARKING FACILITIES.] Parking 258.5 lots, ramps, structures, garages, and other facilities for 258.6 vehicle parking owned by a municipality or authority established 258.7 under chapter 469 or any affiliate nonprofit corporate entity 258.8 organized by a municipality or authority are exempt, including 258.9 those parking lots, ramps, structures, garages, and other 258.10 facilities that are in whole or in part operated by, used by, 258.11 leased, or subleased to an individual or nonprofit or for-profit 258.12 entity. 258.13 [EFFECTIVE DATE.] This section is effective for assessment 258.14 year 2001 and thereafter. 258.15 Sec. 12. Minnesota Statutes 2000, section 272.02, is 258.16 amended by adding a subdivision to read: 258.17 Subd. 46. [RESIDENTIAL BUILDINGS ON TEMPORARY SITES.] A 258.18 newly constructed building that is situated on real property is 258.19 exempt if it is: 258.20 (1) intended for future residential occupancy; 258.21 (2) on a temporary foundation and intended to be moved; 258.22 (3) not used as a model or for any other business purposes; 258.23 (4) not connected to any utilities; and 258.24 (5) located on land that will not be sold with the building. 258.25 The exemption under this subdivision is allowable for only 258.26 one assessment year after the date of the initial construction 258.27 of the building. 258.28 [EFFECTIVE DATE.] This section is effective for assessment 258.29 year 2001 and thereafter. 258.30 Sec. 13. Minnesota Statutes 2000, section 272.02, is 258.31 amended by adding a subdivision to read: 258.32 Subd. 47. [POULTRY LITTER BIOMASS GENERATION FACILITY; 258.33 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 258.34 attached machinery and other personal property which is part of 258.35 an electrical generating facility that meets the requirements of 258.36 this subdivision is exempt. At the time of construction, the 259.1 facility must: 259.2 (1) be designed to utilize poultry litter as a primary fuel 259.3 source; and 259.4 (2) be constructed for the purpose of generating power at 259.5 the facility that will be sold pursuant to a contract approved 259.6 by the public utilities commission in accordance with the 259.7 biomass mandate imposed under section 216B.2424. 259.8 Construction of the facility must be commenced after 259.9 January 1, 2000, and before December 31, 2002. Property 259.10 eligible for this exemption does not include electric 259.11 transmission lines and interconnections or gas pipelines and 259.12 interconnections appurtenant to the property or the facility. 259.13 [EFFECTIVE DATE.] This section is effective for assessment 259.14 year 2001 and thereafter. 259.15 Sec. 14. Minnesota Statutes 2000, section 272.02, is 259.16 amended by adding a subdivision to read: 259.17 Subd. 48. [WASTE TIRE COGENERATION FACILITY; PERSONAL 259.18 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 259.19 machinery and other personal property which is part of an 259.20 electric generating facility that meets the requirements of this 259.21 subdivision is exempt. At the time of construction, the 259.22 facility must: 259.23 (1) be designed to utilize waste tires as a primary fuel 259.24 source; and 259.25 (2) be a cogeneration electric generating facility of 15 to 259.26 25 megawatts of installed capacity. 259.27 Construction of the facility must be commenced after 259.28 January 1, 2000, and before January 1, 2004. Property eligible 259.29 for this exemption does not include electric transmission lines 259.30 and interconnections or gas pipelines and interconnections 259.31 appurtenant to the property or the facility. 259.32 [EFFECTIVE DATE.] This section is effective for assessment 259.33 year 2001 and thereafter. 259.34 Sec. 15. Minnesota Statutes 2000, section 272.02, is 259.35 amended by adding a subdivision to read: 259.36 Subd. 49. [BIOMASS ELECTRICAL GENERATION FACILITY; 260.1 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 260.2 attached machinery and other personal property which is part of 260.3 an electrical generating facility that meets the requirements of 260.4 this subdivision is exempt. At the time of construction, the 260.5 facility must: 260.6 (1) be designed to utilize biomass as established in 260.7 section 216B.2424 as a primary fuel source; and 260.8 (2) be constructed for the purpose of generating power at 260.9 the facility that will be sold pursuant to a contract approved 260.10 by the public utilities commission in accordance with the 260.11 biomass mandate imposed under section 216B.2424. 260.12 Construction of the facility must be commenced after 260.13 January 1, 2000, and before December 31, 2002. Property 260.14 eligible for this exemption does not include electric 260.15 transmission lines and interconnections or gas pipelines and 260.16 interconnections appurtenant to the property or facility. 260.17 [EFFECTIVE DATE.] This section is effective for assessment 260.18 year 2001 and thereafter. 260.19 Sec. 16. Minnesota Statutes 2000, section 272.02, is 260.20 amended by adding a subdivision to read: 260.21 Subd. 50. [AGRICULTURAL HISTORICAL SOCIETY PROPERTY; 260.22 EDUCATIONAL PURPOSES.] Property is exempt from taxation if it: 260.23 (1) is owned and operated by a nonprofit charitable 260.24 organization that qualifies for tax exemption under section 260.25 501(c)(3) of the Internal Revenue Code of 1986, as amended; and 260.26 (2) is primarily used for agricultural educational purposes 260.27 including acquiring, preserving, restoring, and exhibiting 260.28 artifacts and other items useful in providing an understanding 260.29 of local or regional agricultural history. 260.30 The exemption under this subdivision is limited to a 260.31 maximum of $100,000 market value for a nonprofit charitable 260.32 organization. 260.33 [EFFECTIVE DATE.] This section is effective for assessment 260.34 year 2001 and thereafter. 260.35 Sec. 17. [272.028] [PERSONAL PROPERTY USED TO GENERATE 260.36 ELECTRICITY.] 261.1 Subdivision 1. [NEW PLANT CONSTRUCTION AFTER JANUARY 1, 261.2 2001.] For a new generating plant built and placed in service 261.3 after January 1, 2001, personal property used to generate 261.4 electric power is exempt if an exemption of generation personal 261.5 property form, with an attached siting agreement, signed by the 261.6 utility and the host taxing authorities is filed with the 261.7 department of revenue. The siting agreement may include a plan 261.8 to provide fees or compensation to the host jurisdictions. 261.9 Subd. 2. [EXISTING PLANT; INCREASE IN NAMEPLATE CAPACITY.] 261.10 For a plant existing or under construction on the day of final 261.11 enactment of this act, a partial exemption applies if an 261.12 exemption of generation personal property form, with an attached 261.13 siting agreement, signed by the utility and the host taxing 261.14 authorities is filed with the department of revenue, and if the 261.15 nameplate capacity of the plant is increased from that existing 261.16 on the day of final enactment of this act. The siting agreement 261.17 may include a plan to provide fees or compensation to the host 261.18 jurisdictions. This partial exemption must be computed by 261.19 taking the increase in megawatts over the total megawatt 261.20 nameplate capacity after construction is complete, multiplied by 261.21 the market value of all taxable tools, implements, and machinery 261.22 of the generating plant as determined by the commissioner of 261.23 revenue. The resulting exemption is effective beginning in the 261.24 next assessment year. 261.25 Subd. 3. [EXISTING PLANT; NO INCREASE IN NAMEPLATE 261.26 CAPACITY; CAPITAL EXPENDITURES.] (a) For a plant existing on the 261.27 day of final enactment of this act, a reduction in market value 261.28 of the personal property of a plant applies if the utility: 261.29 (1) has made capital expenditures to the plant in a 261.30 calendar year that exceed two percent of the estimated market 261.31 value of the plant for the previous year; and 261.32 (2) applies to the commissioner of revenue and provides 261.33 information documenting the amount of capital expenditures made 261.34 in the calendar year, in the form prescribed by the commissioner. 261.35 The market value reduction equals 75 percent of the capital 261.36 expenditures made, except the market value reductions under this 262.1 subdivision may not exceed 25 percent of the plant's market 262.2 value, excluding the reductions under this section for prior 262.3 years. The reduction applies beginning for the first assessment 262.4 year after the qualifying capital expenditures are made. 262.5 (b) The reduction in market value determined under this 262.6 subdivision applies after the commissioner has allocated the 262.7 utility's market value, using the unit value method, to the 262.8 taxing jurisdiction where the plant is located. The market 262.9 value reduction is permanent and applies in each subsequent 262.10 assessment year. 262.11 (c) For purposes of this subdivision, "capital expenditures" 262.12 excludes any expenditures made for ordinary plant maintenance or 262.13 repair. 262.14 Subd. 4. [DEFINITION; APPLICABILITY.] For purposes of this 262.15 section, "personal property" means tools, implements, and 262.16 machinery of the generating plant. The exemption under this 262.17 section does not apply to transformers, transmission lines, 262.18 distribution lines, or any other tools, implements, and 262.19 machinery that are part of an electric substation, wherever 262.20 located. 262.21 [EFFECTIVE DATE.] This section is effective the day 262.22 following final enactment. 262.23 Sec. 18. Minnesota Statutes 2000, section 273.061, 262.24 subdivision 1, is amended to read: 262.25 Subdivision 1. [OFFICE CREATED; APPOINTMENT, 262.26 QUALIFICATIONS.] Every county in this state shall have a county 262.27 assessor. The county assessor shall be appointed by the board 262.28 of county commissioners. The assessor shall be selected and 262.29 appointed because of knowledge and training in the field of 262.30 property taxation and appointment shall be approved by the 262.31 commissioner of revenue before the same shall become effective. 262.32 Upon receipt by the county commissioners of the commissioner of 262.33 revenue's refusal to approve an appointment, the term of the 262.34 appointee shall terminate at the end of that day. 262.35 The commissioner of revenue may grant approval on a 262.36 probationary basis for a period of two years. The commissioner 263.1 must base the decision to impose a probationary period on 263.2 objective and consistent criteria. At the end of the two-year 263.3 probationary period, the commissioner may either refuse to 263.4 approve the person's appointment for the remainder of the 263.5 person's four-year term, approve the person's appointment but 263.6 only for another two-year probationary period, or 263.7 unconditionally approve the person's appointment for the 263.8 remainder of the four-year term for which the person was 263.9 originally appointed by the county board. The criteria shall 263.10 not be considered rules and are not subject to the 263.11 Administrative Procedure Act. 263.12 Notwithstanding any law to the contrary, a county assessor 263.13 must have senior accreditation from the state board of assessors 263.14 by January 1, 1992, or within two years of the assessor's first 263.15 appointment under this section, whichever is later. 263.16 [EFFECTIVE DATE.] This section is effective the day 263.17 following final enactment. 263.18 Sec. 19. Minnesota Statutes 2000, section 273.061, 263.19 subdivision 2, is amended to read: 263.20 Subd. 2. [TERM; VACANCY.] (a) The terms of county 263.21 assessors appointed under this section shall be four years. A 263.22 new term shall begin on January 1 of every fourth year after 263.23 1973. When any vacancy in the office occurs, the board of 263.24 county commissioners, within3090 days thereafter, shall fill 263.25 the same by appointment for the remainder of the term, following 263.26 the procedure prescribed in subdivision 1. The term of the 263.27 county assessor may be terminated by the board of county 263.28 commissioners at any time, on charges ofinefficiency or neglect263.29of dutymalfeasance, misfeasance, or nonfeasance by the 263.30 commissioner of revenue. If the board of county commissioners 263.31 does not intend to reappoint a county assessor who has been 263.32 certified by the state board of assessors, the board shall 263.33 present written notice to the county assessor not later than 90 263.34 days prior to the termination of the assessor's term, that it 263.35 does not intend to reappoint the assessor. If written notice is 263.36 not timely made, the county assessor will automatically be 264.1 reappointed by the board of county commissioners. 264.2 The commissioner of revenue may recommend to the state 264.3 board of assessors the nonrenewal, suspension, or revocation of 264.4 an assessor's license as provided in sections 270.41 to 270.53. 264.5 (b) In the event of a vacancy in the office of county 264.6 assessor, through death, resignation or other reasons, the 264.7 deputy (or chief deputy, if more than one) shall perform the 264.8 functions of the office. If there is no deputy, the county 264.9 auditor shall designate a person to perform the duties of the 264.10 office until an appointment is made as provided in clause (a). 264.11 Such person shall perform the duties of the office for a period 264.12 not exceeding3090 days during which the county board must 264.13 appoint a county assessor. Such30-day90-day period may, 264.14 however, be extended by written approval of the commissioner of 264.15 revenue. 264.16 (c) In the case of the first appointment under paragraph 264.17 (a) of a county assessor who is accredited but who does not have 264.18 senior accreditation, an approval of the appointment by the 264.19 commissioner shall be provisional, provided that a county 264.20 assessor appointed to a provisional term under this paragraph 264.21 must reapply to the commissioner at the end of the provisional 264.22 term. A provisional term may not exceed two years. The 264.23 commissioner shall not approve the appointment for the remainder 264.24 of the four-year term unless the assessor has obtained senior 264.25 accreditation. 264.26 [EFFECTIVE DATE.] This section is effective the day 264.27 following final enactment. 264.28 Sec. 20. Minnesota Statutes 2000, section 273.061, 264.29 subdivision 8, is amended to read: 264.30 Subd. 8. [POWERS AND DUTIES.] The county assessor shall 264.31 have the following powers and duties: 264.32 (1) To call upon and confer with the township and city 264.33 assessors in the county, and advise and give them the necessary 264.34 instructions and directions as to their duties under the laws of 264.35 this state, to the end that a uniform assessment of all real 264.36 property in the county will be attained. 265.1 (2) To assist and instruct the local assessors in the 265.2 preparation and proper use of land maps and record cards, in the 265.3 property classification of real and personal property, and in 265.4 the determination of proper standards of value. 265.5 (3) To keep the local assessors in the county advised of 265.6 all changes in assessment laws and all instructions which the 265.7 assessor receives from the commissioner of revenue relating to 265.8 their duties. 265.9 (4) Tohave authority torequire the attendance of groups 265.10 of local assessors at sectional meetings called by the assessor 265.11 for the purpose of giving them further assistance and 265.12 instruction as to their duties. 265.13 (5) To require the attendance of all licensed assessors 265.14 working in that county at annual instructional meetings 265.15 presented in part by the department of revenue regional 265.16 representative to provide assistance and instruction as to their 265.17 duties under the law and the proper implementation of assessment 265.18 procedures. 265.19 (6) To immediately commence the preparation of a large 265.20 scale topographical land map of the county, in such form as may 265.21 be prescribed by the commissioner of revenue, showing thereon 265.22 the location of all railroads, highways and roads, bridges, 265.23 rivers and lakes, swamp areas, wooded tracts, stony ridges and 265.24 other features which might affect the value of the land. 265.25 Appropriate symbols shall be used to indicate the best, the 265.26 fair, and the poor land of the county. For use in connection 265.27 with the topographical land map, the assessor shall prepare and 265.28 keep available in the assessor's office tables showing fair 265.29 average minimum and maximum market values per acre of 265.30 cultivated, meadow, pasture, cutover, timber and waste lands of 265.31 each township. The assessor shall keep the map and tables 265.32 available in the office for the guidance of town assessors, 265.33 boards of review, and the county board of equalization. 265.34(6)(7) To also prepare and keep available in the office 265.35 for the guidance of town assessors, boards of review and the 265.36 county board of equalization, a land valuation map of the 266.1 county, in such form as may be prescribed by the commissioner of 266.2 revenue. This map, which shall include the bordering tier of 266.3 townships of each county adjoining, shall show the average 266.4 market value per acre, both with and without improvements, as 266.5 finally equalized in the last assessment of real estate, of all 266.6 land in each town or unorganized township which lies outside the 266.7 corporate limits of cities. 266.8(7)(8) To regularly examine all conveyances of land 266.9 outside the corporate limits of cities of the first and second 266.10 class, filed with the county recorder of the county, and keep a 266.11 file, by descriptions, of the considerations shown thereon. 266.12 From the information obtained by comparing the considerations 266.13 shown with the market values assessed, the assessor shall make 266.14 recommendations to the county board of equalization of necessary 266.15 changes in individual assessments or aggregate valuations. 266.16(8)(9) To become familiar with the values of the different 266.17 items of personal property so as to be in a position when called 266.18 upon to advise the boards of review and the county board of 266.19 equalization concerning property, market values thereof. 266.20(9)(10) While the county board of equalization is in 266.21 session, to give it every possible assistance to enable it to 266.22 perform its duties. The assessor shall furnish the board with 266.23 all necessary charts, tables, comparisons, and data which it 266.24 requires in its deliberations, and shall make whatever 266.25 investigations the board may desire. 266.26(10)(11) At the request of either the board of county 266.27 commissioners or the commissioner of revenue, to investigate 266.28 applications for reductions of valuation and abatements and 266.29 settlements of taxes, examine the real or personal property 266.30 involved, and submit written reports and recommendations with 266.31 respect to the applications, in such form as may be prescribed 266.32 by the board of county commissioners and commissioner of revenue. 266.33(11)(12) To make diligent search each year for real and 266.34 personal property which has been omitted from assessment in the 266.35 county, and report all such omissions to the county auditor. 266.36(12)(13) To regularly confer with county assessors in all 267.1 adjacent counties about the assessment of property in order to 267.2 uniformly assess and equalize the value of similar properties 267.3 and classes of property located in adjacent counties. The 267.4 conference shall emphasize the assessment of agricultural and 267.5 commercial and industrial property or other properties that may 267.6 have an inadequate number of sales in a single county. 267.7(13)(14) To render such other services pertaining to the 267.8 assessment of real and personal property in the county as are 267.9 not inconsistent with the duties set forth in this section, and 267.10 as may be required by the board of county commissioners or by 267.11 the commissioner of revenue. 267.12(14)(15) To maintain a record, in conjunction with other 267.13 county offices, of all transfers of property to assist in 267.14 determining the proper classification of property, including but 267.15 not limited to, transferring homestead property and name changes 267.16 on homestead property. 267.17(15)(16) To determine if a homestead application is 267.18 required due to the transfer of homestead property or an owner's 267.19 name change on homestead property. 267.20 [EFFECTIVE DATE.] This section is effective July 1, 2001, 267.21 and thereafter. 267.22 Sec. 21. Minnesota Statutes 2000, section 273.072, 267.23 subdivision 1, is amended to read: 267.24 Subdivision 1. Any county and any city or town lying 267.25 wholly or partially within the county and constituting a 267.26 separate assessment district may, by agreement entered into 267.27 under section 471.59and approved by the commissioner of267.28revenue, provide for the assessment of property in the 267.29 municipality or town by the county assessor. Any two or more 267.30 cities or towns constituting separate assessment districts,267.31whether their assessors are elective or appointive,may enter 267.32 into an agreement under section 471.59 for the assessment of 267.33 property in the contracting units by the assessor of one of the 267.34 units or by an assessor who is jointly employed. 267.35 [EFFECTIVE DATE.] This section is effective the day 267.36 following final enactment. 268.1 Sec. 22. [273.0755] [TRAINING AND EDUCATION OF PROPERTY 268.2 TAX PERSONNEL.] 268.3 (a) Beginning with the four-year period starting on July 1, 268.4 2000, every person licensed by the state board of assessors at 268.5 the Accredited Minnesota Assessor level or higher, shall 268.6 successfully complete a week-long Minnesota laws course 268.7 sponsored by the department of revenue at least once in every 268.8 four-year period. An assessor need not attend the course if 268.9 they successfully pass the test for the course. 268.10 (b) The commissioner of revenue may require that each 268.11 county, and each city for which the city assessor performs the 268.12 duties of county assessor, have (i) a person on the assessor's 268.13 staff who is certified by the department of revenue in sales 268.14 ratio calculations, (ii) an officer or employee who is certified 268.15 by the department of revenue in tax calculations, and (iii) an 268.16 officer or employee who is certified by the department of 268.17 revenue in the proper preparation of abstracts of assessment. 268.18 (c) The commissioner of revenue may require that each 268.19 county have an officer or employee who is certified by the 268.20 department of revenue in the proper preparation of abstracts of 268.21 tax lists. 268.22 [EFFECTIVE DATE.] This section is effective July 1, 2001, 268.23 and thereafter. 268.24 Sec. 23. Minnesota Statutes 2000, section 273.11, 268.25 subdivision 1a, is amended to read: 268.26 Subd. 1a. [LIMITED MARKET VALUE.] In the case of all 268.27 property classified as agricultural homestead or nonhomestead, 268.28 residential homestead or nonhomestead, or noncommercial seasonal 268.29 recreational residential, the assessor shall compare the value 268.30 withthatthe taxable portion of the value determined in the 268.31 preceding assessment.The amount of the increase entered in the268.32current assessment shall not exceed the greater of (1) 8.5268.33percent of the value in the preceding assessment, or (2) 15268.34percent of the difference between the current assessment and the268.35preceding assessment.268.36 For assessment year 2002, the amount of the increase shall 269.1 not exceed the greater of (1) 12 percent of the value in the 269.2 preceding assessment, or (2) 20 percent of the difference 269.3 between the current assessment and the preceding assessment. 269.4 For assessment year 2003, the amount of the increase shall 269.5 not exceed the greater of (1) 12 percent of the value in the 269.6 preceding assessment, or (2) 25 percent of the difference 269.7 between the current assessment and the preceding assessment. 269.8 For assessment year 2004, the amount of the increase shall 269.9 not exceed the greater of (1) 12 percent of the value in the 269.10 preceding assessment, or (2) 33 percent of the difference 269.11 between the current assessment and the preceding assessment. 269.12 For assessment year 2005, the amount of the increase shall 269.13 not exceed the greater of (1) 12 percent of the value in the 269.14 preceding assessment, or (2) 50 percent of the difference 269.15 between the current assessment and the preceding assessment. 269.16 This limitation shall not apply to increases in value due 269.17 to improvements. For purposes of this subdivision, the term 269.18 "assessment" means the value prior to any exclusion under 269.19 subdivision 16. 269.20 The provisions of this subdivision shall be in effectonly269.21 through assessment year20012005 as provided in this 269.22 subdivision. 269.23 For purposes of the assessment/sales ratio study conducted 269.24 under section 127A.48, and the computation of state aids paid 269.25 under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 269.26 477A, market values and net tax capacities determined under this 269.27 subdivision and subdivision 16, shall be used. 269.28 [EFFECTIVE DATE.] This section is effective the day 269.29 following final enactment. 269.30 Sec. 24. Minnesota Statutes 2000, section 273.11, 269.31 subdivision 14, is amended to read: 269.32 Subd. 14. [VACANT LAND PLATTEDON OR AFTERBEFORE AUGUST 269.33 1,19912001.] (a) All land plattedon or afterbefore August 1, 269.3419912001, and not improved with a permanent structure, shall be 269.35 assessed as provided in this subdivision. The assessor shall 269.36 determine the market value of each individual lot based upon the 270.1 highest and best use of the property as unplatted land. In 270.2 establishing the market value of the property, the assessor 270.3 shall consider the sale price of the unplatted land or 270.4 comparable sales of unplatted land of similar use and similar 270.5 availability of public utilities. 270.6 (b) The market value determined in paragraph (a) shall be 270.7 increased as follows for each of the three assessment years 270.8 immediately following the final approval of the plat: one-third 270.9 of the difference between the property's unplatted market value 270.10 as determined under paragraph (a) and the market value based 270.11 upon the highest and best use of the land as platted property 270.12 shall be added in each of the three subsequent assessment years. 270.13 (c) Any increase in market value after the first assessment 270.14 year following the plat's final approval shall be added to the 270.15 property's market value in the next assessment year. 270.16 Notwithstanding paragraph (b), if construction begins before the 270.17 expiration of the three years in paragraph (b), that lot shall 270.18 be eligible for revaluation in the next assessment year. The 270.19 market value of a platted lot determined under this subdivision 270.20 shall not exceed the value of that lot based upon the highest 270.21 and best use of the property as platted land. 270.22 [EFFECTIVE DATE.] This section is effective for land 270.23 platted after July 31, 2001. 270.24 Sec. 25. Minnesota Statutes 2000, section 273.11, is 270.25 amended by adding a subdivision to read: 270.26 Subd. 14a. [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 270.27 2001; LOCATED IN METROPOLITAN COUNTIES.] (a) All land platted on 270.28 or after August 1, 2001, located in a metropolitan county, and 270.29 not improved with a permanent structure, shall be assessed as 270.30 provided in this subdivision. The assessor shall determine the 270.31 market value of each individual lot based upon the highest and 270.32 best use of the property as unplatted land. In establishing the 270.33 market value of the property, the assessor shall consider the 270.34 sale price of the unplatted land or comparable sales of 270.35 unplatted land of similar use and similar availability of public 270.36 utilities. 271.1 (b) The market value determined in paragraph (a) shall be 271.2 increased as follows for each of the three assessment years 271.3 immediately following the final approval of the plat: one-third 271.4 of the difference between the property's unplatted market value 271.5 as determined under paragraph (a) and the market value based 271.6 upon the highest and best use of the land as platted property 271.7 shall be added in each of the three subsequent assessment years. 271.8 (c) Any increase in market value after the first assessment 271.9 year following the plat's final approval shall be added to the 271.10 property's market value in the next assessment year. 271.11 Notwithstanding paragraph (b), if construction begins before the 271.12 expiration of the three years in paragraph (b), that lot shall 271.13 be eligible for revaluation in the next assessment year. The 271.14 market value of a platted lot determined under this subdivision 271.15 shall not exceed the value of that lot based upon the highest 271.16 and best use of the property as platted land. 271.17 (d) For purposes of this section, "metropolitan county" 271.18 means the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 271.19 Scott, and Washington. 271.20 [EFFECTIVE DATE.] This section is effective for land 271.21 platted after July 31, 2001. 271.22 Sec. 26. Minnesota Statutes 2000, section 273.11, is 271.23 amended by adding a subdivision to read: 271.24 Subd. 14b. [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 271.25 2001; LOCATED IN NONMETROPOLITAN COUNTIES.] (a) All land platted 271.26 on or after August 1, 2001, located in a nonmetropolitan county, 271.27 and not improved with a permanent structure, shall be assessed 271.28 as provided in this subdivision. The assessor shall determine 271.29 the market value of each individual lot based upon the highest 271.30 and best use of the property as unplatted land. In establishing 271.31 the market value of the property, the assessor shall consider 271.32 the sale price of the unplatted land or comparable sales of 271.33 unplatted land of similar use and similar availability of public 271.34 utilities. 271.35 (b) The market value determined in paragraph (a) shall be 271.36 increased as follows for each of the five assessment years 272.1 immediately following the final approval of the plat: one-fifth 272.2 of the difference between the property's unplatted market value 272.3 as determined under paragraph (a) and the market value based 272.4 upon the highest and best use of the land as platted property 272.5 shall be added in each of the five subsequent assessment years. 272.6 (c) Any increase in market value after the first assessment 272.7 year following the plat's final approval shall be added to the 272.8 property's market value in the next assessment year. 272.9 Notwithstanding paragraph (b), if construction begins before the 272.10 expiration of the five years in paragraph (b), that lot shall be 272.11 eligible for revaluation in the next assessment year. The 272.12 market value of a platted lot determined under this subdivision 272.13 shall not exceed the value of that lot based upon the highest 272.14 and best use of the property as platted land. 272.15 [EFFECTIVE DATE.] This section is effective for land 272.16 platted after July 31, 2001. 272.17 Sec. 27. Minnesota Statutes 2000, section 273.111, 272.18 subdivision 4, is amended to read: 272.19 Subd. 4. [DETERMINATION OF VALUE.] The value of any real 272.20 estate described in subdivision 3 shall upon timely application 272.21 by the owner, in the manner provided in subdivision 8, be 272.22 determined solely with reference to its appropriate agricultural 272.23 classification and value notwithstanding sections 272.03, 272.24 subdivision 8, and 273.11. In determining the value for ad 272.25 valorem tax purposes, the assessor shall use sales dataobtained272.26fromfor agricultural lands located outside the seven 272.27 metropolitan countiesbut within the region used for computing272.28the range of values under section 273.11, subdivision 10. The272.29sales shall havehaving similar soil types, number of degree 272.30 days, and other similar agricultural characteristicsas272.31contained in section 273.11, subdivision 10. Furthermore, the 272.32 assessor shall not consider any added values resulting from 272.33 nonagricultural factors. 272.34 [EFFECTIVE DATE.] This section is effective the day 272.35 following final enactment. 272.36 Sec. 28. [273.1115] [MINNESOTA ENVIRONMENTAL PRESERVATION 273.1 PROPERTY TAX LAW.] 273.2 Subdivision 1. [CITATION.] This section may be cited as 273.3 the "Minnesota Environmental Preservation Property Tax Law." 273.4 Subd. 2. [PUBLIC POLICY.] The present general system of ad 273.5 valorem property taxation in the state of Minnesota does not 273.6 provide an equitable basis for the taxation of certain real 273.7 property and may result in excessive taxes on some land. It is 273.8 therefore declared to be the public policy of this state that 273.9 the public interest would best be served by imposing property 273.10 tax burdens through appropriate taxing measures upon certain 273.11 properties within this state based upon their current use and 273.12 not on their potential alternative or future use. 273.13 Subd. 3. [REQUIREMENTS.] (a) Real estate consisting of at 273.14 least 20 acres classified under section 273.13, subdivision 22 273.15 or 23, is entitled to valuation and tax deferment under this 273.16 section only if it meets all of the following criteria: 273.17 (1) the property is either (i) the homestead of the owner, 273.18 the owner's spouse, or the owner or spouse's son or daughter, or 273.19 (ii) has been in possession of the owner, the owner's spouse, or 273.20 the owner or spouse's son or daughter for a period of at least 273.21 seven years prior to application for benefits under this 273.22 section; 273.23 (2) the land consists of forestland, woodland, meadowland, 273.24 slough, wasteland, or a combination thereof; 273.25 (3) revenues derived from the property in the year 273.26 immediately preceding application for enrollment in the program 273.27 must not exceed $5 per acre and must continue to be less than $5 273.28 per acre in each year that the property continues to be enrolled 273.29 in the program; and 273.30 (4) the property must border public waters and the land 273.31 bordering the water must be substantially undeveloped and must 273.32 not be platted. For purposes of this clause, "undeveloped" 273.33 means that the property contains no docks or landings on its 273.34 shoreline and its natural terrain and vegetation has not been 273.35 disturbed. For purposes of this clause, "public waters" has the 273.36 meaning given in section 103G.005, subdivision 15, paragraph 274.1 (a), clauses (1) to (5) and (7) to (9). 274.2 (b) If only a portion of the property meets the 274.3 qualifications of this subdivision then only that portion 274.4 qualifies for deferment under this section. 274.5 (c) Valuation of real estate under this section is limited 274.6 to parcels owned by noncorporate entities. 274.7 Subd. 4. [DETERMINATION OF VALUE.] Notwithstanding 274.8 sections 272.03, subdivision 8, and 273.11, subdivision 1, upon 274.9 timely application by the owner, in the manner provided in 274.10 subdivision 6, the value of any real estate described in 274.11 subdivision 3 must be determined with reference to its current 274.12 use, except that in determining its value, the assessor shall 274.13 ignore any value resulting from proximity to the public waters. 274.14 The market value determined under this section cannot be less 274.15 than the market value of the property for the assessment year 274.16 preceding the year of enrollment. 274.17 Subd. 5. [SEPARATE DETERMINATION OF MARKET VALUE AND TAX; 274.18 HIGHEST AND BEST USE.] The assessor shall annually make a 274.19 separate determination of the market value of the real estate at 274.20 its highest and best use. The tax based upon the appropriate 274.21 local tax rate and the highest and best use value must be 274.22 recorded on the property assessment records. 274.23 Subd. 6. [APPLICATION.] Application for deferment of taxes 274.24 and assessment under this section must be filed by May 1 of the 274.25 assessment year. Any application filed and granted continues in 274.26 effect for subsequent years until the property no longer 274.27 qualifies. The application must be filed with the assessor of 274.28 the taxing district in which the real property is located on 274.29 such form as may be prescribed by the commissioner of revenue. 274.30 The assessor may require proof by affidavit or otherwise that 274.31 the property initially qualifies under subdivision 3, and 274.32 continues to qualify each subsequent year. 274.33 Subd. 7. [ADDITIONAL TAXES.] When real property which has 274.34 been valued and assessed under this section no longer qualifies 274.35 under subdivision 3, the property is subject to additional 274.36 taxes, in the amount equal to the difference between the taxes 275.1 determined in accordance with subdivision 4, and the tax amount 275.2 determined under subdivision 5, provided, however, that if the 275.3 property was sold in an arms-length transaction the tax amount 275.4 determined under subdivision 5 must not be greater than it would 275.5 have been had the actual bona fide sale price of the property 275.6 been used in lieu of the market value determined under 275.7 subdivision 5. The additional taxes under this subdivision 275.8 apply to the entire property if any portion of the property is 275.9 sold, provided that the sold portion does not continue to 275.10 qualify under this section. 275.11 The additional taxes must be extended against the property 275.12 on the tax list for the current year, provided, however, that no 275.13 interest or penalties shall be levied on the additional taxes if 275.14 timely paid, and provided further, that the additional taxes 275.15 must only be levied with respect to the last three years that 275.16 the property has been valued and assessed under this section. 275.17 For purposes of this subdivision, "timely paid" means paid (i) 275.18 within 60 days after notification from the county that the 275.19 property no longer qualifies, or (ii) prior to the recording of 275.20 the conveyance of the property, whichever is earlier. 275.21 Subd. 8. [LIEN.] The tax imposed by this section is a lien 275.22 upon the property assessed to the same extent and for the same 275.23 duration as other taxes imposed upon property within this 275.24 state. The tax must be annually extended by the county auditor 275.25 and if and when payable must be collected and distributed in the 275.26 manner provided by law for the collection and distribution of 275.27 other property taxes. 275.28 Any additional taxes due under subdivision 7 must be paid 275.29 prior to the recording of the conveyance under section 272.12. 275.30 Subd. 9. [CONTINUATION OF TAX TREATMENT UPON 275.31 SALE.] Notwithstanding subdivision 7, when real property 275.32 qualifying under subdivision 3 is sold, no additional taxes 275.33 shall be extended against the property if the property continues 275.34 to qualify under subdivision 3. 275.35 Subd. 10. [APPLICATION.] This section does not apply to 275.36 property located in the counties of Anoka, Carver, Dakota, 276.1 Hennepin, Ramsey, Scott, and Washington. 276.2 [EFFECTIVE DATE.] This section is effective beginning with 276.3 the 2001 assessment year, for taxes payable in 2002 and 276.4 thereafter, except that for the 2001 assessment year, the 276.5 application date under subdivision 6 shall be September 1, 2001. 276.6 Sec. 29. Minnesota Statutes 2000, section 273.121, is 276.7 amended to read: 276.8 273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 276.9 Any county assessor or city assessor having the powers of a 276.10 county assessor, valuing or classifying taxable real property 276.11 shall in each year notify those persons whose property is to be 276.12assessed or reclassifiedincluded on the assessment roll that 276.13 year if the person's address is known to the assessor, otherwise 276.14 the occupant of the property. The notice shall be in writing 276.15 and shall be sent by ordinary mail at least ten days before the 276.16 meeting of the local board of review or equalization under 276.17 section 274.01 or the review process established under section 276.18 274.13, subdivision 1c. It shall contain: (1) the market value 276.19 for the current and prior assessment, (2) the limited market 276.20 value under section 273.11, subdivision 1a for the current and 276.21 prior assessment, (3) the qualifying amount of any improvements 276.22 under section 273.11, subdivision 16 for the current assessment, 276.23 (4) the market value subject to taxation after subtracting the 276.24 amount of any qualifying improvements for the current 276.25 assessment, (5) thenewclassification of the property for the 276.26 current and prior assessment, (6) a note that if the property is 276.27 homestead and at least 35 years old, improvements made to the 276.28 property may be eligible for a valuation exclusion under section 276.29 273.11, subdivision 16, (7) the assessor's office address, and 276.30 (8) the dates, places, and times set for the meetings of the 276.31 local board of review or equalization, the review process 276.32 established under section 274.13, subdivision 1c, and the county 276.33 board of appeal and equalization.If the assessment roll is not276.34complete, the notice shall be sent by ordinary mail at least ten276.35days prior to the date on which the board of review has276.36adjournedThe commissioner of revenue shall specify the form of 277.1 the notice. The assessor shall attach to the assessment roll a 277.2 statement that the notices required by this section have been 277.3 mailed. Any assessor who is not provided sufficient funds from 277.4 the assessor's governing body to provide such notices, may make 277.5 application to the commissioner of revenue to finance such 277.6 notices. The commissioner of revenue shall conduct an 277.7 investigation and, if satisfied that the assessor does not have 277.8 the necessary funds, issue a certification to the commissioner 277.9 of finance of the amount necessary to provide such notices. The 277.10 commissioner of finance shall issue a warrant for such amount 277.11 and shall deduct such amount from any state payment to such 277.12 county or municipality. The necessary funds to make such 277.13 payments are hereby appropriated. Failure to receive the notice 277.14 shall in no way affect the validity of the assessment, the 277.15 resulting tax, the procedures of any board of review or 277.16 equalization, or the enforcement of delinquent taxes by 277.17 statutory means. 277.18 [EFFECTIVE DATE.] This section is effective for notices 277.19 required to be mailed in 2002 and thereafter. 277.20 Sec. 30. Minnesota Statutes 2000, section 273.124, 277.21 subdivision 8, is amended to read: 277.22 Subd. 8. [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 277.23 CORPORATION, JOINT FAMILY FARM VENTURE, LIMITED LIABILITY 277.24 COMPANY, OR PARTNERSHIP.] (a) Each family farm corporation, each 277.25 joint family farm venture, each limited liability company, and 277.26 each partnership operating a family farm is entitled to class 1b 277.27 under section 273.13, subdivision 22, paragraph (b), or class 2a 277.28 assessment for one homestead occupied by a shareholder, member, 277.29 or partner thereof who is residing on the landexcept as277.30provided in subdivision 14, paragraph (g), and actively engaged 277.31 in farming of the land owned by the family farm corporation, 277.32 joint family farm venture, limited liability company, or 277.33 partnership operating a family farm. Homestead treatment 277.34 applies even if legal title to the property is in the name of 277.35 the family farm corporation, joint family farm venture, limited 277.36 liability company, or partnership operating the family farm, and 278.1 not in the name of the person residing on it. 278.2 "Family farm corporation," "family farm," and "farm278.3 partnership operating a family farm" have the meanings given in 278.4 section 500.24, except that the number of allowable 278.5 shareholders, members, or partners under this subdivision shall 278.6 not exceed 12. "Limited liability company" has the meaning 278.7 contained insectionsections 322B.03, subdivision 28, and 278.8 500.24, subdivision 2, paragraphs (l) and (m). "Joint family 278.9 farm venture" means a cooperative agreement among two or more 278.10 farm enterprises authorized to operate a family farmlandunder 278.11 section 500.24. 278.12 (b) In addition to property specified in paragraph (a), any 278.13 other residences owned by family farm corporations, joint family 278.14 farm ventures, limited liability companies, or 278.15 partnerships operating a family farm described in paragraph (a) 278.16 which are located on agricultural land and occupied as 278.17 homesteads by its shareholders, members, or partners who are 278.18 actively engaged in farming on behalf ofthethat corporation, 278.19 joint farm venture, limited liability company, or partnership 278.20 must also be assessed as class 2a property or as class 1b 278.21 property under section 273.13, subdivision 22, paragraph (b). 278.22 (c) Agricultural property that is owned by a member, 278.23 partner, or shareholder of a family farm corporation or 278.24 joint family farm venture,as defined in paragraph (a), or by a278.25member of alimited liability company, or by apartner in a278.26 partnership operating a family farm and leased to the family 278.27 farm corporationby the shareholder, or to a member of a, 278.28 limited liability company, orto thepartnershipby the partner278.29 operating a family farm, or joint farm venture, as defined in 278.30 paragraph (a), is eligible for classification as class 1b or 278.31 class 2a under section 273.13,subdivision 22, paragraph (b), or278.32class 2a under section 273.13, subdivision 23, paragraph (a),if 278.33 the owner is actually residing on the propertyexcept as278.34provided in subdivision 14, paragraph (g), and is actually 278.35 engaged in farming the land on behalf ofthethat corporation, 278.36 joint farm venture, limited liability company, or partnership. 279.1 This paragraph applies without regard to any legal possession 279.2 rights of the family farm corporation, joint family farm 279.3 venture, limited liability company, or partnership operating a 279.4 family farm under the lease. 279.5 [EFFECTIVE DATE.] This section is effective for the 2001 279.6 assessment, taxes payable in 2002, and thereafter. 279.7 Sec. 31. Minnesota Statutes 2000, section 273.124, 279.8 subdivision 13, is amended to read: 279.9 Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets 279.10 the homestead requirements under subdivision 1 must file a 279.11 homestead application with the county assessor to initially 279.12 obtain homestead classification. 279.13 (b) On or before January 2, 1993, each county assessor 279.14 shall mail a homestead application to the owner of each parcel 279.15 of property within the county which was classified as homestead 279.16 for the 1992 assessment year. The format and contents of a 279.17 uniform homestead application shall be prescribed by the 279.18 commissioner of revenue. The commissioner shall consult with 279.19 the chairs of the house and senate tax committees on the 279.20 contents of the homestead application form. The application 279.21 must clearly inform the taxpayer that this application must be 279.22 signed by all owners who occupy the property or by the 279.23 qualifying relative and returned to the county assessor in order 279.24 for the property to continue receiving homestead treatment. The 279.25 envelope containing the homestead application shall clearly 279.26 identify its contents and alert the taxpayer of its necessary 279.27 immediate response. 279.28 (c) Every property owner applying for homestead 279.29 classification must furnish to the county assessor the social 279.30 security number of each occupant who is listed as an owner of 279.31 the property on the deed of record, the name and address of each 279.32 owner who does not occupy the property, and the name and social 279.33 security number of each owner's spouse who occupies the 279.34 property. The application must be signed by each owner who 279.35 occupies the property and by each owner's spouse who occupies 279.36 the property, or, in the case of property that qualifies as a 280.1 homestead under subdivision 1, paragraph (c), by the qualifying 280.2 relative. 280.3 If a property owner occupies a homestead, the property 280.4 owner's spouse may not claim another property as a homestead 280.5 unless the property owner and the property owner's spouse file 280.6 with the assessor an affidavit or other proof required by the 280.7 assessor stating that the property qualifies as a homestead 280.8 under subdivision 1, paragraph (e). 280.9 Owners or spouses occupying residences owned by their 280.10 spouses and previously occupied with the other spouse, either of 280.11 whom fail to include the other spouse's name and social security 280.12 number on the homestead application or provide the affidavits or 280.13 other proof requested, will be deemed to have elected to receive 280.14 only partial homestead treatment of their residence. The 280.15 remainder of the residence will be classified as nonhomestead 280.16 residential. When an owner or spouse's name and social security 280.17 number appear on homestead applications for two separate 280.18 residences and only one application is signed, the owner or 280.19 spouse will be deemed to have elected to homestead the residence 280.20 for which the application was signed. 280.21 The social security numbers or affidavits or other proofs 280.22 of the property owners and spouses are private data on 280.23 individuals as defined by section 13.02, subdivision 12, but, 280.24 notwithstanding that section, the private data may be disclosed 280.25 to the commissioner of revenue, or, for purposes of proceeding 280.26 under the Revenue Recapture Act to recover personal property 280.27 taxes owing, to the county treasurer. 280.28 (d) If residential real estate is occupied and used for 280.29 purposes of a homestead by a relative of the owner and qualifies 280.30 for a homestead under subdivision 1, paragraph (c), in order for 280.31 the property to receive homestead status, a homestead 280.32 application must be filed with the assessor. The social 280.33 security number of each relative occupying the property and the 280.34 social security number of each owner who is related to an 280.35 occupant of the property shall be required on the homestead 280.36 application filed under this subdivision. If a different 281.1 relative of the owner subsequently occupies the property, the 281.2 owner of the property must notify the assessor within 30 days of 281.3 the change in occupancy. The social security number of a 281.4 relative occupying the property is private data on individuals 281.5 as defined by section 13.02, subdivision 12, but may be 281.6 disclosed to the commissioner of revenue. 281.7 (e) The homestead application shall also notify the 281.8 property owners that the application filed under this section 281.9 will not be mailed annually and that if the property is granted 281.10 homestead status for the 1993 assessment, or any assessment year 281.11 thereafter, that same property shall remain classified as 281.12 homestead until the property is sold or transferred to another 281.13 person, or the owners, the spouse of the owner, or the relatives 281.14 no longer use the property as their homestead. Upon the sale or 281.15 transfer of the homestead property, a certificate of value must 281.16 be timely filed with the county auditor as provided under 281.17 section 272.115. Failure to notify the assessor within 30 days 281.18 that the property has been sold, transferred, or that the owner, 281.19 the spouse of the owner, or the relative is no longer occupying 281.20 the property as a homestead, shall result in the penalty 281.21 provided under this subdivision and the property will lose its 281.22 current homestead status. 281.23 (f) If the homestead application is not returned within 30 281.24 days, the county will send a second application to the present 281.25 owners of record. The notice of proposed property taxes 281.26 prepared under section 275.065, subdivision 3, shall reflect the 281.27 property's classification. Beginning with assessment year 1993 281.28 for all properties, if a homestead application has not been 281.29 filed with the county by December 15, the assessor shall 281.30 classify the property as nonhomestead for the current assessment 281.31 year for taxes payable in the following year, provided that the 281.32 owner may be entitled to receive the homestead classification by 281.33 proper application under section 375.192. 281.34 (g) At the request of the commissioner, each county must 281.35 give the commissioner a list that includes the name and social 281.36 security number of each property owner and the property owner's 282.1 spouse occupying the property, or relative of a property owner, 282.2 applying for homestead classification under this subdivision. 282.3 The commissioner shall use the information provided on the lists 282.4 as appropriate under the law, including for the detection of 282.5 improper claims by owners, or relatives of owners, under chapter 282.6 290A. 282.7 (h) If the commissioner finds that a property owner may be 282.8 claiming a fraudulent homestead, the commissioner shall notify 282.9 the appropriate counties. Within 90 days of the notification, 282.10 the county assessor shall investigate to determine if the 282.11 homestead classification was properly claimed. If the property 282.12 owner does not qualify, the county assessor shall notify the 282.13 county auditor who will determine the amount of homestead 282.14 benefits that had been improperly allowed. For the purpose of 282.15 this section, "homestead benefits" means the tax reduction 282.16 resulting from the classification as a homestead under section 282.17 273.13, the taconite homestead credit under section 273.135, the 282.18 homestead and agricultural credits under section 273.1384, and 282.19 the supplemental homestead credit under section 273.1391. 282.20 The county auditor shall send a notice to the person who 282.21 owned the affected property at the time the homestead 282.22 application related to the improper homestead was filed, 282.23 demanding reimbursement of the homestead benefits plus a penalty 282.24 equal to 100 percent of the homestead benefits. The person 282.25 notified may appeal the county's determination by serving copies 282.26 of a petition for review with county officials as provided in 282.27 section 278.01 and filing proof of service as provided in 282.28 section 278.01 with the Minnesota tax court within 60 days of 282.29 the date of the notice from the county. Procedurally, the 282.30 appeal is governed by the provisions in chapter 271 which apply 282.31 to the appeal of a property tax assessment or levy, but without 282.32 requiring any prepayment of the amount in controversy. If the 282.33 amount of homestead benefits and penalty is not paid within 60 282.34 days, and if no appeal has been filed, the county auditor shall 282.35 certify the amount of taxes and penalty to the county 282.36 treasurer. The county treasurer will add interest to the unpaid 283.1 homestead benefits and penalty amounts at the rate provided in 283.2 section 279.03 for real property taxes becoming delinquent in 283.3 the calendar year during which the amount remains unpaid. 283.4 Interest may be assessed for the period beginning 60 days after 283.5 demand for payment was made. 283.6 If the person notified is the current owner of the 283.7 property, the treasurer may add the total amount of homestead 283.8 benefits, penalty, interest, and costs to the ad valorem taxes 283.9 otherwise payable on the property by including the amounts on 283.10 the property tax statements under section 276.04, subdivision 283.11 3. The amounts added under this paragraph to the ad valorem 283.12 taxes shall include interest accrued through December 31 of the 283.13 year preceding the taxes payable year for which the amounts are 283.14 first added. These amounts, when added to the property tax 283.15 statement, become subject to all the laws for the enforcement of 283.16 real or personal property taxes for that year, and for any 283.17 subsequent year. 283.18 If the person notified is not the current owner of the 283.19 property, the treasurer may collect the amounts due under the 283.20 Revenue Recapture Act in chapter 270A, or use any of the powers 283.21 granted in sections 277.20 and 277.21 without exclusion, to 283.22 enforce payment of the homestead benefits, penalty, interest, 283.23 and costs, as if those amounts were delinquent tax obligations 283.24 of the person who owned the property at the time the application 283.25 related to the improperly allowed homestead was filed. The 283.26 treasurer may relieve a prior owner of personal liability for 283.27 the homestead benefits, penalty, interest, and costs, and 283.28 instead extend those amounts on the tax lists against the 283.29 property as provided in this paragraph to the extent that the 283.30 current owner agrees in writing. On all demands, billings, 283.31 property tax statements, and related correspondence, the county 283.32 must list and state separately the amounts of homestead 283.33 benefits, penalty, interest and costs being demanded, billed or 283.34 assessed. 283.35 (i) Any amount of homestead benefits recovered by the 283.36 county from the property owner shall be distributed to the 284.1 county, city or town, and school district where the property is 284.2 located in the same proportion that each taxing district's levy 284.3 was to the total of the three taxing districts' levy for the 284.4 current year. Any amount recovered attributable to taconite 284.5 homestead credit shall be transmitted to the St. Louis county 284.6 auditor to be deposited in the taconite property tax relief 284.7 account. Any amount recovered that is attributable to 284.8 supplemental homestead credit is to be transmitted to the 284.9 commissioner of revenue for deposit in the general fund of the 284.10 state treasury. The total amount of penalty collected must be 284.11 deposited in the county general fund. 284.12 (j) If a property owner has applied for more than one 284.13 homestead and the county assessors cannot determine which 284.14 property should be classified as homestead, the county assessors 284.15 will refer the information to the commissioner. The 284.16 commissioner shall make the determination and notify the 284.17 counties within 60 days. 284.18 (k) In addition to lists of homestead properties, the 284.19 commissioner may ask the counties to furnish lists of all 284.20 properties and the record owners. The social security numbers 284.21 and federal identification numbers that are maintained by a 284.22 county or city assessor for property tax administration 284.23 purposes, and that may appear on the lists retain their 284.24 classification as private or nonpublic data; but may be viewed, 284.25 accessed, and used by the county auditor or treasurer of the 284.26 same county for the limited purpose of assisting the 284.27 commissioner in the preparation of microdata samples under 284.28 section 270.0681. 284.29 [EFFECTIVE DATE.] This section is effective for homestead 284.30 applications submitted on or after the day following final 284.31 enactment. 284.32 Sec. 32. Minnesota Statutes 2000, section 273.124, 284.33 subdivision 14, is amended to read: 284.34 Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 284.35 (a) Real estate of less than ten acres that is the homestead of 284.36 its owner must be classified as class 2a under section 273.13, 285.1 subdivision 23, paragraph (a), if: 285.2 (1) the parcel on which the house is located is contiguous 285.3 on at least two sides to (i) agricultural land, (ii) land owned 285.4 or administered by the United States Fish and Wildlife Service, 285.5 or (iii) land administered by the department of natural 285.6 resources on which in lieu taxes are paid under sections 477A.11 285.7 to 477A.14; 285.8 (2) its owner also owns a noncontiguous parcel of 285.9 agricultural land that is at least 20 acres; 285.10 (3) the noncontiguous land is located not farther than four 285.11 townships or cities, or a combination of townships or cities 285.12 from the homestead; and 285.13 (4) the agricultural use value of the noncontiguous land 285.14 and farm buildings is equal to at least 50 percent of the market 285.15 value of the house, garage, and one acre of land. 285.16 Homesteads initially classified as class 2a under the 285.17 provisions of this paragraph shall remain classified as class 285.18 2a, irrespective of subsequent changes in the use of adjoining 285.19 properties, as long as the homestead remains under the same 285.20 ownership, the owner owns a noncontiguous parcel of agricultural 285.21 land that is at least 20 acres, and the agricultural use value 285.22 qualifies under clause (4). Homestead classification under this 285.23 paragraph is limited to property that qualified under this 285.24 paragraph for the 1998 assessment. 285.25 (b)(i) Agricultural property consisting of at least 40 285.26 acres shall be classified as the owner's homestead, to the same 285.27 extent as other agricultural homestead property, if all of the 285.28 following criteria are met: 285.29 (1) the owner, the owner's spouse, or theowner'sson or 285.30 daughter of the owner or owner's spouse, is actively farming the 285.31 agricultural property, either on the person's own behalf as an 285.32 individual or on behalf of a partnership operating a family 285.33 farm, family farm corporation, joint family farm venture, or 285.34 limited liability company of which the person is a partner, 285.35 shareholder, or member; 285.36 (2) both the owner of the agricultural propertyis a286.1Minnesota resident,andiftheowner's son or daughterperson 286.2 who is actively farming the agricultural property under clause 286.3 (1),that person must also be aare Minnesota 286.4residentresidents; 286.5 (3) neither the owner nor the spouse of the owner claims 286.6 another agricultural homestead in Minnesota; and 286.7 (4) neither the ownerdoes not live, nor the person 286.8 actively farming the property, lives farther than four townships 286.9 or cities, or a combination of four townships or cities, from 286.10 the agricultural property, and if the owner's son or daughter is286.11actively farming the agricultural property under clause (1),286.12that person must also live within the four townships or cities,286.13or combination of four townships or cities from the agricultural286.14property. 286.15 The relationship under this paragraph may be either by 286.16 blood or marriage. 286.17 (ii) Real property held by a trustee under a trust is 286.18 eligible for agricultural homestead classification under this 286.19 paragraph if the qualifications in clause (i) are met, except 286.20 that "owner" means the grantor of the trust. 286.21(ii)(iii) Property containing the residence of an owner 286.22 who owns qualified property under clause (i) shall be classified 286.23 as part of the owner's agricultural homestead, if that property 286.24 is also used for noncommercial storage or drying of agricultural 286.25 crops. 286.26 (c)Except as provided in paragraph (e),Noncontiguous land 286.27 shall be included as part of a homestead under section 273.13, 286.28 subdivision 23, paragraph (a), only if the homestead is 286.29 classified as class 2a and the detached land is located in the 286.30 same township or city, or not farther than four townships or 286.31 cities or combination thereof from the homestead. Any taxpayer 286.32 of these noncontiguous lands must notify the county assessor 286.33 that the noncontiguous land is part of the taxpayer's homestead, 286.34 and, if the homestead is located in another county, the taxpayer 286.35 must also notify the assessor of the other county. 286.36 (d) Agricultural land used for purposes of a homestead and 287.1 actively farmed by a person holding a vested remainder interest 287.2 in it must be classified as a homestead under section 273.13, 287.3 subdivision 23, paragraph (a). If agricultural land is 287.4 classified class 2a, any other dwellings on the land used for 287.5 purposes of a homestead by persons holding vested remainder 287.6 interests who are actively engaged in farming the property, and 287.7 up to one acre of the land surrounding each homestead and 287.8 reasonably necessary for the use of the dwelling as a home, must 287.9 also be assessed class 2a. 287.10 (e) Agricultural land and buildings that were class 2a 287.11 homestead property under section 273.13, subdivision 23, 287.12 paragraph (a), for the 1997 assessment shall remain classified 287.13 as agricultural homesteads for subsequent assessments if: 287.14 (1) the property owner abandoned the homestead dwelling 287.15 located on the agricultural homestead as a result of the April 287.16 1997 floods; 287.17 (2) the property is located in the county of Polk, Clay, 287.18 Kittson, Marshall, Norman, or Wilkin; 287.19 (3) the agricultural land and buildings remain under the 287.20 same ownership for the current assessment year as existed for 287.21 the 1997 assessment year and continue to be used for 287.22 agricultural purposes; 287.23 (4) the dwelling occupied by the owner is located in 287.24 Minnesota and is within 30 miles of one of the parcels of 287.25 agricultural land that is owned by the taxpayer; and 287.26 (5) the owner notifies the county assessor that the 287.27 relocation was due to the 1997 floods, and the owner furnishes 287.28 the assessor any information deemed necessary by the assessor in 287.29 verifying the change in dwelling. Further notifications to the 287.30 assessor are not required if the property continues to meet all 287.31 the requirements in this paragraph and any dwellings on the 287.32 agricultural land remain uninhabited. 287.33 (f) Agricultural land and buildings that were class 2a 287.34 homestead property under section 273.13, subdivision 23, 287.35 paragraph (a), for the 1998 assessment shall remain classified 287.36 agricultural homesteads for subsequent assessments if: 288.1 (1) the property owner abandoned the homestead dwelling 288.2 located on the agricultural homestead as a result of damage 288.3 caused by a March 29, 1998, tornado; 288.4 (2) the property is located in the county of Blue Earth, 288.5 Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 288.6 (3) the agricultural land and buildings remain under the 288.7 same ownership for the current assessment year as existed for 288.8 the 1998 assessment year; 288.9 (4) the dwelling occupied by the owner is located in this 288.10 state and is within 50 miles of one of the parcels of 288.11 agricultural land that is owned by the taxpayer; and 288.12 (5) the owner notifies the county assessor that the 288.13 relocation was due to a March 29, 1998, tornado, and the owner 288.14 furnishes the assessor any information deemed necessary by the 288.15 assessor in verifying the change in homestead dwelling. For 288.16 taxes payable in 1999, the owner must notify the assessor by 288.17 December 1, 1998. Further notifications to the assessor are not 288.18 required if the property continues to meet all the requirements 288.19 in this paragraph and any dwellings on the agricultural land 288.20 remain uninhabited. 288.21 (g) Agricultural property consisting of at least 40 acres 288.22 of a family farm corporation, joint family farm venture, limited 288.23 liability company, or partnership operating a family farm as 288.24 described under subdivision 8 shall be classified homestead, to 288.25 the same extent as other agricultural homestead property, if all 288.26 of the following criteria are met: 288.27 (1)thea shareholder, member, or partner of that entity is 288.28 actively farming the agricultural property; 288.29 (2)thethat shareholder, member, or partnerofwho is 288.30 actively farming the agricultural property is a Minnesota 288.31 resident; 288.32 (3) neitherthethat shareholder, member, or partner, nor 288.33 the spouse ofthethat shareholder, member, or partner claims 288.34 another agricultural homestead in Minnesota; and 288.35 (4)thethat shareholder, member, or partner does not live 288.36 farther than four townships or cities, or a combination of four 289.1 townships or cities, from the agricultural property. 289.2 Homestead treatment applies under this paragraph for 289.3 property leased to a family farm corporation, joint farm 289.4 venture, limited liability company, or partnership operating a 289.5 family farm if legal title to the property is in the name of an 289.6 individual who is a member, shareholder, or partner in the 289.7 entity. 289.8 [EFFECTIVE DATE.] This section is effective for the 2001 289.9 assessment, taxes payable in 2002, and thereafter. 289.10 Sec. 33. Minnesota Statutes 2000, section 274.01, 289.11 subdivision 1, is amended to read: 289.12 Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, 289.13 GRIEVANCES.] (a) The town board of a town, or the council or 289.14 other governing body of a city, is the board ofreviewappeal 289.15 and equalization except (1) in cities whose charters provide for 289.16 a board of equalization or (2) in any city or town that has 289.17 transferred its local board of review power and duties to the 289.18 county board as provided in subdivision 3. The county assessor 289.19 shall fix a day and time when the board or the board of 289.20 equalization shall meet in the assessment districts of the 289.21 county. Notwithstanding any law or city charter to the 289.22 contrary, a city board of equalization shall be referred to as a 289.23 board of appeal and equalization. On or before February 15 of 289.24 each year the assessor shall give written notice of the time to 289.25 the city or town clerk. Notwithstanding the provisions of any 289.26 charter to the contrary, the meetings must be held between April 289.27 1 and May 31 each year. The clerk shall give published and 289.28 posted notice of the meeting at least ten days before the date 289.29 of the meeting. 289.30If in any county, at least 25 percent of the total net tax289.31capacity of a city or town is noncommercial seasonal residential289.32recreational property classified under section 273.13,289.33subdivision 25, the county must hold two countywide289.34informational meetings on Saturdays. The meetings will allow289.35noncommercial seasonal residential recreational taxpayers to289.36discuss their property valuation with the appropriate assessment290.1staff. These Saturday informational meetings must be scheduled290.2to allow the owner of the noncommercial seasonal residential290.3recreational property the opportunity to attend one of the290.4meetings prior to the scheduled board of review for their city290.5or town. The Saturday meeting dates must be contained on the290.6notice of valuation of real property under section 273.121.290.7 The board shall meet at the office of the clerk to review 290.8 the assessment and classification of property in the town or 290.9 city. No changes in valuation or classification which are 290.10 intended to correct errors in judgment by the county assessor 290.11 may be made by the county assessor after the boardof reviewhas 290.12 adjourned in those cities or towns that hold a local board of 290.13 review; however, corrections of errors that are merely clerical 290.14 in nature or changes that extend homestead treatment to property 290.15 are permitted after adjournment until the tax extension date for 290.16 that assessment year. The changes must be fully documented and 290.17 maintained in the assessor's office and must be available for 290.18 review by any person. A copy of the changes made during this 290.19 period in those cities or towns that hold a local board of 290.20 review must be sent to the county board no later than December 290.21 31 of the assessment year. 290.22 (b) The board shall determine whether the taxable property 290.23 in the town or city has been properly placed on the list and 290.24 properly valued by the assessor. If real or personal property 290.25 has been omitted, the board shall place it on the list with its 290.26 market value, and correct the assessment so that each tract or 290.27 lot of real property, and each article, parcel, or class of 290.28 personal property, is entered on the assessment list at its 290.29 market value. No assessment of the property of any person may 290.30 be raised unless the person has been duly notified of the intent 290.31 of the board to do so. On application of any person feeling 290.32 aggrieved, the board shall review the assessment or 290.33 classification, or both, and correct it as appears just. The 290.34 board may not make an individual market value adjustment or 290.35 classification change that would benefit the property in cases 290.36 where the owner or other person having control over the property 291.1 will not permit the assessor to inspect the property and the 291.2 interior of any buildings or structures. 291.3 (c) A local boardof reviewmay reduce assessments upon 291.4 petition of the taxpayer but the total reductions must not 291.5 reduce the aggregate assessment made by the county assessor by 291.6 more than one percent. If the total reductions would lower the 291.7 aggregate assessments made by the county assessor by more than 291.8 one percent, none of the adjustments may be made. The assessor 291.9 shall correct any clerical errors or double assessments 291.10 discovered by the boardof reviewwithout regard to the one 291.11 percent limitation. 291.12 (d) A majority of the members may act at the meeting, and 291.13 adjourn from day to day until they finish hearing the cases 291.14 presented. The assessor shall attend, with the assessment books 291.15 and papers, and take part in the proceedings, but must not 291.16 vote. The county assessor, or an assistant delegated by the 291.17 county assessor shall attend the meetings. The board shall list 291.18 separately, on a form appended to the assessment book, all 291.19 omitted property added to the list by the board and all items of 291.20 property increased or decreased, with the market value of each 291.21 item of property, added or changed by the board, placed opposite 291.22 the item. The county assessor shall enter all changes made by 291.23 the board in the assessment book. 291.24 (e) Except as provided in subdivision 3, if a person fails 291.25 to appear in person, by counsel, or by written communication 291.26 before the board after being duly notified of the board's intent 291.27 to raise the assessment of the property, or if a person feeling 291.28 aggrieved by an assessment or classification fails to apply for 291.29 a review of the assessment or classification, the person may not 291.30 appear before the county board of appeal and equalization for a 291.31 review of the assessment or classification. This paragraph does 291.32 not apply if an assessment was made after the local board 291.33 meeting, as provided in section 273.01, or if the person can 291.34 establish not having received notice of market value at least 291.35 five days before the local boardof reviewmeeting. 291.36 (f) The local boardof review or the board of equalization292.1 must complete its work and adjourn within 20 days from the time 292.2 of convening stated in the notice of the clerk, unless a longer 292.3 period is approved by the commissioner of revenue. No action 292.4 taken after that date is valid. All complaints about an 292.5 assessment or classification made after the meeting of the board 292.6 must be heard and determined by the county board of 292.7 equalization. A nonresident may, at any time, before the 292.8 meeting of the boardof reviewfile written objections to an 292.9 assessment or classification with the county assessor. The 292.10 objections must be presented to the boardof reviewat its 292.11 meeting by the county assessor for its consideration. 292.12 [EFFECTIVE DATE.] This section is effective January 1, 292.13 2002, and thereafter. 292.14 Sec. 34. Minnesota Statutes 2000, section 274.13, 292.15 subdivision 1, is amended to read: 292.16 Subdivision 1. [MEMBERS; MEETINGS; RULES FOR EQUALIZING 292.17 ASSESSMENTS.] The county commissioners, or a majority of them, 292.18 with the county auditor, or, if the auditor cannot be present, 292.19 the deputy county auditor, or, if there is no deputy, the court 292.20 administrator of the district court, shall form a board for the 292.21 equalization of the assessment of the property of the county, 292.22 including the property of all cities whose charters provide for 292.23 a board of equalization. This board shall be referred to as the 292.24 county board of appeal and equalization. The board shall meet 292.25 annually, on the date specified in section 274.14, at the office 292.26 of the auditor. Each member shall take an oath to fairly and 292.27 impartially perform duties as a member. The board shall examine 292.28 and compare the returns of the assessment of property of the 292.29 towns or districts, and equalize them so that each tract or lot 292.30 of real property and each article or class of personal property 292.31 is entered on the assessment list at its market value, subject 292.32 to the following rules: 292.33 (1) The board shall raise the valuation of each tract or 292.34 lot of real property which in its opinion is returned below its 292.35 market value to the sum believed to be its market value. The 292.36 board must first give notice of intention to raise the valuation 293.1 to the person in whose name it is assessed, if the person is a 293.2 resident of the county. The notice must fix a time and place 293.3 for a hearing. 293.4 (2) The board shall reduce the valuation of each tract or 293.5 lot which in its opinion is returned above its market value to 293.6 the sum believed to be its market value. 293.7 (3) The board shall raise the valuation of each class of 293.8 personal property which in its opinion is returned below its 293.9 market value to the sum believed to be its market value. It 293.10 shall raise the aggregate value of the personal property of 293.11 individuals, firms, or corporations, when it believes that the 293.12 aggregate valuation, as returned, is less than the market value 293.13 of the taxable personal property possessed by the individuals, 293.14 firms, or corporations, to the sum it believes to be the market 293.15 value. The board must first give notice to the persons of 293.16 intention to do so. The notice must set a time and place for a 293.17 hearing. 293.18 (4) The board shall reduce the valuation of each class of 293.19 personal property that is returned above its market value to the 293.20 sum it believes to be its market value. Upon complaint of a 293.21 party aggrieved, the board shall reduce the aggregate valuation 293.22 of the individual's personal property, or of any class of 293.23 personal property for which the individual is assessed, which in 293.24 its opinion has been assessed at too large a sum, to the sum it 293.25 believes was the market value of the individual's personal 293.26 property of that class. 293.27 (5) The board must not reduce the aggregate value of all 293.28 the property of its county, as submitted to the county board of 293.29 equalization, with the additions made by the auditor under this 293.30 chapter, by more than one percent of its whole valuation. The 293.31 board may raise the aggregate valuation of real property, and of 293.32 each class of personal property, of the county, or of any town 293.33 or district of the county, when it believes it is below the 293.34 market value of the property, or class of property, to the 293.35 aggregate amount it believes to be its market value. 293.36 (6) The board shall change the classification of any 294.1 property which in its opinion is not properly classified. 294.2 [EFFECTIVE DATE.] This section is effective January 1, 294.3 2002, and thereafter. 294.4 Sec. 35. Minnesota Statutes 2000, section 275.065, 294.5 subdivision 1, is amended to read: 294.6 Subdivision 1. [PROPOSED LEVY.] (a) Notwithstanding any 294.7 law or charter to the contrary, on or before September 15, each 294.8 taxing authority, other than a school district, and including 294.9 the state, shall adopt a proposed budget and shall certify to 294.10 the county auditor the proposed or, in the case of a town or the 294.11 state, the final property tax levy for taxes payable in the 294.12 following year. 294.13 (b) On or before September 30, each school district shall 294.14 certify to the county auditor the proposed property tax levy for 294.15 taxes payable in the following year. The school district shall 294.16 certify the proposed levy as: 294.17 (1)the state determined school levy amount as prescribed294.18under section 126C.13, subdivision 2;294.19(2)voter approved referendum and debt levies; and 294.20(3)(2) the sum of the remaining school levies, or the 294.21 maximum levy limitation certified by the commissioner of 294.22 children, families, and learning according to section 126C.48, 294.23 subdivision 1, less the amounts levied underclauses294.24 clause (1)and (2). 294.25 (c) If the board of estimate and taxation or any similar 294.26 board that establishes maximum tax levies for taxing 294.27 jurisdictions within a first class city certifies the maximum 294.28 property tax levies for funds under its jurisdiction by charter 294.29 to the county auditor by September 15, the city shall be deemed 294.30 to have certified its levies for those taxing jurisdictions. 294.31 (d) For purposes of this section, "taxing authority" 294.32 includes all home rule and statutory cities, towns, counties, 294.33 school districts, and special taxing districts as defined in 294.34 section 275.066. Intermediate school districts that levy a tax 294.35 under chapter 124 or 136D, joint powers boards established under 294.36 sections 123A.44 to 123A.446, and common school districts No. 295.1 323, Franconia, and No. 815, Prinsburg, are also special taxing 295.2 districts for purposes of this section. 295.3 [EFFECTIVE DATE.] This section is effective for taxes 295.4 payable in 2002 and subsequent years. 295.5 Sec. 36. Minnesota Statutes 2000, section 275.065, 295.6 subdivision 3, is amended to read: 295.7 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 295.8 county auditor shall prepare and the county treasurer shall 295.9 deliver after November 10 and on or before November 24 each 295.10 year, by first class mail to each taxpayer at the address listed 295.11 on the county's current year's assessment roll, a notice of 295.12 proposed property taxes. 295.13 (b) The commissioner of revenue shall prescribe the form of 295.14 the notice. 295.15 (c) The notice must inform taxpayers that it contains the 295.16 amount of property taxes each taxing authority proposes to 295.17 collect for taxes payable the following year. In the case of a 295.18 town, or in the case of the statedetermined portion of the295.19school districtgeneral levy, the final tax amount will be its 295.20 proposed tax. In the case of taxing authorities required to 295.21 hold a public meeting under subdivision 6, the notice must 295.22 clearly state that each taxing authority, including regional 295.23 library districts established under section 134.201, and 295.24 including the metropolitan taxing districts as defined in 295.25 paragraph (i), but excluding all other special taxing districts 295.26 and towns, will hold a public meeting to receive public 295.27 testimony on the proposed budget and proposed or final property 295.28 tax levy, or, in case of a school district, on the current 295.29 budget and proposed property tax levy. It must clearly state 295.30 the time and place of each taxing authority's meeting, a 295.31 telephone number for the taxing authority that taxpayers may 295.32 call if they have questions related to the notice, and an 295.33 address where comments will be received by mail. 295.34 (d) The notice must state for each parcel: 295.35 (1) the market value of the property as determined under 295.36 section 273.11, and used for computing property taxes payable in 296.1 the following year and for taxes payable in the current year as 296.2 each appears in the records of the county assessor on November 1 296.3 of the current year; and, in the case of residential property, 296.4 whether the property is classified as homestead or 296.5 nonhomestead. The notice must clearly inform taxpayers of the 296.6 years to which the market values apply and that the values are 296.7 final values; 296.8 (2) the items listed below, shown separately by county, 296.9 city or town, statedetermined schoolgeneral taxnet of the296.10education homestead credit under section 273.1382, voter 296.11 approved school levy, other local school levy, and the sum of 296.12 the special taxing districts, and as a total of all taxing 296.13 authorities in all cases net of the credit amounts determined 296.14 under section 273.1384: 296.15 (i) the actual tax for taxes payable in the current year; 296.16 (ii) the tax change due to spending factors, defined as the 296.17 proposed tax minus the constant spending tax amount; 296.18 (iii) the tax change due to other factors, defined as the 296.19 constant spending tax amount minus the actual current year tax; 296.20 and 296.21 (iv) the proposed tax amount. 296.22 In the case of a town or the statedetermined school296.23 general tax, the final tax shall also be its proposed tax unless 296.24 the town changes its levy at a special town meeting under 296.25 section 365.52. If a school district has certified under 296.26 section 126C.17, subdivision 9, that a referendum will be held 296.27 in the school district at the November general election, the 296.28 county auditor must note next to the school district's proposed 296.29 amount that a referendum is pending and that, if approved by the 296.30 voters, the tax amount may be higher than shown on the notice. 296.31 In the case of the city of Minneapolis, the levy for the 296.32 Minneapolis library board and the levy for Minneapolis park and 296.33 recreation shall be listed separately from the remaining amount 296.34 of the city's levy. In the case of a parcel where tax increment 296.35 or the fiscal disparities areawide tax under chapter 276A or 296.36 473F applies, the proposed tax levy on the captured value or the 297.1 proposed tax levy on the tax capacity subject to the areawide 297.2 tax must each be stated separately and not included in the sum 297.3 of the special taxing districts; and 297.4 (3) the increase or decrease between the total taxes 297.5 payable in the current year and the total proposed taxes, 297.6 expressed as a percentage. 297.7 For purposes of this section, the amount of the tax on 297.8 homesteads qualifying under the senior citizens' property tax 297.9 deferral program under chapter 290B is the total amount of 297.10 property tax before subtraction of the deferred property tax 297.11 amount. 297.12 (e) The notice must clearly state that the proposed or 297.13 final taxes do not include the following: 297.14 (1) special assessments; 297.15 (2) levies approved by the voters after the date the 297.16 proposed taxes are certified, including bond referenda, school 297.17 district levy referenda, and levy limit increase referenda; 297.18 (3) amounts necessary to pay cleanup or other costs due to 297.19 a natural disaster occurring after the date the proposed taxes 297.20 are certified; 297.21 (4) amounts necessary to pay tort judgments against the 297.22 taxing authority that become final after the date the proposed 297.23 taxes are certified; and 297.24 (5) the contamination tax imposed on properties which 297.25 received market value reductions for contamination. 297.26 (f) Except as provided in subdivision 7, failure of the 297.27 county auditor to prepare or the county treasurer to deliver the 297.28 notice as required in this section does not invalidate the 297.29 proposed or final tax levy or the taxes payable pursuant to the 297.30 tax levy. 297.31 (g) If the notice the taxpayer receives under this section 297.32 lists the property as nonhomestead, and satisfactory 297.33 documentation is provided to the county assessor by the 297.34 applicable deadline, and the property qualifies for the 297.35 homestead classification in that assessment year, the assessor 297.36 shall reclassify the property to homestead for taxes payable in 298.1 the following year. 298.2 (h) In the case of class 4 residential property used as a 298.3 residence for lease or rental periods of 30 days or more, the 298.4 taxpayer must either: 298.5 (1) mail or deliver a copy of the notice of proposed 298.6 property taxes to each tenant, renter, or lessee; or 298.7 (2) post a copy of the notice in a conspicuous place on the 298.8 premises of the property. 298.9 The notice must be mailed or posted by the taxpayer by 298.10 November 27 or within three days of receipt of the notice, 298.11 whichever is later. A taxpayer may notify the county treasurer 298.12 of the address of the taxpayer, agent, caretaker, or manager of 298.13 the premises to which the notice must be mailed in order to 298.14 fulfill the requirements of this paragraph. 298.15 (i) For purposes of this subdivision, subdivisions 5a and 298.16 6, "metropolitan special taxing districts" means the following 298.17 taxing districts in the seven-county metropolitan area that levy 298.18 a property tax for any of the specified purposes listed below: 298.19 (1) metropolitan council under section 473.132, 473.167, 298.20 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 298.21 (2) metropolitan airports commission under section 473.667, 298.22 473.671, or 473.672; and 298.23 (3) metropolitan mosquito control commission under section 298.24 473.711. 298.25 For purposes of this section, any levies made by the 298.26 regional rail authorities in the county of Anoka, Carver, 298.27 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 298.28 398A shall be included with the appropriate county's levy and 298.29 shall be discussed at that county's public hearing. 298.30 (j) If a statutory or home rule charter city or a town has 298.31 exercised the local levy option provided by section 473.388, 298.32 subdivision 7, it may include in the notice of its proposed 298.33 taxes the amount of its proposed taxes attributable to its 298.34 exercise of the option. In the first year of the city or town's 298.35 exercise of this option, the statement shall include an estimate 298.36 of the reduction of the metropolitan council's tax on the parcel 299.1 due to exercise of that option. The metropolitan council's levy 299.2 shall be adjusted accordingly. 299.3 [EFFECTIVE DATE.] This section is effective for notices of 299.4 proposed property taxes required in 2001 for taxes payable in 299.5 2002, and thereafter. 299.6 Sec. 37. Minnesota Statutes 2000, section 275.065, 299.7 subdivision 5a, is amended to read: 299.8 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 299.9 population of more than 2,500, county, a metropolitan special 299.10 taxing district as defined in subdivision 3, paragraph (i), a 299.11 regional library district established under section 134.201, or 299.12 school district shall advertise in a newspaper a notice of its 299.13 intent to adopt a budget and property tax levy or, in the case 299.14 of a school district, to review its current budget and proposed 299.15 property taxes payable in the following year, at a public 299.16 hearing. The notice must be published not less than two 299.17 business days nor more than six business days before the hearing. 299.18 The advertisement must be at least one-eighth page in size 299.19 of a standard-size or a tabloid-size newspaper. The 299.20 advertisement must not be placed in the part of the newspaper 299.21 where legal notices and classified advertisements appear. The 299.22 advertisement must be published in an official newspaper of 299.23 general circulation in the taxing authority. The newspaper 299.24 selected must be one of general interest and readership in the 299.25 community, and not one of limited subject matter. The 299.26 advertisement must appear in a newspaper that is published at 299.27 least once per week. 299.28 For purposes of this section, the metropolitan special 299.29 taxing district's advertisement must only be published in the 299.30 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 299.31 In addition to other requirements, a county, a city having 299.32 a population of more than 2,500, and a school district must show 299.33 in the public advertisement required under this section, the 299.34 lobbying expenditures of the county, city, and school district 299.35 as most recently reported under section 6.76. 299.36 In addition to other requirements, a county and a city 300.1 having a population of more than 2,500 must show in the public 300.2 advertisement required under this subdivision the current tax 300.3 rate, the proposed tax rate if no property tax levy increase is 300.4 adopted, and the proposed rate if the proposed levy is adopted. 300.5 (b) The advertisement for school districts, metropolitan 300.6 special taxing districts, and regional library districts must be 300.7 in the following form, except that the notice for a school 300.8 district may include references to the current budget in regard 300.9 to proposed property taxes. 300.10 "NOTICE OF 300.11 PROPOSED PROPERTY TAXES 300.12 (School District/Metropolitan 300.13 Special Taxing District/Regional 300.14 Library District) of ......... 300.15 The governing body of ........ will soon hold budget hearings 300.16 and vote on the property taxes for (metropolitan special taxing 300.17 district/regional library district services that will be 300.18 provided in (year)/school district services that will be 300.19 provided in (year) and (year)). 300.20 NOTICE OF PUBLIC HEARING: 300.21 All concerned citizens are invited to attend a public hearing 300.22 and express their opinions on the proposed (school 300.23 district/metropolitan special taxing district/regional library 300.24 district) budget and property taxes, or in the case of a school 300.25 district, its current budget and proposed property taxes, 300.26 payable in the following year. The hearing will be held on 300.27 (Month/Day/Year) at (Time) at (Location, Address)." 300.28 (c) The advertisement for cities and counties must be in 300.29 the following form. 300.30 "NOTICE OF PROPOSED 300.31 TOTAL BUDGET AND PROPERTY TAXES 300.32 The (city/county) governing body or board of commissioners will 300.33 hold a public hearing to discuss the budget and to vote on the 300.34 amount of property taxes to collect for services the 300.35 (city/county) will provide in (year). 300.36 301.1 SPENDING: The total budget amounts below compare 301.2 (city's/county's) (year) total actual budget with the amount the 301.3 (city/county) proposes to spend in (year). 301.4 301.5 (Year) Total Proposed (Year) Change from 301.6 Actual Budget Budget (Year)-(Year) 301.7 301.8 $....... $....... ...% 301.9 301.10 SPENDING: Lobbying expenditures (included in the budget amounts 301.11 listed above). 301.12 301.13 (Year) Proposed (Year) Change from 301.14 Amount Amount (Year)-(Year) 301.15 301.16 $....... $....... ...% 301.17 301.18 TAXES: The property tax amounts below compare that portion of 301.19 the current budget levied in property taxes in (city/county) for 301.20 (year) with the property taxes the (city/county) proposes to 301.21 collect in (year). 301.22 301.23 (Year) Property Proposed (Year) Change from 301.24 Taxes Property Taxes (Year)-(Year) 301.25 301.26 $....... $....... ...% 301.27 301.28 LOCAL TAX RATE COMPARISON: The current local tax rate, the 301.29 local tax rate if no tax levy increase is adopted, and the 301.30 proposed local tax rate if the proposed levy is adopted. 301.31 301.32 (Year) (Year) (Year) 301.33 Tax Rate Tax Rate if NO Proposed 301.34 Levy Increase Tax Rate 301.36 ....... ....... ....... 302.1 302.2 ATTEND THE PUBLIC HEARING 302.3 All (city/county) residents are invited to attend the public 302.4 hearing of the (city/county) to express your opinions on the 302.5 budget and the proposed amount of (year) property taxes. The 302.6 hearing will be held on: 302.7 (Month/Day/Year/Time) 302.8 (Location/Address) 302.9 If the discussion of the budget cannot be completed, a time and 302.10 place for continuing the discussion will be announced at the 302.11 hearing. You are also invited to send your written comments to: 302.12 (City/County) 302.13 (Location/Address)" 302.14 (d) For purposes of this subdivision, the budget amounts 302.15 listed on the advertisement mean: 302.16 (1) for cities, the total government fund expenditures, as 302.17 defined by the state auditor under section 471.6965, less any 302.18 expenditures for improvements or services that are specially 302.19 assessed or charged under chapter 429, 430, 435, or the 302.20 provisions of any other law or charter; and 302.21 (2) for counties, the total government fund expenditures, 302.22 as defined by the state auditor under section 375.169, less any 302.23 expenditures for direct payments to recipients or providers for 302.24 the human service aids listed below: 302.25 (i) Minnesota family investment program under chapters 256J 302.26 and 256K; 302.27 (ii) medical assistance under sections 256B.041, 302.28 subdivision 5, and 256B.19, subdivision 1; 302.29 (iii) general assistance medical care under section 302.30 256D.03, subdivision 6; 302.31 (iv) general assistance under section 256D.03, subdivision 302.32 2; 302.33 (v) emergency assistance under section 256J.48; 302.34 (vi) Minnesota supplemental aid under section 256D.36, 302.35 subdivision 1; 302.36 (vii) preadmission screening under section 256B.0911, and 303.1 alternative care grants under section 256B.0913; 303.2 (viii) general assistance medical care claims processing, 303.3 medical transportation and related costs under section 256D.03, 303.4 subdivision 4; 303.5 (ix) medical transportation and related costs under section 303.6 256B.0625, subdivisions 17 to 18a; 303.7 (x) group residential housing under section 256I.05, 303.8 subdivision 8, transferred from programs in clauses (iv) and 303.9 (vi); or 303.10 (xi) any successor programs to those listed in clauses (i) 303.11 to (x). 303.12 (e) A city with a population of over 500 but not more than 303.13 2,500 must advertise by posted notice as defined in section 303.14 645.12, subdivision 1. The advertisement must be posted at the 303.15 time provided in paragraph (a). It must be in the form required 303.16 in paragraph (b). 303.17 (f) For purposes of this subdivision, the population of a 303.18 city is the most recent population as determined by the state 303.19 demographer under section 4A.02. 303.20 (g) The commissioner of revenue, subject to the approval of 303.21 the chairs of the house and senate tax committees, shall 303.22 prescribe the form and format of the advertisement. 303.23 [EFFECTIVE DATE.] This section is effective for newspaper 303.24 advertisements in 2001 and thereafter. 303.25 Sec. 38. Minnesota Statutes 2000, section 275.066, is 303.26 amended to read: 303.27 275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 303.28 For the purposes of property taxation and property tax 303.29 state aids, the term "special taxing districts" includes the 303.30 following entities: 303.31 (1) watershed districts under chapter 103D; 303.32 (2) sanitary districts under sections 115.18 to 115.37; 303.33 (3) regional sanitary sewer districts under sections 115.61 303.34 to 115.67; 303.35 (4) regional public library districts under section 303.36 134.201; 304.1 (5) park districts under chapter 398; 304.2 (6) regional railroad authorities under chapter 398A; 304.3 (7) hospital districts under sections 447.31 to 447.38; 304.4 (8) St. Cloud metropolitan transit commission under 304.5 sections 458A.01 to 458A.15; 304.6 (9) Duluth transit authority under sections 458A.21 to 304.7 458A.37; 304.8 (10) regional development commissions under sections 304.9 462.381 to 462.398; 304.10 (11) housing and redevelopment authorities under sections 304.11 469.001 to 469.047; 304.12 (12) port authorities under sections 469.048 to 469.068; 304.13 (13) economic development authorities under sections 304.14 469.090 to 469.1081; 304.15 (14) metropolitan council under sections 473.123 to 304.16 473.549; 304.17 (15) metropolitan airports commission under sections 304.18 473.601 to 473.680; 304.19 (16) metropolitan mosquito control commission under 304.20 sections 473.701 to 473.716; 304.21 (17) Morrison county rural development financing authority 304.22 under Laws 1982, chapter 437, section 1; 304.23 (18) Croft Historical Park District under Laws 1984, 304.24 chapter 502, article 13, section 6; 304.25 (19) East Lake county medical clinic district under Laws 304.26 1989, chapter 211, sections 1 to 6; 304.27 (20) Floodwood area ambulance district under Laws 1993, 304.28 chapter 375, article 5, section 39; 304.29 (21) Middle Mississippi river watershed management 304.30 organization under sections 103B.211 and 103B.241;and304.31 (22) emergency medical services special taxing districts 304.32 under section 144F.01; 304.33 (23) a county levying under the authority of section 304.34 103B.241, 103B.245, or 103B.251; and 304.35 (24) any other political subdivision of the state of 304.36 Minnesota, excluding counties, school districts, cities, and 305.1 towns, that has the power to adopt and certify a property tax 305.2 levy to the county auditor, as determined by the commissioner of 305.3 revenue. 305.4 [EFFECTIVE DATE.] Clause (22) of this section is effective 305.5 for taxes levied in 2001, payable in 2002, through taxes levied 305.6 in 2006, payable in 2007. Clause (23) of this section is 305.7 effective for taxes levied in 2001, payable in 2002, and 305.8 thereafter. 305.9 Sec. 39. Minnesota Statutes 2000, section 275.07, 305.10 subdivision 1, is amended to read: 305.11 Subdivision 1. [CERTIFICATION OF LEVY.] (a) Except as 305.12 provided under paragraph (b), the taxes voted by cities, 305.13 counties, school districts, and special districts shall be 305.14 certified by the proper authorities to the county auditor on or 305.15 before five working days after December 20 in each year. A town 305.16 must certify the levy adopted by the town board to the county 305.17 auditor by September 15 each year. If the town board modifies 305.18 the levy at a special town meeting after September 15, the town 305.19 board must recertify its levy to the county auditor on or before 305.20 five working days after December 20. The taxes certified shall 305.21 not be reduced by the county auditor by the aid received under 305.22 section 273.1398, subdivision 2, but shall be reduced by the 305.23 county auditor by the aid received under section 273.1398, 305.24 subdivision 3. If a city, town, county, school district, or 305.25 special district fails to certify its levy by that date, its 305.26 levy shall be the amount levied by it for the preceding year. 305.27 (b)(i) The taxes voted by counties under sections 103B.241, 305.28 103B.245, and 103B.251 shall be separately certified by the 305.29 county to the county auditor on or before five working days 305.30 after December 20 in each year. The taxes certified shall not 305.31 be reduced by the county auditor by the aid received under 305.32 section 273.1398, subdivisions 2 and 3. If a county fails to 305.33 certify its levy by that date, its levy shall be the amount 305.34 levied by it for the preceding year. 305.35 (ii) For purposes of the proposed property tax notice under 305.36 section 275.065 and the property tax statement under section 306.1 276.04, for the first year in which the county implements the 306.2 provisions of this paragraph, the county auditor shall reduce 306.3 the county's levy for the preceding year to reflect any amount 306.4 levied for water management purposes under clause (i) included 306.5 in the county's levy. 306.6 [EFFECTIVE DATE.] This section is effective for taxes 306.7 levied in 2001, payable in 2002, and thereafter. 306.8 Sec. 40. Minnesota Statutes 2000, section 276.04, 306.9 subdivision 2, is amended to read: 306.10 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 306.11 shall provide for the printing of the tax statements. The 306.12 commissioner of revenue shall prescribe the form of the property 306.13 tax statement and its contents. The statement must contain a 306.14 tabulated statement of the dollar amount due to each taxing 306.15 authority and the amount of the statedetermined schoolgeneral 306.16 tax from the parcel of real property for which a particular tax 306.17 statement is prepared. The dollar amounts attributable to the 306.18 county, the statedetermined schoolgeneral tax, the voter 306.19 approved school tax, the other local school tax, the township or 306.20 municipality, and the total of the metropolitan special taxing 306.21 districts as defined in section 275.065, subdivision 3, 306.22 paragraph (i), must be separately stated. The amounts due all 306.23 other special taxing districts, if any, may be aggregated. The 306.24 amount of the tax on homesteads qualifying under the senior 306.25 citizens' property tax deferral program under chapter 290B is 306.26 the total amount of property tax before subtraction of the 306.27 deferred property tax amount. The amount of the tax on 306.28 contamination value imposed under sections 270.91 to 270.98, if 306.29 any, must also be separately stated. The dollar amounts, 306.30 including the dollar amount of any special assessments, may be 306.31 rounded to the nearest even whole dollar. For purposes of this 306.32 section whole odd-numbered dollars may be adjusted to the next 306.33 higher even-numbered dollar. The amount of market value 306.34 excluded under section 273.11, subdivision 16, if any, must also 306.35 be listed on the tax statement.The statement shall include the306.36following sentences, printed in upper case letters in boldface307.1print: "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT RECEIVE ANY307.2PROPERTY TAX REVENUES, IT SETS THE AMOUNT OF THE307.3STATE-DETERMINED SCHOOL TAX LEVY. THE STATE OF MINNESOTA307.4REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS307.5TO LOCAL UNITS OF GOVERNMENT."307.6 (b) The property tax statements for manufactured homes and 307.7 sectional structures taxed as personal property shall contain 307.8 the same information that is required on the tax statements for 307.9 real property. 307.10 (c) Real and personal property tax statements must contain 307.11 the following information in the order given in this paragraph. 307.12 The information must contain the current year tax information in 307.13 the right column with the corresponding information for the 307.14 previous year in a column on the left: 307.15 (1) the property's estimated market value under section 307.16 273.11, subdivision 1; 307.17 (2) the property's taxable market value after reductions 307.18 under section 273.11, subdivisions 1a and 16; 307.19 (3) the property's gross tax, calculated by adding the 307.20 property's total property tax to the sum of the aids enumerated 307.21 in clause (4); 307.22 (4) a total of the following aids: 307.23 (i) education aids payable under chapters 122A, 123A, 123B, 307.24 124D, 125A, 126C, and 127A; 307.25 (ii) local government aids for cities, towns, and counties 307.26 under chapter 477A; 307.27 (iii) disparity reduction aid under section 273.1398; and 307.28 (iv) homestead and agricultural credit aid under section 307.29 273.1398; 307.30 (5) for homestead residential and agricultural properties, 307.31 theeducationhomestead credit under section273.1382273.1384; 307.32 (6) any credits received under sections 273.119; 273.123; 307.33 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 307.34 473H.10, except that the amount of credit received under section 307.35 273.135 must be separately stated and identified as "taconite 307.36 tax relief"; and 308.1 (7) the net tax payable in the manner required in paragraph 308.2 (a). 308.3 (d) If the county uses envelopes for mailing property tax 308.4 statements and if the county agrees, a taxing district may 308.5 include a notice with the property tax statement notifying 308.6 taxpayers when the taxing district will begin its budget 308.7 deliberations for the current year, and encouraging taxpayers to 308.8 attend the hearings. If the county allows notices to be 308.9 included in the envelope containing the property tax statement, 308.10 and if more than one taxing district relative to a given 308.11 property decides to include a notice with the tax statement, the 308.12 county treasurer or auditor must coordinate the process and may 308.13 combine the information on a single announcement. 308.14 The commissioner of revenue shall certify to the county 308.15 auditor the actual or estimated aids enumerated in clause (4) 308.16 that local governments will receive in the following year. The 308.17 commissioner must certify this amount by January 1 of each year. 308.18 [EFFECTIVE DATE.] This section is effective July 1, 2001, 308.19 and thereafter, for statements required in 2002 and thereafter. 308.20 Sec. 41. Minnesota Statutes 2000, section 282.01, 308.21 subdivision 1a, is amended to read: 308.22 Subd. 1a. [CONVEYANCE; GENERALLY.] Tax-forfeited lands may 308.23 be sold by the county board to an organized or incorporated 308.24 governmental subdivision of the state for any public purpose for 308.25 which the subdivision is authorized to acquire property or may 308.26 be released from the trust in favor of the taxing districts on 308.27 application of a state agency for an authorized use at not less 308.28 than their value as determined by the county board.The308.29commissioner of revenue may convey by deed in the name of the308.30state a tract of tax-forfeited land held in trust in favor of308.31the taxing districts to a governmental subdivision for an308.32authorized public use, if an application is submitted to the308.33commissioner which includes a statement of facts as to the use308.34to be made of the tract and the need therefor and the308.35recommendation of the county board.308.36 [EFFECTIVE DATE.] This section is effective for deeds 309.1 issued on or after July 1, 2001. 309.2 Sec. 42. Minnesota Statutes 2000, section 282.01, 309.3 subdivision 1b, is amended to read: 309.4 Subd. 1b. [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 309.5 Notwithstanding subdivision 1a, in the case of tax-forfeited 309.6 lands located in a targeted neighborhood, as defined in section 309.7 469.201, subdivision 10,outside the metropolitan area, as309.8defined inand section 473.121, subdivision 2, the commissioner 309.9 of revenuemayshall convey by deed in the name of the state any 309.10 tract of tax-forfeited land held in trust in favor of the taxing 309.11 districts, to a political subdivision that submits an 309.12 application to the commissioner of revenue and the 309.13 recommendation of the county board. 309.14 (b)Notwithstanding subdivision 1a, in the case of309.15tax-forfeited lands located in a targeted neighborhood, as309.16defined in section 469.201, subdivision 10, in a county in the309.17metropolitan area, as defined in section 473.121, subdivision 2,309.18the commissioner of revenue shall convey by deed in the name of309.19the state any tract of tax-forfeited land held in trust in favor309.20of the taxing districts, to a political subdivision that submits309.21an application to the commissioner of revenue and the county309.22board.309.23(c)The application under paragraph (a)or (b)must include 309.24 a statement of facts as to the use to be made of the tract, the 309.25 need therefor, and a resolution, adopted by the governing body 309.26 of the political subdivision, finding that the conveyance of a 309.27 tract of tax-forfeited land to the political subdivision is 309.28 necessary to provide for the redevelopment of land as productive 309.29 taxable property. Deeds of conveyance issued under paragraph 309.30 (a) are not conditioned on continued use of the property for the 309.31 use stated in the application. 309.32 [EFFECTIVE DATE.] This section is effective for deeds 309.33 issued on or after July 1, 2001. 309.34 Sec. 43. Minnesota Statutes 2000, section 282.04, 309.35 subdivision 2, is amended to read: 309.36 Subd. 2. [RIGHTS BEFORE SALE; IMPROVEMENTS, INSURANCE, 310.1 DEMOLITION.] Before the sale of a parcel of forfeited land the 310.2 county auditor may, with the approval of the county board of 310.3 commissioners, provide for the repair and improvement of any 310.4 building or structure located upon the parcel, and may provide 310.5 for maintenance of tax-forfeited lands, if it is determined by 310.6 the county board that such repairs, improvements, or maintenance 310.7 are necessary for the operation, use, preservation and safety of 310.8 the building or structure. If so authorized by the county 310.9 board, the county auditor may insure the building or structure 310.10 against loss or damage resulting from fire or windstorm, may 310.11 purchase workers' compensation insurance to insure the county 310.12 against claims for injury to the persons employed in the 310.13 building or structure by the county, and may insure the county, 310.14 its officers and employees against claims for injuries to 310.15 persons or property because of the management, use or operation 310.16 of the building or structure. The county auditor may, with the 310.17 approval of the county board, provide for the demolition of the 310.18 building or structure, which has been determined by the county 310.19 board to be within the purview of section 299F.10, and for the 310.20 sale of salvaged materials from the building or structure. The 310.21 county auditor, with the approval of the county board, may 310.22 provide for the sale of abandoned personal propertyunder either310.23chapter 345 or 566, as appropriate. The sale may be made by the 310.24 sheriff using the procedures for the sale of abandoned property 310.25 in section 345.15 or by the county auditor using the procedures 310.26 for the sale of abandoned property in section 504B.271. The net 310.27 proceeds from any sale of the personal property, salvaged 310.28 materials, timber or other products, or leases made under this 310.29 law must be deposited in the forfeited tax sale fund and must be 310.30 distributed in the same manner as if the parcel had been sold. 310.31 The county auditor, with the approval of the county board, 310.32 may provide for the demolition of any structure on tax-forfeited 310.33 lands, if in the opinion of the county board, the county 310.34 auditor, and the land commissioner, if there is one, the sale of 310.35 the land with the structure on it, or the continued existence of 310.36 the structure by reason of age, dilapidated condition or 311.1 excessive size as compared with nearby structures, will result 311.2 in a material lessening of net tax capacities of real estate in 311.3 the vicinity of the tax-forfeited lands, or if the demolition of 311.4 the structure or structures will aid in disposing of the 311.5 tax-forfeited property. 311.6 Before the sale of a parcel of forfeited land located in an 311.7 urban area, the county auditor may with the approval of the 311.8 county board provide for the grading of the land by filling or 311.9 the removal of any surplus material from it. If the physical 311.10 condition of forfeited lands is such that a reasonable grading 311.11 of the lands is necessary for the protection and preservation of 311.12 the property of any adjoining owner, the adjoining property 311.13 owner or owners may apply to the county board to have the 311.14 grading done. If, after considering the application, the county 311.15 board believes that the grading will enhance the value of the 311.16 forfeited lands commensurate with the cost involved, it may 311.17 approve it, and the work must be performed under the supervision 311.18 of the county or city engineer, as the case may be, and the 311.19 expense paid from the forfeited tax sale fund. 311.20 Sec. 44. Minnesota Statutes 2000, section 469.040, 311.21 subdivision 5, is amended to read: 311.22 Subd. 5. [DESIGNATED HOUSING CORPORATION.] Property 311.23 located within the exterior boundaries ofthe White Earthan 311.24 Indian reservation in the state that is owned by the tribe's 311.25 designated housing entity as defined in United States Code, 311.26 title 25, section 4103(21), and that is a housing project or a 311.27 housing development project, as defined in section 469.002, 311.28 subdivisions 13 and 15, is exempt from all real and personal 311.29 property taxes of the city, the county, the state, or any 311.30 political subdivision thereof, but the property is subject to 311.31 subdivision 3. A copy of those portions of the annual reports 311.32 submitted on behalf of the housing entity to the Secretary of 311.33 the United States Department of Housing and Urban Development 311.34 for the project that contain information sufficient to determine 311.35 the amount due under subdivision 3 satisfies the reporting 311.36 requirements of subdivision 3 for the project. 312.1 [EFFECTIVE DATE.] This section is effective for taxes 312.2 levied in 2001, payable in 2002, and thereafter. 312.3 Sec. 45. Minnesota Statutes 2000, section 469.202, 312.4 subdivision 2, is amended to read: 312.5 Subd. 2. [ELIGIBILITY REQUIREMENTS FOR TARGETED 312.6 NEIGHBORHOODS.] An area within a city is eligible for 312.7 designation as a targeted neighborhood if the area meets two of 312.8 the following three criteria: 312.9 (a) The area had an unemployment rate that was twice the 312.10 unemployment rate for the Minneapolis and Saint Paul standard 312.11 metropolitan statistical area as determined by the1980most 312.12 recent federal decennial census. 312.13 (b) The median household income in the area was no more 312.14 than half the median household income for the Minneapolis and 312.15 Saint Paul standard metropolitan statistical area as determined 312.16 by the1980most recent federal decennial census. 312.17 (c) The area is characterized by residential dwelling units 312.18 in need of substantial rehabilitation. An area qualifies under 312.19 this paragraph if 25 percent or more of the residential dwelling 312.20 units are in substandard condition as determined by the city, or 312.21 if 70 percent or more of the residential dwelling units in the 312.22 area were built before 1940 as determined by the1980most 312.23 recent federal decennial census. 312.24 [EFFECTIVE DATE.] This section is effective beginning July 312.25 1, 2001. 312.26 Sec. 46. [473.246] [LEGISLATIVE COMMISSION ON METROPOLITAN 312.27 GOVERNMENT; REVIEW.] 312.28 Subdivision 1. [METROPOLITAN COUNCIL INFORMATION; REVIEW 312.29 BY LEGISLATIVE COMMISSION ON METROPOLITAN GOVERNMENT.] The 312.30 metropolitan council must submit to the legislative commission 312.31 on metropolitan government information on the council's tax 312.32 rates and dollar amounts levied for the current year, proposed 312.33 property tax rates and levies, operating and capital budgets, 312.34 work program, capital improvement program, and any other 312.35 information requested by the commission, for review by the 312.36 legislative commission, as provided in section 3.99. 313.1 Subd. 2. [EXPIRATION.] This section expires July 1, 2007. 313.2 [EFFECTIVE DATE; APPLICATION.] This section is effective 313.3 July 1, 2001, and applies in the counties of Anoka, Carver, 313.4 Dakota, Hennepin, Ramsey, Scott, and Washington. 313.5 Sec. 47. Minnesota Statutes 2000, section 473H.10, 313.6 subdivision 3, is amended to read: 313.7 Subd. 3. [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 313.8 After having determined the market value of all land valued 313.9 according to subdivision 2, the assessor shall compute the net 313.10 tax capacity of those properties by applying the appropriate 313.11 class rates. When computing the rate of tax pursuant to section 313.12 275.08, the county auditor shall include the net tax capacity of 313.13 land as provided in this clause. 313.14 (b) The county auditor shall compute the tax on lands 313.15 valued according to subdivision 2 and nonresidential buildings 313.16 by multiplying the net tax capacity times the total local tax 313.17 rate for all purposes as provided in clause (a). 313.18 (c) The county auditor shall then compute the tax on lands 313.19 valued according to subdivision 2 and nonresidential buildings 313.20 by multiplying the net tax capacity times the total local tax 313.21 rate for all purposes as provided in clause (a), subtracting 313.22 $1.50 per acre of land in the preserve. 313.23 (d) The county auditor shall then compute the maximum ad 313.24 valorem property tax on lands valued according to subdivision 2 313.25 and nonresidential buildings by multiplying the net tax capacity 313.26 times 105 percent of the previous year's statewide average local 313.27 tax rate levied on property located within townships for all 313.28 purposes. 313.29 (e) The tax due and payable by the owner of preserve land 313.30 valued according to subdivision 2 and nonresidential buildings 313.31 will be the amount determined in clause (c) or (d), whichever is 313.32 less. The state shall reimburse the taxing jurisdictions for 313.33 the amount of the difference between the net tax determined 313.34 under this clause and the gross tax in clause (b). Residential 313.35 buildings shall continue to be valued and classified according 313.36 to the provisions of sections 273.11 and 273.13, as they would 314.1 be in the absence of this section, and the tax on those 314.2 buildings shall not be subject to the limitation contained in 314.3 this clause. 314.4 The county may transfer money from the county conservation 314.5 account created in section 40A.152 to the county revenue fund to 314.6 reimburse the fund for the tax lost as a result of this 314.7 subdivision or to pay taxing jurisdictions within the county for 314.8 the tax lost. The county auditor shall certify to the 314.9 commissioner of revenue on or before June 1 the total amount of 314.10 tax lost to the county and taxing jurisdictions located within 314.11 the county as a result of this subdivision and the extent that 314.12 the tax lost exceeds funds available in the county conservation 314.13 account. Payment shall be made by the state on December2615 314.14 to each of the affected taxing jurisdictions, other than school 314.15 districts, in the same proportion that the ad valorem tax is 314.16 distributed if the county conservation account is insufficient 314.17 to make the reimbursement. There is annually appropriated from 314.18 the Minnesota conservation fund under section 40A.151 to the 314.19 commissioner of revenue an amount sufficient to make the 314.20 reimbursement provided in this subdivision. If the amount 314.21 available in the Minnesota conservation fund is insufficient, 314.22 the balance that is needed is appropriated from the general fund. 314.23 Sec. 48. Minnesota Statutes 2000, section 477A.12, is 314.24 amended to read: 314.25 477A.12 [ANNUAL APPROPRIATIONS; LANDS ELIGIBLE; 314.26 CERTIFICATION OF ACREAGE.] 314.27 Subdivision 1. [TYPES OF LAND; PAYMENTS.] (a) As an offset 314.28 for expenses incurred by counties and towns in support of 314.29 natural resources lands, the following amounts are annually 314.30 appropriated to the commissioner of natural resources from the 314.31 general fund for transfer to the commissioner of revenue. The 314.32 commissioner of revenue shall pay the transferred funds to 314.33 counties as required by sections 477A.11 to 477A.145. The 314.34 amounts are: 314.35 (1) for acquired natural resources land, $3, as adjusted 314.36 for inflation under section 477A.145, multiplied by the total 315.1 number of acres of acquired natural resources land or, at the 315.2 county's option three-fourths of one percent of the appraised 315.3 value of all acquired natural resources land in the county, 315.4 whichever is greater; 315.5 (2) 75 cents, as adjusted for inflation under section 315.6 477A.145, multiplied by the number of acres of 315.7 county-administered other natural resources land; and 315.8 (3) 37.5 cents, as adjusted for inflation under section 315.9 477A.145, multiplied by the number of acres of 315.10 commissioner-administered other natural resources land located 315.11 in each county as of July 1 of each year prior to the payment 315.12 year. 315.13 (b) The amount determined under paragraph (a), clause (1), 315.14 is payable for land that is acquired from a private owner and 315.15 owned by the department of transportation for the purpose of 315.16 replacing wetland losses caused by transportation projects, but 315.17 only if the county contains more than 500 acres of such land at 315.18 the time the certification is made under subdivision 2. 315.19 Subd. 2. [PROCEDURE.] Lands for which payments in lieu are 315.20 made pursuant to section 97A.061, subdivision 3, and Laws 1973, 315.21 chapter 567, shall not be eligible for payments under this 315.22 section. Each county auditor shall certify to the department of 315.23 natural resources during July of each year prior to the payment 315.24 year the number of acres of county-administered other natural 315.25 resources land within the county. The department of natural 315.26 resources may, in addition to the certification of acreage, 315.27 require descriptive lists of land so certified. The 315.28 commissioner of natural resources shall determine and certify to 315.29 the commissioner of revenue by March 1 of the payment year: 315.30 (1) the number of acres and most recent appraised value of 315.31 acquired natural resources land within each county; 315.32 (2) the number of acres of commissioner-administered 315.33 natural resources land within each county; and 315.34 (3) the number of acres of county-administered other 315.35 natural resources land within each county, based on the reports 315.36 filed by each county auditor with the commissioner of natural 316.1 resources. 316.2 The commissioner of transportation shall determine and 316.3 certify to the commissioner of revenue by March 1 of the payment 316.4 year the number of acres of land and the appraised value of the 316.5 land described in subdivision 1, paragraph (b), but only if it 316.6 exceeds 500 acres. 316.7 The commissioner of revenue shall determine the 316.8 distributions provided for in this section using the number of 316.9 acres and appraised values certified by the commissioner of 316.10 natural resources and the commissioner of transportation by 316.11 March 1 of the payment year. 316.12(c)Subd 3. [DETERMINATION OF APPRAISED VALUE.] For the 316.13 purposes of this section, the appraised value of acquired 316.14 natural resources land is the purchase price for the first five 316.15 years after acquisition. The appraised value of acquired 316.16 natural resources land received as a donation is the value 316.17 determined for the commissioner of natural resources by a 316.18 licensed appraiser, or the county assessor's estimated market 316.19 value if no appraisal is done. The appraised value must be 316.20 determined by the county assessor every five years after the 316.21 land is acquired. 316.22 [EFFECTIVE DATE.] This section is effective for payments in 316.23 2002 and thereafter. 316.24 Sec. 49. Minnesota Statutes 2000, section 477A.14, is 316.25 amended to read: 316.26 477A.14 [USE OF FUNDS.] 316.27 Except as provided in section 97A.061, subdivision 5, 40 316.28 percent of the total payment to the county shall be deposited in 316.29 the county general revenue fund to be used to provide property 316.30 tax levy reduction. The remainder shall be distributed by the 316.31 county in the following priority: 316.32 (a) 37.5 cents, as adjusted for inflation under section 316.33 477A.145, for each acre of county-administered other natural 316.34 resources land shall be deposited in a resource development fund 316.35 to be created within the county treasury for use in resource 316.36 development, forest management, game and fish habitat 317.1 improvement, and recreational development and maintenance of 317.2 county-administered other natural resources land. Any county 317.3 receiving less than $5,000 annually for the resource development 317.4 fund may elect to deposit that amount in the county general 317.5 revenue fund; 317.6 (b) From the funds remaining, within 30 days of receipt of 317.7 the payment to the county, the county treasurer shall pay each 317.8 organized township 30 cents, as adjusted for inflation under 317.9 section 477A.145, for each acre of acquired natural resources 317.10 land and each acre of land described in section 477A.12, 317.11 subdivision 1, paragraph (b), and 7.5 cents, as adjusted for 317.12 inflation under section 477A.145, for each acre of other natural 317.13 resources land located within its boundaries. Payments for 317.14 natural resources lands not located in an organized township 317.15 shall be deposited in the county general revenue fund. Payments 317.16 to counties and townships pursuant to this paragraph shall be 317.17 used to provide property tax levy reduction, except that of the 317.18 payments for natural resources lands not located in an organized 317.19 township, the county may allocate the amount determined to be 317.20 necessary for maintenance of roads in unorganized townships. 317.21 Provided that, if the total payment to the county pursuant to 317.22 section 477A.12 is not sufficient to fully fund the distribution 317.23 provided for in this clause, the amount available shall be 317.24 distributed to each township and the county general revenue fund 317.25 on a pro rata basis; and 317.26 (c) Any remaining funds shall be deposited in the county 317.27 general revenue fund. Provided that, if the distribution to the 317.28 county general revenue fund exceeds $35,000, the excess shall be 317.29 used to provide property tax levy reduction. 317.30 [EFFECTIVE DATE.] This section is effective for payments in 317.31 2002 and thereafter. 317.32 Sec. 50. [STUDY REQUIRED; METROPOLITAN FISCAL DISPARITIES 317.33 PROGRAM.] 317.34 The commissioner of revenue, in conjunction with one 317.35 representative from each of the seven metropolitan counties to 317.36 be appointed by the respective county boards and legislative 318.1 staff, shall conduct a study of the metropolitan revenue 318.2 distribution program contained in Minnesota Statutes, chapter 318.3 473F, commonly known as the fiscal disparities program. The 318.4 commissioner shall make a report to the legislature by February 318.5 1, 2002, consisting of the findings of the study and any 318.6 recommendations resulting from the study. 318.7 The study shall primarily address the question of whether 318.8 the program is achieving the purposes for which it was created. 318.9 Additionally, the study shall address the following questions: 318.10 (1) How has the program affected property tax disparities 318.11 across the Twin Cities metropolitan area? 318.12 (2) Is the formula for contributing tax base to the 318.13 areawide pool reasonable? Should certain commercial-industrial 318.14 tax base continue to be exempt from contribution to the areawide 318.15 pool, such as tax base in existence prior to 1979, tax base in 318.16 tax increment financing districts established before 1979, and 318.17 tax base located at the Minneapolis-Saint Paul International 318.18 Airport? Should contribution amounts be adjusted for 318.19 differences in sales ratios between communities? 318.20 (3) Is the formula for distributing tax base from the 318.21 areawide pool reasonable? Should the formula reflect measures 318.22 of need in addition to population? Should the distribution 318.23 formula be based on tax capacity rather than market value? 318.24 (4) Does the program help promote orderly growth and 318.25 encourage environmentally sound land use? 318.26 (5) Does the program reduce competition for 318.27 commercial-industrial tax base between communities? Is reduced 318.28 competition for commercial-industrial tax base desirable? 318.29 (6) Do local governments derive sufficient tax revenues 318.30 from commercial-industrial property to cover the costs of 318.31 providing services to the property, considering the tax base 318.32 that must be contributed to the areawide pool? 318.33 (7) Could improvements be made in the administration of the 318.34 program? 318.35 [EFFECTIVE DATE.] This section is effective July 1, 2001. 318.36 Sec. 51. [LAKES REGION EMS SERVICE CHARGES.] 319.1 Subdivision 1. [AUTHORIZATION.] The Lakes Region emergency 319.2 medical services district may charge and collect through the 319.3 county with county property taxes, an annual service charge of 319.4 $7 per unit for properties in the primary service area within 319.5 Chisago county and $3.50 per unit for properties in the 319.6 secondary service area within Chisago county according to the 319.7 schedule in subdivision 2 for emergency medical services 319.8 authorized as provided in subdivision 3. 319.9 Subd. 2. [EMS FEE SCHEDULE.] 319.10 (a) RESIDENTIAL PROPERTIES UNIT VALUE 319.11 (1) Agricultural with Dwelling 1.0 319.12 (2) Seasonal/Recreational 1.0 319.13 (3) Residential Homestead 1.0 319.14 (4) Residential Non-Homestead 1.0 for up to three 319.15 living units 319.16 1.0 for each additional 319.17 living unit 319.18 thereafter 319.19 (5) Mobile Homes 1.0 319.20 (b) COMMERCIAL PROPERTIES 319.21 (1) Up to $100,000 valuation 1.0 319.22 (2) $100,001 to $150,000 2.0 319.23 (3) $150,001 to $200,000 3.0 319.24 (4) $200,001 to $250,000 4.0 319.25 (5) $250,001 to $300,000 5.0 319.26 (6) $300,001 to $350,000 6.0 319.27 (7) $350,001 to $400,000 7.0 319.28 (8) $400,001 to $450,000 8.0 319.29 (9) $450,001 to $500,000 9.0 319.30 (10) $500,001 to $550,000 10.0 319.31 (11) $550,001 to $600,000 11.0 319.32 (12) Over $600,000 12.0 319.33 Subd. 3. [USE OF FEE PROCEEDS.] The proceeds of fees 319.34 charged and collected under this section must be used to support 319.35 the providing of out-of-hospital emergency medical services 319.36 including, but not limited to, first responder or rescue squads 320.1 recognized by the Lakes Region emergency medical services 320.2 district, ambulance services licensed under Minnesota Statutes, 320.3 chapter 144E, and recognized by the district, medical control 320.4 functions set out in Minnesota Statutes, chapter 144E, and 320.5 communications equipment and systems. 320.6 Subd. 4. [BOARD.] (a) The district is governed by a board 320.7 made up of the members of the governing bodies including town 320.8 boards of local governmental units in Chisago county, as follows: 320.9 (1) three members chosen by all of the cities in a manner 320.10 convenient to them that reflects geographic balance; and 320.11 (2) three members chosen by all of the town boards in a 320.12 manner convenient to them that reflects geographic balance. 320.13 (b) If the members are not selected as provided in 320.14 paragraph (a), clause (1) or (2), by September 1, 2001, the 320.15 county board must make the appointments from the governing 320.16 bodies of cities under paragraph (a), clause (1), or from the 320.17 governing bodies of town boards under paragraph (a), clause (2), 320.18 respectively, and, in either case, reflecting geographic balance. 320.19 (c) A representative from the county board chosen by the 320.20 county board must serve as the chair of the district board. 320.21 (d) All members of the district board serve a three-year 320.22 term. 320.23 (e) A vacancy on the district board must be filled as 320.24 provided for the initial appointment. If the vacancy is not 320.25 filled within 30 days by the initial appointing authority under 320.26 paragraph (a), clause (1) or (2), the county board must make the 320.27 appointment as provided in paragraph (b). 320.28 Subd. 5. [PROCEDURE.] The Chisago county board must charge 320.29 and collect, and disburse the fees authorized in this section in 320.30 the same manner authorized by ordinance for the charging, 320.31 collection, and disbursing of solid waste management fees within 320.32 the county. The county may proceed to collect unpaid fees under 320.33 this section in the same manner and extent, including interest 320.34 charges, as provided by ordinance for collection of unpaid solid 320.35 waste management fees. 320.36 Subd. 6. [ADMINISTRATIVE SHARE.] The county may retain up 321.1 to one percent of the fees collected under this section each 321.2 year for administration of the fee collection and disbursal. 321.3 Subd. 7. [SUNSET.] The fee authorized under this section 321.4 may be imposed in 2001 through 2003 and collected with property 321.5 taxes payable in 2002 through 2004 only. 321.6 Sec. 52. [CONVEYANCE OF TAX-FORFEITED LAND; DAKOTA 321.7 COUNTY.] 321.8 (a) If special school district No. 6 conveys the land 321.9 described in paragraph (c) to the state according to Minnesota 321.10 Statutes, section 282.01, subdivision 1d, then, notwithstanding 321.11 any other provision of Minnesota Statutes, chapter 282, the 321.12 commissioner of revenue shall reconvey the land described in 321.13 paragraph (c) to special school district No. 6 for no 321.14 consideration. 321.15 (b) The conveyance must be in a form approved by the 321.16 attorney general. Notwithstanding Minnesota Statutes, chapter 321.17 282, or other law to the contrary, special school district No. 6 321.18 may use or sell the land for other than a public use. 321.19 Notwithstanding Minnesota Statutes, chapter 282, or other law to 321.20 the contrary, the state shall not retain a reversionary interest 321.21 and shall convey the land free of the trust in favor of the 321.22 taxing district. 321.23 (c) The land to be conveyed is in the city of South St. 321.24 Paul, Dakota county, and is described as: 321.25 (1) Lots 4, 5, 6, and 7, Block 1, Lookout Park Addition; 321.26 (2) Lots 25 and 26, Block 1, Lookout Park Addition; 321.27 (3) Lots 11, 12, 13, 14, 15, 16, 17, 18, 19, and 20, Block 321.28 2, Lookout Park Addition; 321.29 (4) Lots 1, 2, 3, 4, and 5, Block 1, Bryants First Addition 321.30 to the city of South St. Paul; and 321.31 (5) Lot 21, Block 1, Bryants First Addition to the city of 321.32 South St. Paul, together with that part of the vacated alley and 321.33 vacated Stanley Place accruing thereto. 321.34 [EFFECTIVE DATE.] This section is effective the day 321.35 following final enactment. 321.36 Sec. 53. [INDEPENDENT SCHOOL DISTRICT NO. 319, 322.1 NASHWAUK-KEEWATIN, ADDITIONAL LEVY.] 322.2 In addition to other levies, independent school district 322.3 No. 319, Nashwauk-Keewatin, may levy an amount up to $25,000 322.4 each year to finance the Nashwauk School-Community Library and 322.5 Community Service Project. 322.6 [EFFECTIVE DATE.] This section is effective July 1, 2001. 322.7 Sec. 54. [PROPERTY TAX ABATEMENTS; PROPERTY DAMAGED BY 322.8 TORNADO; YELLOW MEDICINE AND CHIPPEWA COUNTIES.] 322.9 Subdivision 1. [AUTHORIZATION.] Notwithstanding the 322.10 requirements of Minnesota Statutes, section 375.192, a city 322.11 council by resolution may request the county board of a 322.12 qualified county to grant abatements on eligible property for 322.13 taxes payable in 2001 as provided in this section. Up to 50 322.14 percent of the taxes payable in 2001 on an eligible property 322.15 that does not qualify for reimbursement under Minnesota 322.16 Statutes, section 273.123, subdivision 4, may be abated. The 322.17 owner of the eligible property is not required to apply for the 322.18 abatement. 322.19 Subd. 2. [DEFINITIONS.] (a) As used in this section, the 322.20 terms defined in this subdivision have the meanings given them. 322.21 (b) "Qualified county" means any county in the area added 322.22 to the Presidential Declaration of Major Disaster, DR1333, by 322.23 amendment number 5 dated July 28, 2000, and amendment number 6 322.24 dated August 14, 2000. 322.25 (c) "Eligible property" means a parcel of taxable property 322.26 located in a qualified county that contains a structure that has 322.27 been determined by the assessor to have lost over 50 percent of 322.28 its estimated market value due to wind damage. In the case of 322.29 agricultural property, the abatement is limited to the taxes on 322.30 the parcel attributable to the value of the house, garage, and 322.31 surrounding one acre, if the house has lost over 50 percent of 322.32 its estimated market value; and the tax attributable to the 322.33 value of any farm buildings and structures that have lost over 322.34 50 percent of their estimated market value. 322.35 Subd. 3. [ASSESSORS' DUTIES.] As soon as practicable, 322.36 local and county assessors in qualified counties shall notify 323.1 the county board and property owners of parcels of eligible 323.2 property. 323.3 Subd. 4. [APPROPRIATION.] $100,000 is appropriated to the 323.4 commissioner of revenue for fiscal year 2002 to be apportioned 323.5 among the counties in amendment number 5 and amendment number 6 323.6 to the Presidential Declaration of Major Disaster, DR1333, to 323.7 provide reimbursement for abatements granted under this section 323.8 for taxes payable in 2001 to properties damaged from tornadoes 323.9 on July 25, 2000. The apportionment shall be based upon the 323.10 amount of disaster-related market value loss in each county. 323.11 Counties must be reimbursed only for property taxes that were 323.12 actually abated, not to exceed each county's apportioned amount. 323.13 Sec. 55. [MINNEHAHA WATERSHED DISTRICT.] 323.14 Subdivision 1. [LEVY AUTHORIZED.] Notwithstanding 323.15 Minnesota Statutes, section 103D.905, subdivision 3, the 323.16 Minnehaha watershed district may annually levy an additional 323.17 amount up to $50,000 for enforcing rules and permits. 323.18 Subd. 2. [EFFECTIVE DATE.] This section is effective, 323.19 without local approval, beginning with taxes levied in 2001, 323.20 payable in 2002. 323.21 Sec. 56. [REPEALER.] 323.22 (a) Minnesota Statutes 2000, section 278.078, is repealed. 323.23 (b) Laws 1988, chapter 426, section 1; Laws 1988, chapter 323.24 702, section 16; Laws 1992, chapter 511, article 2, section 52, 323.25 as amended by Laws 1997, chapter 231, article 2, section 50, and 323.26 Laws 1998, chapter 389, article 3, section 32; Laws 1996, 323.27 chapter 471, article 8, section 45; Laws 1999, chapter 243, 323.28 article 6, section 14; Laws 1999, chapter 243, article 6, 323.29 section 15; and Laws 2000, chapter 490, article 6, section 17, 323.30 are repealed. 323.31 [EFFECTIVE DATE.] This section is effective for taxes 323.32 levied in 2001, payable in 2002 and thereafter. 323.33 ARTICLE 10 323.34 PROPERTY TAX REFUND 323.35 Section 1. Minnesota Statutes 2000, section 290A.03, 323.36 subdivision 6, is amended to read: 324.1 Subd. 6. [HOMESTEAD.] "Homestead" means the dwelling 324.2 occupied as the claimant's principal residence and so much of 324.3 the land surrounding it, not exceeding ten acres, as is 324.4 reasonably necessary for use of the dwelling as a home and any 324.5 other property used for purposes of a homestead as defined in 324.6 section 273.13, subdivision 22, except for agricultural land 324.7 assessed as part of a homestead pursuant to section 273.13, 324.8 subdivision 23, "homestead" is limited to thefirst $600,000 of324.9market value or, where the farm homestead is rented,house and 324.10 garage and immediately surrounding one acre of land. The 324.11 homestead may be owned or rented and may be a part of a 324.12 multidwelling or multipurpose building and the land on which it 324.13 is built. A manufactured home, as defined in section 273.125, 324.14 subdivision 8, or a park trailer taxed as a manufactured home 324.15 under section 168.012, subdivision 9, assessed as personal 324.16 property may be a dwelling for purposes of this subdivision. 324.17 [EFFECTIVE DATE.] This section is effective beginning with 324.18 refunds based on property taxes payable in 2002. 324.19 Sec. 2. Minnesota Statutes 2000, section 290A.03, 324.20 subdivision 11, is amended to read: 324.21 Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent 324.22 constituting property taxes" means19the percent of the gross 324.23 rent, as provided under section 290A.046, actually paid in cash, 324.24 or its equivalent, or the portion of rent paid in lieu of 324.25 property taxes, in any calendar year by a claimant for the right 324.26 of occupancy of the claimant's Minnesota homestead in the 324.27 calendar year, and which rent constitutes the basis, in the 324.28 succeeding calendar year of a claim for relief under this 324.29 chapter by the claimant. 324.30 [EFFECTIVE DATE.] This section is effective beginning with 324.31 refunds based on rent paid in calendar year 2001. 324.32 Sec. 3. Minnesota Statutes 2000, section 290A.03, 324.33 subdivision 12, is amended to read: 324.34 Subd. 12. [GROSS RENT.] (a) "Gross rent" means rental paid 324.35 for the right of occupancy, at arms-length, of a homestead, 324.36 exclusive of charges for any medical services furnished by the 325.1 landlord as a part of the rental agreement, whether expressly 325.2 set out in the rental agreement or not. 325.3 (b) The gross rent of a resident of a nursing home or 325.4 intermediate care facility is $350 per month. The gross rent of 325.5 a resident of an adult foster care home is $550 per month. 325.6 Beginning for rent paid in 2002, the commissioner shall annually 325.7 adjust for inflation the gross rent amounts stated in this 325.8 paragraph. The adjustment must be made in accordance with 325.9 section 1f of the Internal Revenue Code, except that for 325.10 purposes of this paragraph the percentage increase shall be 325.11 determined from the year ending on June 30, 2001, to the year 325.12 ending on June 30 of the year in which the rent is paid. The 325.13 commissioner shall round the gross rents to the nearest $10 325.14 amount. If the amount ends in $5, the commissioner shall round 325.15 it up to the next $10 amount. The determination of the 325.16 commissioner under this paragraph is not a rule under the 325.17 Administrative Procedure Act. 325.18 (c) If the landlord and tenant have not dealt with each 325.19 other at arms-length and the commissioner determines that the 325.20 gross rent charged was excessive, the commissioner may adjust 325.21 the gross rent to a reasonable amount for purposes of this 325.22 chapter. 325.23 (d) Any amount paid by a claimant residing in property 325.24 assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 325.25 for occupancy in that property shall be excluded from gross rent 325.26 for purposes of this chapter. However, property taxes imputed 325.27 to the homestead of the claimant or the dwelling unit occupied 325.28 by the claimant that qualifies for homestead treatment pursuant 325.29 to section 273.124, subdivision 3, 4, 5, or 6 shall be included 325.30 within the term "property taxes payable" as defined in 325.31 subdivision 13, notwithstanding the fact that ownership is not 325.32 in the name of the claimant. 325.33 [EFFECTIVE DATE.] This section is effective for refunds 325.34 based on rent paid after December 31, 2000. 325.35 Sec. 4. Minnesota Statutes 2000, section 290A.03, 325.36 subdivision 13, is amended to read: 326.1 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 326.2 payable" means the property tax exclusive of special 326.3 assessments, penalties, and interest payable on a claimant's 326.4 homestead after deductions made under sections 273.135, 326.5 273.1382, 273.1391, 273.42, subdivision 2, and any other state 326.6 paid property tax credits in any calendar year. In the case of 326.7 a claimant who makes ground lease payments, "property taxes 326.8 payable" includes the amount of the payments directly 326.9 attributable to the property taxes assessed against the parcel 326.10 on which the house is located. No apportionment or reduction of 326.11 the "property taxes payable" shall be required for the use of a 326.12 portion of the claimant's homestead for a business purpose if 326.13 the claimant does not deduct any business depreciation expenses 326.14 for the use of a portion of the homestead in the determination 326.15 of federal adjusted gross income. For homesteads which are 326.16 manufactured homes as defined in section 273.125, subdivision 8, 326.17 and for homesteads which are park trailers taxed as manufactured 326.18 homes under section 168.012, subdivision 9, "property taxes 326.19 payable" shall also include19the percent, as provided under 326.20 section 290A.046, of the gross rent paid in the preceding year 326.21 for the site on which the homestead is located. When a 326.22 homestead is owned by two or more persons as joint tenants or 326.23 tenants in common, such tenants shall determine between them 326.24 which tenant may claim the property taxes payable on the 326.25 homestead. If they are unable to agree, the matter shall be 326.26 referred to the commissioner of revenue whose decision shall be 326.27 final. Property taxes are considered payable in the year 326.28 prescribed by law for payment of the taxes. 326.29 In the case of a claim relating to "property taxes 326.30 payable," the claimant must have owned and occupied the 326.31 homestead on January 2 of the year in which the tax is payable 326.32 and (i) the property must have been classified as homestead 326.33 property pursuant to section 273.124, on or before December 15 326.34 of the assessment year to which the "property taxes payable" 326.35 relate; or (ii) the claimant must provide documentation from the 326.36 local assessor that application for homestead classification has 327.1 been made on or before December 15 of the year in which the 327.2 "property taxes payable" were payable and that the assessor has 327.3 approved the application. 327.4 [EFFECTIVE DATE.] This section is effective beginning with 327.5 refunds based on rent paid in calendar year 2001. 327.6 Sec. 5. Minnesota Statutes 2000, section 290A.04, 327.7 subdivision 2, is amended to read: 327.8 Subd. 2. [HOMEOWNERS.] A claimant whose property taxes 327.9 payable are in excess of the percentage of the household income 327.10 stated below shall pay an amount equal to the percent of income 327.11 shown for the appropriate household income level along with the 327.12 percent to be paid by the claimant of the remaining amount of 327.13 property taxes payable. The state refund equals the amount of 327.14 property taxes payable that remain, up to the state refund 327.15 amount shown below. 327.16 Percent Percent Maximum 327.17 Household Income of Income Paid by State 327.18 Claimant Refund 327.19$0 to 1,029327.20 $0 to 1,189 1.2 percent 18 percent$440$1,190 327.211,030 to 2,059327.22 1,190 to 2,389 1.3 percent 18 percent$440$1,190 327.232,060 to 3,099327.24 2,390 to 3,589 1.4 percent 20 percent$440$1,190 327.253,100 to 4,129327.26 3,590 to 4,779 1.6 percent 20 percent$440$1,190 327.274,130 to 5,159327.28 4,780 to 5,969 1.7 percent 20 percent$440$1,190 327.295,160 to 7,229327.30 5,970 to 8,369 1.9 percent 25 percent$440$1,190 327.317,230 to 8,259327.32 8,370 to 9,559 2.1 percent 25 percent$440$1,190 327.338,260 to 9,289327.34 9,560 to 10,759 2.2 percent 25 percent$440$1,190 327.359,290 to 10,319327.36 10,760 to 11,949 2.3 percent 30 percent$440$1,190 327.3710,320 to 11,349327.38 11,950 to 13,139 2.4 percent 30 percent$440$1,190 327.3911,350 to 12,389327.40 13,140 to 14,349 2.5 percent 30 percent$440$1,190 327.4112,390 to 14,449327.42 14,350 to 16,729 2.6 percent 30 percent$440$1,190 327.4314,450 to 15,479327.44 16,730 to 17,919 2.8 percent 35 percent$440$1,190 327.4515,480 to 16,509327.46 17,920 to 19,119 3.0 percent 35 percent$440$1,190 327.4716,510 to 17,549327.48 19,120 to 20,319 3.2 percent 40 percent$440$1,190 327.4917,550 to 21,669327.50 20,320 to 25,089 3.3 percent 40 percent$440$1,190 327.5121,670 to 24,769327.52 25,090 to 28,679 3.4 percent 45 percent$440$1,190 327.5324,770 to 30,959327.54 28,680 to 41,819 3.5 percent 45 percent$440$1,190 327.5530,960 to 36,1193.5 percent45 percent$440327.5636,120 to 41,279328.1 41,820 to 47,789 3.7 percent 50 percent$440$1,190 328.241,280 to 58,829328.3 47,790 to 63,329 4.0 percent 50 percent$440$1,190 328.4 63,330 to 64,519 4.0 percent 50 percent $1,080 328.5 64,520 to 65,719 4.0 percent 50 percent $ 960 328.6 65,720 to 66,909 4.0 percent 50 percent $ 830 328.7 66,910 to 68,109 4.0 percent 50 percent $ 720 328.858,830 to 59,859328.9 68,110 to 69,309 4.0 percent 50 percent$310$600 328.1059,860 to 60,889328.11 69,310 to 70,499 4.0 percent 50 percent$210$360 328.1260,890 to 61,929328.13 70,500 to 71,699 4.0 percent 50 percent$100$120 328.14 The payment made to a claimant shall be the amount of the 328.15 state refund calculated under this subdivision. No payment is 328.16 allowed if the claimant's household income is$61,930$71,700 or 328.17 more. 328.18 [EFFECTIVE DATE.] This section is effective beginning with 328.19 refunds based on property taxes payable in 2002. 328.20 Sec. 6. Minnesota Statutes 2000, section 290A.04, 328.21 subdivision 2a, is amended to read: 328.22 Subd. 2a. [RENTERS.] A claimant whose rent constituting 328.23 property taxes exceeds the percentage of the household income 328.24 stated below must pay an amount equal to the percent of income 328.25 shown for the appropriate household income level along with the 328.26 percent to be paid by the claimant of the remaining amount of 328.27 rent constituting property taxes. The state refund equals the 328.28 amount of rent constituting property taxes that remain, up to 328.29 the maximum state refund amount shown below. 328.30 Percent Percent Maximum 328.31 Household Income of Income Paid by State 328.32 Claimant Refund 328.33 $0 to 3,099328.34 0 to 3,589 1.0 percent 5 percent$1,030$1,190 328.353,100 to 4,129328.36 3,590 to 4,779 1.0 percent 10 percent$1,030$1,190 328.374,130 to 5,159328.38 4,780 to 5,969 1.1 percent 10 percent$1,030$1,190 328.395,160 to 7,229328.40 5,970 to 8,369 1.2 percent 10 percent$1,030$1,190 328.417,230 to 9,289328.42 8,370 to 10,759 1.3 percent 15 percent$1,030$1,190 328.439,290 to 10,319328.44 10,760 to 11,949 1.4 percent 15 percent$1,030$1,190 328.4510,320 to 11,349328.46 11,950 to 13,139 1.4 percent 20 percent$1,030$1,190 328.4711,350 to 13,419328.48 13,140 to 15,539 1.5 percent 20 percent$1,030$1,190 328.4913,420 to 14,449328.50 15,540 to 16,729 1.6 percent 20 percent$1,030$1,190 328.5114,450 to 15,479328.52 16,730 to 17,919 1.7 percent 25 percent$1,030$1,190 328.5315,480 to 17,549328.54 17,920 to 20,319 1.8 percent 25 percent$1,030$1,190 329.117,550 to 18,579329.2 20,320 to 21,509 1.9 percent 30 percent$1,030$1,190 329.318,580 to 19,609329.4 21,510 to 22,699 2.0 percent 30 percent$1,030$1,190 329.519,610 to 20,639329.6 22,700 to 23,899 2.2 percent 30 percent$1,030$1,190 329.720,640 to 21,669329.8 23,900 to 25,089 2.4 percent 30 percent$1,030$1,190 329.921,670 to 22,709329.10 25,090 to 26,289 2.6 percent 35 percent$1,030$1,190 329.1122,710 to 23,739329.12 26,290 to 27,489 2.7 percent 35 percent$1,030$1,190 329.1323,740 to 24,769329.14 27,490 to 28,679 2.8 percent 35 percent$1,030$1,190 329.1524,770 to 25,799329.16 28,680 to 29,869 2.9 percent 40 percent$1,030$1,190 329.1725,800 to 26,839329.18 29,870 to 31,079 3.0 percent 40 percent$1,030$1,190 329.1926,840 to 27,869329.20 31,080 to 32,269 3.1 percent 40 percent$1,030$1,190 329.2127,870 to 28,899329.22 32,270 to 33,459 3.2 percent 40 percent$1,030$1,190 329.2328,900 to 29,929329.24 33,460 to 34,649 3.3 percent 45 percent$ 930$1,080 329.2529,930 to 30,959329.26 34,650 to 35,849 3.4 percent 45 percent$ 830$ 960 329.2730,960 to 31,999329.28 35,850 to 37,049 3.5 percent 45 percent$ 720$ 830 329.2932,000 to 33,029329.30 37,050 to 38,239 3.5 percent 50 percent$ 620$ 720 329.3133,030 to 34,059329.32 38,240 to 39,439 3.5 percent 50 percent$ 520$ 600 329.3334,060 to 35,089329.34 39,440 to 40,629 3.5 percent 50 percent$ 310$ 360 329.3535,090 to 36,119329.36 40,630 to 41,819 3.5 percent 50 percent$ 100$ 120 329.37 The payment made to a claimant is the amount of the state 329.38 refund calculated under this subdivision. No payment is allowed 329.39 if the claimant's household income is$36,120$41,820 or more. 329.40 [EFFECTIVE DATE.] This section is effective beginning with 329.41 refunds based on rent constituting property taxes paid in 2001. 329.42 Sec. 7. Minnesota Statutes 2000, section 290A.04, 329.43 subdivision 4, is amended to read: 329.44 Subd. 4. [INFLATION ADJUSTMENT.] Beginning for property 329.45 tax refunds payable in calendar year19962002, the commissioner 329.46 shall annually adjust the dollar amounts of the income 329.47 thresholds and the maximum refunds under subdivisions 2 and 2a 329.48 for inflation. The commissioner shall make the inflation 329.49 adjustments in accordance with section290.06, subdivision 2d1f 329.50 of the Internal Revenue Code, except that for purposes of this 329.51 subdivision the percentage increase shall be determined from the 329.52 year ending on June 30,19942000, to the year ending on June 30 329.53 of the year preceding that in which the refund is payable. The 330.1 commissioner shall use the appropriate percentage increase to 330.2 annually adjust the income thresholds and maximum refunds under 330.3 subdivisions 2 and 2a for inflation without regard to whether or 330.4 not the income tax brackets are adjusted for inflation in that 330.5 year. The commissioner shall round the thresholds and the 330.6 maximum amounts, as adjusted to the nearest $10 amount. If the 330.7 amount ends in $5, the commissioner shall round it up to the 330.8 next $10 amount. 330.9 The commissioner shall annually announce the adjusted 330.10 refund schedule at the same time provided under section 290.06. 330.11 The determination of the commissioner under this subdivision is 330.12 not a rule under the Administrative Procedure Act. 330.13 [EFFECTIVE DATE.] This section is effective the day 330.14 following final enactment. 330.15 Sec. 8. [290A.046] [RENT CONSTITUTING PROPERTY TAXES.] 330.16 (a)(1) For claims based on rent paid in calendar years 2001 330.17 and 2002, the percentage of rent constituting property taxes is 330.18 19 percent. 330.19 (2) For claims based on rent paid in calendar year 2003 and 330.20 later calendar years, the percentage is the percentage 330.21 determined under paragraph (c), rounded to the nearest whole 330.22 percent. 330.23 (b)(1) By September 30, 2002, the commissioner shall 330.24 estimate the average percentage that property taxes consist of 330.25 rent paid for occupancy of residential properties in Minnesota 330.26 for taxes and rents payable in the immediately preceding 330.27 calendar year and make the estimate available to the public. 330.28 This percentage must be used in making the determination under 330.29 paragraph (c) for refunds based on rent paid in calendar years 330.30 2003 through 2008. 330.31 (2) Beginning in 2008 and each year after 2008 that is 330.32 evenly divisible by four, the commissioner shall estimate the 330.33 average percentage that property taxes consist of rent paid for 330.34 occupancy of residential properties in Minnesota for taxes and 330.35 rents payable in the immediately preceding calendar year. The 330.36 commissioner shall make the estimate available to the public by 331.1 September 30 of the year in which it was prepared. This 331.2 estimate must be used in making the determination under 331.3 paragraph (c) for refunds based on rent paid in the four 331.4 calendar years immediately following the year in which the 331.5 estimate is published. 331.6 (c) For claims based on rent paid in calendar year 2004 and 331.7 later years, the percentage of rent constituting property taxes 331.8 is the greater of: 331.9 (1) the percentage estimate determined under paragraph (b); 331.10 or 331.11 (2) the percentage used in the immediately previous year 331.12 minus the greater of (i) one-third of the difference between the 331.13 percentage determined under paragraph (b) and the percentage 331.14 used in the year the estimate was prepared or (ii) one 331.15 percentage point. 331.16 (d) In preparing the estimates under this section, the 331.17 commissioner may use surveys of landlords, information obtained 331.18 from assessors, or any other information that the commissioner 331.19 considers appropriate. The estimates are not subject to chapter 331.20 14. 331.21 [EFFECTIVE DATE.] This section is effective beginning with 331.22 refunds based on rent paid in calendar year 2001. 331.23 Sec. 9. Minnesota Statutes 2000, section 290A.15, is 331.24 amended to read: 331.25 290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 331.26 The amount of any claim otherwise payable under this 331.27 chapter may be applied by the commissioner against any 331.28 delinquent tax liability ofthe claimant or spouse of the331.29claimant payable to the department of revenueany member of the 331.30 household. If there are two members of the household, the 331.31 commissioner may apply only one-half of a refund to the separate 331.32 liability of either member of the household. 331.33 [EFFECTIVE DATE.] This section is effective beginning with 331.34 refunds paid on or after July 1, 2001. 331.35 Sec. 10. [REPEALER.] 331.36 Minnesota Statutes 2000, section 290A.04, subdivision 2j, 332.1 is repealed. 332.2 [EFFECTIVE DATE.] This section is effective for taxable 332.3 years beginning after December 31, 2001. 332.4 ARTICLE 11 332.5 SUSTAINABLE FOREST INCENTIVE ACT 332.6 Section 1. Minnesota Statutes 2000, section 88.49, 332.7 subdivision 5, is amended to read: 332.8 Subd. 5. [CANCELLATION.] Upon the failure of the owner 332.9 faithfully to fulfill and perform such contract or any provision 332.10 thereof, or any requirement of sections 88.47 to 88.53, or any 332.11 rule adopted by the commissioner thereunder, the commissioner 332.12 may cancel the contract in the manner herein provided. The 332.13 commissioner shall give to the owner, in the manner prescribed 332.14 in section 88.48, subdivision 4, 60 days' notice of a hearing 332.15 thereon at which the owner may appear and show cause, if any, 332.16 why the contract should not be canceled. The commissioner shall 332.17 thereupon determine whether the contract should be canceled and 332.18 make an order to that effect. Notice of the commissioner's 332.19 determination and the making of the order shall be given to the 332.20 owner in the manner provided in section 88.48, subdivision 4. 332.21 On determining that the contract should be canceled and no 332.22 appeal therefrom be taken, the commissioner shall send notice 332.23 thereof to the auditor of the county and to the town clerk of 332.24 the town affected and file with the recorder a certified copy of 332.25 the order, who shall forthwith note the cancellation upon the 332.26 record thereof, and thereupon the land therein described shall 332.27 cease to be an auxiliary forest and, together with the timber 332.28 thereon, become liable to all taxes and assessments that 332.29 otherwise would have been levied against it had it never been an 332.30 auxiliary forest from the time of the making of the contract, 332.31 any provisions of the statutes of limitation to the contrary 332.32 notwithstanding, less the amount of taxes paid under the 332.33 provisions of section 88.51, subdivision 1, together with 332.34 interest on such taxes and assessments at six percent per annum, 332.35 but without penalties. 332.36 The commissioner may in like manner and with like effect 333.1 cancel the contract upon written application of the owner. 333.2 The commissioner shall cancel any contract if the owner has 333.3 made successful application under sections270.31 to 270.39333.4 290C.01 to 290C.11 inclusive, theMinnesota Tree Growth Tax Law333.5 Sustainable Forest Incentive Act, and has paid to the county 333.6 treasurer the difference between the amount which would have 333.7 been paid had the land under contract been subject to the 333.8 Minnesota Tree Growth Tax Law and the Sustainable Forest 333.9 Incentive Act from the date of the filing of the contract and 333.10 the amount actually paid under section 88.51, subdivisions 1 and 333.11 2. This tax difference must be calculated based on the years 333.12 the lands would have been taxed under the Tree Growth Tax Law 333.13 and the Sustainable Forest Incentive Act. The sustainable 333.14 forest tax difference is net of the refund provision of section 333.15 290C.07. If the amount which would have been paid, had the land 333.16 under contract been under the Minnesota Tree Growth Tax Law and 333.17 the Sustainable Forest Incentive Act from the date of the filing 333.18 of the contract, is less than the amount actually paid under the 333.19 contract, the cancellation shall be made without further payment 333.20 by the owner. 333.21 When the execution of any contract creating an auxiliary 333.22 forest shall have been procured through fraud or deception 333.23 practiced upon the county board or the commissioner or any other 333.24 person or body representing the state, it may be canceled upon 333.25 suit brought by the attorney general at the direction of the 333.26 commissioner. This cancellation shall have the same effect as 333.27 the cancellation of a contract by the commissioner. 333.28 Sec. 2. Minnesota Statutes 2000, section 88.49, 333.29 subdivision 9a, is amended to read: 333.30 Subd. 9a. [LAND TRADES WITH GOVERNMENTAL UNITS.] 333.31 Notwithstanding subdivisions 6 and 9, or section 88.491, 333.32 subdivision 2, if an owner trades land under auxiliary forest 333.33 contract for land owned by a governmental unit and the owner 333.34 agrees to use the land received in trade from the governmental 333.35 unit for the production of forest products, upon resolution of 333.36 the county board, no taxes and assessments shall be levied 334.1 against the land traded, except that any current or delinquent 334.2 annual taxes or yield taxes due on that land while it was under 334.3 the auxiliary forest provision must be paid prior to the land 334.4 exchange. The land received from the governmental unit in the 334.5 land trade automatically qualifies for inclusion in theTree334.6Growth Tax LawSustainable Forest Incentive Act. 334.7 Sec. 3. Minnesota Statutes 2000, section 88.491, 334.8 subdivision 2, is amended to read: 334.9 Subd. 2. [EFFECT OF EXPIRED CONTRACT.] When auxiliary 334.10 forest contracts expire, or prior to expiration by mutual 334.11 agreement between the land owner and the appropriate county 334.12 office, the lands previously covered by an auxiliary forest 334.13 contract automatically qualify for inclusionin the Tree Growth334.14Tax Lawunder the provisions of the Sustainable Forest Incentive 334.15 Act; provided that when such lands are included in theTree334.16Growth Tax LawSustainable Forest Incentive Act prior to 334.17 expiration of the auxiliary forest contract they will be 334.18 transferred and a tax paid as provided inaccordance with the334.19provisions ofsection 88.49, subdivision 5, upon application and 334.20 inclusion in the sustainable forest incentive program. The land 334.21 owner shall pay taxes in an amount equal to the difference 334.22 between the amount which would have been paid from the date of 334.23 the filing of the contract had the land under contract been 334.24 subject to the Minnesota Tree Growth Tax Lawfrom the date of334.25the filing of the contractand, beginning with taxes payable in 334.26 2003 enrolled in the sustainable forest incentive program, and 334.27 the amount actually paid under section 88.51, subdivisions 1 and 334.28 2. 334.29 Sec. 4. Minnesota Statutes 2000, section 270A.03, 334.30 subdivision 7, is amended to read: 334.31 Subd. 7. [REFUND.] "Refund" means an individual income tax 334.32 refund or political contribution refund, pursuant to chapter 334.33 290, or a property tax credit or refund, pursuant to chapter 334.34 290A, or a sustainable forest tax payment to a claimant under 334.35 chapter 290C. 334.36 For purposes of this chapter, lottery prizes, as set forth 335.1 in section 349A.08, subdivision 8, and amounts granted to 335.2 persons by the legislature on the recommendation of the joint 335.3 senate-house of representatives subcommittee on claims shall be 335.4 treated as refunds. 335.5 In the case of a joint property tax refund payable to 335.6 spouses under chapter 290A, the refund shall be considered as 335.7 belonging to each spouse in the proportion of the total refund 335.8 that equals each spouse's proportion of the total income 335.9 determined under section 290A.03, subdivision 3. In the case of 335.10 a joint income tax refund under chapter 289A, the refund shall 335.11 be considered as belonging to each spouse in the proportion of 335.12 the total refund that equals each spouse's proportion of the 335.13 total taxable income determined under section 290.01, 335.14 subdivision 29. The commissioner shall remit the entire refund 335.15 to the claimant agency, which shall, upon the request of the 335.16 spouse who does not owe the debt, determine the amount of the 335.17 refund belonging to that spouse and refund the amount to that 335.18 spouse. For court fines, fees, and surcharges and court-ordered 335.19 restitution under section 611A.04, subdivision 2, the notice 335.20 provided by the commissioner of revenue under section 270A.07, 335.21 subdivision 2, paragraph (b), serves as the appropriate legal 335.22 notice to the spouse who does not owe the debt. 335.23 [EFFECTIVE DATE.] This section is effective for refunds in 335.24 2003 and thereafter. 335.25 Sec. 5. [290C.01] [PURPOSE.] 335.26 It is the policy of this state to promote sustainable 335.27 forest resource management on the state's public and private 335.28 lands. Recognizing that private forests comprise approximately 335.29 one-half of the state forest land resources, that healthy and 335.30 robust forest land provides significant benefits to the state of 335.31 Minnesota, and that ad valorem property taxes represent a 335.32 significant annual cost that can discourage long-term forest 335.33 management investments, this chapter, hereafter referred to as 335.34 the "Sustainable Forest Incentive Act," is enacted to encourage 335.35 the state's private forest landowners to make a long-term 335.36 commitment to sustainable forest management. 336.1 [EFFECTIVE DATE.] This section is effective for taxes 336.2 levied in 2002, payable in 2003, and thereafter. 336.3 Sec. 6. [290C.02] [DEFINITIONS.] 336.4 Subdivision 1. [APPLICATION.] When used in sections 336.5 290C.01 to 290C.11, the terms in this section have the meanings 336.6 given them. 336.7 Subd. 2. [APPROVED PLAN WRITERS.] "Approved plan writers" 336.8 are natural resource professionals who are self-employed, 336.9 employed by private companies or individuals, nonprofit 336.10 organizations, local units of government, or public agencies, 336.11 and who are approved by the commissioner of natural resources. 336.12 Persons determined to be certified foresters by the Society of 336.13 American Foresters shall be deemed to meet the standards 336.14 required under this subdivision. The commissioner of natural 336.15 resources shall issue a unique identification number to each 336.16 approved planner. 336.17 Subd. 3. [CLAIMANT.] "Claimant" means a person, as that 336.18 term is defined in section 290.01, subdivision 2, who owns 336.19 forest land in Minnesota and files an application authorized by 336.20 the Sustainable Forest Incentive Act. No more than one claimant 336.21 is entitled to a payment under this act with respect to any 336.22 tract, parcel, or piece of land enrolled under this act. When 336.23 enrolled forest land is owned by two or more persons, the owners 336.24 must determine between them which person may claim the refunds 336.25 provided under sections 290C.01 to 290C.11. 336.26 Subd. 4. [COMMISSIONER.] "Commissioner" means the 336.27 commissioner of revenue. 336.28 Subd. 5. [CURRENT USE VALUE.] "Current use value" means 336.29 the statewide average annual income per acre, multiplied by 90 336.30 percent and divided by the capitalization rate determined under 336.31 subdivision 9. The statewide net annual income shall be a 336.32 weighted average based on the most recent data as of July 1 of 336.33 the computation year on stumpage prices and annual tree growth 336.34 rates and acreage by cover type provided by the department of 336.35 natural resources and the United States Forest Service. 336.36 Subd. 6. [FOREST LAND.] "Forest land" means land 337.1 containing a minimum of 20 contiguous acres for which the owner 337.2 has implemented a forest management plan that was prepared or 337.3 updated within the past ten years by an approved plan writer. 337.4 At least 50 percent of the contiguous acreage must meet the 337.5 definition of forest land in section 88.01, subdivision 7. For 337.6 the purposes of sections 290C.01 to 209C.11, forest land does 337.7 not include (i) land used for residential or agricultural 337.8 purposes, (ii) land enrolled in the reinvest in Minnesota 337.9 program, a state or federal conservation reserve or easement 337.10 reserve program under sections 103F.501 to 103F.531, the 337.11 Minnesota agricultural property tax law under section 273.111, 337.12 or land subject to agricultural land preservation controls or 337.13 restrictions as defined in section 40A.02 or under the 337.14 Metropolitan Agricultural Preserves Act under chapter 473H, or 337.15 (iii) land improved with a structure, pavement, sewer, campsite, 337.16 or any road, other than a township road, used for purposes not 337.17 prescribed in the forest management plan. 337.18 Subd. 7. [FOREST MANAGEMENT PLAN.] "Forest management plan" 337.19 means a written document providing a framework for site-specific 337.20 healthy, productive, and sustainable forest resources. A forest 337.21 management plan must include at least the following: (i) 337.22 owner-specific forest management goals for the property 337.23 including, when available, goals for individual cover types; 337.24 (ii) a reliable field inventory of the individual forest cover 337.25 types, their age, and density; (iii) a description of the soil 337.26 type and quality; (iv) an aerial photo and/or map of the 337.27 vegetation and other natural features of the property clearly 337.28 indicating the boundaries of the property and of the forest 337.29 land; (v) the proposed future conditions of the property; (vi) 337.30 prescriptions to meet proposed future conditions of the 337.31 property; (vii) a recommended timetable for implementing the 337.32 prescribed activities; and (viii) a legal description of the 337.33 parcels encompassing the parcels included in the plan. All 337.34 management activities prescribed in a plan must be in accordance 337.35 with the recommended timber harvesting and forest management 337.36 guidelines developed under section 89A.05. The commissioner of 338.1 natural resources shall provide a framework for plan content and 338.2 updating and revising plans. 338.3 Subd. 8. [TIMBER HARVESTING AND FOREST MANAGEMENT 338.4 GUIDELINES.] "Timber harvesting and forest management guidelines" 338.5 means guidelines developed under section 89A.05 and adopted by 338.6 the Minnesota forest resources council in 1998. 338.7 Subd. 9. [CAPITALIZATION RATE.] By July 1 of each year, 338.8 the commissioner shall determine a statewide capitalization rate 338.9 for use under this act. The rate shall be the average annual 338.10 effective interest rate for St. Paul on new loans under the Farm 338.11 Credit Bank system calculated under section 2032A(e)(7)(A) of 338.12 the Internal Revenue Code. 338.13 [EFFECTIVE DATE.] This section is effective for taxes 338.14 levied in 2002, payable in 2003, and thereafter. 338.15 Sec. 7. [290C.03] [ELIGIBILITY REQUIREMENTS.] 338.16 (a) Property may be enrolled in the sustainable forest 338.17 incentive program under this chapter if all of the following 338.18 conditions are met: 338.19 (1) property consists of at least 20 contiguous acres and 338.20 at least 50 percent of the land must meet the definition of 338.21 forest land in section 88.01, subdivision 7, during the 338.22 enrollment; 338.23 (2) a forest management plan for the property must be 338.24 prepared by an approved plan writer and implemented during the 338.25 period in which the land is enrolled; 338.26 (3) timber harvesting and forest management guidelines must 338.27 be used in conjunction with any timber harvesting or forest 338.28 management activities conducted on the land during the period in 338.29 which the land is enrolled; 338.30 (4) the property must be enrolled for a minimum of eight 338.31 years; 338.32 (5) there are no delinquent property taxes on the property; 338.33 and 338.34 (6) claimants enrolling at least 80 contiguous acres in the 338.35 sustainable forest incentive program must allow year-round, 338.36 nonmotorized access to fish and wildlife resources on enrolled 339.1 land except within one-fourth mile of a permanent dwelling or 339.2 during periods of high fire hazard as determined by the 339.3 commissioner of natural resources. For purposes of this clause, 339.4 acres are considered to be contiguous even if they are separated 339.5 by a road, waterway, railroad track, or other similar 339.6 intervening type of property. 339.7 (b) Claimants required to allow access under clause (6) do 339.8 not by that action: 339.9 (1) extend any assurance that the land is safe for any 339.10 purpose; 339.11 (2) confer upon the person the legal status of an invitee 339.12 or licensee to whom a duty of care is owed; or 339.13 (3) assume responsibility for or incur liability for any 339.14 injury to the person or property caused by an act or omission of 339.15 the person. 339.16 [EFFECTIVE DATE.] This section is effective for taxes 339.17 levied in 2002, payable in 2003, and thereafter. 339.18 Sec. 8. [290C.04] [APPLICATIONS.] 339.19 (a) A landowner may apply to enroll forest land for the 339.20 sustainable forest incentive program under this act. The 339.21 claimant must complete, sign, and submit an application to the 339.22 commissioner by September 30 in order for the land to become 339.23 eligible beginning in the next year. The application shall be 339.24 on a form prescribed by the commissioner and must include the 339.25 information the commissioner deems necessary. At a minimum, the 339.26 application must show the following information for the land and 339.27 the claimant: (i) the claimant's social security number or 339.28 state or federal business tax registration number and date of 339.29 birth, (ii) the claimant's address, (iii) the claimant's 339.30 signature, (iv) the county's parcel identification numbers for 339.31 the tax parcels that completely contain the claimant's forest 339.32 land that is sought to be enrolled, (v) the number of acres 339.33 eligible for enrollment in the program, (vi) the approved plan 339.34 writer's signature and identification number, and (vii) proof, 339.35 in a form specified by the commissioner, that the claimant has 339.36 executed and acknowledged in the manner required by law for a 340.1 deed, and recorded, a covenant that the land is not and shall 340.2 not be developed in a manner inconsistent with the requirements 340.3 and conditions of chapter 290C. The covenant shall state in 340.4 writing that the covenant is binding on the claimant and the 340.5 claimant's successor or assignee, and that it runs with the land 340.6 for a period of not less than eight years. The commissioner 340.7 shall specify the form of the covenant and provide copies upon 340.8 request. The covenant must include a legal description that 340.9 encompasses all the forest land that the claimant wishes to 340.10 enroll under this section or the certificate of title number for 340.11 that land if it is registered land. 340.12 (b) In all cases, the commissioner shall notify the 340.13 claimant within 90 days after receipt of a completed application 340.14 that either the land has or has not been approved for enrollment. 340.15 The claimant for which the application is denied may, within 60 340.16 days of receipt of a notice of denial, appeal the denial to the 340.17 commissioner. 340.18 (c) Within 45 days after the denial of an application, or 340.19 within 45 days after the denial of an appeal, the commissioner 340.20 shall execute and acknowledge a document releasing the land from 340.21 the covenant required under this chapter. The document must be 340.22 mailed to the claimant and is entitled to be recorded. 340.23 (d) The social security numbers collected from individuals 340.24 under this section are private data as provided in section 13.49. 340.25 The state or federal business tax registration number and date 340.26 of birth data collected under this section are also private data 340.27 but may be shared with county assessors for purposes of tax 340.28 administration and with county treasurers for purposes of the 340.29 revenue recapture under chapter 270A. 340.30 [EFFECTIVE DATE.] This section is effective for taxes 340.31 levied in 2002, payable in 2003, and thereafter. 340.32 Sec. 9. [290C.05] [ANNUAL CERTIFICATION.] 340.33 On or before July 1 of each year, beginning with the year 340.34 after the claimant has received an approved application, the 340.35 commissioner shall send each claimant enrolled under the 340.36 sustainable forest incentive program a certification form. The 341.1 claimant must sign the certification, attesting that the 341.2 requirements and conditions for continued enrollment in the 341.3 program are currently being met, and must return the signed 341.4 certification form to the commissioner by August 15 of that same 341.5 year. Failure to return an annual certification form by the due 341.6 date shall result in removal of the lands from the provisions of 341.7 the sustainable forest incentive program, and the imposition of 341.8 any applicable removal penalty. The claimant may appeal the 341.9 removal and any associated penalty according to the procedures 341.10 and within the time allowed under this chapter. 341.11 [EFFECTIVE DATE.] This section is effective for taxes 341.12 levied in 2002, payable in 2003, and thereafter. 341.13 Sec. 10. [290C.06] [CALCULATION OF AVERAGE TAXABLE MARKET 341.14 VALUE; TIMBERLAND.] 341.15 The commissioner shall annually calculate a statewide 341.16 average taxable market value per acre for class 2b timberland 341.17 under section 273.13, subdivision 23, paragraph (b). 341.18 [EFFECTIVE DATE.] This section is effective for taxes 341.19 levied in 2002, payable in 2003, and thereafter. 341.20 Sec. 11. [290C.07] [CALCULATION OF INCENTIVE PAYMENT.] 341.21 An approved claimant under the sustainable forest incentive 341.22 program is eligible to receive an annual payment. The payment 341.23 shall equal the greater of: 341.24 (1) the difference between the property tax that would be 341.25 paid on the property using the previous year's statewide average 341.26 total township tax rate and the class rate for class 2b 341.27 timberland under section 273.13, subdivision 23, paragraph (b), 341.28 if the property were valued at (i) the average statewide 341.29 timberland market value per acre calculated under section 341.30 290C.06, and (ii) the average statewide timberland current use 341.31 value per acre calculated under section 290C.02, subdivision 5; 341.32 (2) two-thirds of the property tax amount determined by 341.33 using the previous year's statewide average total township tax 341.34 rate, the estimated market value per acre as calculated in 341.35 section 290C.06, and the class rate for 2b timberland under 341.36 section 273.13, subdivision 23, paragraph (b); or 342.1 (3) $1.50 per acre for each acre enrolled in the 342.2 sustainable forest incentive program. 342.3 [EFFECTIVE DATE.] This section is effective for taxes 342.4 levied in 2002, payable in 2003, and thereafter. 342.5 Sec. 12. [290C.08] [ANNUAL INCENTIVE PAYMENT; 342.6 APPROPRIATION.] 342.7 Subdivision 1. [ANNUAL PAYMENT.] An incentive payment on 342.8 enrolled land will be made annually to each claimant in the 342.9 amount determined under section 290C.07. The incentive payment 342.10 shall be paid on or before October 1 each year based on the 342.11 certifications due August 15 of that year. Interest at the 342.12 annual rate determined under section 270.75 shall be included 342.13 with any incentive payment not paid by the later of October 1 of 342.14 the year the certification was due, or 45 days after the 342.15 completed certification was returned or filed if the 342.16 commissioner accepts a certification filed after August 15 of 342.17 the taxes payable year as the resolution of an appeal. 342.18 Subd. 2. [APPROPRIATION.] The amount necessary to make the 342.19 payments under this section is annually appropriated to the 342.20 commissioner from the general fund. 342.21 [EFFECTIVE DATE.] This section is effective for taxes 342.22 levied in 2002, payable in 2003, and thereafter. 342.23 Sec. 13. [290C.09] [REMOVAL FOR PROPERTY TAX DELINQUENCY.] 342.24 The commissioner shall immediately remove any property 342.25 enrolled in the sustainable forest incentive program for which 342.26 taxes are determined to be delinquent as provided in chapter 279 342.27 and shall notify the claimant of such action. Lands terminated 342.28 from the sustainable forest incentive program under this section 342.29 are not entitled to any payments provided in this chapter and 342.30 are subject to removal penalties prescribed in section 290C.11. 342.31 The claimant has 90 days from the receipt of notice from the 342.32 commissioner under this section to pay the delinquent taxes. If 342.33 the delinquent taxes are paid within this 90-day period, the 342.34 lands shall be reinstated in the program as if they had not been 342.35 withdrawn and without the payment of a penalty. 342.36 [EFFECTIVE DATE.] This section is effective for taxes 343.1 levied in 2002, payable in 2003, and thereafter. 343.2 Sec. 14. [290C.10] [WITHDRAWAL PROCEDURES.] 343.3 An approved claimant under the sustainable forest incentive 343.4 program for a minimum of four years may notify the commissioner 343.5 of the intent to terminate enrollment. Within 90 days of 343.6 receipt of notice to terminate enrollment, the commissioner 343.7 shall inform the claimant in writing, acknowledging receipt of 343.8 this notice and indicating the effective date of termination 343.9 from the sustainable forest incentive program. Termination of 343.10 enrollment in the sustainable forest incentive program occurs on 343.11 January 1 of the fifth calendar year that begins after receipt 343.12 by the commissioner of the termination notice. After the 343.13 commissioner issues an effective date of termination, a claimant 343.14 wishing to continue the property's enrollment in the sustainable 343.15 forest incentive program beyond the termination date must apply 343.16 for enrollment as prescribed in section 290C.04. A claimant who 343.17 withdraws a parcel of land from this program may not reenroll 343.18 the parcel for a period of three years. Within 45 days after 343.19 the termination date, the commissioner shall execute and 343.20 acknowledge a document releasing the land from the covenant 343.21 required under this chapter. The document must be mailed to the 343.22 claimant and is entitled to be recorded. The commissioner may 343.23 allow early withdrawal from the Sustainable Forest Incentive Act 343.24 without penalty in cases of condemnation for a public purpose 343.25 notwithstanding the provisions of this section. 343.26 [EFFECTIVE DATE.] This section is effective for taxes 343.27 levied in 2002, payable in 2003, and thereafter. 343.28 Sec. 15. [290C.11] [PENALTIES FOR REMOVAL.] 343.29 (a) If the commissioner determines that property enrolled 343.30 in the sustainable forest incentive program is in violation of 343.31 the conditions for enrollment as specified in section 290C.03, 343.32 the commissioner shall notify the claimant of the intent to 343.33 remove all enrolled land from the sustainable forest incentive 343.34 program. The claimant has 90 days to appeal this determination. 343.35 The appeal must be made in writing to the commissioner, who 343.36 shall, within 60 days, notify the claimant as to the outcome of 344.1 the appeal. Within 60 days after the commissioner denies an 344.2 appeal, or within 120 days after the commissioner received a 344.3 written appeal if the commissioner has not made a determination 344.4 in that time, the owner may appeal to tax court under chapter 344.5 271 as if the appeal is from an order of the commissioner. 344.6 (b) If the commissioner determines the property is to be 344.7 removed from the sustainable forest incentive program, the 344.8 claimant is liable for payment to the commissioner in the amount 344.9 equal to the payments received under this chapter for the 344.10 previous four-year period, plus interest. The claimant has 90 344.11 days to satisfy the payment for removal of land from the 344.12 sustainable forest incentive program under this section. If the 344.13 penalty is not paid within the 90-day period under paragraph 344.14 (a), the commissioner shall certify the amount to the county 344.15 auditor for collection as a part of the general ad valorem real 344.16 property taxes on the land in the following taxes payable year. 344.17 [EFFECTIVE DATE.] This section is effective for taxes 344.18 levied in 2002, payable in 2003, and thereafter. 344.19 Sec. 16. [REPEALER.] 344.20 Minnesota Statutes 2000, sections 270.31; 270.32; 270.33; 344.21 270.34; 270.35; 270.36; 270.37; 270.38; and 270.39, are repealed. 344.22 [EFFECTIVE DATE.] This section is effective for taxes 344.23 levied in 2002, payable in 2003, and thereafter. 344.24 ARTICLE 12 344.25 LOCAL DEVELOPMENT 344.26 Section 1. Minnesota Statutes 2000, section 276A.01, 344.27 subdivision 3, is amended to read: 344.28 Subd. 3. [COMMERCIAL-INDUSTRIAL PROPERTY.] 344.29 "Commercial-industrial property" means the following categories 344.30 of property, as defined in section 273.13, excluding that 344.31 portion of the property (i) that may, by law, constitute the tax 344.32 base for a tax increment pledged pursuant to section 469.042 or 344.33 469.162 or sections 469.174 to 469.178, certification of which 344.34 was requested prior to May 1, 1996, to the extent and while the 344.35 tax increment is so pledged; or (ii) that is exempt from 344.36 taxation under section 272.02: 345.1 (1) that portion of class 5 property consisting of unmined 345.2 iron ore and low-grade iron-bearing formations as defined in 345.3 section 273.14, tools, implements, and machinery, except the 345.4 portion of high voltage transmission lines, the value of which 345.5 is deducted from net tax capacity under section 273.425; and 345.6 (2) that portion of class 3 and class 5 property which is 345.7 either used or zoned for use for any commercial or industrial 345.8 purpose, except for such property which is, or, in the case of 345.9 property under construction, will when completed be used 345.10 exclusively for residential occupancy and the provision of 345.11 services to residential occupants thereof. Property must be 345.12 considered as used exclusively for residential occupancy only if 345.13 each of not less than 80 percent of its occupied residential 345.14 units is, or, in the case of property under construction, will 345.15 when completed be occupied under an oral or written agreement 345.16 for occupancy over a continuous period of not less than 30 days. 345.17 If the classification of property prescribed by section 345.18 273.13 is modified by legislative amendment, the references in 345.19 this subdivision are to the successor class or classes of 345.20 property, or portions thereof, that include the kinds of 345.21 property designated in this subdivision. 345.22 [EFFECTIVE DATE.] This section is effective retroactive to 345.23 July 1, 1997, for taxes levied in 1997, payable in 1998, and 345.24 subsequent years. 345.25 Sec. 2. Minnesota Statutes 2000, section 469.169, is 345.26 amended by adding a subdivision to read: 345.27 Subd. 15. [ADDITIONAL BORDER CITY ALLOCATIONS.] In 345.28 addition to tax reductions authorized in subdivisions 7 to 14, 345.29 the commissioner shall allocate $1,500,000 for tax reductions to 345.30 border city enterprise zones in cities located on the western 345.31 border of the state. The commissioner shall make allocations to 345.32 zones in cities on the western border on a per capita basis. 345.33 Allocations made under this subdivision may be used for tax 345.34 reductions as provided in section 469.171, or for other offsets 345.35 of taxes imposed on or remitted by businesses located in the 345.36 enterprise zone, but only if the municipality determines that 346.1 the granting of the tax reduction or offset is necessary in 346.2 order to retain a business within or attract a business to the 346.3 zone. Limitations on allocations under subdivision 7 do not 346.4 apply to this allocation. 346.5 [EFFECTIVE DATE.] This section is effective the day 346.6 following final enactment. 346.7 Sec. 3. Minnesota Statutes 2000, section 469.174, 346.8 subdivision 1, is amended to read: 346.9 Subdivision 1. [GENERALLY.] In sections 469.174 to469.179346.10 469.1799, the terms defined in this section have the meanings 346.11 given them herein, unless the context indicates a different 346.12 meaning. 346.13 [EFFECTIVE DATE.] This section is effective for all tax 346.14 increment financing districts, regardless of when the request 346.15 for certification was made. 346.16 Sec. 4. Minnesota Statutes 2000, section 469.174, 346.17 subdivision 3, is amended to read: 346.18 Subd. 3. [BONDS.] "Bonds" means any bonds, including 346.19 refunding bonds, notes, interim certificates, 346.20 debentures, interfund loans or advances, or other obligations 346.21 issued by an authority under section 469.178 or which were 346.22 issued in aid of a project under any other law, except revenue 346.23 bonds issued pursuant to sections 469.152 to 469.165, prior to 346.24 August 1, 1979. 346.25 Sec. 5. Minnesota Statutes 2000, section 469.174, 346.26 subdivision 10, is amended to read: 346.27 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 346.28 district" means a type of tax increment financing district 346.29 consisting of a project, or portions of a project, within which 346.30 the authority finds by resolution that one or more of the 346.31 following conditions, reasonably distributed throughout the 346.32 district, exists: 346.33 (1) parcels consisting of 70 percent of the area of the 346.34 district are occupied by buildings, streets, utilities, paved or 346.35 gravel parking lots, or otherimprovementssimilar structures 346.36 and more than 50 percent of the buildings, not including 347.1 outbuildings, are structurally substandard to a degree requiring 347.2 substantial renovation or clearance; or 347.3 (2) the property consists of vacant, unused, underused, 347.4 inappropriately used, or infrequently used railyards, rail 347.5 storage facilities, or excessive or vacated railroad 347.6 rights-of-way; or 347.7 (3) tank facilities, or property whose immediately previous 347.8 use was for tank facilities, as defined in section 115C.02, 347.9 subdivision 15, if the tank facilities: 347.10 (i) have or had a capacity of more than 1,000,000 gallons; 347.11 (ii) are located adjacent to rail facilities; and 347.12 (iii) have been removed or are unused, underused, 347.13 inappropriately used, or infrequently used. 347.14 (b) For purposes of this subdivision, "structurally 347.15 substandard"shall mean containing defects in structural347.16elements or a combination of deficiencies in essential utilities347.17and facilities, light and ventilation, fire protection including347.18adequate egress, layout and condition of interior partitions, or347.19similar factors, which defects or deficiencies are of sufficient347.20total significance to justify substantial renovation or347.21clearancemeans a building that: 347.22 (1) is in an advanced state of disrepair or neglect of 347.23 necessary repairs to the primary and structural components of 347.24 the building that a documented building condition analysis 347.25 determines that major repair is required or the defects are so 347.26 serious and so extensive that the building must be removed; or 347.27 (2) has major defects in secondary building components, 347.28 such as doors, windows, porches, gutters and downspouts, and 347.29 fascia, requiring repairs costing 25 percent of the estimated 347.30 market value of the building. 347.31 (c) A building is not structurally substandard if it is in 347.32 compliance with the building code applicable to new buildings or 347.33 could be modified to satisfy the building code at a cost of less 347.34 than 15 percent of the cost of constructing a new structure of 347.35 the same square footage and type on the site. The municipality 347.36 may find that a building is not disqualified as structurally 348.1 substandard under the preceding sentence on the basis of 348.2 reasonably available evidence, such as the size, type, and age 348.3 of the building, the average cost of plumbing, electrical, or 348.4 structural repairs, or other similar reliable evidence. The 348.5 municipality may not make such a determination without an 348.6 interior inspection of the property, but need not have an 348.7 independent, expert appraisal prepared of the cost of repair and 348.8 rehabilitation of the building. An interior inspection of the 348.9 property is not required, if the municipality finds that (1) the 348.10 municipality or authority is unable to gain access to the 348.11 property after using its best efforts to obtain permission from 348.12 the party that owns or controls the property; and (2) the 348.13 evidence otherwise supports a reasonable conclusion that the 348.14 building is structurally substandard. Items of evidence that 348.15 support such a conclusion include recent fire or police 348.16 inspections, on-site property tax appraisals or housing 348.17 inspections, exterior evidence of deterioration, or other 348.18 similar reliable evidence. Written documentation of the 348.19 findings and reasons why an interior inspection was not 348.20 conducted must be made and retained under section 469.175, 348.21 subdivision 3, clause (1). 348.22 (d) A parcel is deemed to be occupied by a structurally 348.23 substandard building for purposes of the finding under paragraph 348.24 (a) if all of the following conditions are met: 348.25 (1) the parcel was occupied by a substandard building 348.26 within three years of the filing of the request for 348.27 certification of the parcel as part of the district with the 348.28 county auditor; 348.29 (2) the substandard building was demolished or removed by 348.30 the authority or the demolition or removal was financed by the 348.31 authority or was done by a developer under a development 348.32 agreement with the authority; 348.33 (3) the authority found by resolution before the demolition 348.34 or removal that the parcel was occupied by a structurally 348.35 substandard building and that after demolition and clearance the 348.36 authority intended to include the parcel within a district; and 349.1 (4) upon filing the request for certification of the tax 349.2 capacity of the parcel as part of a district, the authority 349.3 notifies the county auditor that the original tax capacity of 349.4 the parcel must be adjusted as provided by section 469.177, 349.5 subdivision 1, paragraph (h). 349.6 (e) For purposes of this subdivision, a parcel is not 349.7 occupied by buildings, streets, utilities, paved or gravel 349.8 parking lots, or otherimprovementssimilar structures unless 15 349.9 percent of the area of the parcel containsimprovements349.10 buildings, streets, utilities, paved or gravel parking lots, or 349.11 other similar structures. 349.12 (f) For districts consisting of two or more noncontiguous 349.13 areas, each area must qualify as a redevelopment district under 349.14 paragraph (a) to be included in the district, and the entire 349.15 area of the district must satisfy paragraph (a). 349.16 [EFFECTIVE DATE.] This section is effective for districts 349.17 for which the request for certification is made after June 30, 349.18 2001, except that the amendments to paragraph (b) are effective 349.19 for districts for which the request for certification is made 349.20 after September 30, 2001. 349.21 Sec. 6. Minnesota Statutes 2000, section 469.174, 349.22 subdivision 10a, is amended to read: 349.23 Subd. 10a. [RENEWAL AND RENOVATION DISTRICT.] (a) "Renewal 349.24 and renovation district" means a type of tax increment financing 349.25 district consisting of a project, or portions of a project, 349.26 within which the authority finds by resolution that: 349.27 (1)(i) parcels consisting of 70 percent of the area of the 349.28 district are occupied by buildings, streets, utilities, paved or 349.29 gravel parking lots, or otherimprovementssimilar structures; 349.30 (ii) 20 percent of the buildings are structurally substandard; 349.31 and (iii) 30 percent of the other buildings require substantial 349.32 renovation or clearance to remove existing conditions such as: 349.33 inadequate street layout, incompatible uses or land use 349.34 relationships, overcrowding of buildings on the land, excessive 349.35 dwelling unit density, obsolete buildings not suitable for 349.36 improvement or conversion, or other identified hazards to the 350.1 health, safety, and general well-being of the community; and 350.2 (2) the conditions described in clause (1) are reasonably 350.3 distributed throughout the geographic area of the district. 350.4 (b) For purposes of determining whether a building is 350.5 structurally substandard, whether parcels are occupied by 350.6 buildings, streets, utilities, paved or gravel parking lots, or 350.7 otherimprovementssimilar structures, or whether noncontiguous 350.8 areas qualify, the provisions of subdivision 10, 350.9 paragraphs(b),(c), (e), and(d)(f) apply. 350.10 [EFFECTIVE DATE.] This section is effective for districts 350.11 for which the requests for certification are made after June 30, 350.12 1997, except the provision requiring parcels to be occupied by 350.13 structures is effective for districts for which the request for 350.14 certification is made after June 30, 2001. 350.15 Sec. 7. Minnesota Statutes 2000, section 469.174, 350.16 subdivision 12, is amended to read: 350.17 Subd. 12. [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 350.18 development district" means a type of tax increment financing 350.19 district which consists of any project, or portions of a 350.20 project,not meeting the requirements found in the definition of350.21redevelopment district, renewal and renovation district, soils350.22condition district, or housing district, butwhich the authority 350.23 finds to be in the public interest because: 350.24 (1) it will discourage commerce, industry, or manufacturing 350.25 from moving their operations to another state or municipality; 350.26 or 350.27 (2) it will result in increased employment in the state; or 350.28 (3) it will result in preservation and enhancement of the 350.29 tax base of the state. 350.30 [EFFECTIVE DATE.] This section is effective for districts 350.31 for which the request for certification is made after June 30, 350.32 2001. 350.33 Sec. 8. Minnesota Statutes 2000, section 469.174, 350.34 subdivision 25, is amended to read: 350.35 Subd. 25. [INCREMENT.] "Increment," "tax increment," "tax 350.36 increment revenues," "revenues derived from tax increment," and 351.1 other similar terms for a district include: 351.2 (1) taxes paid by the captured net tax capacity, but 351.3 excluding any excess taxes, as computed under section 469.177; 351.4 (2) the proceeds from the sale or lease of property, 351.5 tangible or intangible, purchased by the authority with tax 351.6 increments; 351.7 (3)repayments ofdebt service payments received on loans 351.8 or other advances made by the authority with tax increments; and 351.9 (4) interest or other investment earnings, other than 351.10 payments under loans or other advances within the meaning of 351.11 clause (3), on or from tax increments. 351.12 [EFFECTIVE DATE.] This section is effective retroactive to 351.13 the effective date of Minnesota Statutes, section 469.174, 351.14 subdivision 25. 351.15 Sec. 9. Minnesota Statutes 2000, section 469.175, 351.16 subdivision 1, is amended to read: 351.17 Subdivision 1. [TAX INCREMENT FINANCING PLAN.](a)A tax 351.18 increment financing plan shall contain: 351.19 (1) a statement of objectives of an authority for the 351.20 improvement of a project; 351.21 (2) a statement as to the development program for the 351.22 project, including the property within the project, if any, that 351.23 the authority intends to acquire; 351.24 (3) a list of any development activities that the plan 351.25 proposes to take place within the project, for which contracts 351.26 have been entered into at the time of the preparation of the 351.27 plan, including the names of the parties to the contract, the 351.28 activity governed by the contract, the cost stated in the 351.29 contract, and the expected date of completion of that activity; 351.30 (4) identification or description of the type of any other 351.31 specific development reasonably expected to take place within 351.32 the project, and the date when the development is likely to 351.33 occur; 351.34 (5) estimates of the following: 351.35 (i)cost of the project, including administration expenses;351.36(ii) amount of bonded indebtedness to be incurred;352.1(iii)sources of revenue to finance or otherwise pay public 352.2 costs; 352.3(iv)(ii) the most recent net tax capacity of taxable real 352.4 property within the tax increment financing district and within 352.5 any subdistrict; 352.6(v)(iii) the estimated captured net tax capacity of the 352.7 tax increment financing district at completion; and 352.8(vi)(iv) the duration of the tax increment financing 352.9 district's and any subdistrict's existence; 352.10 (6) a budget specifying the following items for the project 352.11 to be paid with tax increments from the district: 352.12 (i) the total cost of the district, broken down by at least 352.13 the following items (to the extent the plan permits spending for 352.14 items within these categories and subcategories within an item, 352.15 if the authority so elects): 352.16 (A) administrative expenses; 352.17 (B) property acquisition and site preparation, including 352.18 but not limited to clearance and soils preparation; 352.19 (C) public improvements (other than public improvements 352.20 that are part of site preparation); and 352.21 (D) amounts for assistance to construct, acquire, or 352.22 improve other improvements or other eligible forms of 352.23 assistance; and 352.24 (ii) the amount of bonded indebtedness to be incurred; 352.25(6)(7) statements of the authority's alternate estimates 352.26 of the impact of tax increment financing on the net tax 352.27 capacities of all taxing jurisdictions in which the tax 352.28 increment financing district is located in whole or in part. 352.29 For purposes of one statement, the authority shall assume that 352.30 the estimated captured net tax capacity would be available to 352.31 the taxing jurisdictions without creation of the district, and 352.32 for purposes of the second statement, the authority shall assume 352.33 that none of the estimated captured net tax capacity would be 352.34 available to the taxing jurisdictions without creation of the 352.35 district or subdistrict; 352.36(7)(8) identification and description of studies and 353.1 analyses used to make the determination set forth in subdivision 353.2 3, clause (2); and 353.3(8)(9) identification of all parcels to be included in the 353.4 district or any subdistrict. 353.5(b) For a housing district, redevelopment district, or a353.6hazardous substance subdistrict, the authority may elect in the353.7tax increment financing plan to provide for the identification353.8of a minimum market value in the plan, development agreement, or353.9assessment agreement, and provide that increment is first353.10received by the authority when (1) the market value of the353.11improvements as determined by the assessor reaches or exceeds353.12the minimum market value, or (2) four years has elapsed from the353.13date of certification of the original net tax capacity of the353.14taxable real property in the district or subdistrict by the353.15county auditor, whichever is earlier.353.16 [EFFECTIVE DATE.] The amendments to paragraph (a) are 353.17 effective for tax increment financing plans approved after June 353.18 30, 2001, and for amendments to tax increment financing plans 353.19 modifying the total estimated tax increment expenditures 353.20 approved after June 30, 2001. The amendments to paragraph (b) 353.21 are effective for requests for certification of tax increment 353.22 financing districts received after June 30, 2001. 353.23 Sec. 10. Minnesota Statutes 2000, section 469.175, 353.24 subdivision 3, is amended to read: 353.25 Subd. 3. [MUNICIPALITY APPROVAL.] A county auditor shall 353.26 not certify the original net tax capacity of a tax increment 353.27 financing district until the tax increment financing plan 353.28 proposed for that district has been approved by the municipality 353.29 in which the district is located. If an authority that proposes 353.30 to establish a tax increment financing district and the 353.31 municipality are not the same, the authority shall apply to the 353.32 municipality in which the district is proposed to be located and 353.33 shall obtain the approval of its tax increment financing plan by 353.34 the municipality before the authority may use tax increment 353.35 financing. The municipality shall approve the tax increment 353.36 financing plan only after a public hearing thereon after 354.1 published notice in a newspaper of general circulation in the 354.2 municipality at least once not less than ten days nor more than 354.3 30 days prior to the date of the hearing. The published notice 354.4 must include a map of the area of the district from which 354.5 increments may be collected and, if the project area includes 354.6 additional area, a map of the project area in which the 354.7 increments may be expended. The hearing may be held before or 354.8 after the approval or creation of the project or it may be held 354.9 in conjunction with a hearing to approve the project. Before or 354.10 at the time of approval of the tax increment financing plan, the 354.11 municipality shall make the following findings, and shall set 354.12 forth in writing the reasons and supporting facts for each 354.13 determination: 354.14 (1) that the proposed tax increment financing district is a 354.15 redevelopment district, a renewal or renovation district, a 354.16 housing district, a soils condition district, or an economic 354.17 development district; if the proposed district is a 354.18 redevelopment district or a renewal or renovation district, the 354.19 reasons and supporting facts for the determination that the 354.20 district meets the criteria of section 469.174, subdivision 10, 354.21 paragraph (a), clauses (1) and (2), or subdivision 10a, must be 354.22 documented in writing and retained and made available to the 354.23 public by the authority until the district has been terminated. 354.24 (2) that the proposed development or redevelopment, in the 354.25 opinion of the municipality, would not reasonably be expected to 354.26 occur solely through private investment within the reasonably 354.27 foreseeable future and that the increased market value of the 354.28 site that could reasonably be expected to occur without the use 354.29 of tax increment financing would be less than the increase in 354.30 the market value estimated to result from the proposed 354.31 development after subtracting the present value of the projected 354.32 tax increments for the maximum duration of the district 354.33 permitted by the plan. The requirements of this clause do not 354.34 apply if the district is a qualified housing district, as 354.35 defined in section 273.1399, subdivision 1. 354.36 (3) that the tax increment financing plan conforms to the 355.1 general plan for the development or redevelopment of the 355.2 municipality as a whole. 355.3 (4) that the tax increment financing plan will afford 355.4 maximum opportunity, consistent with the sound needs of the 355.5 municipality as a whole, for the development or redevelopment of 355.6 the project by private enterprise. 355.7 (5) that the municipality elects the method of tax 355.8 increment computation set forth in section 469.177, subdivision 355.9 3, clause (b), if applicable. 355.10 When the municipality and the authority are not the same, 355.11 the municipality shall approve or disapprove the tax increment 355.12 financing plan within 60 days of submission by the authority. 355.13 When the municipality and the authority are not the same, the 355.14 municipality may not amend or modify a tax increment financing 355.15 plan except as proposed by the authority pursuant to subdivision 355.16 4.Once approved, the determination of the authority to355.17undertake the project through the use of tax increment financing355.18and the resolution of the governing body shall be conclusive of355.19the findings therein and of the public need for the financing.355.20 [EFFECTIVE DATE.] This section is effective for districts 355.21 for which the request for certification is made after September 355.22 30, 2001. 355.23 Sec. 11. Minnesota Statutes 2000, section 469.175, is 355.24 amended by adding a subdivision to read: 355.25 Subd. 4a. [FILING PLAN WITH STATE.] (a) The authority must 355.26 file a copy of the tax increment financing plan and amendments 355.27 to the plan with the commissioner of revenue. The authority 355.28 must also file a copy of the development plan or the project 355.29 plan for the project area with the commissioner of revenue. The 355.30 commissioner of revenue shall provide a copy of a plan to the 355.31 state auditor upon request. 355.32 (b) Filing under this subdivision must be made within 60 355.33 days after the latest of: 355.34 (1) the filing of the request for certification of the 355.35 district; 355.36 (2) approval of the plan by the municipality; or 356.1 (3) adoption of the plan by the authority. 356.2 [EFFECTIVE DATE.] This section is effective for plans and 356.3 amendments approved after July 1, 2000. 356.4 Sec. 12. Minnesota Statutes 2000, section 469.175, 356.5 subdivision 6, is amended to read: 356.6 Subd. 6. [ANNUAL FINANCIAL REPORTING.] (a) The state 356.7 auditor shall develop a uniform system of accounting and 356.8 financial reporting for tax increment financing districts. The 356.9 system of accounting and financial reporting shall, as nearly as 356.10 possible: 356.11 (1) provide for full disclosure of the sources and uses of 356.12 public funds in the district; 356.13 (2) permit comparison and reconciliation with the affected 356.14 local government's accounts and financial reports; 356.15 (3) permit auditing of the funds expended on behalf of a 356.16 district, including a single district that is part of a 356.17 multidistrict project or that is funded in part or whole through 356.18 the use of a development account funded with tax increments from 356.19 other districts or with other public money; 356.20 (4) be consistent with generally accepted accounting 356.21 principles. 356.22 (b) The authority must annually submit to the state auditor 356.23 a financial report in compliance with paragraph (a). Copies of 356.24 the report must also be provided to the county auditor and to 356.25 the governing body of the municipality, if the authority is not 356.26 the municipality. To the extent necessary to permit compliance 356.27 with the requirement of financial reporting, the county and any 356.28 other appropriate local government unit or private entity must 356.29 provide the necessary records or information to the authority or 356.30 the state auditor as provided by the system of accounting and 356.31 financial reporting developed pursuant to paragraph (a). The 356.32 authority must submit the annual report for a year on or before 356.33 August 1 of the next year. 356.34 (c) The annual financial report must also include the 356.35 following items: 356.36 (1) the original net tax capacity of the district and any 357.1 subdistrict under section 469.177, subdivision 1; 357.2 (2) the net tax capacity for the reporting period of the 357.3 district and any subdistrict; 357.4 (3) the captured net tax capacity of the district; 357.5 (4) any fiscal disparity deduction from the captured net 357.6 tax capacity under section 469.177, subdivision 3; 357.7 (5) the captured net tax capacity retained for tax 357.8 increment financing under section 469.177, subdivision 2, 357.9 paragraph (a), clause (1); 357.10 (6) any captured net tax capacity distributed among 357.11 affected taxing districts under section 469.177, subdivision 2, 357.12 paragraph (a), clause (2); 357.13 (7) the type of district; 357.14 (8) the date the municipality approved the tax increment 357.15 financing plan and the date of approval of any modification of 357.16 the tax increment financing plan, the approval of which requires 357.17 notice, discussion, a public hearing, and findings under 357.18 subdivision 4, paragraph (a); 357.19 (9) the date the authority first requested certification of 357.20 the original net tax capacity of the district and the date of 357.21 the request for certification regarding any parcel added to the 357.22 district; 357.23 (10) the date the county auditor first certified the 357.24 original net tax capacity of the district and the date of 357.25 certification of the original net tax capacity of any parcel 357.26 added to the district; 357.27 (11) the month and year in which the authority has received 357.28 or anticipates it will receive the first increment from the 357.29 district; 357.30 (12) the date the district must be decertified; 357.31 (13) for the reporting period and prior years of the 357.32 district, the actual amount received from, at least, the 357.33 following categories: 357.34 (i) tax increments paid by the captured net tax capacity 357.35 retained for tax increment financing under section 469.177, 357.36 subdivision 2, paragraph (a), clause (1), but excluding any 358.1 excess taxes; 358.2 (ii) tax increments that are interest or other investment 358.3 earnings on or from tax increments; 358.4 (iii) tax increments that are proceeds from the sale or 358.5 lease of property, tangible or intangible, purchased by the 358.6 authority with tax increments; 358.7 (iv) tax increments that are repayments of loans or other 358.8 advances made by the authority with tax increments; 358.9 (v) bond or loan proceeds; 358.10 (vi) special assessments; 358.11 (vii) grants; and 358.12 (viii) transfers from funds not exclusively associated with 358.13 the district; 358.14 (14) for the reporting period and for the prior years of 358.15 the district,the amount budgeted under the tax increment358.16financing plan,and the actual amount expended for, at least, 358.17 the following categories: 358.18 (i) acquisition of land and buildings through condemnation 358.19 or purchase; 358.20 (ii) site improvements or preparation costs; 358.21 (iii) installation of public utilities, parking facilities, 358.22 streets, roads, sidewalks, or other similar public improvements; 358.23 (iv) administrative costs, including the allocated cost of 358.24 the authority; 358.25 (v) public park facilities, facilities for social, 358.26 recreational, or conference purposes, or other similar public 358.27 improvements; and 358.28 (vi) transfers to funds not exclusively associated with the 358.29 district; 358.30 (15) for properties sold to developers, the total cost of 358.31 the property to the authority and the price paid by the 358.32 developer; 358.33 (16) the amount of any payments and the value of any 358.34 in-kind benefits, such as physical improvements and the use of 358.35 building space, that are paid or financed with tax increments 358.36 and are provided to another governmental unit other than the 359.1 municipality during the reporting period; 359.2 (17) the amount of any payments for activities and 359.3 improvements located outside of the district that are paid for 359.4 or financed with tax increments; 359.5 (18) the amount of payments of principal and interest that 359.6 are made during the reporting period on any nondefeased: 359.7 (i) general obligation tax increment financing bonds; 359.8 (ii) other tax increment financing bonds; and 359.9 (iii) notes and pay-as-you-go contracts; 359.10 (19) the principal amount, at the end of the reporting 359.11 period, of any nondefeased: 359.12 (i) general obligation tax increment financing bonds; 359.13 (ii) other tax increment financing bonds; and 359.14 (iii) notes and pay-as-you-go contracts; 359.15 (20) the amount of principal and interest payments that are 359.16 due for the current calendar year on any nondefeased: 359.17 (i) general obligation tax increment financing bonds; 359.18 (ii) other tax increment financing bonds; and 359.19 (iii) notes and pay-as-you-go contracts; 359.20 (21) if the fiscal disparities contribution under chapter 359.21 276A or 473F for the district is computed under section 469.177, 359.22 subdivision 3, paragraph (a), the amount of increased property 359.23 taxes imposed on other properties in the municipality that 359.24 approved the tax increment financing plan as a result of the 359.25 fiscal disparities contribution; 359.26 (22) whether the tax increment financing plan or other 359.27 governing document permits increment revenues to be expended: 359.28 (i) to pay bonds, the proceeds of which were or may be 359.29 expended on activities outside of the district; 359.30 (ii) for deposit into a common bond fund from which money 359.31 may be expended on activities located outside of the district; 359.32 or 359.33 (iii) to otherwise finance activities located outside of 359.34 the tax increment financing district; and 359.35 (23) any additional information the state auditor may 359.36 require. 360.1 (d) The commissioner of revenue shall prescribe the method 360.2 of calculating the increased property taxes under paragraph (c), 360.3 clause (21), and the form of the statement disclosing this 360.4 information on the annual statement under subdivision 5. 360.5 (e) The reporting requirements imposed by this subdivision 360.6 apply to districts certified before, on, and after August 1, 360.7 1979. 360.8 [EFFECTIVE DATE.] This section is effective for reports 360.9 filed after January 1, 2002. 360.10 Sec. 13. Minnesota Statutes 2000, section 469.175, 360.11 subdivision 6b, is amended to read: 360.12 Subd. 6b. [DURATION OF DISCLOSURE AND REPORTING 360.13 REQUIREMENTS.] The disclosure and reporting requirements imposed 360.14 by subdivisions 5,and 6, and 6aapply with respect to a tax 360.15 increment financing district beginning with the annual 360.16 disclosure and reports for the year in which the original net 360.17 tax capacity of the district was certified and ending with the 360.18 annual disclosure and reports for the year in which both of the 360.19 following events have occurred: 360.20 (1) decertification of the district; and 360.21 (2) expenditure or return to the county auditor of all 360.22 remaining revenues derived from tax increments paid by 360.23 properties in the district. 360.24 [EFFECTIVE DATE.] This section is effective for reports 360.25 filed after December 31, 2000. 360.26 Sec. 14. Minnesota Statutes 2000, section 469.176, 360.27 subdivision 1b, is amended to read: 360.28 Subd. 1b. [DURATION LIMITS; TERMS.] (a) No tax increment 360.29 shall in any event be paid to the authority 360.30 (1) after 15 years after receipt by the authority of the 360.31 first increment for a renewal and renovation district, 360.32 (2) after 20 years after receipt by the authority of the 360.33 first increment for a soils condition district, 360.34 (3) after eight years after receipt by the authority of the 360.35 first increment for an economic development district, 360.36 (4) for a housing district or a redevelopment district, 361.1after 20 years from the date of receipt by the authority of the361.2first tax increment by the authority pursuant to section361.3469.175, subdivision 1, paragraph (b); or, if no provision is361.4made under section 469.175, subdivision 1, paragraph (b),after 361.5 25 years from the date of receipt by the authority of the first 361.6 increment. 361.7 (b) For purposes of determining a duration limit under this 361.8 subdivision or subdivision 1e that is based on the receipt of an 361.9 increment, any increments from taxes payable in the year in 361.10 which the district terminates shall be paid to the authority. 361.11 This paragraph does not affect a duration limit calculated from 361.12 the date of approval of the tax increment financing plan or 361.13 based on the recovery of costs or to a duration limit under 361.14 subdivision 1c. This paragraph does not supersede the 361.15 restrictions on payment of delinquent taxes in subdivision 1f. 361.16 (c)Except as authorized by section 469.175, subdivision 1,361.17paragraph (b),An action by the authority to waive or decline to 361.18 accept an increment has no effect for purposes of computing a 361.19 duration limit based on the receipt of increment under this 361.20 subdivision or any other provision of law. The authority is 361.21 deemed to have received an increment for any year in which it 361.22 waived or declined to accept an increment, regardless of whether 361.23 the increment was paid to the authority. 361.24 (d) Receipt by a hazardous substance subdistrict of an 361.25 increment as a result of a reduction in original net tax 361.26 capacity under section 469.174, subdivision 7, paragraph (b), 361.27 does not constitute receipt of increment by the overlying 361.28 district for purpose of calculating the duration limit under 361.29 this section. 361.30 [EFFECTIVE DATE.] This section is effective for districts 361.31 for which the request for certification is made after June 30, 361.32 2001. 361.33 Sec. 15. Minnesota Statutes 2000, section 469.176, 361.34 subdivision 1c, is amended to read: 361.35 Subd. 1c. [DURATION LIMITS; PRE-1979 DISTRICTS.] For tax 361.36 increment financing districts created prior to August 1, 1979, 362.1 no tax increment shall be paid to the authority after April 1, 362.2 2001, or the term of a nondefeased bond or obligation 362.3 outstanding on April 1, 1990, secured by increments from the 362.4 district or project area, whichever time is greater, provided 362.5 that in no case will a tax increment be paid to an authority 362.6 after August 1, 2009, from such a district. If a district's 362.7 termination date is extended beyond April 1, 2001, because bonds 362.8 were outstanding on April 1, 1990, with maturities extending 362.9 beyond April 1, 2001, the following restrictions apply.No362.10 Increment collected from the districtmayat any time, and 362.11 interest earned on increment from the district and received 362.12 after December 31, 2001, must be expended after April 1, 362.13 2001,exceptonly to pay or defease (i) bonds issued before 362.14 April 1, 1990, or (ii) bonds issued to refund the principal of 362.15 the outstanding bonds and pay associated issuance costs, 362.16 provided the average maturity of the refunding bonds does not 362.17 exceed the bonds refunded. When sufficient money has been 362.18 received to defease or pay the bonds, the tax increment project 362.19 or district must be decertified. 362.20 [EFFECTIVE DATE.] This section is effective for tax 362.21 increment financing districts and projects for which the request 362.22 for certification was made before August 1, 1979. 362.23 Sec. 16. Minnesota Statutes 2000, section 469.176, 362.24 subdivision 1e, is amended to read: 362.25 Subd. 1e. [DURATION LIMITS; HAZARDOUS SUBSTANCE 362.26 SUBDISTRICTS.] If a parcel of a district is part of a designated 362.27 hazardous substance site or a hazardous substance subdistrict, 362.28 tax increment may be paid to the authority from the parcel for 362.29 longer than the period otherwise provided by subdivisions 1 to 362.30 1f for the overlying district. The extended period for 362.31 collection of tax increment begins on the date of receipt of the 362.32 first tax increment from the parcel that is more than any tax 362.33 increment received from the parcel before the date of the 362.34 certification under section 469.174, subdivision 7, paragraph 362.35 (b), and received after the date of certification to the county 362.36 auditor described in section 469.174, subdivision 7, paragraph 363.1 (b). The extended period for collection of tax increment is the 363.2 lesser of: (1) 25 years from the date of commencement of the 363.3 extended periodor 20 years if the authority elects under363.4section 469.175, subdivision 1, paragraph (b), to defer receipt363.5of the first increment; or (2) the period necessary to recover 363.6 the costs of removal actions or remedial actions specified in a 363.7 development response action plan. 363.8 [EFFECTIVE DATE.] This section is effective for requests 363.9 for certification of subdistricts made after June 30, 2001. 363.10 Sec. 17. Minnesota Statutes 2000, section 469.176, 363.11 subdivision 3, is amended to read: 363.12 Subd. 3. [LIMITATION ON ADMINISTRATIVE EXPENSES.] (a) For 363.13 districts for which certification was requested before August 1, 363.14 1979, or after June 30, 1982, no tax increment shall be used to 363.15 pay any administrative expenses for a project which exceed ten 363.16 percent of the total tax increment expenditures authorized by 363.17 the tax increment financing plan or the total tax increment 363.18 expenditures for the project, whichever is less. 363.19 (b) For districts for which certification was requested 363.20 after July 31, 1979, and before July 1, 1982, no tax increment 363.21 shall be used to pay administrative expenses, as defined in 363.22 Minnesota Statutes 1980, section 273.73, for aprojectdistrict 363.23 which exceeds five percent of the total tax increment 363.24 expenditures authorized by the tax increment financing plan or 363.25 the total tax increment expenditures for theprojectdistrict, 363.26 whichever is less. 363.27 (c) For districts for which certification was requested 363.28 after June 30, 2001, no tax increment may be used to pay any 363.29 administrative expenses for a project which exceed ten percent 363.30 of total tax increment expenditures authorized by the tax 363.31 increment financing plan or the total tax increments from the 363.32 district, whichever is less. 363.33 [EFFECTIVE DATE.] This section is effective for districts 363.34 for which the request for certification is received after June 363.35 30, 2001. 363.36 Sec. 18. Minnesota Statutes 2000, section 469.176, 364.1 subdivision 4, is amended to read: 364.2 Subd. 4. [LIMITATION ON USE OF TAX INCREMENT; GENERAL 364.3 RULE.] (a)All revenues derived fromTaxincrement shall364.4 increments must be used in accordance with the tax increment 364.5 financing plan, including the separate line items amounts 364.6 required by section 469.175, subdivision 1, clause (6), but 364.7 excluding any subcategories within the required items that the 364.8 authority elects to include. If a tax increment financing plan 364.9 does not include an amount for a separate line item required by 364.10 section 469.175, subdivision 1, clause (6), the amount for the 364.11 line item is zero. 364.12 (b) Therevenues shalltax increments may be used solely 364.13 for the following purposes: 364.14 (1) to pay the principal of and interest on bonds issued to 364.15 finance a project; 364.16 (2) as permitted by an enabling development authority law, 364.17 whether made by the authority or the municipality or another 364.18 entity authorized to exercise the powers of the respective 364.19 authority, as specified in paragraph (c). 364.20 (c) The following purposes are permitted: 364.21 (1) by a rural development financing authority for the 364.22 purposes stated in section 469.142,; 364.23 (2) by a port authorityor municipality exercising the364.24powers of a port authorityto finance or otherwise pay the cost 364.25 of redevelopmentpursuant tounder sections 469.048 to 469.068,; 364.26 (3) by an economic development authority to finance or 364.27 otherwise pay the cost of redevelopmentpursuant tounder 364.28 sections 469.090 to 469.108,; 364.29 (4) by a housing and redevelopment authorityor economic364.30development authorityto finance or otherwise pay public 364.31 redevelopment costspursuant tounder sections 469.001 to 364.32 469.047,; 364.33 (5) by a municipalityor economic development authorityto 364.34 finance or otherwise pay the capital and administration costs of 364.35 a development districtpursuant tounder sections 469.124 to 364.36 469.134,; 365.1 (6) by a municipality or authority to finance or otherwise 365.2 pay the costs of developing and implementing a development 365.3 action response plan,; 365.4 (7) by a municipality or redevelopment agency to finance or 365.5 otherwise pay premiums for insurance or other security 365.6 guaranteeing the payment when due of principal of and interest 365.7 on the bondspursuant tounder chapter 462C, sections 469.152 to 365.8 469.165, or both, or to accumulate and maintain a reserve 365.9 securing the payment when due of the principal of and interest 365.10 on the bondspursuant tounder chapter 462C, sections 469.152 to 365.11 469.165, or both, which revenues in the reserveshallmay not 365.12 exceed,subsequent toafter the fifth anniversary of the date of 365.13 issue of the first bond issue secured by the reserve, an amount365.14equal to20 percent of the aggregate principal amount of the 365.15 outstanding and nondefeased bonds secured by the reserve. 365.16 [EFFECTIVE DATE.] This section is effective for tax 365.17 increment financing plans approved after June 30, 2001, and for 365.18 amendments to tax increment financing plans modifying the total 365.19 estimated tax increment expenditures approved after June 30, 365.20 2001. Amounts spent in excess of the estimates or budget items 365.21 in the tax increment financing plan are deemed to be spent in 365.22 accordance within the plan, notwithstanding that they exceeded 365.23 the estimates or budget items, for purposes of this section if 365.24 the plan and amendments to it were approved before July 1, 2001, 365.25 and if the total amounts spent are within the total estimated 365.26 tax increment expenditures under the plan for the district. 365.27 Sec. 19. Minnesota Statutes 2000, section 469.176, 365.28 subdivision 4g, is amended to read: 365.29 Subd. 4g. [GENERAL GOVERNMENT USE PROHIBITED.] (a)These365.30revenues shallTax increments may not be used to circumvent 365.31 existing levy limit law. 365.32 (b) Norevenues derived fromtax increment from any 365.33 district, whether certified before or after August 1, 1979,365.34shallmay be used for the acquisition, construction, renovation, 365.35 operation, or maintenance of a building to be used primarily and 365.36 regularly for conducting the business of a municipality, county, 366.1 school district, or any other local unit of government or the 366.2 state or federal governmentor for a commons area used as a366.3public park, or a facility used for social, recreational, or366.4conference purposes. This provisionshalldoes not prohibit the 366.5 use of revenues derived from tax increments for the construction 366.6 or renovation of a parking structureor of a privately owned366.7facility for conference purposes. 366.8(b) If any publicly owned facility used for social,366.9recreational, or conference purposes and financed in whole or in366.10part from revenues derived from a district is operated or366.11managed by an entity other than the authority, the operating and366.12management policies of the facility must be approved by the366.13governing body of the authority.366.14 (c)(1) Tax increments may not be used to pay for the cost 366.15 of public improvements, equipment, or other items, if: 366.16 (i) the improvements, equipment, or other items are located 366.17 outside of the area of the tax increment financing district from 366.18 which the increments were collected; and 366.19 (ii) the improvements, equipment, or items that (A) 366.20 primarily serve a decorative or aesthetic purpose, or (B) serve 366.21 a functional purpose, but their cost is increased by more than 366.22 100 percent as a result of the selection of materials, design, 366.23 or type as compared with more commonly used materials, designs, 366.24 or types for similar improvements, equipment, or items. 366.25 (2) The provisions of this paragraph do not apply to 366.26 expenditures related to the rehabilitation of historic 366.27 structures that are: 366.28 (i) individually listed on the National Register of 366.29 Historic Places; or 366.30 (ii) a contributing element to a historic district listed 366.31 on the National Register of Historic Places. 366.32 [EFFECTIVE DATE.] This section is effective for 366.33 expenditures of increment made after June 30, 2001. 366.34 Sec. 20. Minnesota Statutes 2000, section 469.176, is 366.35 amended by adding a subdivision to read: 366.36 Subd. 41. [PROHIBITED FACILITIES.] (a) No tax increment 367.1 from any district may be used for: 367.2 (1) a commons area used as a public park; or 367.3 (2) a facility used for social, recreational, or conference 367.4 purposes. 367.5 (b) This subdivision does not apply to a privately owned 367.6 facility for conference purposes or a parking structure. 367.7 [EFFECTIVE DATE.] This section is effective for 367.8 expenditures of increment made after June 30, 2001, but does not 367.9 apply to (1) expenditures made before January 1, 2000; (2) 367.10 expenditures made under a binding contract entered before 367.11 January 1, 2000; or (3) expenditures made under a binding 367.12 contract entered pursuant to a letter of intent with the 367.13 developer or contractor or its assigns if the letter of intent 367.14 was entered before January 1, 2000. 367.15 Sec. 21. Minnesota Statutes 2000, section 469.1763, 367.16 subdivision 6, is amended to read: 367.17 Subd. 6. [POOLING PERMITTED FOR DEFICITS.] (a) This 367.18 subdivision applies only to districts for which the request for 367.19 certification was made before June 2,19972001. 367.20 (b) The municipality for the district may transfer 367.21 available increments from another tax increment financing 367.22 district located in the municipality, if the transfer is 367.23 necessary to eliminate a deficit in the district to which the 367.24 increments are transferred. A deficit in the district for 367.25 purposes of this subdivision means the lesser of the following 367.26 two amounts: 367.27 (1)(i) the amount due during the calendar year to pay 367.28 preexisting obligations of the district; minus 367.29 (ii) the total increments to be collected from properties 367.30 located within the district that are available for the calendar 367.31 year; plus 367.32 (iii) total increments from properties located in other 367.33 districts in the municipality that are available to be used to 367.34 meet the district's obligations under this section, excluding 367.35 this subdivision, or other provisions of law (but excluding a 367.36 special tax under section 469.1791 and the grant program under 368.1 Laws 1997, chapter 231, article 1, section 19, or this act); or 368.2 (2) the reduction in increments collected from properties 368.3 located in the district for the calendar year as a result of the 368.4 changes in class rates in Laws 1997, chapter 231, article 1; 368.5 Laws 1998, chapter 389, article 2; and Laws 1999, chapter 368.6 243 and this act or the elimination of the general education tax 368.7 levy under this act. 368.8 (c) A preexisting obligation means: 368.9 (1) bonds issued and sold before June 2,19972001, and 368.10 bonds issued to refund such bonds or to reimburse expenditures 368.11 made in conjunction with a signed contractual agreement entered 368.12 into before June 2,19972001, to the extent that the bonds are 368.13 secured by a pledge of increments from the tax increment 368.14 financing district. For purposes of this subdivision, bonds368.15exclude an obligation to reimburse or pay a developer or owner368.16of property located in the district for amounts incurred or paid368.17by the developer or owner; and 368.18 (2) binding contracts entered into before June 2, 2001, to 368.19 the extent that the contracts require payments secured by a 368.20 pledge of increments from the tax increment financing district. 368.21 (d) The municipality may require a development authority, 368.22 other than a seaway port authority, to transfer available 368.23 increments for any of its tax increment financing districts in 368.24 the municipality to make up an insufficiency in another district 368.25 in the municipality, regardless of whether the district was 368.26 established by the development authority or another development 368.27 authority. This authority applies notwithstanding any law to 368.28 the contrary, but applies only to a development authority that: 368.29 (1) was established by the municipality; or 368.30 (2) the governing body of which is appointed, in whole or 368.31 part, by the municipality or an officer of the municipality or 368.32 which consists, in whole or part, of members of the governing 368.33 body of the municipality. 368.34 (e) The authority under this subdivision to spend tax 368.35 increments outside of the area of the district from which the 368.36 tax increments were collected: 369.1 (1) may only be exercised after obtaining approval of the 369.2 use of the increments, in writing, by the commissioner of 369.3 revenue; 369.4 (2) is an exception to the restrictions under section 369.5 469.176, subdivision 4i, and the other provisions of this 369.6 section, and the percentage restrictions under subdivision 2 369.7 must be calculated after deducting increments spent under this 369.8 subdivision from the total increments for the district; and 369.9 (3) applies notwithstanding the provisions of the Tax 369.10 Increment Financing Act in effect for districts for which the 369.11 request for certification was made before June 30, 1982, or any 369.12 other law to the contrary. 369.13 [EFFECTIVE DATE.] This section is effective January 2, 369.14 2003, and thereafter. 369.15 Sec. 22. Minnesota Statutes 2000, section 469.177, 369.16 subdivision 1, is amended to read: 369.17 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or 369.18 after adoption of a tax increment financing plan, the auditor of 369.19 any county in which the district is situated shall, upon request 369.20 of the authority, certify the original net tax capacity of the 369.21 tax increment financing district and that portion of the 369.22 district overlying any subdistrict as described in the tax 369.23 increment financing plan and shall certify in each year 369.24 thereafter the amount by which the original net tax capacity has 369.25 increased or decreased as a result of a change in tax exempt 369.26 status of property within the district and any subdistrict, 369.27 reduction or enlargement of the district or changes pursuant to 369.28 subdivision 4. 369.29 (b) For districts approved under section 469.175, 369.30 subdivision 3, or parcels added to existing districts after May 369.31 1, 1988, if the classification under section 273.13 of property 369.32 located in a district changes to a classification that has a 369.33 different assessment ratio, the original net tax capacity of 369.34 that property must be redetermined at the time when its use is 369.35 changed as if the property had originally been classified in the 369.36 same class in which it is classified after its use is changed. 370.1 (c) The amount to be added to the original net tax capacity 370.2 of the district as a result of previously tax exempt real 370.3 property within the district becoming taxable equals the net tax 370.4 capacity of the real property as most recently assessed pursuant 370.5 to section 273.18 or, if that assessment was made more than one 370.6 year prior to the date of title transfer rendering the property 370.7 taxable, the net tax capacity assessed by the assessor at the 370.8 time of the transfer. If improvements are made to tax exempt 370.9 property after certification of the district and before the 370.10 parcel becomes taxable, the assessor shall, at the request of 370.11 the authority, separately assess the estimated market value of 370.12 the improvements. If the property becomes taxable, the county 370.13 auditor shall add to original net tax capacity, the net tax 370.14 capacity of the parcel, excluding the separately assessed 370.15 improvements. If substantial taxable improvements were made to 370.16 a parcel after certification of the district and if the property 370.17 later becomes tax exempt, in whole or part, as a result of the 370.18 authority acquiring the property through foreclosure or exercise 370.19 of remedies under a lease or other revenue agreement or as a 370.20 result of tax forfeiture, the amount to be added to the original 370.21 net tax capacity of the district as a result of the property 370.22 again becoming taxable is the amount of the parcel's value that 370.23 was included in original net tax capacity when the parcel was 370.24 first certified. The amount to be added to the original net tax 370.25 capacity of the district as a result of enlargements equals the 370.26 net tax capacity of the added real property as most recently 370.27 certified by the commissioner of revenue as of the date of 370.28 modification of the tax increment financing plan pursuant to 370.29 section 469.175, subdivision 4. 370.30 (d) For districts approved under section 469.175, 370.31 subdivision 3, or parcels added to existing districts after May 370.32 1, 1988, if the net tax capacity of a property increases because 370.33 the property no longer qualifies under the Minnesota 370.34 Agricultural Property Tax Law, section 273.111; the Minnesota 370.35 Open Space Property Tax Law, section 273.112; or the 370.36 Metropolitan Agricultural Preserves Act, chapter 473H, or 371.1 because platted, unimproved property is improved or three years 371.2 pass after approval of the plat under section 273.11, 371.3 subdivision 1, the increase in net tax capacity must be added to 371.4 the original net tax capacity. 371.5 (e) The amount to be subtracted from the original net tax 371.6 capacity of the district as a result of previously taxable real 371.7 property within the district becoming tax exempt, or a reduction 371.8 in the geographic area of the district, shall be the amount of 371.9 original net tax capacity initially attributed to the property 371.10 becoming tax exempt or being removed from the district. If the 371.11 net tax capacity of property located within the tax increment 371.12 financing district is reduced by reason of a court-ordered 371.13 abatement, stipulation agreement, voluntary abatement made by 371.14 the assessor or auditor or by order of the commissioner of 371.15 revenue, the reduction shall be applied to the original net tax 371.16 capacity of the district when the property upon which the 371.17 abatement is made has not been improved since the date of 371.18 certification of the district and to the captured net tax 371.19 capacity of the district in each year thereafter when the 371.20 abatement relates to improvements made after the date of 371.21 certification. The county auditor may specify reasonable form 371.22 and content of the request for certification of the authority 371.23 and any modification thereof pursuant to section 469.175, 371.24 subdivision 4. 371.25 (f) If a parcel of property contained a substandard 371.26 building that was demolished or removed and if the authority 371.27 elects to treat the parcel as occupied by a substandard building 371.28 under section 469.174, subdivision 10, paragraph (b), the 371.29 auditor shall certify the original net tax capacity of the 371.30 parcel using the greater of (1) the current net tax capacity of 371.31 the parcel, or (2) the estimated market value of the parcel for 371.32 the year in which the building was demolished or removed, but 371.33 applying the class rates for the current year. 371.34 [EFFECTIVE DATE.] This section is effective for parcels 371.35 that become taxable after June 30, 2001, and applies to tax 371.36 increment financing districts, regardless of when the request 372.1 for certification was made. 372.2 Sec. 23. Minnesota Statutes 2000, section 469.177, is 372.3 amended by adding a subdivision to read: 372.4 Subd. 1b. [STATE TAX AND INCREMENT COMPUTATION.] The 372.5 original local tax rate and any other tax rate or amount used to 372.6 calculate the amount of tax increment does not include any rate 372.7 or amount attributable to a state levy, whether the state levy 372.8 is imposed by section 275.02 or another provision of law. 372.9 Sec. 24. Minnesota Statutes 2000, section 469.177, 372.10 subdivision 11, is amended to read: 372.11 Subd. 11. [DEDUCTION FOR ENFORCEMENT COSTS; 372.12 APPROPRIATION.] (a) The county treasurer shall deduct an amount 372.13 equal to0.250.34 percent of any increment distributed to an 372.14 authority or municipality. The county treasurer shall pay the 372.15 amount deducted to the state treasurer for deposit in the state 372.16 general fund. 372.17 (b) The amounts deducted and paid under paragraph (a) are 372.18 appropriated to the state auditor for the cost of (1) the 372.19 financial reporting of tax increment financing information and 372.20 (2) the cost of examining and auditing of authorities' use of 372.21 tax increment financing as provided under section 469.1771, 372.22 subdivision 1. Notwithstanding section 16A.28 or any other law 372.23 to the contrary, this appropriation does not cancel and remains 372.24 available until spent. 372.25 [EFFECTIVE DATE.] This section is effective for taxes 372.26 payable in 2002 and thereafter. 372.27 Sec. 25. Minnesota Statutes 2000, section 469.1771, 372.28 subdivision 1, is amended to read: 372.29 Subdivision 1. [ENFORCEMENT.] (a) The owner of taxable 372.30 property located in the city, town, school district, or county 372.31 in which the tax increment financing district is located may 372.32 bring suit for equitable relief or for damages, as provided in 372.33 subdivisions 2, 3, and 4, arising out of a failure of a 372.34 municipality or authority to comply with the provisions of 372.35 sections 469.174 to469.179469.1799, or related provisions of 372.36 this chapter. The prevailing party in a suit filed under the 373.1 preceding sentence is entitled to costs, including reasonable 373.2 attorney fees. 373.3 (b) The state auditor may examine and audit political 373.4 subdivisions' use of tax increment financing. Without previous 373.5 notice, the state auditor may examine or audit accounts and 373.6 records on a random basis as the auditor deems to be in the 373.7 public interest. If the state auditor finds evidence that an 373.8 authority or municipality has violated a provision of the law 373.9 for which a remedy is provided under this section, the state 373.10 auditor shall forward the relevant information to the county 373.11 attorney. The county attorney may bring an action to enforce 373.12 the provisions of sections 469.174 to469.179469.1799 or 373.13 related provisions of this chapter, for matters referred by the 373.14 state auditor or on behalf of the county. If the county 373.15 attorney determines not to bring an action or if the county 373.16 attorney has not brought an action within 12 months after 373.17 receipt of the initial notification by the state auditor of the 373.18 violation, the county attorney shall notify the state auditor in 373.19 writing. 373.20 (c) If the state auditor finds an authority is not in 373.21 compliance with sections 469.174 to469.179469.1799 or related 373.22 provisions of law, the auditor shall notify the governing body 373.23 of the municipality that approved the tax increment financing 373.24 district of its findings. The governing body of the 373.25 municipality must respond in writing to the state auditor within 373.26 60 days after receiving the notification. Its written response 373.27 must state whether the municipality accepts, in whole or part, 373.28 the auditor's findings. If the municipality does not accept the 373.29 findings, the statement must indicate the basis for its 373.30 disagreement. The state auditor shall annually summarize the 373.31 responses it receives under this section and send the summary 373.32 and copies of the responses to the chairs of the committees of 373.33 the legislature with jurisdiction over tax increment financing. 373.34 (d) The state auditor shall notify the attorney general in 373.35 writing and provide supporting materials for a violation found 373.36 by the auditor, if the: 374.1 (1) auditor receives notification from the county attorney 374.2 under paragraph (b) or receives no notification for a 12-month 374.3 period after initially notifying the county attorney and the 374.4 state auditor confirms with the county attorney or the 374.5 municipality that no action has been brought regarding the 374.6 matter; and 374.7 (2) municipality or development authority have not 374.8 eliminated or resolved the violation to the satisfaction of the 374.9 state auditor. 374.10 The auditor shall provide the municipality and development 374.11 authority a copy of the notification sent to the attorney 374.12 general. 374.13 [EFFECTIVE DATE.] This section applies to violations 374.14 occurring after July 1, 2001. 374.15 Sec. 26. Minnesota Statutes 2000, section 469.178, is 374.16 amended by adding a subdivision to read: 374.17 Subd. 7. [INTERFUND LOANS.] The authority or municipality 374.18 may advance or loan money to finance expenditures under section 374.19 469.176, subdivision 4, from its general fund or any other fund 374.20 regarding which it has legal authority to do so. The loan or 374.21 advance must be approved, by resolution of the governing body, 374.22 before money is transferred, advanced, or spent, whichever is 374.23 earliest. The terms and conditions for repayment of the loan 374.24 must be provided in writing and include, at a minimum, the 374.25 principal amount, the interest rate, maturity, and repayment 374.26 schedule. The maximum rate of interest permitted to be charged 374.27 is limited to the greater of the rates specified under section 374.28 270.75 or 549.09. 374.29 [EFFECTIVE DATE.] This section is effective for loans and 374.30 advances made after June 30, 2001. Interfund loans and advances 374.31 made before July 1, 2001, are ratified and approved, subject to 374.32 the requirement that interest accrued or paid after July 1, 374.33 2001, may not exceed the limit in this section. An authority or 374.34 municipality may modify the terms of an interfund loan or 374.35 advance made before July 1, 2001, to comply with any of the 374.36 requirements of this section as the authority or municipality 375.1 deems appropriate. 375.2 Sec. 27. Minnesota Statutes 2000, section 469.1791, 375.3 subdivision 1, is amended to read: 375.4 Subdivision 1. [DEFINITIONS.] (a) As used in this section, 375.5 the terms defined in this subdivision have the meanings given 375.6 them. 375.7 (b) "City" means acitymunicipality containing a tax 375.8 increment financing district, the request for certification of 375.9 which was made before June 2,19972001. 375.10 (c) "Enabling ordinance" means an ordinance adopted by a 375.11 city council establishing a special taxing district. 375.12 (d) "Special taxing district" means all or any portion of 375.13 the property located within a tax increment financing district, 375.14 the request for certification of which was made before June 2, 375.1519972001. 375.16 (e) "Development or redevelopment services" has the meaning 375.17 given in the city's enabling ordinance, and may include any 375.18 services or expenditures the city or its economic development 375.19 authority or housing and redevelopment authority or port 375.20 authority may provide or incur under sections 469.001 to 375.21 469.1081 and 469.124 to 469.134, including, without limitation, 375.22 amounts necessary to pay the principal of or interest on bonds 375.23 issued by the city or its economic development authority or 375.24 housing and redevelopment authority or port authority under 375.25 section 469.178, for the tax increment financing districts 375.26 contained within the special taxing district or projects to be 375.27 funded with increments from tax increment financing districts 375.28 contained within the special taxing district. 375.29 (f) "Preexisting obligations" means bonds issued and sold 375.30 before June 2,19972001, and binding contracts entered into 375.31 before June 2,19972001, to the extent that the bonds and 375.32 contracts are secured by a pledge of increments from the tax 375.33 increment financing district contained within the special taxing 375.34 district. 375.35 [EFFECTIVE DATE.] This section is effective for all tax 375.36 increment financing districts, regardless of when the request 376.1 for certification was made. 376.2 Sec. 28. Minnesota Statutes 2000, section 469.1791, 376.3 subdivision 3, is amended to read: 376.4 Subd. 3. [PRECONDITIONS TO ESTABLISH DISTRICT.] (a) A city 376.5 may establish a special taxing district within a tax increment 376.6 financing district under this section only if the conditions 376.7 under paragraphs (b) and (c) are met or if the city elects to 376.8 exercise the authority under paragraph (d). 376.9 (b) The city has determined that: 376.10 (1) total tax increments from the district, including 376.11 unspent increments from previous years and increments 376.12 transferred under paragraph (c), will be insufficient to pay the 376.13 amounts due in a year on preexisting obligations; and 376.14 (2) this insufficiency of increments resulted from the 376.15 reduction in property tax class rates enacted in the 1997and, 376.16 1998, and 2001 legislative sessions. 376.17 (c) The city has agreed to transfer any available 376.18 increments from other tax increment financing districts in the 376.19 city to pay the preexisting obligations of the district under 376.20 section 469.1763, subdivision 6. This requirement does not 376.21 apply to any available increments of a qualified housing 376.22 district, as defined in Minnesota Statutes 2000, section 376.23 273.1399, subdivision 1. 376.24 (d) If a tax increment financing district does not qualify 376.25 under paragraphs (b) and (c), the governing body may elect to 376.26 establish a special taxing district under this section. If the 376.27 city elects to exercise this authority, increments from the tax 376.28 increment financing district and the proceeds of the tax imposed 376.29 under this section may only be used to pay preexisting 376.30 obligations and reasonable administrative expenses of the 376.31 authority for the tax increment financing district. The tax 376.32 increment financing district must be decertified when all 376.33 preexisting obligations have been paid. 376.34 [EFFECTIVE DATE.] This section is effective for all tax 376.35 increment financing districts, regardless of when the request 376.36 for certification was made. 377.1 Sec. 29. Minnesota Statutes 2000, section 469.1791, 377.2 subdivision 9, is amended to read: 377.3 Subd. 9. [LIMITS ON TAX.] (a) The maximum levy for any 377.4 year may not exceed the least of: 377.5 (1) the amount specified in the assessment agreement or 377.6 development agreement; 377.7 (2) the amount needed to pay preexisting obligations, less 377.8 available increments including increments transferred from other 377.9 districts; and 377.10 (3) the amount of the general ad valorem tax that would 377.11 have been paid by the captured net tax capacity of the tax 377.12 increment financing district, if the property tax class rates 377.13 for taxes payable in19972001 were in effect, less the amount 377.14 of the general ad valorem tax imposed for the payable year on 377.15 the captured net tax capacity. 377.16 (b) If the city uses the proceeds of a tax imposed under 377.17 this section to pay preexisting obligations secured by 377.18 increments from more than one tax increment financing district, 377.19 the city must establish a special taxing district in each of the 377.20 districts and impose a uniform rate upon all the districts. The 377.21 maximum limits under paragraph (a) must be calculated in 377.22 aggregate for all of the affected districts. 377.23 (c) If neither the assessment agreement nor the development 377.24 agreement specify a tax amount but state an agreed market value 377.25 for the property, the amount specified for purposes of paragraph 377.26 (a), clause (1), is the market value of the property under the 377.27 agreement multiplied by the class rate for taxes payable in1997377.28 2001 and multiplied by the sum of the ad valorem tax rates for 377.29 all the taxing jurisdictions. 377.30 (d) If neither the assessment agreement nor the development 377.31 agreement specify a tax amount or an agreed market value for the 377.32 property, the amount for purposes of paragraph (a), clause (1), 377.33 is the amount specified in the development agreement to be paid 377.34 or provided by the development authority on behalf of 377.35 development of the district, less the amount of increment paid 377.36 or collected in prior years and estimated to be collected in the 378.1 current year and any tax imposed under this section in prior 378.2 years. 378.3 (e) If neither the assessment agreement nor the development 378.4 agreement specify a tax amount, an agreed market value for the 378.5 property, or an amount to be paid or provided by the development 378.6 authority on behalf of development of the district, the 378.7 provisions of paragraph (a), clause (1), do not apply. 378.8 [EFFECTIVE DATE.] This section is effective for all tax 378.9 increment financing districts, regardless of when the request 378.10 for certification was made. 378.11 Sec. 30. [469.1792] [CERTAIN DISTRICTS; LIMITATIONS.] 378.12 Subdivision 1. [TAX INCREMENT FINANCING PLAN MODIFICATION 378.13 PROHIBITED.] Notwithstanding any other law to the contrary, no 378.14 tax increment financing district the certification of which was 378.15 requested before May 1, 1990, may modify its tax increment 378.16 financing plan after April 30, 2001. 378.17 Subd. 2. [LIMITS ON USE OF TAX INCREMENT REVENUES.] (a) 378.18 After April 30, 2001, tax increments from a tax increment 378.19 financing district the certification of which was requested 378.20 after July 31, 1979, and before May 1, 1990, may be expended on 378.21 an activity as defined under section 469.1763, subdivision 2, 378.22 only if one of the following occurs: 378.23 (1) on or before April 30, 2002, the revenues are actually 378.24 paid to a third party with respect to the activity; 378.25 (2) bonds, the proceeds of which must be used to finance 378.26 the activity, are issued and sold to a third party on or before 378.27 April 30, 2002, the revenues are spent to repay the bonds, and 378.28 the proceeds of the bonds either are, on the date of issuance, 378.29 reasonably expected to be spent on or before April 30, 2002, or 378.30 are deposited in a reasonably required reserve or replacement 378.31 fund; 378.32 (3) binding contracts with a third party are entered into 378.33 for performance of the activity on or before April 30, 2002, and 378.34 the revenues are spent under the contractual obligation; or 378.35 (4) costs with respect to the activity are paid on or 378.36 before April 30, 2002, and the revenues are spent to reimburse a 379.1 party for payment of the costs, including interest on 379.2 unreimbursed costs. 379.3 (b) For purposes of this section, bonds include subsequent 379.4 refunding bonds if the original refunded bonds meet the 379.5 requirements of paragraph (a), clause (2). 379.6 (c) Nothing in this section extends the duration of a 379.7 district beyond the earlier of: 379.8 (1) the duration limit of the district as established in 379.9 its tax increment financing plan; or 379.10 (2) the duration limit of the district as established by 379.11 law. 379.12 Subd. 3. [USE OF REVENUES FOR DECERTIFICATION.] (a) For 379.13 any tax increment financing district subject to subdivision 2, 379.14 any revenues derived from tax increments paid by properties in 379.15 the district that remain after the expenditures permitted under 379.16 subdivision 2 must be used only to pay: 379.17 (1) outstanding bonds, as defined in subdivision 2, 379.18 paragraphs (a), clause (2), and (b); 379.19 (2) contractual obligations, as defined in subdivision 2, 379.20 paragraph (a), clauses (3) and (4); or 379.21 (3) credit enhanced bonds as defined in section 469.1763, 379.22 subdivision 5, to which the revenues derived from tax increments 379.23 are pledged, but only to the extent that revenues of the 379.24 district for which the credit enhanced bonds were issued are 379.25 insufficient to pay the bonds and to the extent that the 379.26 increments from the applicable pooling percent share for the 379.27 district are insufficient. 379.28 (b) When the outstanding bonds have been defeased and when 379.29 sufficient money has been set aside to pay contractual 379.30 obligations as defined in subdivision 2, paragraph (a), clauses 379.31 (3) and (4), the district must be decertified and the pledge of 379.32 tax increment discharged. 379.33 Subd. 4. [EXEMPTIONS.] The provisions of this section do 379.34 not apply if any of the following apply: 379.35 (1) the county board approves, by resolution, a request by 379.36 the authority and municipality to exempt the district from this 380.1 section by April 1, 2002; 380.2 (2) the increments are spent to obtain matching federal 380.3 funds for a portion of the project; 380.4 (3) a special law applies to authorize the spending; or 380.5 (4) a special law extended the duration of the district and 380.6 the district is subject to section 469.1782, subdivision 1, and 380.7 was approved under section 469.1782, subdivision 2. 380.8 [EFFECTIVE DATE.] This section is effective the day 380.9 following final enactment for districts for which the request 380.10 for certification was made before May 1, 1990. 380.11 Sec. 31. [469.1793] [TIF CONSULTANTS.] 380.12 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 380.13 section, the definitions under section 469.174 apply and the 380.14 following terms have the meanings given. 380.15 (b) "Act" means sections 469.174 to 469.1791. 380.16 (c) "Commissioner" means the commissioner of revenue. 380.17 (d) "Consultant" means an individual, partnership, 380.18 association, private corporation, or any other legal entity that 380.19 provides consulting services. 380.20 (e) "Consulting services" include the rendering of 380.21 professional opinion, advice, or analysis regarding application 380.22 of the act for a municipality or authority, including legal, 380.23 accounting, and fiscal services. 380.24 Subd. 2. [REGISTRATION.] (a) All consultants who provide 380.25 consulting services to municipalities or development authorities 380.26 must register with the commissioner. Registrations must be 380.27 annually renewed. In order to register, consultants must meet 380.28 and demonstrate compliance with the following criteria: 380.29 (1) provide a signed statement agreeing to abide by the 380.30 act; 380.31 (2) provide a signed statement agreeing to make available 380.32 for inspection any records requested by the commissioner, state 380.33 auditor, or commissioner of commerce for field or financial 380.34 audits under the scope of the act; 380.35 (3) certify knowledge of the requirements of the act and 380.36 guidelines published by the state auditor; 381.1 (4) obtain and maintain professional liability coverage; 381.2 and 381.3 (5) agree to submit to the commissioner a certificate or 381.4 certificates verifying the existence of the required insurance 381.5 coverage. 381.6 (b) The commissioner shall maintain a list of all 381.7 registered consultants. 381.8 (c) All consulting services must be performed by registered 381.9 consultants. A municipality or authority may not contract for 381.10 consulting services other than with registered consultants. 381.11 This requirement does not apply to employees of the municipality 381.12 or development authority. Reimbursement for services performed 381.13 by an unregistered consultant does not qualify for payment using 381.14 tax increments. Consulting services performed by a consultant 381.15 before the consultant's removal from the registration list may 381.16 be paid with tax increments. A municipality or development 381.17 authority may not enter into a contract or other arrangement 381.18 with a consultant that provides that the consultant's 381.19 compensation is contingent upon establishment of a tax increment 381.20 district or completion of a financing arrangement to be paid 381.21 with tax increments or that provides compensation to the 381.22 consultant is based on a percentage of increments or eligible 381.23 costs of a tax increment financing district. 381.24 (d) If the information in an application for registration 381.25 becomes inaccurate or incomplete in any material respect, the 381.26 registered consultant must promptly file a corrected application 381.27 with the commissioner. 381.28 (e) Registration is effective 30 days after a complete 381.29 application is received by the commissioner. 381.30 (f) Registration under this section remains in force until 381.31 voluntarily terminated by the registrant, until the registrant 381.32 fails to renew, or until suspended or revoked by the 381.33 commissioner of revenue. All registrants must comply with 381.34 registration criteria under this subdivision. 381.35 (g) The fee for filing an application for registration 381.36 under this section is $100. The fee for filing an application 382.1 for renewal of registration under this section is $50. The 382.2 commissioner shall deposit the fees in the general fund. 382.3 Subd. 3. [CONSULTANT AND CONTRACTOR SANCTIONS.] (a) The 382.4 commissioner of commerce may, by order, revoke a registration, 382.5 censure or suspend a registrant and require payment of all costs 382.6 of proceedings resulting in an action instituted under this 382.7 section and impose a civil penalty of not more than $10,000 if 382.8 the commissioner of commerce finds: 382.9 (1) that the order is in the public interest; and 382.10 (2) that the registrant or, in the case of a registrant 382.11 that is not a natural person, any partner, officer, or director, 382.12 any person occupying a similar status or performing similar 382.13 functions, or any person directly or indirectly controlling the 382.14 registrant committed a violation enumerated in paragraph (b). 382.15 (b) A consultant violates the provisions of this section if 382.16 the consultant: 382.17 (1) has engaged in conduct that departs from or fails to 382.18 conform to the minimal standards of acceptable and prevailing 382.19 legal, accounting, or fiscal practices under the act within the 382.20 reasonable control of the consultant; 382.21 (2) has committed fraud, embezzlement, theft, forgery, 382.22 bribery, falsified or destroyed records, made false statements, 382.23 received stolen property, made false claims, or obstructed 382.24 justice; 382.25 (3) is the subject of an order revoking, suspending, 382.26 restricting, limiting, or imposing other disciplinary action 382.27 against the consultant's license or certification in this or 382.28 another state or jurisdiction; 382.29 (4) has failed to comply with any of the ongoing 382.30 obligations for registration; 382.31 (5) has failed to comply with any provision or order under 382.32 the act or chapter 45; 382.33 (6) has provided consulting services without having an 382.34 accurate and complete registration on file with the 382.35 commissioner; 382.36 (7) has been shown to be incompetent, untrustworthy, or 383.1 financially irresponsible; 383.2 (8) has made or assisted another in making any material 383.3 misrepresentation or omission to the governing body or staff of 383.4 the authority or the municipality or to the commissioner or upon 383.5 reasonable request has withheld or concealed information from, 383.6 or refused to furnish information to, the authority, 383.7 municipality, commissioner, or the commissioner of commerce; or 383.8 (9) has entered into a compensation arrangement for 383.9 consulting services that is contingent upon establishment of a 383.10 tax increment financing district or completion of a financing 383.11 arrangement to be paid with tax increments or that provides 383.12 compensation to the consultant based on a percentage of 383.13 increments or eligible costs of a tax increment financing 383.14 district. 383.15 Subd. 4. [ORDERS.] The commissioner of commerce may issue 383.16 an order requiring a registrant or applicant for registration to 383.17 show cause why the registration should not be revoked or 383.18 suspended, the registrant censured, the application denied, or 383.19 other sanction imposed under this section. The order must be 383.20 calculated to give reasonable notice of the time and place for 383.21 hearing on the matter and must state the reasons for the entry 383.22 of the order. The commissioner of commerce may, by order, 383.23 summarily suspend a registration pending final determination of 383.24 an order to show cause. A hearing on the merits must be held 383.25 within 30 days of the issuance of the order of summary 383.26 suspension. All hearings must be conducted under chapter 14. 383.27 After the hearing, the commissioner of commerce shall enter an 383.28 order disposing of the matter as the facts require. If the 383.29 registrant or applicant for registration fails to appear at a 383.30 hearing after having been duly notified of it, the person is in 383.31 default and the proceeding may be determined against the 383.32 registrant or applicant for registration upon consideration of 383.33 the order to show cause, the allegations of which may be 383.34 considered to be true. 383.35 [EFFECTIVE DATE.] This section is effective for consulting 383.36 services provided after July 1, 2002. 384.1 Sec. 32. Minnesota Statutes 2000, section 469.1812, 384.2 subdivision 2, is amended to read: 384.3 Subd. 2. [GOVERNING BODY.] "Governing body" means, for a 384.4 city, the city council; for a school district, the school board; 384.5 for a county, the county board; and for a town, theannual384.6meeting of the townboard of supervisors. 384.7 [EFFECTIVE DATE.] This section is effective retroactive to 384.8 May 26, 1999. 384.9 Sec. 33. Minnesota Statutes 2000, section 469.1813, 384.10 subdivision 4, is amended to read: 384.11 Subd. 4. [PROPERTY LOCATED IN TAX INCREMENT FINANCING 384.12 DISTRICTS.] The governing body of a political subdivision may 384.13 not enter into a property tax abatement agreement under sections 384.14 469.1812 to 469.1815 that provides for abatement of taxes on a 384.15 parcel,if the abatement will occur either: 384.16 (1) while the parcel is located in a tax increment 384.17 financing district; or 384.18 (2) within two years after the parcel was eliminated from a 384.19 tax increment financing district, other than by decertification 384.20 of the entire district. 384.21 [EFFECTIVE DATE.] This section is effective for abatement 384.22 resolutions approved after June 30, 2001. 384.23 Sec. 34. Minnesota Statutes 2000, section 469.1813, 384.24 subdivision 6, is amended to read: 384.25 Subd. 6. [DURATION LIMIT.] (a) A political subdivision may 384.26 grant an abatement for a period no longer than ten years, except 384.27 as provided under paragraph (b). The subdivision may specify in 384.28 the abatement resolution a shorter duration. If the resolution 384.29 does not specify a period of time, the abatement is for eight 384.30 years. If an abatement has been granted to a parcel of property 384.31 and the period of the abatement has expired, the political 384.32 subdivision that granted the abatement may not grant another 384.33 abatement for eight years after the expiration of the first 384.34 abatement. This prohibition does not apply to improvements 384.35 added after and not subject to the first abatement. 384.36 (b) A political subdivision proposing to abate taxes for a 385.1 parcel may request, in writing, that the other political 385.2 subdivisions in which the parcel is located grant an abatement 385.3 for the property. If one of the other political subdivisions 385.4 declines, in writing, to grant an abatement or if 90 days pass 385.5 after receipt of the request to grant an abatement without a 385.6 written response from one of the political subdivisions, the 385.7 duration limit for an abatement for the parcel by the requesting 385.8 political subdivision and any other participating political 385.9 subdivision is increased to 15 years. If the political 385.10 subdivision which declined to grant an abatement later grants an 385.11 abatement for the parcel, the 15-year duration limit is reduced 385.12 by one year for each year that the declining political 385.13 subdivision grants an abatement for the parcel during the period 385.14 of the abatement granted by the requesting political 385.15 subdivision. The duration limit may not be reduced below the 385.16 limit under paragraph (a). 385.17 [EFFECTIVE DATE.] This section is effective for abatements 385.18 approved after the day following final enactment. 385.19 Sec. 35. Minnesota Statutes 2000, section 475.58, 385.20 subdivision 1, is amended to read: 385.21 Subdivision 1. [APPROVAL BY ELECTORS; EXCEPTIONS.] 385.22 Obligations authorized by law or charter may be issued by any 385.23 municipality upon obtaining the approval of a majority of the 385.24 electors voting on the question of issuing the obligations, but 385.25 an election shall not be required to authorize obligations 385.26 issued: 385.27 (1) to pay any unpaid judgment against the municipality; 385.28 (2) for refunding obligations; 385.29 (3) for an improvement or improvement program, which 385.30 obligation is payable wholly or partly from the proceeds of 385.31 special assessments levied upon property specially benefited by 385.32 the improvement or by an improvement within the improvement 385.33 program, or of taxes levied upon the increased value of property 385.34 within a district for the development of which the improvement 385.35 is undertaken, including obligations which are the general 385.36 obligations of the municipality, if the municipality is entitled 386.1 to reimbursement in whole or in part from the proceeds of such 386.2 special assessments or taxes and not less than 20 percent of the 386.3 cost of the improvement or the improvement program is to be 386.4 assessed against benefited property or is to be paid from the 386.5 proceeds of federal grant funds or a combination thereof, or is 386.6 estimated to be received from such taxes within the district; 386.7 (4) payable wholly from the income of revenue producing 386.8 conveniences; 386.9 (5) under the provisions of a home rule charter which 386.10 permits the issuance of obligations of the municipality without 386.11 election; 386.12 (6) under the provisions of a law which permits the 386.13 issuance of obligations of a municipality without an election; 386.14 (7) to fund pension or retirement fund liabilities pursuant 386.15 to section 475.52, subdivision 6; 386.16 (8) under a capital improvement plan under section 373.40; 386.17 (9) to fund facilities as provided in subdivision 3; and 386.18 (10) under sections 469.1813 to 469.1815 (property tax 386.19 abatement authority bonds), if the proceeds of the bonds are not 386.20 used for a purpose prohibited under section 469.176, subdivision 386.21 4g, paragraph (b). 386.22 [EFFECTIVE DATE.] This section is effective for bonds 386.23 issued or sold after the day following final enactment. 386.24 Sec. 36. Laws 1997, chapter 231, article 10, section 25, 386.25 is amended to read: 386.26 Sec. 25. [EFFECTIVE DATE.] 386.27 Sections 1, 3 to 6, 7, and 10, are effective for districts 386.28 for which the requests for certification are made after June 30, 386.29 1997. 386.30 Section 2,clausesclause (1)and (4), areis effective for 386.31 all districtsfor whichregardless of when the requests for 386.32 certification were madeafter July 31, 1979, and for payments386.33and investment earnings received after July 1, 1997and 386.34 regardless of when the increments were received. Section 2, 386.35 clauses (2) and (3), are effective for districts for which the 386.36 request for certification was made after June 30, 1982, and 387.1 proceeds from sales and leases of properties purchased by the 387.2 authority after June 30, 1997, and repayments of advances and 387.3 loans that were made after June 30, 1997. Section 2, clause 387.4 (4), is effective for districts for which the requests for 387.5 certification were made (i) after July 31, 1979, and for 387.6 investment earnings received after July 1, 1997, and (ii) before 387.7 August 1, 1979, and for interest and investment earnings 387.8 received after December 31, 2001. 387.9 Sections 8 and 9 apply to all tax increment districts, 387.10 whenever certified, insofar as the underlying law applies to 387.11 them, and any uses of tax increment expended prior to the date 387.12 of enactment of this act which are in compliance with the 387.13 provisions of those sections are deemed valid. 387.14 Sections 12 and 13 are effective on the day the chief 387.15 clerical officer of the city of Columbia Heights complies with 387.16 Minnesota Statutes, sections 645.021, subdivision 3. 387.17 Sections 17 to 20 are effective the day following final 387.18 enactment and upon compliance by the governing body with 387.19 Minnesota Statutes, section 645.021, subdivision 3. 387.20 Section 24 is effective the day following final enactment. 387.21 [EFFECTIVE DATE.] This section is effective the day 387.22 following final enactment. 387.23 Sec. 37. Laws 2000, chapter 490, article 11, section 26, 387.24 the effective date, is amended to read: 387.25 EFFECTIVE DATE: This section is effective for increments 387.26 spent after July 1, 2000, from districts for which certification 387.27 was requested afterMay 1, 1990June 30, 1982. 387.28 [EFFECTIVE DATE.] This section is effective the day 387.29 following final enactment. 387.30 Sec. 38. [HOLLMAN DECREE HOUSING.] 387.31 To implement a federal court order or decree relating to 387.32 the provision of low-rent public housing finance, in whole or in 387.33 part, with federal financial assistance under section 5 of the 387.34 United States Housing Act, or any successor legislation, the 387.35 Minneapolis public housing authority or the metropolitan 387.36 council, acting under the powers of Minnesota Statutes, sections 388.1 469.001 to 469.047, may enter a cooperation agreement with the 388.2 governing body of any municipality or county within the 388.3 metropolitan area, as defined in Minnesota Statutes, section 388.4 473.121, subdivision 2, to provide exemption from all real and 388.5 personal taxes levied or imposed by the state, city, county, or 388.6 other political subdivision, for which the Minneapolis public 388.7 housing authority or the metropolitan council shall make, or 388.8 cause to be made, payments in lieu of taxes as provided under 388.9 Minnesota Statutes, section 469.040. This exemption and 388.10 obligation to make payments in lieu of taxes continues until the 388.11 housing is no longer subject to the provisions of section 5 of 388.12 the United States Housing Act, or any successor legislation. 388.13 [EFFECTIVE DATE.] This section is effective with respect to 388.14 any cooperation agreement entered into on or after November 1, 388.15 1997. Any owner of low-rent public housing acquired and 388.16 renovated or constructed under a cooperation agreement under 388.17 this section may apply for abatement of the real or personal 388.18 property taxes under Minnesota Statutes, section 375.192, 388.19 notwithstanding the time limitation for filing application under 388.20 section 375.192. This section applies in counties of Anoka, 388.21 Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 388.22 Sec. 39. [AURORA; TAX INCREMENT DISTRICT EXTENSION.] 388.23 Subdivision 1. [DISTRICT EXTENSION.] Notwithstanding the 388.24 provisions of Minnesota Statutes, section 469.176, subdivision 388.25 1c, upon approval of the governing body of the city of Aurora by 388.26 resolution, the housing and redevelopment authority in and for 388.27 the city of Aurora may extend to December 31, 2009, the duration 388.28 of its downtown tax increment financing district originally 388.29 certified in 1978. 388.30 Subd. 2. [SPECIAL RULES.] Increments permitted to be paid 388.31 to and retained by the authority by subdivision 1 may only be 388.32 used to: 388.33 (1) pay or defease bonds or other contractual obligations; 388.34 (2) fund public redevelopment costs within the 388.35 redevelopment project or costs provided for in the tax increment 388.36 financing plan; or 389.1 (3) pay or defease bonds issued to refund the bonds. 389.2 [EFFECTIVE DATE.] This section is effective the day after 389.3 compliance with Minnesota Statutes, sections 469.1782, 389.4 subdivision 2, and 645.021, subdivision 2. 389.5 Sec. 40. [GAYLORD; TIF DISTRICT EXTENSION.] 389.6 Notwithstanding the provisions of Minnesota Statutes, 389.7 section 469.176, subdivision 1c, or any other law, the city of 389.8 Gaylord may, by resolution, extend the duration of a tax 389.9 increment financing district originally certified in 1978. If 389.10 the city extends the district, the district is deemed to 389.11 continue to be in effect, beginning for taxes payable in 2002, 389.12 and notwithstanding the decertification of the district for 389.13 taxes payable in 2001. The city may not extend the duration 389.14 beyond December 31, 2008. Notwithstanding the provisions of 389.15 Minnesota Statutes, section 469.176, subdivision 1c, the city 389.16 may spend increments from the district on project costs other 389.17 than bonds issued before April 1, 1990. 389.18 [EFFECTIVE DATE.] This section is effective upon completion 389.19 with the requirements of Minnesota Statutes, sections 469.1782 389.20 and 645.021. 389.21 Sec. 41. [CITY OF NORTH ST. PAUL; TIF GRANT.] 389.22 Notwithstanding Laws 1997, chapter 231, article 1, sections 389.23 19 and 22, as amended by Laws 1997, First Special Session 389.24 chapter 5, section 36, Laws 1999, chapter 243, article 10, 389.25 sections 16, 17, 27, and 28, and Laws 2000, chapter 490, article 389.26 11, section 36, the commissioner of revenue shall pay to the 389.27 city of North St. Paul the amount of $12,800 as a tax increment 389.28 financing grant provided for under those laws. This amount 389.29 compensates the city for the aggregate amount of the calendar 389.30 year 1999 deficits in the tax increment financing districts 389.31 within the city, as determined under the laws cited in this 389.32 section using the accrual method of accounting. The amount 389.33 authorized to be paid under this section for the calendar year 389.34 1999 tax increment financing deficits may not also be paid under 389.35 any other provision of law. The commissioner shall pay the 389.36 amount authorized under this section to the city by warrant 390.1 issued on or before 60 days after the enactment of this 390.2 section. The warrant must be drawn on the state treasury from 390.3 the appropriations made in Laws 1997, chapter 231, article 1, 390.4 section 19, and Laws 1999, chapter 243, article 10, section 27. 390.5 [EFFECTIVE DATE.] This section is effective the day 390.6 following final enactment without local approval. 390.7 Sec. 42. [CITY OF PARK RAPIDS; EXTENSION OF TIME FOR 390.8 ACTIVITY IN A TAX INCREMENT FINANCING DISTRICT.] 390.9 The requirement in Minnesota Statutes, section 469.1763, 390.10 subdivision 3, that activities must be undertaken within a 390.11 five-year period from the date of certification of a tax 390.12 increment financing district must be considered to be met in the 390.13 case of redevelopment district No. 4 in the city of Park Rapids 390.14 if the activities are undertaken within six years from the date 390.15 of certification of the district. 390.16 [EFFECTIVE DATE.] This section is effective upon approval 390.17 by the governing body of the city of Park Rapids and compliance 390.18 with Minnesota Statutes, section 645.021, subdivision 3. 390.19 Sec. 43. [ROBBINSDALE; TAX INCREMENT FINANCING DISTRICT.] 390.20 Notwithstanding the provisions of Minnesota Statutes, 390.21 section 469.176, subdivision 1c, tax increment may be expended 390.22 until June 30, 2001, for project costs other than bonds 390.23 outstanding on April 1, 1990, for the tax increment financing 390.24 district designated as Project 4 in the city of Robbinsdale. 390.25 [EFFECTIVE DATE.] This section is effective the day 390.26 following final enactment, and after approval by the governing 390.27 body of the city of Robbinsdale and compliance with Minnesota 390.28 Statutes, section 645.021, subdivision 3. 390.29 Sec. 44. [CITY OF LUVERNE; BORDER CITY DEVELOPMENT ZONES.] 390.30 Subdivision 1. [AUTHORIZATION.] The governing body of the 390.31 city of Luverne may designate between one and six areas of the 390.32 city as border city development zones. The total area of the 390.33 zones may not exceed 100 acres. 390.34 Subd. 2. [APPLICATION OF GENERAL LAW.] (a) The provisions 390.35 of Minnesota Statutes, sections 469.1731 to 469.1735, apply to 390.36 the border city development zones designated under this 391.1 section. The governing body of the city may exercise the powers 391.2 granted under Minnesota Statutes, sections 469.1731 to 469.1735, 391.3 including powers that apply outside of the zones. 391.4 (b) The allocation under subdivision 3 for purposes of 391.5 Minnesota Statutes, section 469.1735, subdivision 2, and the 391.6 necessary amount of the allocation is appropriated to the 391.7 commissioner of revenue. 391.8 Subd. 3. [ALLOCATION OF STATE TAX REDUCTIONS.] (a) The 391.9 cumulative total amount of tax reductions for all years of the 391.10 program under Minnesota Statutes, sections 469.1731 to 469.1735, 391.11 is limited to $183,000. 391.12 (b) This allocation may be used for tax reductions provided 391.13 in Minnesota Statutes, section 469.1732 or 469.1734, or for 391.14 reimbursements under Minnesota Statutes, section 469.1735, 391.15 subdivision 3, but only if the governing body of the city of 391.16 Luverne determines that the tax reduction or offset is necessary 391.17 to enable a business to expand within a city or to attract a 391.18 business to the city. 391.19 (c) The commissioner of revenue may waive the limit under 391.20 this subdivision using the same rules and standards provided in 391.21 Minnesota Statutes, section 469.169, subdivision 12, paragraph 391.22 (b). 391.23 [EFFECTIVE DATE.] This section is effective upon compliance 391.24 by the governing body of the city of Luverne with the 391.25 requirements of Minnesota Statutes, section 645.021. 391.26 Sec. 45. [REPEALER.] 391.27 Minnesota Statutes 2000, sections 273.1399, and 469.1782, 391.28 subdivision 1, are repealed. 391.29 [EFFECTIVE DATE.] This section is effective January 1, 2002. 391.30 ARTICLE 13 391.31 STREAMLINED SALES TAX 391.32 Section 1. [295.60] [SPECIAL FUR CLOTHING TAX.] 391.33 Subdivision 1. [IMPOSITION.] If clothing made of fur is 391.34 not subject to the sales tax under chapter 297A, a tax is 391.35 imposed on each furrier equal to 6.5 percent of gross revenues 391.36 from the sale of clothing made from fur made in Minnesota during 392.1 the calendar year. 392.2 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 392.3 the following terms have the meanings given. 392.4 (b) "Commissioner" means the commissioner of revenue. 392.5 (c) "Furrier" means a retailer that sells clothing made of 392.6 fur. 392.7 (d) "Clothing made of fur" means articles of clothing made 392.8 of fur on the hide or pelt, and articles of clothing of which 392.9 such fur is the component material of chief value, but only if 392.10 such value is more than three times the value of the next most 392.11 valuable material. 392.12 Subd. 3. [PAYMENT.] (a) Each furrier shall make estimated 392.13 payments of the taxes for the calendar year in quarterly 392.14 installments to the commissioner by April 15, July 15, October 392.15 15, and January 15 of the following calendar year. 392.16 (b) Estimated tax payments are not required if: 392.17 (1) the tax for the current calendar year is less than 392.18 $500; or 392.19 (2) the tax for the previous calendar year is less than 392.20 $500, if the taxpayer had a tax liability and was doing business 392.21 the entire year. 392.22 (c) Underpayment of estimated installments bear interest at 392.23 the rate specified in section 270.75, from the due date of the 392.24 payment until paid or until the due date of the annual return, 392.25 whichever comes first. An underpayment of an estimated 392.26 installment is the difference between the amount paid and the 392.27 lesser of (1) 90 percent of one-quarter of the tax for the 392.28 calendar year or (2) one-quarter of the total tax for the 392.29 previous calendar year if the taxpayer had a tax liability and 392.30 was doing business the entire year. 392.31 Subd. 4. [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 392.32 with an aggregate tax liability of $120,000 or more during a 392.33 fiscal year ending June 30 must remit all liabilities by means 392.34 of a funds transfer as defined in section 336.4A-104, paragraph 392.35 (a), in the subsequent calendar year. The funds transfer 392.36 payment date, as defined in section 336.4A-401, is on or before 393.1 the date the tax is due. If the date the tax is due is not a 393.2 funds-transfer business day, as defined in section 336.4A-105, 393.3 paragraph (a), clause (4), the payment date is on or before the 393.4 first funds-transfer business day after the date the tax is due. 393.5 Subd. 5. [ANNUAL RETURN.] The taxpayer must file an annual 393.6 return reconciling the estimated payments by March 15 of the 393.7 following calendar year. 393.8 Subd. 6. [FORM OF RETURNS.] The estimated payments and 393.9 annual return must contain the information and be in the form 393.10 prescribed by the commissioner. 393.11 Subd. 7. [APPLICATION OF OTHER CHAPTERS.] Unless 393.12 specifically provided otherwise by this section, the 393.13 enforcement, interest, and penalty provisions under chapter 294, 393.14 appeal provisions in sections 289A.43 and 289A.65, criminal 393.15 penalties in section 289A.63, refunds provisions in section 393.16 289A.50, and collection and rulemaking provisions under chapter 393.17 270, apply to a liability for the taxes imposed under this 393.18 section. 393.19 Subd. 8. [INTEREST ON OVERPAYMENTS.] Interest must be paid 393.20 on an overpayment refunded or credited to the taxpayer from the 393.21 date of payment of the tax until the date the refund is paid or 393.22 credited. For purposes of this subdivision, the date of payment 393.23 is the due date of the return or the date of actual payment of 393.24 the tax, whichever is later. 393.25 Subd. 9. [DEPOSIT OF REVENUES.] The commissioner shall 393.26 deposit all revenues, including penalties and interest, derived 393.27 from the tax imposed by this section in the general fund. 393.28 [EFFECTIVE DATE.] This section is effective for sales made 393.29 after December 31, 2001. 393.30 Sec. 2. Minnesota Statutes 2000, section 297A.61, 393.31 subdivision 3, is amended to read: 393.32 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 393.33 include, but are not limited to, each of the transactions listed 393.34 in this subdivision. 393.35 (b) Sale and purchase include any transfer of title or 393.36 possession, or both, of tangible personal property, whether 394.1 absolutely or conditionally, and the leasing of or the granting 394.2 of a license to use or consume, for a consideration, tangible 394.3 personal property, other than a manufactured home used for 394.4 residential purposes for a continuous period of 30 days or more. 394.5 (c) Sale and purchase include the production, fabrication, 394.6 printing, or processing of tangible personal property for a 394.7 consideration for consumers who furnish either directly or 394.8 indirectly the materials used in the production, fabrication, 394.9 printing, or processing. 394.10 (d) Sale and purchase include thefurnishing,preparing, or394.11servingfor a consideration of foodor drinks. Notwithstanding 394.12 section 297A.67, subdivision 2, taxable foodor drinks394.13includeincludes, butareis not limited to, the following: 394.14 (1) prepared foodor drinkssold by the retailerfor394.15immediate consumption on the retailer's premises. Food and394.16drinks sold within a building or grounds that require an394.17admission charge for entrance are presumed to be sold for394.18consumption on the premises; 394.19(2) food or drinks prepared by the retailer for immediate394.20consumption either on or off the retailer's premises. For394.21purposes of this subdivision, "food or drinks prepared for394.22immediate consumption" means any food product upon which an act394.23of preparation including, but not limited to, cooking, mixing,394.24sandwich making, blending, heating, or pouring has been394.25performed by the retailer so the food product may be immediately394.26consumed by the purchaser;394.27(3) ice cream, ice milk, frozen yogurt products, or frozen394.28novelties sold in single or individual servings including, but394.29not limited to, cones, sundaes, and snow cones;394.30(4)(2) soft drinksand other beverages, including all394.31carbonated and noncarbonated beverages or drinks sold in liquid394.32form, but not including beverages or drinks which contain milk394.33or milk products, beverages or drinks containing 15 or more394.34percent fruit juice, and noncarbonated and noneffervescent394.35bottled water sold in individual containers of one-half gallon394.36or more in size; 395.1(5) gum,(3) candy, and candy products; and 395.2(6) ice;395.3(7)(4) all food soldfromthrough vending machines;. 395.4(8) all food for immediate consumption sold from concession395.5stands and vehicles;395.6(9) party trays;395.7(10) all meals and single servings of packaged snack food395.8sold in restaurants and bars; and395.9(11) bakery products that are:395.10(i) prepared by the retailer for consumption on the395.11retailer's premises;395.12(ii) sold at a place that charges admission;395.13(iii) sold from vending machines; or395.14(iv) sold in single or individual servings from concession395.15stands, vehicles, bars, and restaurants.395.16For purposes of this paragraph, "single or individual395.17servings" does not include products when sold in bulk containers395.18or bulk packaging.395.19For purposes of this paragraph, "premises" means the total395.20space and facilities, including buildings, grounds, and parking395.21lots that are made available or that are available for use by395.22the retailer or customer for the purpose of sale or consumption395.23of prepared food and drinks. The premises of a caterer is the395.24place where the catered food or drinks are served.395.25 (e) A sale and a purchase includes the furnishing for a 395.26 consideration of electricity, gas, water, or steam for use or 395.27 consumption within this state or local exchange telephone 395.28 service, intrastate toll service, and interstate toll service, 395.29 if that service originates from and is charged to a telephone 395.30 located in this state. Telephone service includes (1) paging 395.31 services, and (2) private communication service, as defined in 395.32 United States Code, title 26, section 4252(d), except for 395.33 private communication service purchased by an agent acting on 395.34 behalf of the state lottery. Telephone service does not include 395.35 services purchased with a prepaid telephone calling card. The 395.36 furnishing for a consideration of access to telephone services 396.1 by a hotel to its guests is a sale. The furnishing for a 396.2 consideration of items listed in this paragraph by a municipal 396.3 corporation is a sale. 396.4 (f) A sale and a purchase includes the transfer for a 396.5 consideration of computer software. 396.6 (g) A sale and a purchase includes the furnishing for a 396.7 consideration of taxable services as defined in subdivision 16. 396.8 (h) A sale and a purchase includes the furnishing for a 396.9 consideration of tangible personal property or taxable services 396.10 by the United States or any of its agencies or 396.11 instrumentalities, or the state of Minnesota, its agencies, 396.12 instrumentalities, or political subdivisions. 396.13 [EFFECTIVE DATE.] This section is effective for sales and 396.14 purchases occurring after December 31, 2001. 396.15 Sec. 3. Minnesota Statutes 2000, section 297A.61, 396.16 subdivision 4, is amended to read: 396.17 Subd. 4. [RETAIL SALE.] (a) A "retail sale" meansaany 396.18 sale, lease, or rental for any purpose other than resalein the396.19regular course of business, sublease, or subrent. 396.20 (b) A sale of property used by the owner only by leasing it 396.21 to others or by holding it in an effort to lease it, and put to 396.22 no use by the owner other than resale after the lease or effort 396.23 to lease, is a sale of property for resale. 396.24 (c) A sale of master computer software that is purchased 396.25 and used to make copies for sale or lease is a sale of property 396.26 for resale. 396.27 (d) A sale of building materials, supplies, and equipment 396.28 to owners, contractors, subcontractors, or builders for the 396.29 erection of buildings or the alteration, repair, or improvement 396.30 of real property is a retail sale in whatever quantity sold, 396.31 whether the sale is for purposes of resale in the form of real 396.32 property or otherwise. 396.33 (e) A sale of carpeting, linoleum, or similar floor 396.34 covering to a person who provides for installation of the floor 396.35 covering is a retail sale and not a sale for resale since a sale 396.36 of floor covering which includes installation is a contract for 397.1 the improvement of real property. 397.2 (f) A sale of shrubbery, plants, sod, trees, and similar 397.3 items to a person who provides for installation of the items is 397.4 a retail sale and not a sale for resale since a sale of 397.5 shrubbery, plants, sod, trees, and similar items that includes 397.6 installation is a contract for the improvement of real property. 397.7 (g) A sale of tangible personal property that is awarded as 397.8 prizes is a retail sale and is not considered a sale of property 397.9 for resale. 397.10 (h) A sale of tangible personal property utilized or 397.11 employed in the furnishing or providing of services under 397.12 subdivision 16, paragraph (b), including, but not limited to, 397.13 property given as promotional items, is a retail sale and is not 397.14 considered a sale of property for resale. 397.15 (i) A sale of tangible personal property used in conducting 397.16 lawful gambling under chapter 349 or the state lottery under 397.17 chapter 349A, including, but not limited to, property given as 397.18 promotional items, is a retail sale and is not considered a sale 397.19 of property for resale. 397.20 (j) A sale of machines, equipment, or devices that are used 397.21 to furnish, provide, or dispense goods or services, including, 397.22 but not limited to, coin-operated devices, is a retail sale and 397.23 is not considered a sale of property for resale. 397.24 (k) In the case of a lease, a retail sale occurs when an 397.25 obligation to make a lease payment becomes due under the terms 397.26 of the agreement or the trade practices of the lessor. 397.27 (l) In the case of a conditional sales contract, a retail 397.28 sale occurs upon the transfer of title or possession of the 397.29 tangible personal property. 397.30 [EFFECTIVE DATE.] This section is effective January 1, 2002. 397.31 Sec. 4. Minnesota Statutes 2000, section 297A.61, 397.32 subdivision 7, is amended to read: 397.33 Subd. 7. [SALES PRICE.] (a) "Sales price" meansthe total397.34consideration for a retail sale, valued in money, whether paid397.35in money or by barter or exchange.the measure subject to sales 397.36 tax, and means the total amount of consideration, including 398.1 cash, credit, property, and services, for which personal 398.2 property or services are sold, leased, or rented, valued in 398.3 money, whether received in money or otherwise, without any 398.4 deduction for the following: 398.5 (1) the seller's cost of the property sold; 398.6 (2) the cost of materials used, labor or service cost, 398.7 interest, losses, all costs of transportation to the seller, all 398.8 taxes imposed on the seller, and any other expenses of the 398.9 seller; 398.10 (3) charges by the seller for any services necessary to 398.11 complete the sale, other than delivery and installation charges; 398.12 and 398.13 (4) the value of exempt property given to the purchaser 398.14 when taxable and exempt personal property have been bundled 398.15 together and sold by the seller as a single product or piece of 398.16 merchandise. 398.17(b) Sales price includes:398.18(1) the cost of the property sold, cost of materials used,398.19labor or service cost, interest, or discount allowed after the398.20sale is consummated;398.21(2) the cost of transportation incurred prior to the time398.22of sale;398.23(3) any amount for which credit is given by the seller to398.24the purchaser;398.25(4) charges for services that are part of a sale; or398.26(5) any other expense whatsoever.398.27(c)(b) Sales price does not includethe following: 398.28 (1)an amount allowed as credit for tangible personal398.29property taken in trade for resalediscounts, including cash, 398.30 terms, or coupons that are not reimbursed by a third party and 398.31 that are allowed by the seller and taken by a purchaser on a 398.32 sale; 398.33 (2)charges of up to 15 percent in lieu of tips if the398.34charges are separately statedinterest, financing, and carrying 398.35 charges from credit extended on the sale of personal property or 398.36 services, if the amount is separately stated on the invoice, 399.1 bill of sale, or similar document given to the purchaser; 399.2 (3)interest, financing, or carrying charges if the charges399.3are separately statedany taxes legally imposed directly on the 399.4 consumer that are separately stated on the invoice, bill of 399.5 sale, or similar document given to the purchaser; 399.6 (4) charges for labor or services used in installing or 399.7 applying the property sold if the charges are separately stated; 399.8 and 399.9 (5)transportation charges if the transportation occurs399.10after the retail sale of the propertydelivery charges if the 399.11 charges are separately stated;399.12(6) cash discounts allowed and taken on sales or the amount399.13refunded either in cash or in credit for property returned by399.14purchasers;399.15(7) the rental motor vehicle tax imposed under section399.16297A.64; or399.17(8) the amount of any tax imposed by the United States on399.18communications services under United States Code, title 26,399.19section 4251(a).399.20(d) Notwithstanding paragraph (c), "sales price," for399.21purposes of sales of ready-mixed concrete sold from a399.22ready-mixed concrete truck, includes any transportation,399.23delivery, or other service charges, and no deduction is allowed399.24for those charges, whether or not the charges are separately399.25stated. 399.26 [EFFECTIVE DATE.] This section is effective January 1, 2002. 399.27 Sec. 5. Minnesota Statutes 2000, section 297A.61, 399.28 subdivision 9, is amended to read: 399.29 Subd. 9. [RETAILER AND SELLER.] "Retailer" and "seller" 399.30 meanseveryany personengaged inmakingretailsales, leases, 399.31 or rentals of personal property or services. 399.32 [EFFECTIVE DATE.] This section is effective January 1, 2002. 399.33 Sec. 6. Minnesota Statutes 2000, section 297A.61, is 399.34 amended by adding a subdivision to read: 399.35 Subd. 24. [PURCHASE PRICE.] "Purchase price" means the 399.36 measure subject to the use tax and has the same meaning as 400.1 "sales price." 400.2 [EFFECTIVE DATE.] This section is effective January 1, 2002. 400.3 Sec. 7. Minnesota Statutes 2000, section 297A.61, is 400.4 amended by adding a subdivision to read: 400.5 Subd. 25. [STATE.] Unless specifically provided otherwise, 400.6 "state" means any state of the United States and the District of 400.7 Columbia. 400.8 [EFFECTIVE DATE.] This section is effective January 1, 2002. 400.9 Sec. 8. Minnesota Statutes 2000, section 297A.61, is 400.10 amended by adding a subdivision to read: 400.11 Subd. 26. [DELIVERY CHARGES.] "Delivery charges" means 400.12 charges by the seller for preparation and delivery to a location 400.13 designated by the purchaser of personal property or services 400.14 including, but not limited to, transportation, shipping, 400.15 postage, handling, crating, and packing. 400.16 [EFFECTIVE DATE.] This section is effective January 1, 2002. 400.17 Sec. 9. Minnesota Statutes 2000, section 297A.61, is 400.18 amended by adding a subdivision to read: 400.19 Subd. 27. [PREPARED FOOD.] "Prepared food" means (i) food 400.20 sold in a heated state or heated by the seller; (ii) two or more 400.21 food ingredients mixed or combined by the seller for sale as a 400.22 single item; or (iii) food sold with eating utensils provided by 400.23 the seller, including plates, knives, forks, spoons, glasses, 400.24 cups, napkins, or straws. Prepared food does not include food 400.25 that is sliced, repackaged, or pasteurized by the seller. 400.26 [EFFECTIVE DATE.] This section is effective January 1, 2002. 400.27 Sec. 10. Minnesota Statutes 2000, section 297A.61, is 400.28 amended by adding a subdivision to read: 400.29 Subd. 28. [SOFT DRINKS.] "Soft drinks" means nonalcoholic 400.30 beverages that contain natural or artificial sweeteners. Soft 400.31 drinks do not include beverages that contain milk or milk 400.32 products; soy, rice, or similar milk substitutes; or greater 400.33 than 50 percent vegetable or fruit juice by volume. 400.34 [EFFECTIVE DATE.] This section is effective January 1, 2002. 400.35 Sec. 11. Minnesota Statutes 2000, section 297A.61, is 400.36 amended by adding a subdivision to read: 401.1 Subd. 29. [CANDY.] "Candy" means a preparation of sugar, 401.2 honey, or other natural or artificial sweeteners in combination 401.3 with chocolate, fruits, nuts, or other ingredients or flavorings 401.4 in the form of bars, drops, or pieces. Candy does not include 401.5 any preparation containing flour and must require no 401.6 refrigeration. 401.7 [EFFECTIVE DATE.] This section is effective January 1, 2002. 401.8 Sec. 12. Minnesota Statutes 2000, section 297A.61, is 401.9 amended by adding a subdivision to read: 401.10 Subd. 30. [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 401.11 through vending machines" means food dispensed from a machine or 401.12 other mechanical device that accepts payment. 401.13 [EFFECTIVE DATE.] This section is effective January 1, 2002. 401.14 Sec. 13. [297A.668] [SOURCING OF SALE; SITUS IN THIS 401.15 STATE.] 401.16 Subdivision 1. [SOURCING RULES.] (a) The following 401.17 provisions apply regardless of the characterization of a product 401.18 as tangible personal property, a digital good, or a service; but 401.19 do not apply to telecommunications services, or the sales of 401.20 motor vehicles, watercraft, aircraft, modular homes, 401.21 manufactured homes, or mobile homes. These provisions only 401.22 apply to determine a seller's obligation to pay or collect and 401.23 remit a sales or use tax with respect to the seller's sale of a 401.24 product. These provisions do not affect the obligation of a 401.25 seller as purchaser to remit tax on the use of the product. 401.26 (b) When the product is received by the purchaser at a 401.27 business location of the seller, the sale is sourced to that 401.28 business location. 401.29 (c) When the product is not received by the purchaser at a 401.30 business location of the seller, the sale is sourced to the 401.31 location where receipt by the purchaser or the donee designated 401.32 by the purchaser occurs, including the location indicated by 401.33 instructions for delivery to the purchasers or the purchaser's 401.34 donee, known to the seller. 401.35 (d) When paragraphs (b) and (c) do not apply, the sale is 401.36 sourced to the location indicated by an address for the 402.1 purchaser that is available from the business records of the 402.2 seller that are maintained in the ordinary course of the 402.3 seller's business, when use of this address does not constitute 402.4 bad faith. 402.5 (e) When paragraphs (b), (c), and (d) do not apply, the 402.6 sale is sourced to the location indicated by an address for the 402.7 purchaser obtained during the consummation of the sale, 402.8 including the address of a purchaser's payment instrument if no 402.9 other address is available, when use of this address does not 402.10 constitute bad faith. 402.11 (f) When paragraphs (b), (c), (d), and (e) do not apply, 402.12 including the circumstance where the seller is without 402.13 sufficient information to apply the previous paragraphs, then 402.14 the location is determined by the address from which tangible 402.15 personal property was shipped, from which the digital good was 402.16 first available for transmission by the seller, or from which 402.17 the service was provided. 402.18 Subd. 2. [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 402.19 provisions of subdivision 1, a business purchaser that is not a 402.20 holder of a direct pay permit that knows at the time of its 402.21 purchase of a digital good or service that the digital good or 402.22 service will be concurrently available for use in more than one 402.23 taxing jurisdiction shall deliver to the seller in conjunction 402.24 with its purchase a multiple points of use exemption certificate 402.25 disclosing this fact. 402.26 (b) Upon receipt of the multiple points of use exemption 402.27 certificate, the seller is relieved of the obligation to 402.28 collect, pay, or remit the applicable tax and the purchaser is 402.29 obligated to collect, pay, or remit the applicable tax on a 402.30 direct pay basis. 402.31 (c) A purchaser delivering the multiple points of use 402.32 exemption certificate may use any reasonable, but consistent and 402.33 uniform, method of apportionment that is supported by the 402.34 purchaser's business records as they exist at the time of the 402.35 consummation of the sale. 402.36 (d) The multiple points of use exemption certificate 403.1 remains in effect for all future sales by the seller to the 403.2 purchaser until it is revoked in writing. 403.3 (e) A holder of a direct pay permit is not required to 403.4 deliver a multiple points or use exemption certificate to the 403.5 seller. A direct pay permit holder shall follow the provisions 403.6 of paragraph (c) in apportioning the tax due on a digital good 403.7 or a service that will be concurrently available for use in more 403.8 than one taxing jurisdiction. 403.9 Subd. 3. [DEFINITION OF TERMS.] For purposes of this 403.10 section, the terms "receive" and "receipt" mean taking 403.11 possession of tangible personal property, making first use of 403.12 services, or taking possession of making first use of digital 403.13 goods, whichever occurs first. The terms receive and receipt do 403.14 not include possession by a carrier for hire on behalf of the 403.15 purchaser. 403.16 [EFFECTIVE DATE.] This section is effective for sales and 403.17 purchases occurring after December 31, 2001. 403.18 Sec. 14. Minnesota Statutes 2000, section 297A.67, 403.19 subdivision 2, is amended to read: 403.20 Subd. 2. [FOODPRODUCTSAND FOOD INGREDIENTS.] 403.21 Foodproducts including, but not limited to, cereal and cereal403.22products, butter, cheese, milk and milk products, oleomargarine,403.23meat and meat products, fish and fish products, eggs and egg403.24products, vegetables and vegetable products, fruit and fruit403.25products, spices and salt, sugar and sugar products, coffee and403.26coffee substitutes, tea, and cocoa and cocoa productsand food 403.27 ingredients are exempt. For purposes of this subdivision, 403.28 "food" and "food ingredients" mean substances, whether in 403.29 liquid, concentrated, solid, frozen, dried, or dehydrated form, 403.30 that are sold for ingestion or chewing by humans and are 403.31 consumed for their taste or nutritional value. Food and food 403.32 ingredients do not include candy, soft drinks, food sold through 403.33 vending machines, and prepared foods. Food and food ingredients 403.34 do not include alcoholic beverages, dietary supplements, and 403.35 tobacco. For purposes of this subdivision, "alcoholic 403.36 beverages" means beverages that are suitable for human 404.1 consumption and contain one-half of one percent or more of 404.2 alcohol by volume. For purposes of this subdivision, "tobacco" 404.3 means cigarettes, cigars, chewing or pipe tobacco, or any other 404.4 item that contains tobacco. For purposes of this subdivision, 404.5 "dietary supplements" means any product, other than tobacco, 404.6 intended to supplement the diet that: 404.7 (1) contains one or more of the following dietary 404.8 ingredients: 404.9 (i) a vitamin; 404.10 (ii) a mineral; 404.11 (iii) an herb or other botanical; 404.12 (iv) an amino acid; 404.13 (v) a dietary substance for use by humans to supplement the 404.14 diet by increasing the total dietary intake; and 404.15 (vi) a concentrate, metabolite, constituent, extract, or 404.16 combination of any ingredient described in items (i) to (v); 404.17 (2) is intended for ingestion in tablet, capsule, powder, 404.18 softgel, gelcap, or liquid form, or if not intended for 404.19 ingestion in such form, is not represented as conventional food 404.20 and is not represented for use as a sole item of a meal or of 404.21 the diet; and 404.22 (3) is required to be labeled as a dietary supplement, 404.23 identifiable by the supplement facts box found on the label and 404.24 as required pursuant to Code of Federal Regulations, title 21, 404.25 section 101.36. 404.26 [EFFECTIVE DATE.] This section is effective for sales and 404.27 purchases occurring after December 31, 2001. 404.28 Sec. 15. Minnesota Statutes 2000, section 297A.67, 404.29 subdivision 8, is amended to read: 404.30 Subd. 8. [CLOTHING.] (a) Clothingand wearing apparel,404.31including sewing materials to be directly incorporated into404.32wearing apparel, areis exempt. For purposes of this 404.33 subdivision,clothing and wearing apparel do not include the404.34following:404.35(1) articles designed primarily for use while engaging in a404.36specific sport or recreational activity that are not also worn405.1for general use;405.2(2) articles designed primarily to provide safety or405.3protection against injury while the user is engaged in405.4industrial or general job activities;405.5(3) all articles commonly or commercially known as jewelry405.6including, but not limited to, watches;405.7(4) nonprescription optical glasses of any sort;405.8(5) articles made entirely of fur on the hide or pelt, or405.9partially of such fur if the value of the fur is more than three405.10times the value of the next most valuable component material;405.11(6) perfume, lotions, creams, dyes, or other substances405.12that are applied to the skin or the hair; and405.13(7) luggage, bags, purses, wallets, or cases of any405.14sort."clothing" means all human wearing apparel suitable for 405.15 general use. 405.16 (b) Clothing includes, but is not limited to, aprons, 405.17 household and shop; athletic supporters; baby receiving 405.18 blankets; bathing suits and caps; beach capes and coats; belts 405.19 and suspenders; boots; coats and jackets; costumes; children and 405.20 adult diapers, including disposable; ear muffs; footlets; formal 405.21 wear; garters and garter belts; girdles; gloves and mittens for 405.22 general use; hats and caps; hosiery; insoles for shoes; lab 405.23 coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 405.24 sandals; scarves; shoes and shoe laces; slippers; sneakers; 405.25 socks and stockings; steel-toed boots; underwear; uniforms, 405.26 athletic and nonathletic; and wedding apparel. 405.27 (c) Clothing does not include the following: 405.28 (1) belt buckles sold separately; 405.29 (2) costume masks sold separately; 405.30 (3) patches and emblems sold separately; 405.31 (4) sewing equipment and supplies, including but not 405.32 limited to, knitting needles, patterns, pins, scissors, sewing 405.33 machines, sewing needles, tape measures, and thimbles; 405.34 (5) sewing materials that become part of clothing, 405.35 including but not limited to, buttons, fabric, lace, thread, 405.36 yarn, and zippers; 406.1 (6) clothing accessories or equipment; 406.2 (7) sports or recreational equipment; and 406.3 (8) protective equipment. 406.4 Clothing also does not include apparel made from fur if a 406.5 uniform definition of "apparel made from fur" is developed by 406.6 the member states of the Streamlined Sales and Use Tax Agreement. 406.7 For purposes of this subdivision, "clothing accessories or 406.8 equipment" means incidental items worn on the person or in 406.9 conjunction with clothing. Clothing accessories include, but 406.10 are not limited to, briefcases; cosmetics; hair notions, 406.11 including barrettes, hair bows, and hairnets; handbags; 406.12 handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 406.13 wallets; watches; and wigs and hairpieces. "Sports or 406.14 recreational equipment" means items designed for human use and 406.15 worn in conjunction with an athletic or recreational activity 406.16 that are not suitable for general use. Sports and recreational 406.17 equipment includes, but is not limited to, ballet and tap shoes; 406.18 cleated or spiked athletic shoes; baseball, bowling, boxing, 406.19 hockey, and golf gloves; goggles; hand and elbow guards; life 406.20 preservers and vests; mouth guards; roller and ice skates; shin 406.21 guards; shoulder pads; ski boots; waders; and wetsuits and 406.22 fins. "Protective equipment" means items for human wear and 406.23 designed as protection of the wearer against injury or disease 406.24 or as protection against damage or injury of other persons or 406.25 property but not suitable for general use. Protective equipment 406.26 includes, but is not limited to, breathing masks; clean room 406.27 apparel and equipment; ear and hearing protectors; face shields; 406.28 finger guards; hard hats; helmets; paint or dust respirators; 406.29 protective gloves; safety glasses and goggles; safety belts; 406.30 tool belts; and welders gloves and masks. 406.31 [EFFECTIVE DATE.] This section is effective for sales and 406.32 purchases occurring after December 31, 2001. 406.33 Sec. 16. Minnesota Statutes 2000, section 297A.67, is 406.34 amended by adding a subdivision to read: 406.35 Subd. 26. [TRADE ALLOWANCE.] The amount allowed as a 406.36 credit against the sales price for tangible personal property 407.1 taken in trade for resale is exempt. 407.2 [EFFECTIVE DATE.] This section is effective for sales and 407.3 purchases occurring after December 31, 2001. 407.4 Sec. 17. Minnesota Statutes 2000, section 297A.67, is 407.5 amended by adding a subdivision to read: 407.6 Subd. 27. [SEWING MATERIALS.] Sewing materials are exempt. 407.7 For purposes of this subdivision "sewing materials" mean fabric, 407.8 thread, zippers, interfacing, buttons, trim, and other items 407.9 that are usually directly incorporated into the construction of 407.10 clothing, regardless of whether it is actually used for making 407.11 clothing. It does not include batting, foam, or fabric 407.12 specifically manufactured for arts and craft projects, or other 407.13 materials for craft projects. 407.14 [EFFECTIVE DATE.] This section is effective for sales and 407.15 purchases made after December 31, 2001. 407.16 Sec. 18. Minnesota Statutes 2000, section 297A.72, 407.17 subdivision 1, is amended to read: 407.18 Subdivision 1. [DUTY OF RETAILER.]AnA fully completed 407.19 exemption certificate conclusively relieves the retailer from 407.20 collecting and remitting the taxonlyif takenin good faith407.21 from the purchaser at the time of sale. 407.22 [EFFECTIVE DATE.] This section is effective for sales and 407.23 purchases occurring after December 31, 2001. 407.24 Sec. 19. Minnesota Statutes 2000, section 297A.99, 407.25 subdivision 9, is amended to read: 407.26 Subd. 9. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 407.27 (a) The commissioner of revenue shall collect the taxes subject 407.28 to this section. The commissioner may collect the tax with the 407.29 state sales and use tax. All taxes under this section are 407.30 subject to the same penalties, interest, and enforcement 407.31 provisions as apply to the state sales and use tax. 407.32 (b) A request for a refund of state sales tax paid in 407.33 excess of the amount of tax legally due includes a request for a 407.34 refund of the political subdivision taxes paid on the goods or 407.35 services. The commissioner shall refund to the taxpayer the 407.36 full amount of the political subdivision taxes paid on exempt 408.1 sales or use. 408.2(c) A political subdivision that is collecting and408.3administering its own sales and use tax before January 1, 1998,408.4may elect to be exempt from this subdivision and subdivision 11.408.5 [EFFECTIVE DATE.] This section is effective January 1, 2002. 408.6 Sec. 20. Minnesota Statutes 2000, section 297A.99, 408.7 subdivision 11, is amended to read: 408.8 Subd. 11. [REVENUES; COST OF COLLECTION.] The commissioner 408.9 shall remit the proceeds of the tax, less refunds and a 408.10 proportionate share of the cost of collection, at least 408.11 quarterly, to the political subdivision. The commissioner shall 408.12 deduct from the proceeds remitted an amount that equals 408.13 (1) the direct and indirect costs of the department to 408.14 administer, audit, and collect the political subdivision's tax, 408.15 plus 408.16 (2) the political subdivision's proportionate share of the 408.17 indirect cost of administering all taxes under this section, 408.18 plus 408.19 (3) the cost of constructing and maintaining a zip code or 408.20 geo-code data base necessary for local sales tax collections 408.21 under the Streamlined Sales and Use Tax Agreement in section 408.22 297A.995. 408.23 The initial cost of constructing a data base under clause 408.24 (3) shall be distributed among the cities with a local sales tax 408.25 based on each city's population. The commissioner shall develop 408.26 a method for distributing the cost of maintaining the data base 408.27 among the cities with a local sales tax based on the number of 408.28 boundary changes for each city. 408.29 [EFFECTIVE DATE.] This section is effective for payments to 408.30 the counties after June 30, 2001, for costs incurred after June 408.31 30, 2001. 408.32 Sec. 21. [297A.995] [UNIFORM SALES AND USE TAX 408.33 ADMINISTRATION ACT.] 408.34 Subdivision 1. [TITLE.] This section may be cited as the 408.35 Uniform Sales and Use Tax Administration Act. 408.36 Subd. 2. [DEFINITIONS.] As used in this section: 409.1 (a) "Agreement" means the Streamlined Sales and Use Tax 409.2 Agreement. 409.3 (b) "Certified automated system" means software certified 409.4 jointly by the states that are signatories to the agreement to 409.5 calculate the tax imposed by each jurisdiction on a transaction, 409.6 determine the amount of tax to remit to the appropriate state, 409.7 and maintain a record of the transaction. 409.8 (c) "Certified service provider" means an agent certified 409.9 jointly by the states that are signatories to the agreement to 409.10 perform all of the seller's sales tax functions. 409.11 Subd. 3. [LEGISLATIVE FINDING.] The legislature finds that 409.12 this state should enter into an agreement with one or more 409.13 states to simplify and modernize sales and use tax 409.14 administration in order to substantially reduce the burden of 409.15 tax compliance for all sellers and for all types of commerce. 409.16 Subd. 4. [AUTHORITY TO ENTER AGREEMENT.] The commissioner 409.17 of revenue is authorized and directed to enter into the 409.18 agreement with one or more states to simplify and modernize 409.19 sales and use tax administration in order to substantially 409.20 reduce the burden of tax compliance for all sellers and for all 409.21 types of commerce. In furtherance of the agreement, the 409.22 commissioner is authorized to act jointly with other states that 409.23 are members of the agreement to establish standards for 409.24 certification of a certified service provider and certified 409.25 automated system and establish performance standards for 409.26 multistate sellers. 409.27 The commissioner is further authorized to take other 409.28 actions reasonably required to implement the provisions set 409.29 forth in this article. Other actions authorized by this section 409.30 include, but are not limited to, the adoption of rules and 409.31 regulations and the joint procurement, with other member states, 409.32 of goods and services in furtherance of the cooperative 409.33 agreement. 409.34 The commissioner or the commissioner's designee is 409.35 authorized to represent this state before the other states that 409.36 are signatories to the agreement. 410.1 Subd. 5. [RELATIONSHIP TO STATE LAW.] No provision of the 410.2 agreement authorized by this bill in whole or part invalidates 410.3 or amends any provision of the law of this state. Adoption of 410.4 the agreement by this state does not amend or modify any law of 410.5 this state. Implementation of any condition of the agreement in 410.6 this state, whether adopted before, at, or after membership of 410.7 this state in the agreement, must be by the action of this state. 410.8 Subd. 6. [AGREEMENT REQUIREMENTS.] The commissioner of 410.9 revenue shall not enter into the agreement unless the agreement 410.10 requires each state to abide by the following requirements: 410.11 (a) [UNIFORM STATE RATE.] The agreement must set 410.12 restrictions to achieve more uniform state rates through the 410.13 following: 410.14 (1) limiting the number of state rates; 410.15 (2) eliminating maximums on the amount of state tax that is 410.16 due on a transaction; and 410.17 (3) eliminating thresholds on the application of state tax. 410.18 (b) [UNIFORM STANDARDS.] The agreement must establish 410.19 uniform standards for the following: 410.20 (1) the sourcing of transactions to taxing jurisdictions; 410.21 (2) the administration of exempt sales; 410.22 (3) the allowances a seller can take for bad debts; and 410.23 (4) sales and use tax returns and remittances. 410.24 (c) [UNIFORM DEFINITIONS.] The agreement must require 410.25 states to develop and adopt uniform definitions of sales and use 410.26 tax terms. The definitions must enable a state to preserve its 410.27 ability to make policy choices not inconsistent with the uniform 410.28 definitions. 410.29 (d) [CENTRAL REGISTRATION.] The agreement must provide a 410.30 central, electronic registration system that allows a seller to 410.31 register to collect and remit sales and use taxes for all 410.32 signatory states. 410.33 (e) [NO NEXUS ATTRIBUTION.] The agreement must provide that 410.34 registration with the central registration system and the 410.35 collection of sales and use taxes in the signatory states will 410.36 not be used as a factor in determining whether the seller has 411.1 nexus with a state for any tax. 411.2 (f) [LOCAL SALES AND USE TAXES.] The agreement must provide 411.3 for reduction of the burdens of complying with local sales and 411.4 use taxes through the following: 411.5 (1) restricting and eliminating variances between the state 411.6 and local tax bases; 411.7 (2) requiring states to administer any sales and use taxes 411.8 levied by local jurisdictions within the state so that sellers 411.9 collecting and remitting these taxes will not have to register 411.10 or file returns with, remit funds to, or be subject to 411.11 independent audits from local taxing jurisdictions; 411.12 (3) restricting the frequency of changes in the local sales 411.13 and use tax rates and setting effective dates for the 411.14 application of local jurisdictional boundary changes to local 411.15 sales and use taxes; and 411.16 (4) providing notice of changes in local sales and use tax 411.17 rates and of changes in the boundaries of local taxing 411.18 jurisdictions. 411.19 (g) [MONETARY ALLOWANCES.] The agreement must outline any 411.20 monetary allowances that are to be provided by the states to 411.21 sellers or certified service providers. 411.22 (h) [STATE COMPLIANCE.] The agreement must require each 411.23 state to certify compliance with the terms of the agreement 411.24 prior to joining and to maintain compliance, under the laws of 411.25 the member state, with all provisions of the agreement while a 411.26 member. 411.27 (i) [CONSUMER PRIVACY.] The agreement must require each 411.28 state to adopt a uniform policy for certified service providers 411.29 that protects the privacy of consumers and maintains the 411.30 confidentiality of tax information. 411.31 (j) [ADVISORY COUNCILS.] The agreement must provide for the 411.32 appointment of an advisory council of private sector 411.33 representatives and an advisory council of nonmember state 411.34 representatives to consult with in the administration of the 411.35 agreement. 411.36 Subd. 7. [COOPERATING SOVEREIGNS.] The agreement 412.1 authorized by this bill is an accord among individual 412.2 cooperating sovereigns in furtherance of their governmental 412.3 functions. The agreement provides a mechanism among the member 412.4 states to establish and maintain a cooperative, simplified 412.5 system for the application and administration of sales and use 412.6 taxes under the duly adopted law of each member state. 412.7 Subd. 8. [LIMITED BINDING AND BENEFICIAL EFFECT.] (a) The 412.8 agreement authorized by this bill binds and inures only to the 412.9 benefit of this state and the other member states. No person, 412.10 other than a member state, is an intended beneficiary of the 412.11 agreement. Any benefit to a person other than a state is 412.12 established by the law of this state and the other member states 412.13 and not by the terms of the agreement. 412.14 (b) Consistent with paragraph (a), no person shall have any 412.15 cause of action or defense under the agreement or by virtue of 412.16 this state's approval of the agreement. No person may 412.17 challenge, in any action brought under any provision of law, any 412.18 action or inaction by any department, agency, or other 412.19 instrumentality of this state, or any political subdivision of 412.20 this state, on the ground that the action or inaction is 412.21 inconsistent with the agreement. 412.22 (c) No law of this state, or its application, may be 412.23 declared invalid as to any person or circumstance on the ground 412.24 that the provision or application is inconsistent with the 412.25 agreement. 412.26 Subd. 9. [SELLER AND THIRD-PARTY LIABILITY.] (a) A 412.27 certified service provider is the agent of a seller, with whom 412.28 the certified service provider has contracted, for the 412.29 collection and remittance of sales and use taxes. As the 412.30 seller's agent, the certified service provider is liable for 412.31 sales and use tax due each member state on all sales 412.32 transactions it processes for the seller except as set out in 412.33 this section. 412.34 A seller that contracts with a certified service provider 412.35 is not liable to the state for sales or use tax due on 412.36 transactions processed by the certified service provider unless 413.1 the seller misrepresented the type of items it sells or 413.2 committed fraud. In the absence of probable cause to believe 413.3 that the seller has committed fraud or made a material 413.4 misrepresentation, the seller is not subject to audit on the 413.5 transactions processed by the certified service provider. A 413.6 seller is subject to audit for transactions not processed by the 413.7 certified service provider. The member states acting jointly 413.8 may perform a system check of the seller and review the seller's 413.9 procedures to determine if the certified service provider's 413.10 system is functioning properly and the extent to which the 413.11 seller's transactions are being processed by the certified 413.12 service provider. 413.13 (b) A person that provides a certified automated system is 413.14 responsible for the proper functioning of that system and is 413.15 liable to the state for underpayments of tax attributable to 413.16 errors in the functioning of the certified automated system. A 413.17 seller that uses a certified automated system remains 413.18 responsible and is liable to the state for reporting and 413.19 remitting tax. 413.20 (c) A seller that has a proprietary system for determining 413.21 the amount of tax due on transactions and has signed an 413.22 agreement establishing a performance standard for that system is 413.23 liable for the failure of the system to meet the performance 413.24 standard. 413.25 [EFFECTIVE DATE.] This section is effective the day 413.26 following final enactment. 413.27 Sec. 22. [PLAN FOR REPLACEMENT OF REVENUES RAISED BY 413.28 CURRENT TAXES ON ALCOHOL.] 413.29 The commissioner of revenue, in consultation with 413.30 interested parties from the alcohol beverage industry, shall 413.31 prepare a plan to replace the current higher sales tax on liquor 413.32 and beer under Minnesota Statutes, section 297A.62, subdivision 413.33 2, and the liquor tax under Minnesota Statutes, chapter 297G, 413.34 with a single tax on liquor. The commissioner shall report the 413.35 plan to the legislature by January 1, 2003. The plan should 413.36 include recommendations for tax rates, tax base, and tax 414.1 administration, and should be structured so that the revenue 414.2 raised is equivalent to the revenue lost from the repeal of the 414.3 current taxes. The plan should also, to the extent practical, 414.4 mirror the current incidence of the tax as it relates to 414.5 different types of liquor, and whether the liquor is consumed 414.6 on-site or off-site. 414.7 [EFFECTIVE DATE.] This section is effective the day after 414.8 final enactment. 414.9 Sec. 23. [PLAN FOR REPLACEMENT OF REVENUES RAISED BY TAXES 414.10 ON SHORT-TERM MOTOR VEHICLE RENTAL.] 414.11 The commissioner of revenue, in consultation with 414.12 interested parties from the industry, shall prepare a plan to 414.13 replace the current sales tax and fees on short-term motor 414.14 vehicle rentals under Minnesota Statutes, section 297A.64, with 414.15 a single tax or fee on motor vehicle rentals. The commissioner 414.16 shall report the plan to the legislature by January 1, 2003. 414.17 The plan should include recommendations for tax rates, tax base, 414.18 and tax administration, and should be structured so that the 414.19 state revenue raised is equivalent to the state revenue lost 414.20 from the repeal of the current taxes. 414.21 [EFFECTIVE DATE.] This section is effective the day after 414.22 final enactment. 414.23 Sec. 24. [DIRECTIONS TO COMMISSIONER OF REVENUE.] 414.24 The commissioner of revenue shall request that the member 414.25 states of the Streamlined Sales and Use Tax Agreement adopt at 414.26 their earliest convenience a uniform definition of clothing made 414.27 from fur. 414.28 [EFFECTIVE DATE.] This section is effective the day after 414.29 final enactment. 414.30 Sec. 25. [REPEALER.] 414.31 Minnesota Statutes 2000, sections 297A.62, subdivision 2 414.32 and 297A.64, are repealed. 414.33 [EFFECTIVE DATE.] This section is effective for sales and 414.34 purchases made after December 31, 2005. 414.35 ARTICLE 14 414.36 SALES TAX RECODIFICATION TECHNICAL 415.1 Section 1. Minnesota Statutes 2000, section 289A.31, 415.2 subdivision 7, is amended to read: 415.3 Subd. 7. [SALES AND USE TAX.] (a) The sales and use tax 415.4 required to be collected by the retailer under chapter 297A 415.5 constitutes a debt owed by the retailer to Minnesota, and the 415.6 sums collected must be held as a special fund in trust for the 415.7 state of Minnesota. 415.8 A retailer who does not maintain a place of business within 415.9 this state as defined by section 297A.21, subdivision 1, shall 415.10 not be indebted to Minnesota for amounts of tax that it was 415.11 required to collect but did not collect unless the retailer knew 415.12 or had been advised by the commissioner of its obligation to 415.13 collect the tax. 415.14 (b) The use tax required to be paid by a purchaser is a 415.15 debt owed by the purchaser to Minnesota. 415.16 (c) The tax imposed by chapter 297A, and interest and 415.17 penalties, is a personal debt of the individual required to file 415.18 a return from the time the liability arises, irrespective of 415.19 when the time for payment of that liability occurs. The debt 415.20 is, in the case of the executor or administrator of the estate 415.21 of a decedent and in the case of a fiduciary, that of the 415.22 individual in an official or fiduciary capacity unless the 415.23 individual has voluntarily distributed the assets held in that 415.24 capacity without reserving sufficient assets to pay the tax, 415.25 interest, and penalties, in which case the individual is 415.26 personally liable for the deficiency. 415.27 (d) Liability for payment of sales and use taxes includes 415.28 any responsible person or entity described in the personal 415.29 liability provisions of section 270.101. 415.30 (e) Any amounts collected, even if erroneously or illegally 415.31 collected, from a purchaser under a representation that they are 415.32 taxes imposed under chapter 297A are state funds from the time 415.33 of collection and must be reported on a return filed with the 415.34 commissioner.The amounts collected are not subject to refund415.35unless the seller submits written evidence to the commissioner415.36that the tax and any interest earned on the tax has been or will416.1be refunded or credited to the purchaser by the seller.416.2 (f) The tax imposed under chapter 297A on sales of tickets 416.3 to the premises of or events sponsored by the state agricultural 416.4 society and conducted on the state fairgrounds during the period 416.5 of the annual state fair may be retained by the state 416.6 agricultural society if the funds are used and matched as 416.7 required under section 37.13, subdivision 2. 416.8 Sec. 2. Minnesota Statutes 2000, section 289A.50, 416.9 subdivision 2, is amended to read: 416.10 Subd. 2. [REFUND OF SALES TAX TO VENDORS; LIMITATION.] If 416.11 a vendor has collected from a purchaser and remitted to the 416.12 state a tax on a transaction that is not subject to the tax 416.13 imposed by chapter 297A, the tax is refundable to the vendor 416.14 only if and to the extent thatitthe tax and any interest 416.15 earned on the tax is credited to amounts due to the vendor by 416.16 the purchaser or returned to the purchaser by the vendor. In 416.17 addition to the requirements of subdivision 1, a claim for 416.18 refund under this subdivision must state in writing that the tax 416.19 and interest earned on the tax has been or will be refunded or 416.20 credited to the purchaser by the vendor. 416.21 Sec. 3. Minnesota Statutes 2000, section 297A.61, 416.22 subdivision 2, is amended to read: 416.23 Subd. 2. [PERSON.] (a) "Person" includes any individual,416.24and anyor grouporand any combination of individuals, 416.25 groups, or individuals and groups acting as a unit, and the416.26plural as well as the singular number. 416.27 (b) Person includes a firm, partnership, joint venture, 416.28 limited liability company, association, cooperative, social 416.29 club, fraternal organization, municipal or private corporation 416.30 whether or not organized for profit,estates, trusts, business416.31trustsestate, trust, business trust, receiver, trustee, 416.32 syndicate, the United States, and a state and its political 416.33 subdivisions. 416.34 (c) Person includes, but is not limited to, directors and 416.35 officers of corporations, governors and managers of a limited 416.36 liability company, or members of partnerships who, either 417.1 individually or jointly with others, have the control, 417.2 supervision, or responsibility of filing returns and making 417.3 payment of the amount of tax imposed by this chapter. 417.4 (d) Personalsoincludes any agent or consignee of any 417.5 individual or organizationenumeratedlisted in this subdivision. 417.6 Sec. 4. Minnesota Statutes 2000, section 297A.61, 417.7 subdivision 3, is amended to read: 417.8 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 417.9 include, but are not limited to, each of the transactions listed 417.10 in this subdivision. 417.11 (b) Sale and purchase include: 417.12 (1) any transfer of title or possession, or both, of 417.13 tangible personal property, whether absolutely or conditionally, 417.14 for a consideration in money or by exchange or barter; and 417.15 (2) the leasing of or the granting of a license to use or 417.16 consume, for a consideration in money or by exchange or barter, 417.17 tangible personal property, other than a manufactured home used 417.18 for residential purposes for a continuous period of 30 days or 417.19 more. 417.20 (c) Sale and purchase include the production, fabrication, 417.21 printing, or processing of tangible personal property for a 417.22 consideration for consumers who furnish either directly or 417.23 indirectly the materials used in the production, fabrication, 417.24 printing, or processing. 417.25 (d) Sale and purchase include the furnishing, preparing, or 417.26 serving for a consideration of food or drinks. Notwithstanding 417.27 section 297A.67, subdivision 2, taxable food or drinks include, 417.28 but are not limited to, the following: 417.29 (1) food or drinks sold by the retailer for immediate 417.30 consumption on the retailer's premises. Food and drinks sold 417.31 within a building or grounds that require an admission charge 417.32 for entrance are presumed to be sold for consumption on the 417.33 premises; 417.34 (2) food or drinks prepared by the retailer for immediate 417.35 consumption either on or off the retailer's premises. For 417.36 purposes of this subdivision, "food or drinks prepared for 418.1 immediate consumption" means any food product upon which an act 418.2 of preparation including, but not limited to, cooking, mixing, 418.3 sandwich making, blending, heating, or pouring has been 418.4 performed by the retailer so the food product may be immediately 418.5 consumed by the purchaser; 418.6 (3) ice cream, ice milk, frozen yogurt products, or frozen 418.7 novelties sold in single or individual servings including, but 418.8 not limited to, cones, sundaes, and snow cones; 418.9 (4) soft drinks and other beverages, including all 418.10 carbonated and noncarbonated beverages or drinks sold in liquid 418.11 form, but not including beverages or drinks which contain milk 418.12 or milk products, beverages or drinks containing 15 or more 418.13 percent fruit juice, and noncarbonated and noneffervescent 418.14 bottled water sold in individual containers of one-half gallon 418.15 or more in size; 418.16 (5) gum, candy, and candy products; 418.17 (6) ice; 418.18 (7) all food sold from vending machines; 418.19 (8) all food for immediate consumption sold from concession 418.20 stands and vehicles; 418.21 (9) party trays; 418.22 (10) all meals and single servings of packaged snack food 418.23 sold in restaurants and bars; and 418.24 (11) bakery products that are: 418.25 (i) prepared by the retailer for consumption on the 418.26 retailer's premises; 418.27 (ii) sold at a place that charges admission; 418.28 (iii) sold from vending machines; or 418.29 (iv) sold in single or individual servings from concession 418.30 stands, vehicles, bars, and restaurants. 418.31 For purposes of this paragraph, "single or individual 418.32 servings" does not include products when sold in bulk containers 418.33 or bulk packaging. 418.34 For purposes of this paragraph, "premises" means the total 418.35 space and facilities, including buildings, grounds, and parking 418.36 lots that are made available or that are available for use by 419.1 the retailer or customer for the purpose of sale or consumption 419.2 of prepared food and drinks. The premises of a caterer is the 419.3 place where the catered food or drinks are served. 419.4 (e) A sale and a purchase includes the furnishing for a 419.5 consideration of electricity, gas, water, or steam for use or 419.6 consumption within this state or local exchange telephone 419.7 service, intrastate toll service, and interstate toll service, 419.8 if that service originates from and is charged to a telephone 419.9 located in this state. Telephone service includes (1) paging 419.10 services, and (2) private communication service, as defined in 419.11 United States Code, title 26, section 4252(d), except for 419.12 private communication service purchased by an agent acting on 419.13 behalf of the state lottery. Telephone service does not include 419.14 services purchased with a prepaid telephone calling card. The 419.15 furnishing for a consideration of access to telephone services 419.16 by a hotel to its guests is a sale. The furnishing for a 419.17 consideration of items listed in this paragraph by a municipal 419.18 corporation is a sale. 419.19 (f) A sale and a purchase includes the transfer for a 419.20 consideration of computer software. 419.21 (g) A sale and a purchase includes the furnishing for a 419.22 consideration oftaxable services as defined in subdivision419.2316.the following services: 419.24 (1) the privilege of admission to places of amusement, 419.25 recreational areas, or athletic events, and the making available 419.26 of amusement devices, tanning facilities, reducing salons, steam 419.27 baths, turkish baths, health clubs, and spas or athletic 419.28 facilities; 419.29 (2) lodging and related services by a hotel, rooming house, 419.30 resort, campground, motel, or trailer camp and the granting of 419.31 any similar license to use real property other than the renting 419.32 or leasing of it for a continuous period of 30 days or more; 419.33 (3) cable television services or similar television 419.34 services, including, but not limited to, charges for basic, 419.35 premium, pay-per-view, and any other similar service; 419.36 (4) parking services, whether on a contractual, hourly, or 420.1 other periodic basis, except for parking at a meter; 420.2 (5) the granting of membership in a club, association, or 420.3 other organization if: 420.4 (i) the club, association, or other organization makes 420.5 available for the use of its members sports and athletic 420.6 facilities, without regard to whether a separate charge is 420.7 assessed for use of the facilities; and 420.8 (ii) use of the sports and athletic facility is not made 420.9 available to the general public on the same basis as it is made 420.10 available to members. 420.11 Granting of membership means both one-time initiation fees and 420.12 periodic membership dues. Sports and athletic facilities 420.13 include golf courses; tennis, racquetball, handball, and squash 420.14 courts; basketball and volleyball facilities; running tracks; 420.15 exercise equipment; swimming pools; and other similar athletic 420.16 or sports facilities; and 420.17 (6) services as provided in this clause: 420.18 (i) laundry and dry cleaning services including cleaning, 420.19 pressing, repairing, altering, and storing clothes, linen 420.20 services and supply, cleaning and blocking hats, and carpet, 420.21 drapery, upholstery, and industrial cleaning. Laundry and dry 420.22 cleaning services do not include services provided by coin 420.23 operated facilities operated by the customer; 420.24 (ii) motor vehicle washing, waxing, and cleaning services, 420.25 including services provided by coin operated facilities operated 420.26 by the customer, and rustproofing, undercoating, and towing of 420.27 motor vehicles; 420.28 (iii) building and residential cleaning, maintenance, and 420.29 disinfecting and exterminating services; 420.30 (iv) detective, security, burglar, fire alarm, and armored 420.31 car services; but not including services performed within the 420.32 jurisdiction they serve by off-duty licensed peace officers as 420.33 defined in section 626.84, subdivision 1, or services provided 420.34 by a nonprofit organization for monitoring and electronic 420.35 surveillance of persons placed on in-home detention pursuant to 420.36 court order or under the direction of the Minnesota department 421.1 of corrections; 421.2 (v) pet grooming services; 421.3 (vi) lawn care, fertilizing, mowing, spraying and sprigging 421.4 services; garden planting and maintenance; tree, bush, and shrub 421.5 pruning, bracing, spraying, and surgery; indoor plant care; 421.6 tree, bush, shrub, and stump removal; and tree trimming for 421.7 public utility lines. Services performed under a construction 421.8 contract for the installation of shrubbery, plants, sod, trees, 421.9 bushes, and similar items are not taxable; 421.10 (vii) massages, except when provided by a licensed health 421.11 care facility or professional or upon written referral from a 421.12 licensed health care facility or professional for treatment of 421.13 illness, injury, or disease; and 421.14 (viii) the furnishing of lodging, board, and care services 421.15 for animals in kennels and other similar arrangements, but 421.16 excluding veterinary and horse boarding services. 421.17 The services listed in this clause (6) are taxable under 421.18 section 297A.62 if the service is performed wholly within 421.19 Minnesota or if the service is performed partly within and 421.20 partly outside Minnesota and the greater proportion of the 421.21 service is performed in Minnesota, based on the cost of 421.22 performance. In applying the provisions of this chapter, the 421.23 terms "tangible personal property" and "sales at retail" include 421.24 taxable services and the provision of taxable services, unless 421.25 specifically provided otherwise. Services performed by an 421.26 employee for an employer are not taxable. Services performed by 421.27 a partnership or association for another partnership or 421.28 association are not taxable if one of the entities owns or 421.29 controls more than 80 percent of the voting power of the equity 421.30 interest in the other entity. Services performed between 421.31 members of an affiliated group of corporations are not taxable. 421.32 For purposes of this section, "affiliated group of corporations" 421.33 includes those entities that would be classified as members of 421.34 an affiliated group under United States Code, title 26, section 421.35 1504, and that are eligible to file a consolidated tax return 421.36 for federal income tax purposes. 422.1 (h) A sale and a purchase includes the furnishing for a 422.2 consideration of tangible personal property or taxable services 422.3 by the United States or any of its agencies or 422.4 instrumentalities, or the state of Minnesota, its agencies, 422.5 instrumentalities, or political subdivisions. 422.6 Sec. 5. Minnesota Statutes 2000, section 297A.61, 422.7 subdivision 4, is amended to read: 422.8 Subd. 4. [RETAIL SALE.] (a) A "retail sale" means a sale 422.9 for any purpose other than resale in the regular course of 422.10 business. 422.11 (b) A sale of property used by the owner only by leasing it 422.12 to others or by holding it in an effort to lease it, and put to 422.13 no use by the owner other than resale after the lease or effort 422.14 to lease, is a sale of property for resale. 422.15 (c) A sale of master computer software that is purchased 422.16 and used to make copies for sale or lease is a sale of property 422.17 for resale. 422.18 (d) A sale of building materials, supplies, and equipment 422.19 to owners, contractors, subcontractors, or builders for the 422.20 erection of buildings or the alteration, repair, or improvement 422.21 of real property is a retail sale in whatever quantity sold, 422.22 whether the sale is for purposes of resale in the form of real 422.23 property or otherwise. 422.24 (e) A sale of carpeting, linoleum, or similar floor 422.25 covering to a person who provides for installation of the floor 422.26 covering is a retail sale and not a sale for resale since a sale 422.27 of floor covering which includes installation is a contract for 422.28 the improvement of real property. 422.29 (f) A sale of shrubbery, plants, sod, trees, and similar 422.30 items to a person who provides for installation of the items is 422.31 a retail sale and not a sale for resale since a sale of 422.32 shrubbery, plants, sod, trees, and similar items that includes 422.33 installation is a contract for the improvement of real property. 422.34 (g) A sale of tangible personal property that is awarded as 422.35 prizes is a retail sale and is not considered a sale of property 422.36 for resale. 423.1 (h) A sale of tangible personal property utilized or 423.2 employed in the furnishing or providing of services under 423.3 subdivision163, paragraph(b)(g), clause (1), including, but 423.4 not limited to, property given as promotional items, is a retail 423.5 sale and is not considered a sale of property for resale. 423.6 (i) A sale of tangible personal property used in conducting 423.7 lawful gambling under chapter 349 or the state lottery under 423.8 chapter 349A, including, but not limited to, property given as 423.9 promotional items, is a retail sale and is not considered a sale 423.10 of property for resale. 423.11 (j) A sale of machines, equipment, or devices that are used 423.12 to furnish, provide, or dispense goods or services, including, 423.13 but not limited to, coin-operated devices, is a retail sale and 423.14 is not considered a sale of property for resale. 423.15 (k) In the case of a lease, a retail sale occurs when an 423.16 obligation to make a lease payment becomes due under the terms 423.17 of the agreement or the trade practices of the lessor. 423.18 (l) In the case of a conditional sales contract, a retail 423.19 sale occurs upon the transfer of title or possession of the 423.20 tangible personal property. 423.21 Sec. 6. Minnesota Statutes 2000, section 297A.61, 423.22 subdivision 6, is amended to read: 423.23 Subd. 6. [USE.] (a) "Use" includes the exercise of a right 423.24 or power incident to the ownership of any interest in tangible 423.25 personal property, ortaxableservices, purchased from a 423.26 retailer, other than the sale of that property in the regular 423.27 course of business. 423.28 (b) Use includes the consumption of printed materials in 423.29 the creation of nontaxable advertising that is distributed, 423.30 either directly or indirectly, within Minnesota. 423.31 Sec. 7. Minnesota Statutes 2000, section 297A.61, 423.32 subdivision 10, is amended to read: 423.33 Subd. 10. [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 423.34 personal property" means corporeal personal property of any 423.35 kind, including property that is to become real property as a 423.36 result of incorporation, attachment, or installation following 424.1 its acquisition. 424.2 (b) Tangible personal property includes, but is not limited 424.3 to: 424.4 (1) computer software, whether contained on tape, discs, 424.5 cards, or other devices; and 424.6 (2) prepaid telephone calling cards. 424.7 (c) Tangible personal property does not include: 424.8 (1) large ponderous machinery and equipment used in a 424.9 business or production activity which at common law would be 424.10 considered to be real property; 424.11 (2) property which is subject to an ad valorem property 424.12 tax; 424.13 (3) property described in section 272.02, subdivision 9, 424.14 clauses (a) to (d); and 424.15 (4) property described in section 272.03, subdivision 2, 424.16 clauses (3) and (5). 424.17 Sec. 8. Minnesota Statutes 2000, section 297A.61, 424.18 subdivision 14, is amended to read: 424.19 Subd. 14. [LEASING; LEASE.] "Leasing" includes all 424.20 transfers of possession or the use of tangible personal property 424.21 by the lessee for a consideration, if title remains with the 424.22 lessor at the end of the lease.For purposes of this chapter,A 424.23 lease of tangible personal property is a series of sales 424.24 transactions that impose upon the lessee multiple payment 424.25 obligations. "Leasing" does not include a transaction defined 424.26 under subdivision 15. 424.27 Sec. 9. Minnesota Statutes 2000, section 297A.61, 424.28 subdivision 17, is amended to read: 424.29 Subd. 17. [COMPUTER SOFTWARE.] "Computer software" means a 424.30 computer program, either in the form of written procedures orin424.31the form of storage media on which, or in which, the program is424.32recordedcontained on tapes, discs, cards, or another device, or 424.33 any required documentation or manuals designed to facilitate the 424.34 use of the computer program. For purposes of this subdivision: 424.35 (1)"Storage media" includes punched cards, tapes, discs,424.36diskettes, or drums on which computer programs may be embodied425.1or stored;425.2(2)"Computer" does not include tape-controlled automatic 425.3 drilling, milling, or other manufacturing machinery or 425.4 equipment; and 425.5(3)(2) "Computer program" means information and directions 425.6 that dictate the function performed by data processing 425.7 equipment. It includes the complete plan for the solution of a 425.8 problem, such as the complete sequence of automatic data 425.9 processing equipment instructions necessary to solve a problem 425.10 and includes both systems and application programs and 425.11 subdivisions, such as assemblers, compilers, routines, 425.12 generators, and utility programs. Computer program includes a 425.13 "canned" or prewritten computer program that is held or existing 425.14 for general or repeated sale or lease, even if the prewritten or 425.15 "canned" program was initially developed on a custom basis or 425.16 for in-house use. 425.17 Sec. 10. Minnesota Statutes 2000, section 297A.61, 425.18 subdivision 19, is amended to read: 425.19 Subd. 19. [COMMONFOR-HIRE CARRIER.] "CommonFor-hire 425.20 carrier" means a person engaged in transportation for hire of 425.21 tangible personal propertyby motor vehicle, if the person:. 425.22(1) has a certificate or permit or has completed a425.23registration process that authorizes for-hire transportation of425.24property from the United States Department of Transportation,425.25the transportation regulation board, or the department of425.26transportation;425.27(2) is transporting commodities defined as "exempt" in425.28for-hire transportation; or425.29(3) transports tangible personal property pursuant to a425.30contract with a person described in clause (1) or (2).425.31 Sec. 11. Minnesota Statutes 2000, section 297A.61, 425.32 subdivision 22, is amended to read: 425.33 Subd. 22. [INTERNAL REVENUE CODE.] Unless specifically 425.34 provided otherwise, "Internal Revenue Code" means the Internal 425.35 Revenue Code of 1986, as amended through December 31,19992000. 425.36 Sec. 12. Minnesota Statutes 2000, section 297A.61, 426.1 subdivision 23, is amended to read: 426.2 Subd. 23. [UNITED STATES CODE.] Unless specifically 426.3 provided otherwise, "United States Code" means the United States 426.4 Code as amended through December 31,19992000. 426.5 Sec. 13. Minnesota Statutes 2000, section 297A.66, 426.6 subdivision 1, is amended to read: 426.7 Subdivision 1. [DEFINITIONS.] (a) "Retailer maintaining a 426.8 place of business in this state," or a similar term, means a 426.9 retailer: 426.10 (1) having or maintaining within this state, directly or by 426.11 a subsidiary, an office, place of distribution, sales or sample 426.12 room or place, warehouse, or other place of business; or 426.13 (2) having a representative, agent, salesperson, canvasser, 426.14 or solicitor operating in this state under the authority of the 426.15 retailer or its subsidiary, for any purpose, including the 426.16 repairing, selling, delivering, installing, or soliciting of 426.17 orders for the retailer's goods or services, or the leasing of 426.18 tangible personal property located in this state, whether the 426.19 place of business or agent, representative, salesperson, 426.20 canvasser, or solicitor is located in the state permanently or 426.21 temporarily, or whether or not the retailer or subsidiary is 426.22 authorized to do business in this state. 426.23 (b) "Destination of a sale" means the location to which the 426.24 retailer makes delivery of the property sold, or causes the 426.25 property to be delivered, to the purchaser of the property, or 426.26 to the agent or designee of the purchaser. The delivery may be 426.27 made by any means, including the United States Postal Service, a426.28common carrier,or acontractfor-hire carrier. 426.29 Sec. 14. Minnesota Statutes 2000, section 297A.66, 426.30 subdivision 3, is amended to read: 426.31 Subd. 3. [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 426.32 THIS STATE.] (a) To the extent allowed by the United States 426.33 Constitution and the laws of the United States, a retailer 426.34 making retail sales from outside this state to a destination 426.35 within this state and not maintaining a place of business in 426.36 this state shall collect sales and use taxes and remit them to 427.1 the commissioner under section 297A.77, if the retailer engages 427.2 in the regular or systematic soliciting of sales from potential 427.3 customers in this state by: 427.4 (1) distribution, by mail or otherwise, of catalogs, 427.5 periodicals, advertising flyers, or other written solicitations 427.6 of business to customers in this state; 427.7 (2) display of advertisements on billboards or other 427.8 outdoor advertising in this state; 427.9 (3) advertisements in newspapers published in this state; 427.10 (4) advertisements in trade journals or other periodicals 427.11 the circulation of which is primarily within this state; 427.12 (5) advertisements in a Minnesota edition of a national or 427.13 regional publication or a limited regional edition in which this 427.14 state is included as part of a broader regional or national 427.15 publication which are not placed in other geographically defined 427.16 editions of the same issue of the same publication; 427.17 (6) advertisements in regional or national publications in 427.18 an edition which is not by its contents geographically targeted 427.19 to Minnesota but which is sold over the counter in Minnesota or 427.20 by subscription to Minnesota residents; 427.21 (7) advertisements broadcast on a radio or television 427.22 station located in Minnesota; or 427.23 (8) any other solicitation by telegraphy, telephone, 427.24 computer database, cable, optic, microwave, or other 427.25 communication system. 427.26 This paragraph (a) must be construed without regard to the 427.27 state from which distribution of the materials originated or in 427.28 which they were prepared. 427.29 (b) The location within or without this state of 427.30 independent vendorsindependent of the retailerthat provide 427.31 products or services to the retailer in connection with its 427.32 solicitation of customers within this state, including such 427.33 products and services as creation of copy, printing, 427.34 distribution, and recording, is not considered in determining 427.35 whether the retailer is required to collect tax. 427.36 (c) A retailer not maintaining a place of business in this 428.1 state is presumed, subject to rebuttal, to be engaged in regular 428.2 solicitation within this state if it engages in any of the 428.3 activities in paragraph (a) and: 428.4 (1) makes 100 or more retail sales from outside this state 428.5 to destinations in this state during a period of 12 consecutive 428.6 months; or 428.7 (2) makes ten or more retail sales totaling more than 428.8 $100,000 from outside this state to destinations in this state 428.9 during a period of 12 consecutive months. 428.10 Sec. 15. Minnesota Statutes 2000, section 297A.67, 428.11 subdivision 8, is amended to read: 428.12 Subd. 8. [CLOTHING.] Clothing and wearing apparel, 428.13 including sewing materials to be directly incorporated into 428.14 wearing apparel, are exempt. For purposes of this subdivision, 428.15 clothing and wearing apparel do not include the following: 428.16 (1) articles designed primarily for use while engaging in a 428.17 specific sport or recreational activity that are not also worn 428.18 for general use; 428.19 (2) articles designed primarily to provide safety or 428.20 protection against injury while the user is engaged in 428.21 industrial or general job activities; 428.22 (3) all articles commonly or commercially known as jewelry 428.23 including, but not limited to, watches; 428.24 (4) nonprescription optical glasses of any sort; 428.25 (5) articles made entirely of fur on the hide or pelt, or 428.26 partially of such fur if the value of the fur is more than three 428.27 times the value of the next most valuable component material; 428.28 (6) perfume, lotions, creams, dyes, or other substances 428.29 that are applied to the skin, nails, orthehair; and 428.30 (7) luggage, bags, purses, wallets, or cases of any sort. 428.31 Sec. 16. Minnesota Statutes 2000, section 297A.67, 428.32 subdivision 23, is amended to read: 428.33 Subd. 23. [OCCASIONAL SALES.] Isolated and occasional 428.34 sales in Minnesota not made in the normal course of business,428.35andof selling that kind of property or service are exempt. The 428.36 storage, use, or consumption of property or servicesresulting429.1from such sales, areacquired as a result of such a sale is 429.2 exempt. This exemption does not apply to sales of tangible 429.3 personal property primarily used in a trade or business. 429.4 Sec. 17. Minnesota Statutes 2000, section 297A.67, 429.5 subdivision 24, is amended to read: 429.6 Subd. 24. [CONSTITUTIONAL PROHIBITIONS.]The gross429.7receipts fromThe sale of and the storage, use, orother429.8 consumption in Minnesota of tangible personal property,tickets,429.9or admissions, electricity, gas, or local exchange telephone429.10serviceor services, that the state of Minnesota is prohibited 429.11 from taxing under the Constitution or laws of the United States 429.12 or under the Constitution of Minnesota, are exempt. 429.13 Sec. 18. Minnesota Statutes 2000, section 297A.67, 429.14 subdivision 25, is amended to read: 429.15 Subd. 25. [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 429.16 related services used in the maintenance of cemetery grounds are 429.17 exempt. For purposes of this subdivision, "lawn care and 429.18 related services" means the services listed in section 297A.61, 429.19 subdivision163, paragraph (g), clause (6), item (vi), and 429.20 "cemetery" means a cemetery for human burial. 429.21 Sec. 19. Minnesota Statutes 2000, section 297A.68, 429.22 subdivision 2, is amended to read: 429.23 Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 429.24 (a) Materials stored, used, or consumed in industrial production 429.25 of personal property intended to be sold ultimately at retail 429.26 are exempt, whether or not the item so used becomes an 429.27 ingredient or constituent part of the property produced. 429.28 Materials that qualify for this exemption include, but are not 429.29 limited to, the following: 429.30 (1) chemicals, including chemicals used for cleaning food 429.31 processing machinery and equipment; 429.32 (2) materials, including chemicals, fuels, and electricity 429.33 purchased by persons engaged in industrial production to treat 429.34 waste generated as a result of the production process; 429.35 (3) fuels, electricity, gas, and steam used or consumed in 429.36 the production process, except that electricity, gas, or steam 430.1 used for space heating, cooling, or lighting is exemptonlyif 430.2 (i) it is in excess of the average climate control or lighting 430.3 for the production area, and (ii) it is necessary to produce 430.4 that particularindustrialproduct; 430.5 (4) petroleum products and lubricants; 430.6 (5) packaging materials, including returnable containers 430.7 used in packaging food and beverage products; 430.8 (6) accessory tools, equipment, and other items that are 430.9 separate detachable units with an ordinary useful life of less 430.10 than 12 months used in producing a direct effect upon the 430.11 product; and 430.12 (7) the following materials, tools, and equipment used in 430.13 metalcasting: crucibles, thermocouple protection sheaths and 430.14 tubes, stalk tubes, refractory materials, molten metal filters 430.15 and filter boxes, degassing lances, and base blocks. 430.16 (b) This exemption does not include: 430.17 (1) machinery, equipment, implements, tools, accessories, 430.18 appliances, contrivances and furniture and fixtures, except 430.19 those listed in paragraph (a), clause (6); and 430.20 (2) petroleum and special fuels used in producing or 430.21 generating power for propelling ready-mixed concrete trucks on 430.22 the public highways of this state. 430.23 (c) Industrial production includes, but is not limited to, 430.24 research, development, design or production of any tangible 430.25 personal property, manufacturing, processing (other than by 430.26 restaurants and consumers) of agricultural products (whether 430.27 vegetable or animal), commercial fishing, refining, smelting, 430.28 reducing, brewing, distilling, printing, mining, quarrying, 430.29 lumbering, generating electricity and the production of road 430.30 building materials. Industrial production does not include 430.31 painting, cleaning, repairing or similar processing of property 430.32 except as part of the original manufacturing process. 430.33 Sec. 20. Minnesota Statutes 2000, section 297A.68, 430.34 subdivision 3, is amended to read: 430.35 Subd. 3. [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 430.36 SERVICES.] (a) Materials stored, used, or consumed in providing 431.1 a taxable service listed in section 297A.61, subdivision163, 431.2 paragraph (g), clause (6), intended to be sold ultimately at 431.3 retail are exempt. 431.4 (b) This exemption includes, but is not limited to: 431.5 (1) chemicals, lubricants, packaging materials, seeds, 431.6 trees, fertilizers, and herbicides, if these items are used or 431.7 consumed in providing the taxable service; 431.8 (2) chemicals used to treat waste generated as a result of 431.9 providing the taxable service; 431.10 (3) accessory tools, equipment, and other items that are 431.11 separate detachable units used in providing the service and that 431.12 have an ordinary useful life of less than 12 months; and 431.13 (4) fuel, electricity, gas, and steam used or consumed in 431.14 the production process, except that electricity, gas, or steam 431.15 used for space heating, cooling, or lighting is exemptonlyif 431.16 (i) it is in excess of average climate control or lighting, and 431.17 (ii) it is necessary to produce that particulartaxableservice. 431.18 (c) This exemption does not include machinery, equipment, 431.19 implements, tools, accessories, appliances, contrivances, 431.20 furniture, and fixtures used in providing the taxable service. 431.21 Sec. 21. Minnesota Statutes 2000, section 297A.68, 431.22 subdivision 5, is amended to read: 431.23 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 431.24 exempt. The tax must be imposed and collected as if the rate 431.25 under section 297A.62, subdivision 1, applied, and then refunded 431.26 in the manner provided in section 297A.75. 431.27 "Capital equipment" means machinery and equipment purchased 431.28 or leased, and used in this state by the purchaser or lessee 431.29 primarily for manufacturing, fabricating, mining, or refining 431.30 tangible personal property to be sold ultimately at retail.431.31Capital equipment meansif the machinery and equipment is 431.32 essential to the integrated production process of manufacturing, 431.33 fabricating, mining, or refining. Capital equipment also 431.34 includes machinery and equipment used to electronically transmit 431.35 results retrieved by a customer of an online computerized data 431.36 retrieval system. 432.1 (b) Capital equipment includes, but is not limited to: 432.2 (1) machinery and equipment used to operate, control, or 432.3 regulate the production equipment; 432.4 (2) machinery and equipment used for research and 432.5 development, design, quality control, and testing activities; 432.6 (3) environmental control devices that are used to maintain 432.7 conditions such as temperature, humidity, light, or air pressure 432.8 when those conditions are essential to and are part of the 432.9 production process; 432.10 (4) materials and supplies used to construct and install 432.11 machinery or equipment; 432.12 (5) repair and replacement parts, including accessories, 432.13 whether purchased as spare parts, repair parts, or as upgrades 432.14 or modifications to machinery or equipment; 432.15 (6) materials used for foundations that support machinery 432.16 or equipment; 432.17 (7) materials used to construct and install special purpose 432.18 buildings used in the production process; and 432.19 (8) ready-mixed concrete trucks in which the ready-mixed 432.20 concrete is mixed as part of the delivery process. 432.21 (c) Capital equipment does not include the following: 432.22 (1) motor vehicles taxed under chapter 297B; 432.23 (2) machinery or equipment used to receive or store raw 432.24 materials; 432.25 (3) building materials, except for materials included in 432.26 paragraph (b), clauses (6) and (7); 432.27 (4) machinery or equipment used for nonproduction purposes, 432.28 including, but not limited to, the following: plant security, 432.29 fire prevention, first aid, and hospital stations; support 432.30 operations or administration; pollution control; and plant 432.31 cleaning, disposal of scrap and waste, plant communications, 432.32 space heating, cooling, lighting, or safety; 432.33 (5) farm machinery and aquaculture production equipment as 432.34 defined by section 297A.61, subdivisions 12 and 13; 432.35 (6) machinery or equipment purchased and installed by a 432.36 contractor as part of an improvement to real property; or 433.1 (7) any other item that is not essential to the integrated 433.2 process of manufacturing, fabricating, mining, or refining. 433.3 (d) For purposes of this subdivision: 433.4 (1) "Machinery" means mechanical, electronic, or electrical 433.5 devices, including computers and computer software, that are 433.6 purchased or constructed to be used for the activities set forth 433.7 in paragraph (a), beginning with the removal of raw materials 433.8 from inventory through completion of the product, including 433.9 packaging of the product. 433.10 (2) "Equipment" means independent devices or tools separate 433.11 from machinery but essential to an integrated production 433.12 process, including computers and computer software, used in 433.13 operating, controlling, or regulating machinery and equipment; 433.14 and any subunit or assembly comprising a component of any 433.15 machinery or accessory or attachment parts of machinery, such as 433.16 tools, dies, jigs, patterns, and molds. 433.17 (3) "Primarily" means machinery and equipment used 50 433.18 percent or more of the time in an activity described in 433.19 paragraph (a). 433.20 (4) "Manufacturing" means an operation or series of 433.21 operations where raw materials are changed in form, composition, 433.22 or condition by machinery and equipment and which results in the 433.23 production of a new article of tangible personal property. For 433.24 purposes of this subdivision, "manufacturing" includes the 433.25 generation of electricity or steam to be sold at retail. 433.26 (5) "Fabricating" means to make, build, create, produce, or 433.27 assemble components or property to work in a new or different 433.28 manner. 433.29 (6) "Mining" means the extraction of minerals, ores, stone, 433.30 or peat. 433.31 (7) "Refining" means the process of converting a natural 433.32 resource to a product, including the treatment of water to be 433.33 sold at retail. 433.34 (8)"Integrated production process" means a process433.35beginning with the removal of raw materials from inventory433.36through the completion of the product, including packaging of434.1the product.434.2(9)"Online data retrieval system" means a system whose 434.3 cumulation of information is equally available and accessible to 434.4 all its customers. 434.5(10)(9) "Machinery and equipment used for pollution 434.6 control" means machinery and equipment used solely to eliminate, 434.7 prevent, or reduce pollution resulting from an activity 434.8 described in paragraph (a). 434.9 Sec. 22. Minnesota Statutes 2000, section 297A.68, 434.10 subdivision 11, is amended to read: 434.11 Subd. 11. [ADVERTISING MATERIALS.]MaterialMaterials 434.12 designed to advertise and promote the sale of merchandise or 434.13 servicesisare exempt ifthe material is purchased and stored434.14for the purpose of subsequently shipping or otherwise434.15transferring outside the state by the purchaser for laterthese 434.16 materials are mailed or transferred to a person outside the 434.17 state for use solely outside the stateof Minnesota. Mailing 434.18 and reply envelopes and cards used exclusively in connection 434.19 with these advertising and promotional materials are included in 434.20 this exemption. The exemption applies regardless of where the 434.21 mailing occurs. The storage of these materials in the state for 434.22 the purpose of subsequently shipping or otherwise transferring 434.23 the material out of state is also exempt if the other conditions 434.24 in this subdivision are met. 434.25 Sec. 23. Minnesota Statutes 2000, section 297A.68, 434.26 subdivision 13, is amended to read: 434.27 Subd. 13. [OUTSTATE TRANSPORT OR DELIVERY.] (a) Tangible 434.28 personal property is exempt ifthe property, without434.29intermediate use, isall of the following conditions are met: 434.30 (1) the property, without intermediate use, is shipped or 434.31 transported outside Minnesota by the purchaser or is stored, 434.32 processed, fabricated or manufactured into, attached to or 434.33 incorporated into other tangible personal property that is 434.34 transported or shipped outside Minnesota; and 434.35 (2) the property is used in a trade or business outside 434.36 Minnesota after being shipped or transported outside of 435.1 Minnesota, and is not returned to Minnesota, except in the 435.2 course of interstate commerce; and 435.3 (3) the property is either (i) not subject to tax in the 435.4 state or country to which it is transported for storage or use, 435.5 or (ii) to be used in other states or countries as part of a 435.6 maintenance contract. 435.7 (b) For purposes of this subdivision, storage or 435.8 processing, fabricating, manufacturing, attaching to, or 435.9 incorporating into other property is not intermediate use. 435.10 Sec. 24. Minnesota Statutes 2000, section 297A.68, 435.11 subdivision 14, is amended to read: 435.12 Subd. 14. [TEMPORARY STORAGEPROPERTY IN TRANSIT.] 435.13 Tangible personal property is exempt if all of the following 435.14 conditions are met: 435.15 (1) it is shipped or brought into Minnesota by acommon435.16 for-hire carrier; 435.17 (2) withoutintermediateuse, it is kept in a public 435.18 warehouse; 435.19 (3) it is kept for the purpose of being later transported 435.20 outside Minnesota; and 435.21 (4) after storage, it is used solely outside Minnesota, 435.22 except in the course of interstate commerce. 435.23 Sec. 25. Minnesota Statutes 2000, section 297A.68, 435.24 subdivision 18, is amended to read: 435.25 Subd. 18. [CUSTOM COMPUTER SOFTWARE.] The design, 435.26 development, writing, translation, fabrication, lease, or 435.27 transfer for a consideration of title or possession of a custom 435.28 computer program is exempt. "Custom computer program" means a 435.29 computer program prepared to the special order of the customer, 435.30 either in the form of written procedures orin the form of435.31storage media on which, or in which, the program is435.32recordedcontained on tapes, discs, cards, or another device, or 435.33 any required documentation or manuals designed to facilitate the 435.34 use of the custom computer program transferred. It includes 435.35 those services represented by separately stated charges for 435.36 modifications to an existing prewritten program that are 436.1 prepared to the special order of the customer. It does not 436.2 include a "canned" or prewritten computer program that is held 436.3 or existing for general or repeated sale or lease, even if the 436.4 prewritten or "canned" program was initially developed on a 436.5 custom basis or for in-house use. Modification to an existing 436.6 prewritten program to meet the customer's needs is custom 436.7 computer programming only to the extent of the modification. 436.8 Sec. 26. Minnesota Statutes 2000, section 297A.68, 436.9 subdivision 25, is amended to read: 436.10 Subd. 25. [OCCASIONAL SALESSALE OF PROPERTY USED IN A 436.11 TRADE OR BUSINESS.] (a)Isolated or occasional sales ofThe sale 436.12 of tangible personal propertyin Minnesotaprimarily used in a 436.13 trade or business is exempt if the sale is not made in the 436.14 normal course of business of selling that kind of propertyare436.15exempt. The storage, use, or consumption of property acquired436.16as a result of such a sale is exempt.436.17(b) This exemption applies to a sale of tangible personal436.18property primarily used in a trade or business onlyand if one 436.19 of the following conditions is satisfied: 436.20 (1) the sale occurs in a transaction subject to or 436.21 described in section 118, 331, 332, 336, 337, 338, 351, 355, 436.22 368, 721, 731, 1031, or 1033 of the Internal Revenue Code; 436.23 (2) the sale is between members of a controlled group as 436.24 defined in section 1563(a) of the Internal Revenue Code; 436.25 (3) the sale is a sale of farm machinery; 436.26 (4) the sale is a farm auction sale; 436.27 (5) the sale is a sale of substantially all of the assets 436.28 of a trade or business; or 436.29 (6) the total amount of gross receipts from the sale of 436.30 trade or business property made during the calendar month of the 436.31 sale and the preceding 11 calendar months does not exceed $1,000. 436.32 The use, storage, distribution, or consumption of tangible 436.33 personal property acquired as a result of a sale exempt under 436.34 this subdivision is also exempt. 436.35(c)(b) For purposes of this subdivision, the following 436.36 terms have the meanings given. 437.1 (1) A "farm auction" is a public auction conducted by a 437.2 licensed auctioneer if substantially all of the property sold 437.3 consists of property used in the trade or business of farming 437.4 and property not used primarily in a trade or business. 437.5 (2) "Trade or business" includes the assets of a separate 437.6 division, branch, or identifiable segment of a trade or business 437.7 if, before the sale, the income and expenses attributable to the 437.8 separate division, branch, or identifiable segment could be 437.9 separately ascertained from the books of account or record (the 437.10 lease or rental of an identifiable segment does not qualify for 437.11 the exemption). 437.12 (3) A "sale of substantially all of the assets of a trade 437.13 or business" must occur as a single transaction or a series of 437.14 related transactions within the 12-month period beginning on the 437.15 date of the first sale of assets intended to qualify for the 437.16 exemption provided in paragraph(b)(a), clause (5). 437.17 Sec. 27. Minnesota Statutes 2000, section 297A.69, 437.18 subdivision 2, is amended to read: 437.19 Subd. 2. [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 437.20 (a) Materials stored, used, or consumed in agricultural 437.21 production of personal property intended to be sold ultimately 437.22 at retail are exempt, whether or not the item becomes an 437.23 ingredient or constituent part of the property produced. 437.24 Materials that qualify for this exemption include, but are not 437.25 limited to, the following: 437.26 (1) feeds, seeds, trees, fertilizers, and herbicides, 437.27 including when purchased for use by farmers in a federal or 437.28 state farm or conservation program; 437.29 (2) materials sold to a veterinarian to be used or consumed 437.30 in the care, medication, and treatment of agricultural 437.31 production animals and horses; 437.32 (3) chemicals, including chemicals used for cleaning food 437.33 processing machinery and equipment; 437.34 (4) materials, including chemicals, fuels, and electricity 437.35 purchased by persons engaged in agricultural production to treat 437.36 waste generated as a result of the production process; 438.1 (5) fuels, electricity, gas, and steam used or consumed in 438.2 the production process, except that electricity, gas, or steam 438.3 used for space heating, cooling, or lighting is exemptonlyif 438.4 (i) it is in excess of the average climate control or lighting 438.5 for the production area, and (ii) it is necessary to produce 438.6 that particularagriculturalproduct; 438.7 (6) petroleum products and lubricants; 438.8 (7) packaging materials, including returnable containers 438.9 used in packaging food and beverage products; and 438.10 (8) accessory tools and equipment that are separate 438.11 detachable units with an ordinary useful life of less than 12 438.12 months used in producing a direct effect upon the product. 438.13 Machinery, equipment, implements, tools, accessories, 438.14 appliances, contrivances, and furniture and fixtures, except 438.15 those listed in this clause are not included within this 438.16 exemption. 438.17 (b) For purposes of this subdivision, "agricultural 438.18 production" includes, but is not limited to, horticulture, 438.19 floriculture, maple syrup harvesting, and the raising of pets, 438.20 fur-bearing animals, research animals, horses, farmed cervidae 438.21 as defined in section 17.451, subdivision 2, llamas as defined 438.22 in section 17.455, subdivision 2, and ratitae as defined in 438.23 section 17.453, subdivision 3. 438.24 Sec. 28. Minnesota Statutes 2000, section 297A.70, 438.25 subdivision 1, is amended to read: 438.26 Subdivision 1. [SCOPE.] (a) To the extent provided in this 438.27 section, the gross receipts from sales of items to or by, and 438.28 storage, distribution, use, or consumption of items by the 438.29 organizations listed in this section are specifically exempted 438.30 from the taxes imposed by this chapter. 438.31 (b) Notwithstanding any law to the contrary enacted before 438.32 1992, only sales to governments and political subdivisions 438.33 listed in this section are exempt from the taxes imposed by this 438.34 chapter. 438.35 (c) "Sales" includes purchases under an installment 438.36 contract or lease purchase agreement under section 465.71. 439.1 Sec. 29. Minnesota Statutes 2000, section 297A.70, 439.2 subdivision 2, is amended to read: 439.3 Subd. 2. [SALES TO GOVERNMENT.] (a) All sales, except 439.4 those listed in paragraph (b), to the following governments and 439.5 political subdivisions, or to the listed agencies or 439.6 instrumentalities of governments and political subdivisions, are 439.7 exempt: 439.8 (1) the United States and its agencies and 439.9 instrumentalities; 439.10 (2) school districts, the University of Minnesota, state 439.11 universities, community colleges, technical colleges, state 439.12 academies, the Perpich Minnesota center for arts education, and 439.13 an instrumentality of a political subdivision that is accredited 439.14 as an optional/special function school by the North Central 439.15 Association of Colleges and Schools; 439.16 (3) hospitals and nursing homes owned and operated by 439.17 political subdivisions of the state; 439.18 (4) other states or political subdivisions of other states, 439.19 if the sale would be exempt from taxation if it occurred in that 439.20 state; and 439.21 (5) sales to public libraries, public library systems, 439.22 multicounty, multitype library systems as defined in section 439.23 134.001, county law libraries under chapter 134A, state agency 439.24 libraries, the state library under section 480.09, and the 439.25 legislative reference library. 439.26 (b) This exemption does not apply to the sales of the 439.27 following products and services: 439.28 (1) building, construction, or reconstruction materials 439.29 purchased by a contractor or a subcontractor as a part of a 439.30 lump-sum contract or similar type of contract with a guaranteed 439.31 maximum price covering both labor and materials for use in the 439.32 construction, alteration, or repair of a building or facility; 439.33 (2) construction materials purchased by tax exempt entities 439.34 or their contractors to be used in constructing buildings or 439.35 facilities which will not be used principally by the tax exempt 439.36 entities; 440.1 (3) the leasing of a motor vehicle as defined in section 440.2 297B.01, subdivision 5, except for leases entered into by the 440.3 United States or its agencies or instrumentalities; or 440.4 (4) meals and lodging as defined under section 297A.61, 440.5subdivisionssubdivision 3,paragraphparagraphs (d),and16440.6 (g),paragraph (c)clause (2), except for meals and lodging 440.7 purchased directly by the United States or its agencies or 440.8 instrumentalities. 440.9 (c) As used in this subdivision, "school districts" means 440.10 public school entities and districts of every kind and nature 440.11 organized under the laws of the state of Minnesota, and any 440.12 instrumentality of a school district, as defined in section 440.13 471.59. 440.14 Sec. 30. Minnesota Statutes 2000, section 297A.70, 440.15 subdivision 4, is amended to read: 440.16 Subd. 4. [SALES TO NONPROFIT GROUPS.] (a) All sales, 440.17 except those listed in paragraph (b), to the following 440.18 "nonprofit organizations" are exempt: 440.19 (1)an entitya corporation, society, association, 440.20 foundation, or institution organized and operated exclusively 440.21 for charitable, religious, or educational purposes if the item 440.22 purchased is used in the performance of charitable, religious, 440.23 or educational functions; and 440.24 (2) any senior citizen group or association of groups that: 440.25 (i) in general limits membership to persons who are either 440.26 age 55 or older, or physically disabled; and 440.27 (ii) is organized and operated exclusively for pleasure, 440.28 recreation, and other nonprofit purposes, no part of the net 440.29 earnings of which inures to the benefit of any private 440.30 shareholders; and. 440.31(3) an entity organized and operated exclusively to440.32maintain440.33 For purposes of this subdivision, charitable purpose includes 440.34 the maintenance of a cemetery owned by a religious organization. 440.35 (b) This exemption does not apply to the following sales: 440.36 (1) building, construction, or reconstruction materials 441.1 purchased by a contractor or a subcontractor as a part of a 441.2 lump-sum contract or similar type of contract with a guaranteed 441.3 maximum price covering both labor and materials for use in the 441.4 construction, alteration, or repair of a building or facility; 441.5 (2) construction materials purchased by tax-exempt entities 441.6 or their contractors to be used in constructing buildings or 441.7 facilities that will not be used principally by the tax-exempt 441.8 entities; and 441.9 (3) meals and lodging as defined under section 297A.61, 441.10subdivisionssubdivision 3,paragraphparagraphs (d),and 441.1116(g),paragraph (c)clause (2); and 441.12 (4) leasing of a motor vehicle as defined in section 441.13 297B.01, subdivision 5, except as provided in paragraph (c). 441.14 (c) This exemption applies to the leasing of a motor 441.15 vehicle as defined in section 297B.01, subdivision 5, only if 441.16 the vehicle is: 441.17 (1) a truck, as defined in section 168.011, a bus, as 441.18 defined in section 168.011, or a passenger automobile, as 441.19 defined in section 168.011, if the automobile is designed and 441.20 used for carrying more than nine persons including the driver; 441.21 and 441.22 (2) intended to be used primarily to transport tangible 441.23 personal property or individuals, other than employees, to whom 441.24 the organization provides service in performing its charitable, 441.25 religious, or educational purpose. 441.26 Sec. 31. Minnesota Statutes 2000, section 297A.70, 441.27 subdivision 7, is amended to read: 441.28 Subd. 7. [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 441.29 Sales, except for those listed in paragraph (c), to a hospital 441.30 are exempt, if the items purchased are used in providing 441.31 hospital services. For purposes of this subdivision, "hospital" 441.32 means a hospital organized and operated for charitable purposes 441.33 within the meaning of section 501(c)(3) of the Internal Revenue 441.34 Code, and licensed under chapter 144 or by any other 441.35 jurisdiction, and "hospital services" are services authorized or 441.36 required to be performed by a "hospital" under chapter 144. 442.1 (b) Sales, except for those listed in paragraph (c), to an 442.2 outpatient surgical center are exempt, if the items purchased 442.3 are used in providing outpatient surgical services. For 442.4 purposes of this subdivision, "outpatient surgical center" means 442.5 an outpatient surgical center organized and operated for 442.6 charitable purposes within the meaning of section 501(c)(3) of 442.7 the Internal Revenue Code, and licensed under chapter 144 or by 442.8 any other jurisdiction. For the purposes of this subdivision, 442.9 "outpatient surgical services" means: (1) services authorized 442.10 or required to be performed by an outpatient surgical center 442.11 under chapter 144or under the applicable licensure law of any442.12other jurisdiction; and (2) urgent care. For purposes of this 442.13 subdivision, "urgent care" means health services furnished to a 442.14 person whose medical condition is sufficiently acute to require 442.15 treatment unavailable through, or inappropriate to be provided 442.16 by, a clinic or physician's office, but not so acute as to 442.17 require treatment in a hospital emergency room. 442.18 (c) This exemption does not apply to the following products 442.19 and services: 442.20 (1) purchases made by a clinic, physician's office, or any 442.21 other medical facility not operating as a hospital or outpatient 442.22 surgical center, even though the clinic, office, or facility may 442.23 be owned and operated by a hospital or outpatient surgical 442.24 center; 442.25 (2) sales under section 297A.61, subdivisions 3, paragraph 442.26 (d), and 16, paragraph (c); 442.27 (3) building and construction materials used in 442.28 constructing buildings or facilities that will not be used 442.29 principally by the hospital or outpatient surgical center; 442.30 (4) building, construction, or reconstruction materials 442.31 purchased by a contractor or a subcontractor as a part of a 442.32 lump-sum contract or similar type of contract with a guaranteed 442.33 maximum price covering both labor and materials for use in the 442.34 construction, alteration, or repair of a hospital or outpatient 442.35 surgical center; or 442.36 (5) the leasing of a motor vehicle as defined in section 443.1 297B.01, subdivision 5. 443.2 Sec. 32. Minnesota Statutes 2000, section 297A.70, 443.3 subdivision 8, is amended to read: 443.4 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 443.5 SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 443.6 but not limited to, end user equipment used for construction, 443.7 ownership, operation, maintenance, and enhancement of the 443.8 backbone system of the regionwide public safety radio 443.9 communication system established under sections 473.891 to 443.10 473.905, are exempt. For purposes of this subdivision, backbone 443.11 system is defined in section 473.891, subdivision 9. This 443.12 subdivision is effective for purchases, sales, storage, use, or 443.13 consumption occurring before August 1, 2003, in the counties of 443.14 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 443.15 Sec. 33. Minnesota Statutes 2000, section 297A.70, 443.16 subdivision 10, is amended to read: 443.17 Subd. 10. [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 443.18 admissions to the premises of or events sponsored by an 443.19 organization that provides an opportunity for citizens of the 443.20 state to participate in the creation, performance, or 443.21 appreciation of the arts are exempt if the organization is 443.22 either: 443.23 (1)a tax-exempt organization within the meaning of443.24Minnesota Statutes 1980, section 290.05, subdivision 1, clause443.25(i),a corporation, fund, foundation, trust, or association if 443.26 (i) it is organized for exclusively scientific, literary, 443.27 religious, charitable, educational, or artistic purposes, or for 443.28 the purpose of making contributions to or for the use of the 443.29 United States of America, the state of Minnesota or any of its 443.30 political subdivisions for exclusively public purposes, or for 443.31 any combination of the purposes listed in this clause, and (ii) 443.32 no part of the net income of the corporation, fund, foundation, 443.33 trust, or association inures to the benefit of any private 443.34 member, stockholder, or individual; or 443.35 (2) a municipal board that promotes cultural and arts 443.36 activities. 444.1 The exemption providedwith respectto a municipal board applies 444.2 only to tickets and admissions to events sponsored by the board. 444.3 Sec. 34. Minnesota Statutes 2000, section 297A.70, 444.4 subdivision 13, is amended to read: 444.5 Subd. 13. [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 444.6 (a) The following sales by the specified organizations for 444.7 fundraising purposes are exempt, subject to the limitations 444.8 listed in paragraph (b): 444.9 (1) all sales made by an organization that exists solely 444.10 for the purpose of providing educational or social activities 444.11 for young people primarily age 18 and under; 444.12 (2) all sales made by an organization that is a senior 444.13 citizen group or association of groups if (i) in general it 444.14 limits membership to persons age 55 or older; (ii) it is 444.15 organized and operated exclusively for pleasure, recreation, and 444.16 other nonprofit purposes; and (iii) no part of its net earnings 444.17 inures to the benefit of any private shareholders; 444.18 (3) the sale or use of tickets or admissions to a golf 444.19 tournament held in Minnesota if the beneficiary of the 444.20 tournament's net proceeds qualifies as a tax-exempt organization 444.21 under section 501(c)(3) of the Internal Revenue Code; and 444.22 (4) sales of gum, candy, and candy products sold for 444.23 fundraising purposes by a nonprofit organization that provides 444.24 educational and social activities primarily for young people age 444.25 18years of ageand under. 444.26 (b) The exemptions listed in paragraph (a) are limited in 444.27 the following manner: 444.28 (1) the exemption under paragraph (a), clauses (1) and (2), 444.29 applies only if the gross annual receipts of the organization 444.30 from fundraising do not exceed $10,000; and 444.31 (2) the exemption under paragraph (a), clause (1), does not 444.32 apply if the sales are derived from admission charges or from 444.33 activities for which the money must be deposited with the school 444.34 district treasurer under section 123B.49, subdivision 2, or be 444.35 recorded in the same manner as other revenues or expenditures of 444.36 the school district under section 123B.49, subdivision 4. 445.1 (c) For purposes of this subdivision, a club, association, 445.2 or other organization of elementary or secondary school students 445.3 organized for the purpose of carrying on sports, educational, or 445.4 other extracurricular activities is a separate organization from 445.5 the school district or school for purposes of applying the 445.6 $10,000 limit. 445.7 Sec. 35. Minnesota Statutes 2000, section 297A.70, 445.8 subdivision 14, is amended to read: 445.9 Subd. 14. [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 445.10 GROUPS.] (a) Sales of tangible personal property at, and 445.11 admission charges for fundraising events sponsored by, a 445.12 nonprofit organization are exempt if the entire proceeds, less 445.13 the necessary expenses for the event, will be used solely and 445.14 exclusively for charitable, religious, or educational purposes. 445.15 Exempt sales include the sale of food, meals, and drinks, and445.16taxable servicesat the fundraising event. 445.17 (b) This exemption is limited in the following manner: 445.18 (1) it does not apply to admission charges for events 445.19 involving bingo or other gambling activities or to charges for 445.20 use of amusement devices involving bingo or other gambling 445.21 activities; 445.22 (2) all gross receipts are taxable if the profits are not 445.23 used solely and exclusively for charitable, religious, or 445.24 educational purposes; 445.25 (3) it does not apply unless the organization keeps a 445.26 separate accounting record, including receipts and disbursements 445.27 from each fundraising event that documents all deductions from 445.28 gross receipts with receipts and other records; 445.29 (4) it does not apply to any sale made by or in the name of 445.30 a nonprofit corporation as the active or passive agent of a 445.31 person that is not a nonprofit corporation; 445.32 (5) all gross receipts are taxable if fundraising events 445.33 exceed 24 days per year; and 445.34 (6) it does not apply to fundraising events conducted on 445.35 premises leased for more than five days but less than 30 days. 445.36 (c) For purposes of this subdivision, a "nonprofit 446.1 organization" means any unit of government, corporation, 446.2 society, association, foundation, or institution organized and 446.3 operated for charitable, religious, educational, civic, 446.4 fraternal, and senior citizens' or veterans' purposes, no part 446.5 of the net earnings of which inures to the benefit of a private 446.6 individual. 446.7 Sec. 36. Minnesota Statutes 2000, section 297A.75, is 446.8 amended to read: 446.9 297A.75 [REFUND; APPROPRIATION.] 446.10 Subdivision 1. [TAX COLLECTED.] The tax on the gross 446.11 receipts from the sale of the following exempt items must be 446.12 imposed and collected as if the sale were taxable and the rate 446.13 under section 297A.62, subdivision 1, applied. The exempt items 446.14 include: 446.15 (1) capital equipment exempt under section 297A.68, 446.16 subdivision 5; 446.17 (2) building materials for an agricultural processing 446.18 facility exempt under section 297A.71, subdivision 13; 446.19 (3) building materials for mineral production facilities 446.20 exempt under section 297A.71, subdivision 14; 446.21 (4) building materials for correctional facilities under 446.22 section 297A.71, subdivision 3; 446.23 (5) building materials used in a residence for disabled 446.24 veterans exempt under section 297A.71, subdivision 11;and446.25 (6) chair lifts, ramps, elevators, and associated building 446.26 materials exempt under section 297A.71, subdivision 12; and 446.27 (7) building materials for the Long Lake Conservation 446.28 Center exempt under section 297A.71, subdivision 17. 446.29 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 446.30 forms prescribed by the commissioner, a refund equal to the tax 446.31 paid on the gross receipts of the exempt items must be paid to 446.32 the applicant. Only the following persons may apply for the 446.33 refund: 446.34 (1) for subdivision 1, clauses (1) to (3), the applicant 446.35 must be the purchaser; 446.36 (2) for subdivision 1,clauseclauses (4) and (7), the 447.1 applicant must be the governmental subdivision; 447.2 (3) for subdivision 1, clause (5), the applicant must be 447.3 the recipient of the benefits provided in United States Code, 447.4 title 38, chapter 21; and 447.5 (4) for subdivision 1, clause (6), the applicant must be 447.6 the owner of the homestead property. 447.7 Subd. 3. [APPLICATION.] (a) The application must include 447.8 sufficient information to permit the commissioner to verify the 447.9 tax paid. If the tax was paid by a contractor, subcontractor, 447.10 or builder, under subdivision 1, clause (4), (5),or(6), or 447.11 (7), the contractor, subcontractor, or builder must furnish to 447.12 the refund applicant a statement including the cost of the 447.13 exempt items and the taxes paid on the items unless otherwise 447.14 specifically provided by this subdivision. The provisions of 447.15 sections 289A.40 and 289A.50 apply to refunds under this section. 447.16 (b) An applicant may not file more than two applications 447.17 per calendar year for refunds for taxes paid on capital 447.18 equipment exempt under section 297A.68, subdivision 5. 447.19 Subd. 4. [INTEREST.] Interest must be paid on the refund 447.20 at the rate in section 270.76 from the date the refund claim is 447.21 filed for taxes paid under subdivision 1, clauses (1) to (3), 447.22 and (5), and from 60 days after the date the refund claim is 447.23 filed with the commissioner for claims filed under subdivision 447.24 1, clauses (4)and, (6), and (7). 447.25 Subd. 5. [APPROPRIATION.] The amount required to make the 447.26 refunds is annually appropriated to the commissioner. 447.27 Sec. 37. Minnesota Statutes 2000, section 297A.77, 447.28 subdivision 1, is amended to read: 447.29 Subdivision 1. [COLLECTION OF TAX AT TIME OF SALE.] The 447.30 tax must be stated and charged separately from the sales 447.31 priceor charge for serviceinsofar as practicable and must be 447.32 collected by the seller from the purchaser. 447.33 Sec. 38. Minnesota Statutes 2000, section 297A.80, is 447.34 amended to read: 447.35 297A.80 [TAXES IN OTHER STATES;OFFSET AGAINSTUSE 447.36 TAX CREDIT.] 448.1 Subdivision 1. [MULTISTATE TAX COMPACT STATES.] If an 448.2 article of tangible personal property or an item listed in 448.3 section 297A.63 has already been taxed for its sale, 448.4 distribution, storage, use, or other consumption by another 448.5 state, or a subdivision of another state, that is a member of 448.6 the multistate tax compact, a tax credit is allowed to the 448.7 person who paid the tax in the other state or subdivision of the 448.8 other state under the provisions of section 290.171, article V. 448.9 Subd. 2. [OTHER STATES; GENERALLY.] If an article of 448.10 tangible personal property or an item listed in section 297A.63 448.11 has already been taxedby another statefor its sale, 448.12 distribution, storage, use, or other consumptionin an amount448.13less than the tax imposed by this chapter, then as to the person448.14who paid the tax in the other state, section 297A.63 applies448.15only at a rate measured by the difference between the rate448.16imposed under section 297A.62 and the rate by which the previous448.17tax was computedby another state not included in subdivision 1, 448.18 a tax credit is allowed against the tax imposed in section 448.19 297A.63 to the person who paid the tax in the amount of tax paid 448.20 to the other state.If the tax imposed in the other state is448.21equal to or greater thanThe credit cannot exceed the tax 448.22 imposed in this state, then no tax is due from that personunder 448.23 section 297A.63. 448.24 Sec. 39. Minnesota Statutes 2000, section 297A.82, 448.25 subdivision 3, is amended to read: 448.26 Subd. 3. [PAYMENT OF TAX TO COMMISSIONER.] Ifthean 448.27 aircraft is purchased from a person who is not the holder of a 448.28 valid sales and use tax permit under this chapter, the purchaser 448.29 shall pay the tax to the commissioner of revenue prior to 448.30 registering or licensing the aircraft in this state. The 448.31 commissioner of revenue shall issue a certificate stating that 448.32 the sales and use tax in respect to the transaction has been 448.33 paid. 448.34 Sec. 40. Minnesota Statutes 2000, section 297A.89, 448.35 subdivision 1, is amended to read: 448.36 Subdivision 1. [COMMISSIONER MAY PERMIT.] The commissioner 449.1 may permit purchasers to pay taxes imposed by this chapter 449.2 directly to the commissioner. Any taxes paid by purchasers 449.3 under this section are considered use taxes, except for local449.4sales taxes when no corresponding local use tax is imposed. 449.5 Sec. 41. Minnesota Statutes 2000, section 297A.90, 449.6 subdivision 1, is amended to read: 449.7 Subdivision 1. [REGISTRATION; RECORDS.] (a) A person who 449.8 is engaged in interstate for-hire transportation of tangible 449.9 personal property or passengers by motor vehicle may, under 449.10 rules prescribed by the commissioner, register as a retailer and 449.11 pay the taxes imposed by this chapter in accordance with this 449.12 section. Any taxes paid under this section are use taxes,449.13except local sales taxes when no corresponding local use tax is449.14imposed. 449.15 (b) As used in this section, "person" means: 449.16 (1) one who possesses a certificate or permit or has 449.17 completed a registration process that authorizes for-hire 449.18 transportation of property or passengers from the United States 449.19 Department of Transportation, the transportation regulation 449.20 board, or the department of transportation; 449.21 (2) one who transports commodities defined as "exempt" in 449.22 for-hire transportation in interstate commerce; or 449.23 (3) one who transports tangible personal property in 449.24 interstate commerce, pursuant to contracts with persons 449.25 described in clause (1) or (2). 449.26 Persons qualifying under clause (2) or (3) must maintain on a 449.27 current basis the same type of mileage records that are required 449.28 by persons specified in clause (1) by the United States 449.29 Department of Transportation. 449.30 (c) Persons who in the course of their business are 449.31 transporting solely their own goods in interstate commerce may 449.32 also register as retailers under rules prescribed by the 449.33 commissioner and pay the taxes imposed by this chapter in 449.34 accordance with this section. 449.35 Sec. 42. Minnesota Statutes 2000, section 297A.91, 449.36 subdivision 1, is amended to read: 450.1 Subdivision 1. [SEIZURE OF PROPERTY USED IN ILLEGAL 450.2 TRANSPORT.] (a) If the retailer does not have a sales or use tax 450.3 permit and has been engaging in transporting personal property 450.4 into the state without payment of the tax, the commissioner of 450.5 revenue or the commissioner's agents may seize in the name of 450.6 the state any truck, automobile, or means of transportation not 450.7 owned or operated by acommonfor-hire carrier, used in the 450.8 illegal importation and transportation of any tangible personal 450.9 property by a retailer or the retailer's agent or employee. The 450.10 commissioner may demand the forfeiture and sale of the truck, 450.11 automobile, or other means of transportation together with the 450.12 property being transported illegally, unless the owner 450.13 establishes to the satisfaction of the commissioner or the court 450.14 that the owner had no notice or knowledge or reason to believe 450.15 that the vehicle was used or intended to be used in any such 450.16 violation. 450.17 (b) Within two days after the seizure, the person making 450.18 the seizure shall deliver an inventory of the vehicle and 450.19 property seized to the person from whom the seizure was made, if 450.20 known, and to any person known or believed to have any right, 450.21 title, interest, or lien on the vehicle or property. The person 450.22 making the seizure shall also file a copy of the inventory with 450.23 the commissioner. 450.24 Sec. 43. Minnesota Statutes 2000, section 297A.92, 450.25 subdivision 2, is amended to read: 450.26 Subd. 2. [AUCTIONS OF SECURITY.] The commissioner may sell 450.27 property deposited as security at public auction if necessary to 450.28 recover the amount required to be collected, including any 450.29 interest and penalties. Notice of the sale must be served upon 450.30 the person who deposited the security. It must be served 450.31 personally, or by mail as prescribed forthe service of a notice450.32of a deficiencyan order of assessment under section 289A.37, 450.33 subdivision 5. After a sale any surplus above the amount due 450.34 not required as security under this section must be returned to 450.35 the person who deposited the security. 450.36 Sec. 44. Minnesota Statutes 2000, section 297A.94, is 451.1 amended to read: 451.2 297A.94 [DEPOSIT OF REVENUES.] 451.3 (a) Except as provided in this section, the commissioner 451.4 shall deposit the revenues, including interest and penalties, 451.5 derived from the taxes imposed by this chapter in the state 451.6 treasury and credit them to the general fund. 451.7 (b) The commissioner shall deposit taxes in the Minnesota 451.8 agricultural and economic account in the special revenue fund if: 451.9 (1) the taxes are derived from sales and use of property 451.10 and services purchased for the construction and operation of an 451.11 agricultural resource project; and 451.12 (2) the purchase was made on or after the date on which a 451.13 conditional commitment was made for a loan guaranty for the 451.14 project under section 41A.04, subdivision 3. 451.15 The commissioner of finance shall certify to the commissioner 451.16 the date on which the project received the conditional 451.17 commitment. The amount deposited in the loan guaranty account 451.18 must be reduced by any refunds and by the costs incurred by the 451.19 department of revenue to administer and enforce the assessment 451.20 and collection of the taxes. 451.21 (c) The commissioner shall deposit the revenues, including 451.22 interest and penalties, derived from the taxes imposed on sales 451.23 and purchases included in section 297A.61, subdivision16,451.24paragraphs (b) and (f)3, paragraph (g), clauses (1) and (5), in 451.25 the state treasury, and credit them as follows: 451.26 (1) first to the general obligation special tax bond debt 451.27 service account in each fiscal year the amount required by 451.28 section 16A.661, subdivision 3, paragraph (b); and 451.29 (2) after the requirements of clause (1) have been met, the 451.30 balance to the general fund. 451.31 (d) The commissioner shall deposit the revenues, including 451.32 interest and penalties, collected under section 297A.64, 451.33 subdivision 5, in the state treasury and credit them to the 451.34 general fund. By July 15 of each year the commissioner shall 451.35 transfer to the highway user tax distribution fund an amount 451.36 equal to the excess fees collected under section 297A.64, 452.1 subdivision 5, for the previous calendar year. 452.2 (e) For fiscal year 2001, 97 percent, and for fiscal year 452.3 2002 and thereafter, 87 percent of the revenues, including 452.4 interest and penalties, transmitted to the commissioner under 452.5 section 297A.65, must be deposited by the commissioner in the 452.6 state treasury as follows: 452.7 (1) 50 percent of the receipts must be deposited in the 452.8 heritage enhancement account in the game and fish fund, and may 452.9 be spent only on activities that improve, enhance, or protect 452.10 fish and wildlife resources, including conservation, 452.11 restoration, and enhancement of land, water, and other natural 452.12 resources of the state; 452.13 (2) 22.5 percent of the receipts must be deposited in the 452.14 natural resources fund, and may be spent only for state parks 452.15 and trails; 452.16 (3) 22.5 percent of the receipts must be deposited in the 452.17 natural resources fund, and may be spent only on metropolitan 452.18 park and trail grants; 452.19 (4) three percent of the receipts must be deposited in the 452.20 natural resources fund, and may be spent only on local trail 452.21 grants; and 452.22 (5) two percent of the receipts must be deposited in the 452.23 natural resources fund, and may be spent only for the Minnesota 452.24 zoological garden, the Como park zoo and conservatory, and the 452.25 Duluth zoo. 452.26 (f) The revenue dedicated under paragraph (e) may not be 452.27 used as a substitute for traditional sources of funding for the 452.28 purposes specified, but the dedicated revenue shall supplement 452.29 traditional sources of funding for those purposes. Land 452.30 acquired with money deposited in the game and fish fund under 452.31 paragraph (e) must be open to public hunting and fishing during 452.32 the open season. At least 87 percent of the money deposited in 452.33 the game and fish fund for improvement, enhancement, or 452.34 protection of fish and wildlife resources under paragraph (e) 452.35 must be allocated for field operations. 452.36 Sec. 45. Minnesota Statutes 2000, section 297A.99, 453.1 subdivision 7, is amended to read: 453.2 Subd. 7. [EXEMPTIONS.] (a) All goods or services that are 453.3 otherwise exempt from taxation under this chapter are exempt 453.4 from a political subdivision's tax. 453.5 (b) The gross receipts from the sale of tangible personal 453.6 property that meets the requirement of section 297A.68, 453.7 subdivision13 or 1415, are exempt, except the qualification 453.8 test applies based on the boundaries of the political 453.9 subdivision instead of the state of Minnesota. 453.10 (c) All mobile transportation equipment, and parts and 453.11 accessories attached to or to be attached to the equipment are 453.12 exempt, if purchased by a holder of a motor carrier direct pay 453.13 permit under section 297A.90. 453.14 Sec. 46. [INSTRUCTIONS TO REVISOR.] 453.15 (a) In the next edition of Minnesota Statutes, the revisor 453.16 of statutes shall put the definitions in section 297A.68, 453.17 subdivision 5, paragraph (d), in alphabetical order and correct 453.18 any references to the reordered definitions. 453.19 (b) In the next edition of Minnesota Statutes, the revisor 453.20 of statutes shall renumber section 297A.68, subdivision 27, as 453.21 297A.67, subdivision 25, and correct any references to the 453.22 renumbered section. 453.23 Sec. 47. [REPEALER.] 453.24 Minnesota Statutes 2000, sections 297A.61, subdivision 16; 453.25 297A.68, subdivision 21; and 297A.71, subdivision 21, are 453.26 repealed. 453.27 Sec. 48. [EFFECTIVE DATE.] 453.28 Each section of this act takes effect at the time the 453.29 section it amends is effective under Laws 2000, chapter 418, 453.30 article 1, section 46. 453.31 ARTICLE 15 453.32 SPECIAL TAXES 453.33 Section 1. Minnesota Statutes 2000, section 69.021, 453.34 subdivision 5, is amended to read: 453.35 Subd. 5. [CALCULATION OF STATE AID.] (a) The amount of 453.36 fire state aid available for apportionment, before the addition 454.1 of the minimum fire state aid allocation amount under 454.2 subdivision 7, is equal to 107 percent of the amount of premium 454.3 taxes paid to the state upon the fire, lightning, sprinkler 454.4 leakage, and extended coverage premiums reported to the 454.5 commissioner by insurers on the Minnesota Firetown Premium 454.6 Report. This amount shall be reduced by the amount required to 454.7 pay the state auditor's costs and expenses of the audits or 454.8 exams of the firefighters relief associations. 454.9 The total amount for apportionment in respect to fire state 454.10 aid must not be less than two percent of the premiums reported 454.11 to the commissioner by insurers on the Minnesota Firetown 454.12 Premium Report after subtracting the following amounts: 454.13 (1) the amount required to pay the state auditor's costs 454.14 and expenses of the audits or exams of the firefighters relief 454.15 associations; and 454.16 (2) one percent of the premiums reported by town and 454.17 farmers' mutual insurance companies and mutual property and 454.18 casualty companies with total assets of $5,000,000 or less. 454.19 (b) The total amount for apportionment as police state aid 454.20 is equal to 104 percent of the amount of premium taxes paid to 454.21 the state on the premiums reported to the commissioner by 454.22 insurers on the Minnesota Aid to Police Premium Report, plus the 454.23 payment amounts received under section 60A.152 since the last 454.24 aid apportionment, and reduced by the amount required to pay the 454.25 costs and expenses of the state auditor for audits or exams of 454.26 police relief associations. The total amount for apportionment 454.27 in respect to the police state aid program must not be less than 454.28 two percent of the amount of premiums reported to the 454.29 commissioner by insurers on the Minnesota Aid to Police Premium 454.30 Report after subtracting the amount required to pay the state 454.31 auditor's cost and expenses of the audits or exams of the police 454.32 relief associations. 454.33 (c) The commissioner shall calculate the percentage of 454.34 increase or decrease reflected in the apportionment over or 454.35 under the previous year's available state aid using the same 454.36 premiums as a basis for comparison. 455.1 (d) The amount for apportionment in respect to peace 455.2 officer state aid under paragraph (b) must be further reduced by 455.3 $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 455.4 and $2,404,000 in fiscal year 2001. These reductions in this 455.5 paragraph cancel to the general fund. 455.6 (e) The amount for apportionment of police state aid under 455.7 paragraph (b) is annually increased by an amount equal to the 455.8 revenues under the tax on automobile risk self-insurance under 455.9 Minnesota Statutes 2000, section 297I.05, subdivision 8, that 455.10 were collected in fiscal year 2001. An amount sufficient to pay 455.11 this increase is annually appropriated from the general fund. 455.12 [EFFECTIVE DATE.] This section is effective beginning with 455.13 fiscal year 2002. 455.14 Sec. 2. Minnesota Statutes 2000, section 168.013, 455.15 subdivision 1a, is amended to read: 455.16 Subd. 1a. [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 455.17 automobiles as defined in section 168.011, subdivision 7, and 455.18 hearses, except as otherwise provided, the tax shall be $10 plus 455.19 an additional tax equal to 1.25 percent of the base value. 455.20 (b) Subject to the classification provisions herein, "base 455.21 value" means the manufacturer's suggested retail price of the 455.22 vehicle including destination charge using list price 455.23 information published by the manufacturer or determined by the 455.24 registrar if no suggested retail price exists, and shall not 455.25 include the cost of each accessory or item of optional equipment 455.26 separately added to the vehicle and the suggested retail price. 455.27 (c) If the manufacturer's list price information contains a 455.28 single vehicle identification number followed by various 455.29 descriptions and suggested retail prices, the registrar shall 455.30 select from those listings only the lowest price for determining 455.31 base value. 455.32 (d) If unable to determine the base value because the 455.33 vehicle is specially constructed, or for any other reason, the 455.34 registrar may establish such value upon the cost price to the 455.35 purchaser or owner as evidenced by a certificate of cost but not 455.36 including Minnesota sales or use tax or any local sales or other 456.1 local tax. 456.2 (e) The registrar shall classify every vehicle in its 456.3 proper base value class as follows: 456.4 FROM TO 456.5 $ 0 $199.99 456.6 200 399.99 456.7 and thereafter a series of classes successively set in brackets 456.8 having a spread of $200 consisting of such number of classes as 456.9 will permit classification of all vehicles. 456.10 (f) The base value for purposes of this section shall be 456.11 the middle point between the extremes of its class. 456.12 (g) The registrar shall establish the base value, when new, 456.13 of every passenger automobile and hearse registered prior to the 456.14 effective date of Extra Session Laws 1971, chapter 31, using 456.15 list price information published by the manufacturer or any 456.16 nationally recognized firm or association compiling such data 456.17 for the automotive industry. If unable to ascertain the base 456.18 value of any registered vehicle in the foregoing manner, the 456.19 registrar may use any other available source or method. The tax 456.20 on all previously registered vehicles shall be computed upon the 456.21 base value thus determined taking into account the depreciation 456.22 provisions of paragraph (h). 456.23 (h)Except as provided in paragraph (i),The annual 456.24 additional tax computed upon the base value as provided herein, 456.25 during the first and second years of vehicle life shall be 456.26 computed upon 100 percent of the base value; for the third and 456.27 fourth years, 90 percent of such value; for the fifth and sixth 456.28 years, 75 percent of such value; for the seventh year, 60 456.29 percent of such value; for the eighth year, 40 percent of such 456.30 value; for the ninth year, 30 percent of such value; for the 456.31 tenth year, ten percent of such value; for the 11th and each 456.32 succeeding year, the sum of $25. 456.33 In no event shall the annual additional tax be less than $25. 456.34 The total tax under this subdivision shall not exceed $189 for 456.35 the first renewal period and shall not exceed $99 for subsequent 456.36 renewal periods. The total tax under this subdivision on any 457.1 vehicle filing its initial registration in Minnesota in the 457.2 second year of vehicle life shall not exceed $189 and shall not 457.3 exceed $99 for subsequent renewal periods. The total tax under 457.4 this subdivision on any vehicle filing its initial registration 457.5 in Minnesota in the third or subsequent year of vehicle life 457.6 shall not exceed $99 and shall not exceed $99 in any subsequent 457.7 renewal period. 457.8 (i)The annual additional tax under paragraph (h) on a457.9motor vehicle on which the first annual tax was paid before457.10January 1, 1990, must not exceed the tax that was paid on that457.11vehicle the year before.The total tax due for the first 457.12 renewal period on any vehicle whose initial registration in 457.13 Minnesota was for a period of less than 12 months under section 457.14 168.017, subdivision 3, paragraph (a), clause (2), shall be the 457.15 ad valorem rate for the remainder of the initial 12-month period 457.16 plus $16 per month on each remaining month. The total tax due 457.17 on the second renewal period shall be $16 per month for the 457.18 remainder of the first 12-month renewal period and $8 per month 457.19 thereafter for a total of 12 months. 457.20 [EFFECTIVE DATE.] This section is effective June 1, 2001, 457.21 for taxes payable on and after that date. 457.22 Sec. 3. Minnesota Statutes 2000, section 239.101, 457.23 subdivision 3, is amended to read: 457.24 Subd. 3. [PETROLEUM INSPECTION FEE.]A person who owns457.25petroleum products held in storage at a pipeline terminal, river457.26terminal, or refinery shall pay a petroleum inspection fee of 85457.27cents for every 1,000 gallons sold or withdrawn from the457.28terminal or refinery storageAn inspection fee is imposed on 457.29 petroleum products when received by the first licensed 457.30 distributor, and on petroleum products received and held for 457.31 sale or use by any person when the petroleum products have not 457.32 previously been received by a licensed distributor. The 457.33 petroleum inspection fee is 85 cents for every 1,000 gallons 457.34 received. The commissioner of revenue shall collect the fee. 457.35 The revenue from the fee must first be applied to cover the 457.36 amounts appropriated for petroleum product quality inspection 458.1 expenses, for the inspection and testing of petroleum product 458.2 measuring equipment, and for petroleum supply monitoring under 458.3 chapter 216C. 458.4 The commissioner of revenue shall credit a person for 458.5 inspection fees previously paid in error or for any material 458.6 exported or sold for export from the state upon filing of a 458.7 report as prescribed by the commissioner of revenue. The 458.8 commissioner of revenue may collect the inspection fee along 458.9 with any taxes due under chapter 296A. 458.10 [EFFECTIVE DATE.] This section is effective for petroleum 458.11 products received on or after July 1, 2001. 458.12 Sec. 4. Minnesota Statutes 2000, section 287.035, is 458.13 amended to read: 458.14 287.035 [IMPOSITION OF TAX.] 458.15 A taxof 23 cents is imposed upon each $100, or fraction458.16thereof,is imposed on the privilege of recording a mortgage. 458.17 The tax rate is .0023 of the debt or portion of a debt that is 458.18 secured by any recorded mortgage of real property located in 458.19 this state. The person liable for the tax is the mortgagee. If 458.20 the mortgagee is a governmental agency, the tax is imposed on 458.21 and must be paid by the mortgagor. A governmental agency 458.22 includes a federal, state, or local government or an 458.23 instrumentality of a federal, state, or local government. The 458.24 tax is not imposed on the lawful interest amounts that may 458.25 accrue with respect to a debt. 458.26 [EFFECTIVE DATE.] This section is effective for mortgages 458.27 recorded after June 30, 2001. 458.28 Sec. 5. Minnesota Statutes 2000, section 287.04, is 458.29 amended to read: 458.30 287.04 [EXEMPTIONS.] 458.31 The tax imposed by section 287.035 does not apply to: 458.32 (a) A decree of marriage dissolution or an instrument made 458.33 pursuant to it. 458.34 (b) A mortgage given to correct a misdescription of the 458.35 mortgaged property. 458.36 (c) A mortgage or other instrument that adds additional 459.1 security for the same debt for which mortgage registry tax has 459.2 been paid. 459.3 (d) A contract for the conveyance of any interest in real 459.4 property, including a contract for deed. 459.5 (e) A mortgage secured by real property subject to the 459.6 minerals production tax of sections 298.24 to 298.28. 459.7 (f) The principal amount ofbonds or other obligations459.8issued by the St. Paul port authority under its common revenue459.9bond fund if each of the following conditions are met.459.10(1) The bonds or other obligations are secured by a459.11mortgage on property, title to which is held by the political459.12subdivision.459.13(2) The mortgage is recorded after May 19, 1993.459.14(3) The bonds or other obligations are either (i)459.15outstanding on May 19, 1993, or (ii) issued in exchange for or459.16to otherwise refund bonds or other obligations the original459.17series of which were issued before May 19, 1993a mortgage loan 459.18 made under a low and moderate income or other affordable housing 459.19 program, if the mortgagee is a federal, state, or local 459.20 government agency. 459.21 (g) Mortgages taken in good faith by persons or 459.22 corporations whose property is expressly exempted from taxation 459.23 by section 272.02, subdivisions 2 to87, or mortgagees that are 459.24 fraternal benefit societies subject to section 64B.24. 459.25 (h) A mortgage amendment or extension, as defined in 459.26 section 287.01. 459.27 [EFFECTIVE DATE.] This section is effective for mortgages 459.28 recorded after June 30, 2001. 459.29 Sec. 6. Minnesota Statutes 2000, section 287.08, is 459.30 amended to read: 459.31 287.08 [TAX, HOW PAYABLE; RECEIPTS.] 459.32 (a) The tax imposed by sections 287.01 to 287.12 must be 459.33 paid to the treasurer of any county in this state in which the 459.34 real property or some part is located at or before the time of 459.35 filing the mortgage for record. The treasurer shall endorse 459.36 receipt on the mortgage and the receipt is conclusive proof that 460.1 the tax has been paid in the amount stated and authorizes any 460.2 county recorder or registrar of titles to record the mortgage. 460.3 Its form, in substance, shall be "registration tax hereon of 460.4 ..................... dollars paid." If the mortgage is exempt 460.5 from taxation the endorsement shall, in substance, be "exempt 460.6 from registration tax." In either case the receipt must be 460.7 signed by the treasurer. In case the treasurer is unable to 460.8 determine whether a claim of exemption should be allowed, the 460.9 tax must be paid as in the case of a taxable mortgage. 460.10 (b)Upon written application of the taxpayer,The county 460.11 treasurer may refund in whole or in part any mortgage registry 460.12 taxthat has been erroneously paid, or a person having paid a460.13mortgage registry tax amount may seek a refund of the tax, or460.14other appropriate relief,overpayment if a written application 460.15 by the taxpayer is submitted to the county treasurer within 460.16 three and one-half years from the date of the overpayment. If 460.17 the county has not issued a denial of the application, the 460.18 taxpayer may bring an action in tax court in the county in which 460.19 the tax was paid at any time after the expiration of six months 460.20 from the time that the application was submitted. A denial of 460.21 refund may be appealed within 60 days from the date of the 460.22 denial by bringing an action in tax court in the county in which 460.23 the tax was paid, within 60 days of the payment. The action is 460.24 commenced by the serving of a petition for relief on the county 460.25 treasurer, and by filing a copy with the court. The county 460.26 attorney shall defend the action. The county treasurer shall 460.27 notify the treasurer of each county that has or would receive a 460.28 portion of the tax as paid. 460.29 (c) If the county treasurer determines a refund should be 460.30 paid, or if a refund is ordered by the court, the county 460.31 treasurer of each county that actually received a portion of the 460.32 tax shall immediately pay a proportionate share of three percent 460.33 of the refund using any available county funds. The county 460.34 treasurer of each county that received, or would have received, 460.35 a portion of the tax shall also pay their county's proportionate 460.36 share of the remaining 97 percent of the court-ordered refund on 461.1 or before the 20th day of the following month using solely the 461.2 mortgage registry tax funds that would be paid to the 461.3 commissioner of revenue on that date under section 287.12. If 461.4 the funds on hand under this procedure are insufficient to fully 461.5 fund 97 percent of the court-ordered refund, the county 461.6 treasurer of the county in which the action was brought shall 461.7 file a claim with the commissioner of revenue under section 461.8 16A.48 for the remaining portion of 97 percent of the refund, 461.9 and shall pay over the remaining portion upon receipt of a 461.10 warrant from the state issued pursuant to the claim. 461.11 (d) When any mortgage covers real property located in more 461.12 than one county in this state the total tax must be paid to the 461.13 treasurer of the county where the mortgage is first presented 461.14 for recording, and the payment must be receipted as provided in 461.15 paragraph (a). If the principal debt or obligation secured by 461.16 such a multiple county mortgage exceeds $1,000,000, the nonstate 461.17 portion of the tax must be divided and paid over by the county 461.18 treasurer receiving it, on or before the 20th day of each month 461.19 after receipt, to the county or counties entitled in the ratio 461.20 that the market value of the real property covered by the 461.21 mortgage in each county bears to the market value of all the 461.22 real property in this state described in the mortgage. In 461.23 making the division and payment the county treasurer shall send 461.24 a statement giving the description of the real property 461.25 described in the mortgage and the market value of the part 461.26 located in each county. For this purpose, the treasurer of any 461.27 county may require the treasurer of any other county to certify 461.28 to the former the market valuation of any tract of real property 461.29 in any mortgage. 461.30 (e) If the mortgagee is a governmental agency as defined in 461.31 section 287.035, the mortgagor must pay the tax imposed by 461.32 sections 287.01 to 287.12. The mortgagee may undertake to 461.33 collect and remit the tax on behalf of the mortgagor. If the 461.34 mortgagee collects money from the mortgagor to remit the tax on 461.35 behalf of the mortgagor, the mortgagee has a fiduciary duty to 461.36 remit the tax on behalf of the mortgagor as to the amount of the 462.1 tax collected for that purpose and the mortgagor is relieved of 462.2 any further obligation to pay the tax as to the amount collected 462.3 by the mortgagee for this purpose. 462.4 [EFFECTIVE DATE.] This section is effective for 462.5 overpayments made after June 30, 2001, and for documents 462.6 executed, recorded, or registered after June 30, 2001. 462.7 Sec. 7. Minnesota Statutes 2000, section 287.13, is 462.8 amended by adding a subdivision to read: 462.9 Subd. 3. [PAYMENT TO MORTGAGEE.] If a mortgagee undertakes 462.10 to collect from the mortgagor the amount of the tax due under 462.11 sections 287.01 to 287.12 as provided in section 287.08, 462.12 paragraph (e), the mortgagor is not subject to the penalties 462.13 under this section and the mortgagee is subject to the 462.14 provisions of this section. 462.15 [EFFECTIVE DATE.] This section is effective for documents 462.16 executed, recorded, or registered after June 30, 2001. 462.17 Sec. 8. Minnesota Statutes 2000, section 287.20, 462.18 subdivision 2, is amended to read: 462.19 Subd. 2. [CONSIDERATION.] (a) "Consideration" means 462.20 generally the total monetary value that is given in return for a 462.21 conveyance of real property in this state and includes all 462.22 lump-sum payments, all prior or future installment payments that 462.23 are required under the agreement between the parties, and the 462.24 fair market value of any property taken, or to be taken, in 462.25 exchange. 462.26 (b) Consideration does not include the reasonable and 462.27 lawful amounts of interest paid for the privilege of paying the 462.28 purchase price in installments and the fair market value of any 462.29 items of intangible personal property that are conveyed by the 462.30 taxable instrument. 462.31 (c) Consideration does not include the amount paid for the 462.32 personal property located on the real property being conveyed 462.33 and transferred as a part of the total consideration, except 462.34 that the amount paid for the personal property located on the 462.35 real property being conveyed must be included if the real 462.36 property being conveyed is a one-, two-, or three-unit 463.1 residential structure. 463.2 (d) When a conveyance of real property is made pursuant to 463.3 a contract for deed, the consideration is the price for the real 463.4 property reflected in the contract; except that, subject to the 463.5 limitations under section 287.221,when the conveyance is made463.6by a person engaged in the business of land sales or463.7construction of buildings and other improvements, or by an463.8affiliated personif the contract for deed, or other agreement 463.9 entered into as a condition to the seller executing the 463.10 contract, requires the property to be improved during the term 463.11 of the contract and the price of the real property as reflected 463.12 in the contract does not include the consideration for the 463.13 required improvements, then the consideration is theamount paid463.14for the landprice for the real property as reflected in the 463.15 contract and the consideration for the required improvements 463.16 added during the term of the contract.By January 1, 2001, the463.17commissioner shall adopt rules that define the phrases "engaged463.18in the business of land sales or construction of buildings and463.19other improvements" and "affiliated person" as those phrases are463.20used in this paragraph.463.21 (e) "Total consideration" has the same meaning as 463.22 consideration. 463.23 (f) "Consideration, exclusive of the value of any lien or 463.24 encumbrance remaining at the time of sale" or "net 463.25 consideration" means the amount of consideration as reduced by 463.26 the amount outstanding under any lien that attached to the real 463.27 property prior to the time of sale and that is not released or 463.28 satisfied as a result of the sale. 463.29 [EFFECTIVE DATE.] This section is effective for deeds 463.30 recorded after June 30, 2001. 463.31 Sec. 9. Minnesota Statutes 2000, section 287.20, 463.32 subdivision 9, is amended to read: 463.33 Subd. 9. [REORGANIZATION.] "Reorganization" means the 463.34 transfer of substantially all of the assets of a corporation, a 463.35 limited liability company, or a partnership not in the usual or 463.36 regular course of business if at the time of the transfer the 464.1 transfer qualifies as: (i) a corporate reorganization under 464.2 section 368(a) of the Internal Revenue Code of 1986, as amended 464.3 through December 31, 2000; or (ii) a transfer pursuant to the 464.4 continuation of an existing partnership under section 708 of the 464.5 Internal Revenue Code of 1986, as amended through December 31, 464.6 2000. 464.7 [EFFECTIVE DATE.] This section is effective for taxable 464.8 deeds recorded or registered on or after July 1, 2001. 464.9 Sec. 10. Minnesota Statutes 2000, section 287.21, 464.10 subdivision 1, is amended to read: 464.11 Subdivision 1. [DETERMINATION OF TAX.] (a) A tax is 464.12 imposed on each deed or instrument by which any real property in 464.13 this state is granted, assigned, transferred, or otherwise 464.14 conveyed. The tax applies against the net consideration. 464.15 (b) The tax is determined in the following manner: (1) 464.16 when transfers are made by instruments pursuant to mergers, 464.17 consolidations, sales, or transfers of substantially all of the 464.18 assets of the entities as defined in section 287.20, subdivision 464.19 9, pursuant to plans of reorganization, the tax is $1.65; (2) 464.20 when there is no consideration or when the consideration, 464.21 exclusive of the value of any lien or encumbrance remaining 464.22 thereon at the time of sale, is $500 or less, the tax is $1.65; 464.23 or (3) when the consideration, exclusive of the value of any 464.24 lien or encumbrance remaining at the time of sale, exceeds $500, 464.25 the tax is$1.65 plus $1.65 for each additional $500 or fraction464.26of that amount.0033 of the net consideration. 464.27 (c) The tax is due at the time a taxable deed or instrument 464.28 is presented for recording. 464.29 [EFFECTIVE DATE.] This section is effective for documents 464.30 executed, recorded, or registered after June 30, 2001. 464.31 Sec. 11. Minnesota Statutes 2000, section 287.28, is 464.32 amended to read: 464.33 287.28 [REFUNDS OR REDEMPTION.] 464.34 (a) The county treasurer mayrefund in whole or in part any464.35tax which has been erroneously paid and may allow for orredeem 464.36such of thestamps,issued under the authority of sections 465.1 287.20 to 287.31as maythat have been spoiled, destroyed, or 465.2 rendered useless or unfit for the purpose intended or for which 465.3 the owner may have no use or which through mistake may have been 465.4 improperly or unnecessarily used.Such orderRedemption shall 465.5 be made only upon written application of the taxpayer. 465.6 (b)A person having paid a deed tax amount may seek a465.7refund of the tax, or other appropriate relief,The county 465.8 treasurer may refund any deed tax overpayment if a written 465.9 application by the taxpayer is submitted to the county treasurer 465.10 within three and one-half years from the date of the 465.11 overpayment. If the county has not issued a denial of the 465.12 application, the taxpayer may bring an action in tax court in 465.13 the county in which the tax was paid at any time after the 465.14 expiration of six months from the time that the application was 465.15 submitted. A denial of refund may be appealed within 60 days 465.16 from the date of the denial by commencing an action in tax court 465.17 in the county where the tax was paid, within 60 days of the465.18payment. The action is commenced by serving a petition for 465.19 relief on the county treasurer, and filing a copy with the 465.20 court. The county attorney shall defend the action. The county 465.21 treasurer shall notify the treasurer of each county that has, or 465.22 would receive a portion of the tax as paid. Any refund of deed 465.23 tax which the county treasurer determines should be made, and 465.24 any court ordered refund of deed tax, shall be accomplished 465.25 using the refund procedures in section 287.08. 465.26 [EFFECTIVE DATE.] This section is effective for 465.27 overpayments made on or after July 1, 2001. 465.28 Sec. 12. Minnesota Statutes 2000, section 296A.15, 465.29 subdivision 1, is amended to read: 465.30 Subdivision 1. [MONTHLY GASOLINE REPORT; SHRINKAGE 465.31 ALLOWANCE.] (a) Except as provided in paragraph (e), on or 465.32 before the 23rd day of each month, every person who is required 465.33 to pay a gasoline tax shall file with the commissioner a report, 465.34 in the form and manner prescribed by the commissioner, showing 465.35 the number of gallons of petroleum products received by the 465.36 reporter during the preceding calendar month, and other 466.1 information the commissioner may require. A written report is 466.2 deemed to have been filed as required in this subdivision if 466.3 postmarked on or before the 23rd day of the month in which the 466.4 tax is payable. 466.5 (b) The number of gallons of gasoline must be reported in 466.6 United States standard liquid gallons, 231 cubic inches, except 466.7 that the commissioner may upon written application and for cause 466.8 shown permit the distributor to report the number of gallons of 466.9 gasoline as corrected to a temperature of 60-degrees 466.10 Fahrenheit. If the application is granted, all gasoline covered 466.11 in the application and allowed by the commissioner must continue 466.12 to be reported by the distributor on the adjusted basis for a 466.13 period of one year from the date of the granting of the 466.14 application. The number of gallons of petroleum products other 466.15 than gasoline must be reported as originally invoiced. Each 466.16 report must show separately the number of gallons of aviation 466.17 gasoline received by the reporter during each calendar month. 466.18 (c) Each report must also include the amount of gasoline 466.19 tax on gasoline received by the reporter during the preceding 466.20 month. In computing the tax a deduction ofthree2.5 percent of 466.21 the quantity of gasoline received by a distributor shall be made 466.22 for evaporation and loss. At the time of reporting, the 466.23 reporter shall submit satisfactory evidence that one-third of 466.24 thethree2.5 percent deduction has been credited or paid to 466.25 dealers on quantities sold to them. 466.26 (d) Each report shall contain a confession of judgment for 466.27 the amount of the tax shown due to the extent not timely paid. 466.28 (e) Under certain circumstances and with the approval of 466.29 the commissioner, taxpayers may be allowed to file reports 466.30 annually. 466.31 [EFFECTIVE DATE.] This section is effective for reports due 466.32 on or after July 1, 2001. 466.33 Sec. 13. Minnesota Statutes 2000, section 296A.16, 466.34 subdivision 2, is amended to read: 466.35 Subd. 2. [FUEL USED IN OTHER VEHICLE; CLAIM FOR REFUND.] 466.36 Any person whoshall buybuys anduseuses gasoline for a 467.1 qualifying purpose other than use in motor vehicles, snowmobiles 467.2 except as provided in clause (2), or motorboats, or special fuel 467.3 for a qualifying purpose other than use in licensed motor 467.4 vehicles, and whoshall havepaid the tax directly or indirectly 467.5 through the amount of the tax being included in the price of the 467.6 gasoline or special fuel, or otherwise, shall be reimbursed and 467.7 repaid the amount of the tax paid upon filing with the 467.8 commissioner a claim for refund in the form and manner 467.9 prescribed by the commissioner, and containing the information 467.10 the commissioner shall require. By signing any such claim which 467.11 is false or fraudulent, the applicant shall be subject to the 467.12 penalties provided in this chapter for knowingly making a false 467.13 claim. The claim shall set forth the total amount of the 467.14 gasoline so purchased and used by the applicant other than in 467.15 motor vehicles, or special fuel purchased and used by the 467.16 applicant other than in licensed motor vehicles, and shall state 467.17 when and for what purpose it was used. When a claim contains an 467.18 error in computation or preparation, the commissioner is 467.19 authorized to adjust the claim in accordance with the evidence 467.20 shown on the claim or other information available to the 467.21 commissioner. The commissioner, on being satisfied that the 467.22 claimant is entitled to the payments, shall approve the claim 467.23 and transmit it to the commissioner of finance. The words 467.24 "gasoline" or "special fuel" as used in this subdivision do not 467.25 include aviation gasoline or special fuel for aircraft. 467.26 Gasoline or special fuel bought and used for a "qualifying 467.27 purpose" means: 467.28 (1) Gasoline or special fuel used in carrying on a trade or 467.29 business, used on a farm situated in Minnesota, and used for a 467.30 farming purpose. "Farm" and "farming purpose" have the meanings 467.31 given them in section 6420(c)(2), (3), and (4) of the Internal 467.32 Revenue Code of 1986, as amended through December 31, 1997. 467.33 (2) Gasoline or special fuel used for off-highway business 467.34 use. "Off-highway business use" means any use off the public 467.35 highway by a person in that person's trade, business, or 467.36 activity for the production of income. Off-highway business use 468.1 includes: 468.2 (i) use of a passenger snowmobile off the public highways 468.3 as part of the operations of a resort as defined in section 468.4 157.15, subdivision 11; and 468.5 (ii) use of gasoline or special fuel to operate a power 468.6 takeoff unit on a vehicle, but not including fuel consumed 468.7 during idling time. 468.8 Off-highway business use does not include: 468.9 (i) use as a fuel in a motor vehicle which, at the time of 468.10 use, is registered or is required to be registered for highway 468.11 use under the laws of any state or foreign country; or 468.12 (ii) use of a licensed motor vehicle fuel tank in lieu of a 468.13 separate storage tank for storing fuel to be used for a 468.14 qualifying purpose, as defined in this section. Fuel purchased 468.15 to be used for a qualifying purpose cannot be placed in the fuel 468.16 tank of a licensed motor vehicle and must be stored in a 468.17 separate supply tank. 468.18 (3) Gasoline or special fuel placed in the fuel tanks of 468.19 new motor vehicles, manufactured in Minnesota, and shipped by 468.20 interstate carrier to destinations in other states or foreign 468.21 countries. 468.22By July 1, 1998, the commissioner shall adopt rules that468.23determine the rates and percentages necessary to develop468.24formulas for calculating the refund under clause (2), item (ii).468.25 [EFFECTIVE DATE.] This section is effective the day 468.26 following final enactment. 468.27 Sec. 14. [296A.201] [ASSESSMENTS.] 468.28 Subdivision 1. [GENERAL RULE.] The commissioner may make 468.29 determinations, corrections, and assessments with respect to any 468.30 tax or fee under this chapter, including interest, additions to 468.31 taxes and fees, and assessable penalties. 468.32 Subd. 2. [COMMISSIONER FILED RETURNS.] If a taxpayer fails 468.33 to file a required return, the commissioner, from information in 468.34 the commissioner's possession or obtainable by the commissioner, 468.35 may make a return for the taxpayer. The return is prima facie 468.36 correct and valid. The commissioner may use statistical or 469.1 other sampling techniques consistent with generally accepted 469.2 auditing standards in examining returns or records and making 469.3 assessments. 469.4 Subd. 3. [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 469.5 TAXPAYER.] (a) If a return has been filed and the commissioner 469.6 determines that the tax or fee disclosed by the return is 469.7 different than the tax or fee determined by the examination, the 469.8 commissioner shall send an order of assessment to the taxpayer. 469.9 If no return has been filed, the commissioner may make a return 469.10 for the taxpayer under subdivision 2 or may send an order of 469.11 assessment under this subdivision. The order must explain the 469.12 basis for the assessment and must explain the taxpayer's appeal 469.13 rights. An order of assessment is final when made but may be 469.14 reconsidered by the commissioner under section 296A.25. 469.15 (b) Penalties under this chapter are not imposed and no 469.16 collection action can be taken, including the filing of liens 469.17 under section 270.69, if the amount shown on the order is paid 469.18 to the commissioner: 469.19 (1) within 60 days after notice of the amount and demand 469.20 for its payment have been mailed to the taxpayer by the 469.21 commissioner; or 469.22 (2) if an administrative appeal is filed under this 469.23 chapter, or a tax court appeal is filed under chapter 271, 469.24 within 60 days following final determination of the appeal if 469.25 the appeal is based upon a constitutional challenge to the tax 469.26 or fee, and if not, when the decision of the tax court is made. 469.27 Subd. 4. [ERRONEOUS REFUNDS.] An erroneous refund is 469.28 considered an underpayment of tax or fee on the date made. An 469.29 assessment of a deficiency arising out of an erroneous refund 469.30 may be made at any time within two years from the making of the 469.31 refund. If part of the refund was induced by fraud or 469.32 misrepresentation of a material fact, the assessment may be made 469.33 at any time. 469.34 Subd. 5. [ASSESSMENT PRESUMED VALID.] A return or 469.35 assessment of tax or fee made by the commissioner is prima facie 469.36 correct and valid. The taxpayer has the burden of establishing 470.1 its incorrectness or invalidity in any related action or 470.2 proceeding. 470.3 Subd. 6. [AGGREGATE REFUND OR ASSESSMENT.] The 470.4 commissioner, on examining returns of a taxpayer for more than 470.5 one year or period, may issue one order covering the period 470.6 under examination that reflects the aggregate refund or 470.7 additional tax or fee due. 470.8 Subd. 7. [SUFFICIENCY OF NOTICE.] An order of assessment, 470.9 sent postage prepaid by United States mail to the taxpayer at 470.10 the taxpayer's last known address, is sufficient even if the 470.11 taxpayer is deceased or is under a legal disability, or, in the 470.12 case of a corporation, even if the corporation has terminated 470.13 its existence, unless the department has been provided with a 470.14 new address by a party authorized to receive notices of 470.15 assessment. 470.16 [EFFECTIVE DATE.] This section is effective the day 470.17 following final enactment. 470.18 Sec. 15. Minnesota Statutes 2000, section 296A.21, 470.19 subdivision 1, is amended to read: 470.20 Subdivision 1. [GENERALRULERULES.] (a) The commissioner 470.21 shall make determinations, corrections,andassessments, and 470.22 refunds with respect to taxes and fees under this chapter, 470.23 including interest, additions to taxes, and assessable 470.24 penalties. Except as otherwise provided in this section, the 470.25 amount of taxes assessable must be assessed within 3-1/2 years 470.26 after the date the return is filed. 470.27 (b) A claim for a refund of an overpayment of state tax or 470.28 fees must be filed within 3-1/2 years from the date prescribed 470.29 for filing the return, plus any extension of time granted for 470.30 filing the return, but only if filed within the extended time; 470.31 or the claim must be filed within one year from the date of an 470.32 order assessing tax or fees, or from the date of a return filed 470.33 by the commissioner, upon payment in full of the tax, fees, 470.34 penalties, and interest shown on the order or return, whichever 470.35 period expires later. 470.36 [EFFECTIVE DATE.] This section is effective the day 471.1 following final enactment. 471.2 Sec. 16. Minnesota Statutes 2000, section 296A.21, 471.3 subdivision 4, is amended to read: 471.4 Subd. 4. [TIME LIMIT FORREPAYMENTCERTAIN REFUNDS.]No471.5repaymentNotwithstanding subdivision 1, paragraph (b), no 471.6 refund under section 296A.16, subdivision 2, shall be made 471.7 unless the claim for refund and invoiceshall beare filed with 471.8 the commissioner within one year from the date of purchase.The471.9postmark on the envelope in which a written claim is mailed471.10shall determine its date of filing.471.11 [EFFECTIVE DATE.] This section is effective the day 471.12 following final enactment. 471.13 Sec. 17. Minnesota Statutes 2000, section 297E.02, 471.14 subdivision 1, is amended to read: 471.15 Subdivision 1. [IMPOSITION.] A tax is imposed on all 471.16 lawful gambling other than (1) pull-tab deals or games; (2) 471.17 tipboard deals or games; and (3) items listed in section 471.18 297E.01, subdivision 8, clauses (4) and (5), at the rate of8.5471.19 7.5 percent on the gross receipts as defined in section 297E.01, 471.20 subdivision 8, less prizes actually paid. The tax imposed by 471.21 this subdivision is in lieu of the tax imposed by section 471.22 297A.02 and all local taxes and license fees except a fee 471.23 authorized under section 349.16, subdivision 8, or a tax 471.24 authorized under subdivision 5. 471.25 The tax imposed under this subdivision is payable by the 471.26 organization or party conducting, directly or indirectly, the 471.27 gambling. 471.28 [EFFECTIVE DATE.] This section is effective July 1, 2001. 471.29 Sec. 18. Minnesota Statutes 2000, section 297E.02, 471.30 subdivision 4, is amended to read: 471.31 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 471.32 on the sale of each deal of pull-tabs and tipboards sold by a 471.33 distributor. The rate of the tax is1.71.5 percent of the 471.34 ideal gross of the pull-tab or tipboard deal. The sales tax 471.35 imposed by chapter 297A on the sale of the pull-tabs and 471.36 tipboards by the distributor is imposed on the retail sales 472.1 price less the tax imposed by this subdivision. The retail sale 472.2 of pull-tabs or tipboards by the organization is exempt from 472.3 taxes imposed by chapter 297A and is exempt from all local taxes 472.4 and license fees except a fee authorized under section 349.16, 472.5 subdivision 8. 472.6 (b) The liability for the tax imposed by this section is 472.7 incurred when the pull-tabs and tipboards are delivered by the 472.8 distributor to the customer or to a common or contract carrier 472.9 for delivery to the customer, or when received by the customer's 472.10 authorized representative at the distributor's place of 472.11 business, regardless of the distributor's method of accounting 472.12 or the terms of the sale. 472.13 The tax imposed by this subdivision is imposed on all sales 472.14 of pull-tabs and tipboards, except the following: 472.15 (1) sales to the governing body of an Indian tribal 472.16 organization for use on an Indian reservation; 472.17 (2) sales to distributors licensed under the laws of 472.18 another state or of a province of Canada, as long as all 472.19 statutory and regulatory requirements are met in the other state 472.20 or province; 472.21 (3) sales of promotional tickets as defined in section 472.22 349.12; and 472.23 (4) pull-tabs and tipboards sold to an organization that 472.24 sells pull-tabs and tipboards under the exemption from licensing 472.25 in section 349.166, subdivision 2. A distributor shall require 472.26 an organization conducting exempt gambling to show proof of its 472.27 exempt status before making a tax-exempt sale of pull-tabs or 472.28 tipboards to the organization. A distributor shall identify, on 472.29 all reports submitted to the commissioner, all sales of 472.30 pull-tabs and tipboards that are exempt from tax under this 472.31 subdivision. 472.32 (c) A distributor having a liability of $120,000 or more 472.33 during a fiscal year ending June 30 must remit all liabilities 472.34 in the subsequent calendar year by a funds transfer as defined 472.35 in section 336.4A-104, paragraph (a). The funds transfer 472.36 payment date, as defined in section 336.4A-401, must be on or 473.1 before the date the tax is due. If the date the tax is due is 473.2 not a funds transfer business day, as defined in section 473.3 336.4A-105, paragraph (a), clause (4), the payment date must be 473.4 on or before the funds transfer business day next following the 473.5 date the tax is due. 473.6 (d) Any customer who purchases deals of pull-tabs or 473.7 tipboards from a distributor may file an annual claim for a 473.8 refund or credit of taxes paid pursuant to this subdivision for 473.9 unsold pull-tab and tipboard tickets. The claim must be filed 473.10 with the commissioner on a form prescribed by the commissioner 473.11 by March 20 of the year following the calendar year for which 473.12 the refund is claimed. The refund must be filed as part of the 473.13 customer's February monthly return. The refund or credit is 473.14 equal to1.71.5 percent of the face value of the unsold 473.15 pull-tab or tipboard tickets, provided that the refund or credit 473.16 will be1.751.6 percent of the face value of the unsold 473.17 pull-tab or tipboard tickets for claims for a refund or credit 473.18 of taxes filed on the February20012002 monthly return. The 473.19 refund claimed will be applied as a credit against tax owing 473.20 under this chapter on the February monthly return. If the 473.21 refund claimed exceeds the tax owing on the February monthly 473.22 return, that amount will be refunded. The amount refunded will 473.23 bear interest pursuant to section 270.76 from 90 days after the 473.24 claim is filed. 473.25 [EFFECTIVE DATE.] This section is effective July 1, 2001. 473.26 Sec. 19. Minnesota Statutes 2000, section 297E.02, 473.27 subdivision 6, is amended to read: 473.28 Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes 473.29 imposed under subdivisions 1 and 4, a tax is imposed on the 473.30 combined receipts of the organization. As used in this section, 473.31 "combined receipts" is the sum of the organization's gross 473.32 receipts from lawful gambling less gross receipts directly 473.33 derived from the conduct of bingo, raffles, and paddlewheels, as 473.34 defined in section 297E.01, subdivision 8, for the fiscal year. 473.35 The combined receipts of an organization are subject to a tax 473.36 computed according to the following schedule: 474.1 If the combined receipts for the The tax is: 474.2 fiscal year are: 474.3 Not over $500,000 zero 474.4 Over $500,000, but not over 474.5 $700,0001.71.5 percent of the 474.6 amount over $500,000, but 474.7 not over $700,000 474.8 Over $700,000, but not over 474.9 $900,000$3,400$3,000 plus3.43.0 474.10 percent of the amount 474.11 over $700,000, but 474.12 not over $900,000 474.13 Over $900,000$10,200$9,000 plus5.1474.14 4.5 percent of the amount 474.15 over $900,000 474.16 [EFFECTIVE DATE.] This section is effective July 1, 2001. 474.17 Sec. 20. Minnesota Statutes 2000, section 297F.16, 474.18 subdivision 4, is amended to read: 474.19 Subd. 4. [ERRONEOUS REFUNDSOR CREDITS.] An erroneous 474.20 refundor creditis considered an underpayment of tax on the 474.21 date made. An assessment of a deficiency arising out of an 474.22 erroneous refundor creditmust be made within3-1/2 years from474.23the date prescribed for filing the return, plus any extension of474.24time granted for filing the return, but only if filed within the474.25extended time, or two years from the time the tax is paid in474.26full, whichever period expires latertwo years from the making 474.27 of the refund. If part of the refund was induced by fraud or 474.28 misrepresentation of a material fact, the assessment may be made 474.29 at any time. 474.30 [EFFECTIVE DATE.] This section is effective the day 474.31 following final enactment. 474.32 Sec. 21. Minnesota Statutes 2000, section 297F.20, 474.33 subdivision 3, is amended to read: 474.34 Subd. 3. [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 474.35 person who files with the commissioner a return, report, or 474.36 other document, or who maintains or provides invoices subject to 475.1 review by the commissioner under this chapter, known by the 475.2 person to be fraudulent or false concerning a material matter, 475.3 is guilty of a felony. 475.4 (b) A person who knowingly aids or assists in, or advises 475.5 in the preparation or presentation of a return, report, invoice, 475.6 or other document that is fraudulent or false concerning a 475.7 material matter, whether or not the falsity or fraud is 475.8 committed with the knowledge or consent of the person authorized 475.9 or required to present the return, report, invoice, or other 475.10 document, is guilty of a felony. 475.11 [EFFECTIVE DATE.] This section is effective for crimes 475.12 occurring on or after July 1, 2001. 475.13 Sec. 22. Minnesota Statutes 2000, section 297G.15, 475.14 subdivision 4, is amended to read: 475.15 Subd. 4. [ERRONEOUS REFUNDSOR CREDITS.] An erroneous 475.16 refundor creditis considered an underpayment of tax on the 475.17 date made. An assessment of a deficiency arising out of an 475.18 erroneous refundor creditmust be made within3-1/2 years from475.19the date prescribed for filing the return, plus any extension of475.20time granted for filing the return, but only if filed within the475.21extended time, or two years from the time the tax is paid in475.22full, whichever period expires latertwo years from the making 475.23 of the refund. If part of the refund was induced by fraud or 475.24 misrepresentation of a material fact, the assessment may be made 475.25 at any time. 475.26 [EFFECTIVE DATE.] This section is effective the day 475.27 following final enactment. 475.28 Sec. 23. Minnesota Statutes 2000, section 297G.16, 475.29 subdivision 5, is amended to read: 475.30 Subd. 5. [TIME LIMIT FOR REFUNDS.] Unless otherwise 475.31 provided in this chapter, a claim for a refund of an overpayment 475.32 of tax must be filed within 3-1/2 years from the date prescribed 475.33 for filing the return, plus any extension of time granted for 475.34 filing the return, but only if filed within the extended time, 475.35or two years from the time the tax is paid in full, whichever475.36period expires later. Claimants under this section are subject476.1to the notice requirements of section 289A.38, subdivision 7or 476.2 within one year from the date of an order assessing tax or from 476.3 the date of a return filed by the commissioner, upon payment in 476.4 full of the tax, penalties, and interest shown on the order or 476.5 return made by the commissioner, whichever period expires later. 476.6 [EFFECTIVE DATE.] This section is effective for returns 476.7 becoming due or orders assessing tax issued on or after the day 476.8 following final enactment. 476.9 Sec. 24. Minnesota Statutes 2000, section 297G.16, 476.10 subdivision 7, is amended to read: 476.11 Subd. 7. [TIME LIMIT FOR A BAD DEBT DEDUCTION.] Claims for 476.12 refund must be filed with the commissioner within one year of 476.13 the filing of the taxpayer's income tax return containing the 476.14 bad debt deduction that is being claimed. Claimants under this 476.15 subdivision are subject to the notice requirements of section 476.16 289A.38, subdivision 7. 476.17 [EFFECTIVE DATE.] This section is effective the day 476.18 following final enactment. 476.19 Sec. 25. Minnesota Statutes 2000, section 297H.02, 476.20 subdivision 2, is amended to read: 476.21 Subd. 2. [RATES.] The rate of tax under this section 476.22 is9.758.8 percent. 476.23 [EFFECTIVE DATE.] This section is effective July 1, 2001, 476.24 and thereafter. 476.25 Sec. 26. Minnesota Statutes 2000, section 297H.03, 476.26 subdivision 2, is amended to read: 476.27 Subd. 2. [RATE.] The rate of the tax under this section is 476.281715.4 percent. 476.29 [EFFECTIVE DATE.] This section is effective July 1, 2001, 476.30 and thereafter. 476.31 Sec. 27. Minnesota Statutes 2000, section 297H.04, 476.32 subdivision 2, is amended to read: 476.33 Subd. 2. [RATE.] (a) Commercial generators that generate 476.34 non-mixed-municipal solid waste shall pay a solid waste 476.35 management tax of6054 cents per noncompacted cubic yard of 476.36 periodic waste collection capacity purchased by the generator, 477.1 based on the size of the container for the non-mixed-municipal 477.2 solid waste, the actual volume, or the weight-to-volume 477.3 conversion schedule in paragraph (c). However, the tax must be 477.4 calculated by the waste management service provider using the 477.5 same method for calculating the waste management service fee so 477.6 that both are calculated according to container capacity, actual 477.7 volume, or weight. 477.8 (b) Notwithstanding section 297H.02, a residential 477.9 generator that generates non-mixed-municipal solid waste shall 477.10 pay a solid waste management tax in the same manner as provided 477.11 in paragraph (a). 477.12 (c) The weight-to-volume conversion schedule for: 477.13 (1) construction debris as defined in section 115A.03, 477.14 subdivision 7, is one ton equals 3.33 cubic yards, or$2$1.80 477.15 per ton; 477.16 (2) industrial waste as defined in section 115A.03, 477.17 subdivision 13a, is equal to6054 cents per cubic yard. The 477.18 commissioner of revenue after consultation with the commissioner 477.19 of the pollution control agency, shall determine, and may 477.20 publish by notice, a conversion schedule for various industrial 477.21 wastes; and 477.22 (3) infectious waste as defined in section 116.76, 477.23 subdivision 12, and pathological waste as defined in section 477.24 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 477.256054 cents per 150 pounds. 477.26 [EFFECTIVE DATE.] This section is effective July 1, 2001, 477.27 and thereafter. 477.28 Sec. 28. Minnesota Statutes 2000, section 297H.04, is 477.29 amended by adding a subdivision to read: 477.30 Subd. 4. [DISPOSAL WITH MIXED WASTE; RATE.] Nonmixed 477.31 municipal solid waste that is separately collected or processed, 477.32 but is disposed of within the permitted boundaries of a land 477.33 disposal facility that is also actively accepting and disposing 477.34 of mixed municipal solid waste, shall be taxed at the rate for 477.35 mixed municipal solid waste, unless the facility owner and 477.36 operator can demonstrate a physical separation between the mixed 478.1 municipal solid waste disposal area and nonmixed municipal solid 478.2 waste disposal area, such that any air or liquid emissions being 478.3 collected from the disposal areas are collected separately. 478.4 [EFFECTIVE DATE.] This section is effective for waste 478.5 disposed of after June 30, 2001. 478.6 Sec. 29. Minnesota Statutes 2000, section 297H.05, is 478.7 amended to read: 478.8 297H.05 [SELF-HAULERS.] 478.9 (a) A self-hauler of mixed municipal solid waste shall pay 478.10 the tax to the operator of the waste management facility to 478.11 which the waste is delivered at the rate imposed under section 478.12 297H.03, based on the sales price of the waste management 478.13 services. 478.14 (b) A self-hauler of non-mixed-municipal solid waste shall 478.15 pay the tax to the operator of the waste management facility to 478.16 which the waste is delivered at the rate imposed under section 478.17 297H.04. 478.18 (c) The tax imposed on the self-hauler of 478.19 non-mixed-municipal solid waste may be based either on the 478.20 capacity of the container, the actual volume, or the 478.21 weight-to-volume conversion schedule in paragraph (d). However, 478.22 the tax must be calculated by the operator using the same method 478.23 for calculating the tipping fee so that both are calculated 478.24 according to container capacity, actual volume, or weight. 478.25 (d) The weight-to-volume conversion schedule for: 478.26 (1) construction debris as defined in section 115A.03, 478.27 subdivision 7, is one ton equals 3.33 cubic yards, or$2$1.80 478.28 per ton; 478.29 (2) industrial waste as defined in section 115A.03, 478.30 subdivision 13a, is equal to6054 cents per cubic yard. The 478.31 commissioner of revenue, after consultation with the 478.32 commissioner of the pollution control agency, shall determine, 478.33 and may publish by notice, a conversion schedule for various 478.34 industrial wastes; and 478.35 (3) infectious waste as defined in section 116.76, 478.36 subdivision 12, and pathological waste as defined in section 479.1 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 479.26054 cents per 150 pounds. 479.3 (e) For mixed municipal solid waste the tax is imposed upon 479.4 the difference between the market price and the tip fee at a 479.5 processing or disposal facility if the tip fee is less than the 479.6 market price and the political subdivision subsidizes the cost 479.7 of service at the facility. The political subdivision is liable 479.8 for the tax. 479.9 [EFFECTIVE DATE.] This section is effective July 1, 2001, 479.10 and thereafter. 479.11 Sec. 30. Minnesota Statutes 2000, section 297H.13, is 479.12 amended by adding a subdivision to read: 479.13 Subd. 6. [NOTICE OF RATE CHANGE.] Waste management service 479.14 providers shall provide notice to each customer of the rate 479.15 decreases provided in this section no later than 90 days after 479.16 the rate decreases take effect. 479.17 [EFFECTIVE DATE.] This section is effective July 1, 2001, 479.18 and thereafter. 479.19 Sec. 31. [297H.14] [SOLID WASTE MANAGEMENT TAX WAIVER.] 479.20 Notwithstanding any law to the contrary, the commissioner 479.21 of revenue may waive solid waste management taxes under 479.22 Minnesota Statutes, chapter 297H, for construction debris 479.23 generated from repair and demolition activities in a disaster or 479.24 emergency area, and disposed of in a waste management facility 479.25 or facilities designated by the commissioner of the pollution 479.26 control agency. The commissioner of revenue shall designate the 479.27 date on which the waiver of taxes for waste transported to the 479.28 designated facilities expires. For purposes of this section, 479.29 "disaster or emergency area" has the meaning given in section 479.30 273.123, subdivision 1. 479.31 Sec. 32. Minnesota Statutes 2000, section 297I.05, is 479.32 amended by adding a subdivision to read: 479.33 Subd. 14. [LIFE INSURANCE.] A tax is imposed on every 479.34 domestic and foreign insurance company equal to 1.75 percent of 479.35 gross premiums less return premiums on all direct business 479.36 received by the insurer or agents of the insurer in Minnesota 480.1 for life insurance, in cash or otherwise, during the year. 480.2 [EFFECTIVE DATE.] This section is effective for premiums 480.3 received after June 30, 2001. 480.4 Sec. 33. Minnesota Statutes 2000, section 297I.40, 480.5 subdivision 1, is amended to read: 480.6 Subdivision 1. [REQUIREMENT TO PAY.] On or beforeApril 1480.7 March 15, June115, September 15, and December1 of each year480.8 15 of the current year, every taxpayer subject to tax under 480.9 section 297I.05, subdivisions 1 to 6, and 12, paragraphs (a), 480.10 clauses (1) to (5), (b), and (e), must pay to the commissioner 480.11 an installment equal toone-thirdone-fourth of the insurer's 480.12 total estimated tax for the current year. 480.13 [EFFECTIVE DATE.] This section is effective for payments 480.14 required to be made after December 31, 2001. 480.15 Sec. 34. Minnesota Statutes 2000, section 297I.40, 480.16 subdivision 2, is amended to read: 480.17 Subd. 2. [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 480.18 any required installment isone-thirdone-fourth of the lesser 480.19 of 480.20 (1) 80 percent of the tax imposed for the current year, or 480.21 (2) 100 percent of the tax paid for the previous year. 480.22 [EFFECTIVE DATE.] This section is effective for payments 480.23 required to be made after December 31, 2001. 480.24 Sec. 35. Minnesota Statutes 2000, section 297I.40, 480.25 subdivision 7, is amended to read: 480.26 Subd. 7. [APRILMARCH ESTIMATED PAYMENT.] A taxpayer who 480.27 claims a refund of an overpayment on an original return may 480.28 elect to have all or any portion of the overpayment applied as a 480.29 credit to theApril 1March 15 estimated tax payment for the 480.30 year following the year of the return. The credit is considered 480.31 applied onApril 1March 15. Notwithstanding section 297I.80, 480.32 the amount credited does not bear interest. 480.33 [EFFECTIVE DATE.] This section is effective for payments 480.34 required to be made after December 31, 2001. 480.35 Sec. 36. Minnesota Statutes 2000, section 349.19, 480.36 subdivision 2a, is amended to read: 481.1 Subd. 2a. [TAX REFUND OR CREDIT.] (a) Each organization 481.2 that receives a refund or credit under section 297E.02, 481.3 subdivision 4, paragraph (d), must within four business days of 481.4 receiving a refund under that paragraph deposit the refund in 481.5 the organization's gambling account. 481.6 (b)In addition, each organization must annually calculate481.75.26 percent of the sum of the amount of tax it paid under:481.8(1) section 297E.02, subdivision 1, on gross receipts, less481.9prizes paid, after August 1, 1998; and481.10(2) section 297E.02, subdivision 6, on combined receipts481.11received after August 1, 1998.481.12(c) The calculated amount must be reported to the board on481.13a form prescribed by the board by March 20 of the year after the481.14calendar year for which the calculated amount is made. The481.15calculated amount must be filed as part of the organization's481.16report of expenditure of profits from lawful gambling required481.17under section 349.19, subdivision 5.481.18(d)The organization may expend the tax refund or credit 481.19 issued under section 297E.02, subdivision 4, paragraph (d),plus481.20the amount calculated under paragraph (b),only for lawful 481.21 purposes, other than lawful purposes described in section 481.22 349.12, subdivision 25, paragraph (a), clauses (8), (9), and 481.23 (12). Amounts subject to this paragraph must be spent for 481.24 qualifying lawful purposes no later than one year after the 481.25 refund or credit is receivedor the tax savings calculated under481.26paragraph (b). 481.27 Sec. 37. Minnesota Statutes 2000, section 461.12, is 481.28 amended by adding a subdivision to read: 481.29 Subd. 8. [NOTICE TO COMMISSIONER.] The licensing authority 481.30 under this section shall, within 30 days of the issuance of a 481.31 license, inform the commissioner of revenue of the licensee's 481.32 name, address, trade name, and the effective and expiration 481.33 dates of the license. The commissioner of revenue must also be 481.34 informed of a license renewal, transfer, cancellation, 481.35 suspension, or revocation during the license period. 481.36 [EFFECTIVE DATE.] This section is effective for licenses 482.1 issued, renewed, transferred, canceled, suspended, or revoked on 482.2 or after January 1, 2002. 482.3 Sec. 38. [REPEALER.] 482.4 (a) Minnesota Statutes 2000, section 296A.16, subdivision 482.5 6, is repealed effective the day following final enactment. 482.6 (b) Minnesota Statutes 2000, sections 297I.05, subdivision 482.7 8; and 297I.30, subdivision 3, are repealed effective for 482.8 calendar years beginning after December 31, 1999. 482.9 (c) Minnesota Rules, parts 8120.0200; 8120.0500; 8120.0700; 482.10 8120.0900; 8120.1300; 8120.1600; 8120.2000; 8120.2100; 482.11 8120.2200; 8120.2300; 8120.2500; 8120.2700; 8120.2800; 482.12 8120.3000; 8120.3200; 8120.4300; 8120.4400; 8120.4500; 482.13 8120.4600; 8120.4900; 8120.5000; 8120.5100; and 8120.5300, are 482.14 repealed effective the day following final enactment. 482.15 ARTICLE 16 482.16 MINERALS TAXES 482.17 Section 1. Minnesota Statutes 2000, section 273.1104, 482.18 subdivision 2, is amended to read: 482.19 Subd. 2. [NOTICE OF MARKET VALUE.] On or before May 1 in 482.20 each year, the commissioner shall send to each person subject to 482.21 the tax on unmined iron ores and to each taxing district 482.22 affected, a notice of the market value of the unmined ores as 482.23 determined by the commissionerprior to adjustment under482.24subdivision 1. Said notice shall be sent by mail directed to 482.25 such person at the address given in the report filed and the 482.26 assessor of such taxing district, but the validity of the tax 482.27 shall not be affected by the failure of the commissioner of 482.28 revenue to mail such notice or the failure of the person subject 482.29 to the tax to receive it. 482.30 On the first secular day following May 20, the commissioner 482.31 of revenue shall hold a hearing which may be adjourned from day 482.32 to day. All relevant and material evidence having probative 482.33 value with respect to the issues shall be submitted at the 482.34 hearing and such hearing shall not be a "contested case" within 482.35 the meaning of section 14.02, subdivision 3. Every person 482.36 subject to such tax may at such hearing present evidence and 483.1 argument on any matter bearing upon the validity or correctness 483.2 of the tax determined to be due, and the commissioner of revenue 483.3 shall review the determination of such tax. 483.4 [EFFECTIVE DATE.] This section is effective the day 483.5 following final enactment. 483.6 Sec. 2. Minnesota Statutes 2000, section 298.01, 483.7 subdivision 3, is amended to read: 483.8 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 483.9 engaged in the business of mining or producing ores in this 483.10 state, except iron ore or taconite concentrates, shall pay an 483.11 occupation tax to the state of Minnesota as provided in this 483.12 subdivision. The tax is determined in the same manner as the 483.13 tax imposed by section 290.02, except that sections 290.05, 483.14 subdivision 1, clause (a), and 290.17, subdivision 4, do not 483.15 apply, and except that the tax rate is 2.45 percent of a 483.16 person's taxable income. The tax is in addition to all other 483.17 taxes. 483.18 [EFFECTIVE DATE.] This section is effective for taxes 483.19 payable May 1, 2002, and thereafter. 483.20 Sec. 3. Minnesota Statutes 2000, section 298.01, 483.21 subdivision 3a, is amended to read: 483.22 Subd. 3a. [GROSS INCOME.] (a) For purposes of determining 483.23 a person's taxable income under subdivision 3, gross income is 483.24 determined by the amount of gross proceeds from mining in this 483.25 state under section 298.016 and includes any gain or loss 483.26 recognized from the sale or disposition of assets used in the 483.27 business in this state. 483.28 (b) In applying section 290.191, subdivision 5, all 483.29 transfers of ores are deemed to be salesoutsideinside this 483.30 stateif the ores are transported out of this state after the483.31ores have been converted to a marketable quality. 483.32 [EFFECTIVE DATE.] This section is effective for taxes 483.33 payable May 1, 2002, and thereafter. 483.34 Sec. 4. Minnesota Statutes 2000, section 298.01, 483.35 subdivision 4, is amended to read: 483.36 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 484.1 CONCENTRATES.] A person engaged in the business of mining or 484.2 producing of iron ore, taconite concentrates or direct reduced 484.3 ore in this state shall pay an occupation tax to the state of 484.4 Minnesota. The tax is determined in the same manner as the tax 484.5 imposed by section 290.02, except that sections 290.05, 484.6 subdivision 1, clause (a), and 290.17, subdivision 4, do not 484.7 apply, and except that the tax rate is 2.45 percent of a 484.8 person's taxable income. The tax is in addition to all other 484.9 taxes. 484.10 [EFFECTIVE DATE.] This section is effective for taxes 484.11 payable May 1, 2002, and thereafter. 484.12 Sec. 5. Minnesota Statutes 2000, section 298.01, 484.13 subdivision 4a, is amended to read: 484.14 Subd. 4a. [GROSS INCOME.] (a) For purposes of determining 484.15 a person's taxable income under subdivision 4, gross income is 484.16 determined by the mine value of the ore mined in Minnesota and 484.17 includes any gain or loss recognized from the sale or 484.18 disposition of assets used in the business in this state. 484.19 (b) Mine value is the value, or selling price, of iron ore 484.20 or taconite concentrates, f.o.b. mine. The mine value is 484.21 calculated by multiplying the iron unit price for the period, as 484.22 determined by the commissioner, by the tons produced and the 484.23 weighted average analysis. 484.24 (c) In applying section 290.191, subdivision 5, all 484.25 transfers of iron ore and taconite concentrates are deemed to be 484.26 salesoutsideinside this stateif the iron ore or taconite484.27concentrates are transported out of this state after the raw484.28iron ore and taconite concentrates have been converted to a484.29marketable quality. 484.30 [EFFECTIVE DATE.] This section is effective for taxes 484.31 payable May 1, 2002, and thereafter. 484.32 Sec. 6. Minnesota Statutes 2000, section 298.225, 484.33 subdivision 1, is amended to read: 484.34 Subdivision 1. (a) The distribution of the taconite 484.35 production tax as provided in section 298.28, subdivisions23 484.36 to 5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 485.1 following amounts: 485.2 (1) the amount distributed pursuant to this section and 485.3 section 298.28, with respect to 1983 production if the 485.4 production for the year prior to the distribution year is no 485.5 less than 42,000,000 taxable tons. If the production is less 485.6 than 42,000,000 taxable tons, the amount of the distributions 485.7 shall be reduced proportionately at the rate of two percent for 485.8 each 1,000,000 tons, or part of 1,000,000 tons by which the 485.9 production is less than 42,000,000 tons; or 485.10 (2)(i) for the distributions made pursuant to section 485.11 298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 485.12 (c), 40.5 percent of the amount distributed pursuant to this 485.13 section and section 298.28, with respect to 1983 production; 485.14 (ii) for the distributions made pursuant to section 298.28, 485.15 subdivision 5, paragraphs (b) and (d), 75 percent of the amount 485.16 distributed pursuant to this section and section 298.28, with 485.17 respect to 1983 production. 485.18 (b) The distribution of the taconite production tax as 485.19 provided in section 298.28, subdivision 2, shall equal the 485.20 following amount: 485.21 (1) if the production for the year prior to the 485.22 distribution year is at least 42,000,000 taxable tons, the 485.23 amount distributed pursuant to this section and section 298.28, 485.24 with respect to 1999 production; or 485.25 (2) if the production for the year prior to the 485.26 distribution year is less than 42,000,000 taxable tons, the 485.27 amount distributed pursuant to this section and section 298.28 485.28 with respect to 1999 production, reduced proportionately at the 485.29 rate of two percent for each 1,000,000 tons or part of 1,000,000 485.30 tons by which the production is less than 42,000,000 tons. 485.31 [EFFECTIVE DATE; RETROACTIVE APPLICATION.] This section is 485.32 effective for distributions in 2001 and thereafter. For the 485.33 distribution paid in February 2001 only, as soon as practicable 485.34 after the date of final enactment of this act, the commissioner 485.35 of Iron Range Resources and Rehabilitation shall pay two-thirds 485.36 of any additional amounts required under this section from the 486.1 taconite environmental protection fund and one-third of any 486.2 additional amounts required under this section from the 486.3 northeast Minnesota economic protection trust fund, as directed 486.4 by the commissioner of revenue. 486.5 Sec. 7. Minnesota Statutes 2000, section 298.24, 486.6 subdivision 1, is amended to read: 486.7 Subdivision 1. (a) For concentrate produced in19992001, 486.8 2002, and 2003, there is imposed upon taconite and iron 486.9 sulphides, and upon the mining and quarrying thereof, and upon 486.10 the production of iron ore concentrate therefrom, and upon the 486.11 concentrate so produced, a tax of$2.141$2.013 per gross ton of 486.12 merchantable iron ore concentrate produced therefrom. 486.13 (b) For concentrates produced in20002004 and subsequent 486.14 years, the tax rate shall be equal to the preceding year's tax 486.15 rate plus an amount equal to the preceding year's tax rate 486.16 multiplied by the percentage increase in the implicit price 486.17 deflator from the fourth quarter of the second preceding year to 486.18 the fourth quarter of the preceding year. "Implicit price 486.19 deflator" means the implicit price deflator for the gross 486.20 domestic product prepared by the bureau of economic analysis of 486.21 the United States Department of Commerce. 486.22(c)On concentrates produced in 1997 and thereafter, an 486.23 additional tax is imposed equal to three cents per gross ton of 486.24 merchantable iron ore concentrate for each one percent that the 486.25 iron content of the product exceeds 72 percent, when dried at 486.26 212 degrees Fahrenheit. 486.27(d)(c) The tax shall be imposed on the average of the 486.28 production for the current year and the previous two years. The 486.29 rate of the tax imposed will be the current year's tax rate. 486.30 This clause shall not apply in the case of the closing of a 486.31 taconite facility if the property taxes on the facility would be 486.32 higher if this clause and section 298.25 were not applicable. 486.33(e)(d) If the tax or any part of the tax imposed by this 486.34 subdivision is held to be unconstitutional, a tax 486.35 of$2.141$2.013 per gross ton of merchantable iron ore 486.36 concentrate produced shall be imposed. 487.1(f)(e) Consistent with the intent of this subdivision to 487.2 impose a tax based upon the weight of merchantable iron ore 487.3 concentrate, the commissioner of revenue may indirectly 487.4 determine the weight of merchantable iron ore concentrate 487.5 included in fluxed pellets by subtracting the weight of the 487.6 limestone, dolomite, or olivine derivatives or other basic flux 487.7 additives included in the pellets from the weight of the 487.8 pellets. For purposes of this paragraph, "fluxed pellets" are 487.9 pellets produced in a process in which limestone, dolomite, 487.10 olivine, or other basic flux additives are combined with 487.11 merchantable iron ore concentrate. No subtraction from the 487.12 weight of the pellets shall be allowed for binders, mineral and 487.13 chemical additives other than basic flux additives, or moisture. 487.14(g)(f)(1) Notwithstanding any other provision of this 487.15 subdivision, for the first two years of a plant's production of 487.16 direct reduced ore, no tax is imposed under this section. As 487.17 used in this paragraph, "direct reduced ore" is ore that results 487.18 in a product that has an iron content of at least 75 percent. 487.19 For the third year of a plant's production of direct reduced 487.20 ore, the rate to be applied to direct reduced ore is 25 percent 487.21 of the rate otherwise determined under this subdivision. For 487.22 the fourth such production year, the rate is 50 percent of the 487.23 rate otherwise determined under this subdivision; for the fifth 487.24 such production year, the rate is 75 percent of the rate 487.25 otherwise determined under this subdivision; and for all 487.26 subsequent production years, the full rate is imposed. 487.27 (2) Subject to clause (1), production of direct reduced ore 487.28 in this state is subject to the tax imposed by this section, but 487.29 if that production is not produced by a producer of taconite or 487.30 iron sulfides, the production of taconite or iron sulfides 487.31 consumed in the production of direct reduced iron in this state 487.32 is not subject to the tax imposed by this section on taconite or 487.33 iron sulfides. 487.34 Sec. 8. Minnesota Statutes 2000, section 298.27, is 487.35 amended to read: 487.36 298.27 [COLLECTION AND PAYMENT OF TAX.] 488.1 The taxes provided by section 298.24 shall be paid directly 488.2 to each eligible county and the iron range resources and 488.3 rehabilitation board. The commissioner of revenue shall notify 488.4 each producer of the amount to be paid each recipient prior to 488.5 February 15. Every person subject to taxes imposed by section 488.6 298.24 shall file a correct report covering the preceding year. 488.7 The report must contain the information required by the 488.8 commissioner. The report shall be filed on or before February 488.9 1. A remittance equal to10050 percent of the total tax 488.10 required to be paid hereunder shall be paid on or before 488.11 February 24 and June 15.On or before February 25,The county 488.12 auditor shall make distribution of the payment received by the 488.13 countyin the manner provided by section 298.28on March 1 and 488.14 June 24. Reports shall be made and hearings held upon the 488.15 determination of the tax in accordance with procedures 488.16 established by the commissioner of revenue. The commissioner of 488.17 revenue shall have authority to make reasonable rules as to the 488.18 form and manner of filing reports necessary for the 488.19 determination of the tax hereunder, and by such rules may 488.20 require the production of such information as may be reasonably 488.21 necessary or convenient for the determination and apportionment 488.22 of the tax. All the provisions of the occupation tax law with 488.23 reference to the assessment and determination of the occupation 488.24 tax, including all provisions for appeals from or review of the 488.25 orders of the commissioner of revenue relative thereto, but not 488.26 including provisions for refunds, are applicable to the taxes 488.27 imposed by section 298.24 except in so far as inconsistent 488.28 herewith. If any person subject to section 298.24 shall fail to 488.29 make the report provided for in this section at the time and in 488.30 the manner herein provided, the commissioner of revenue shall in 488.31 such case, upon information possessed or obtained, ascertain the 488.32 kind and amount of ore mined or produced and thereon find and 488.33 determine the amount of the tax due from such person. There 488.34 shall be added to the amount of tax due a penalty for failure to 488.35 report on or before February 1, which penalty shall equal ten 488.36 percent of the tax imposed and be treated as a part thereof. 489.1 If any person responsible for making a tax payment at the 489.2 time and in the manner herein provided fails to do so, there 489.3 shall be imposed a penalty equal to ten percent of the amount so 489.4 due, which penalty shall be treated as part of the tax due. 489.5 In the case of any underpayment of the tax payment required 489.6 herein, there may be added and be treated as part of the tax due 489.7 a penalty equal to ten percent of the amount so underpaid. 489.8 A person having a liability of $120,000 or more during a 489.9 calendar year must remit all liabilities by means of a funds 489.10 transfer as defined in section 336.4A-104, paragraph (a). The 489.11 funds transfer payment date, as defined in section 336.4A-401, 489.12 must be on or before the date the tax is due. If the date the 489.13 tax is due is not a funds transfer business day, as defined in 489.14 section 336.4A-105, paragraph (a), clause (4), the payment date 489.15 must be on or before the funds transfer business day next 489.16 following the date the tax is due. 489.17 [EFFECTIVE DATE.] This section is effective for the 2001 489.18 production year and thereafter. 489.19 Sec. 9. Minnesota Statutes 2000, section 298.28, 489.20 subdivision 6, is amended to read: 489.21 Subd. 6. [PROPERTY TAX RELIEF.] (a) In19992001, 2002, 489.22 and 2003,38.8122.81 cents per taxable ton, and in 2004 and 489.23 thereafter, 38.81 cents per taxable ton, less any amount 489.24 required to be distributed under paragraphs (b) and (c), and 489.25 less any amount required to be deducted under paragraph (d), 489.26 must be allocated to St. Louis county acting as the counties' 489.27 fiscal agent, to be distributed as provided in sections 273.134 489.28 to 273.136. 489.29 (b) If an electric power plant owned by and providing the 489.30 primary source of power for a taxpayer mining and concentrating 489.31 taconite is located in a county other than the county in which 489.32 the mining and the concentrating processes are conducted, .1875 489.33 cent per taxable ton of the tax imposed and collected from such 489.34 taxpayer shall be paid to the county. 489.35 (c) If an electric power plant owned by and providing the 489.36 primary source of power for a taxpayer mining and concentrating 490.1 taconite is located in a school district other than a school 490.2 district in which the mining and concentrating processes are 490.3 conducted, .7282 cent per taxable ton of the tax imposed and 490.4 collected from the taxpayer shall be paid to the school district. 490.5 (d) Two cents per taxable ton must be deducted from the 490.6 amount allocated to the St. Louis county auditor under paragraph 490.7 (a). 490.8 Sec. 10. Minnesota Statutes 2000, section 298.28, 490.9 subdivision 9a, is amended to read: 490.10 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 490.1115.431.4 cents per ton for distributions in1999, 2000, 2001,490.12and2002, 2003, and 2004, and 15.4 cents per ton for 490.13 distributions in 2005 and thereafter must be paid to the 490.14 taconite economic development fund. No distribution shall be 490.15 made under this paragraph in any year in which total industry 490.16 production falls below 30 million tons. 490.17 (b) An amount equal to 50 percent of the tax under section 490.18 298.24 for concentrate sold in the form of pellet chips and 490.19 fines not exceeding 5/16 inch in size and not including crushed 490.20 pellets shall be paid to the taconite economic development 490.21 fund. The amount paid shall not exceed $700,000 annually for 490.22 all companies. If the initial amount to be paid to the fund 490.23 exceeds this amount, each company's payment shall be prorated so 490.24 the total does not exceed $700,000. 490.25 Sec. 11. Minnesota Statutes 2000, section 298.2961, 490.26 subdivision 2, is amended to read: 490.27 Subd. 2. [PROJECTS; APPROVAL.] (a) Projects funded must be 490.28 for: 490.29 (1) environmentally unique reclamation projects;or490.30 (2) pit or plant expansions or modernizations other than 490.31 for a value added iron products plant that extend the life of 490.32 the plant; or 490.33 (3) haulage trucks and equipment and mining shovels. 490.34 (b) To be proposed by the board, a project must be approved 490.35 by at least eight iron range resources and rehabilitation board 490.36 members. The money for a project may be spent only upon 491.1 approval of the project by the governor. The board may submit 491.2 supplemental projects for approval at any time. 491.3 (c) The board may require that it receive an equity 491.4 percentage in any project to which it contributes under this 491.5 section. 491.6 Sec. 12. Minnesota Statutes 2000, section 298.75, 491.7 subdivision 1, is amended to read: 491.8 Subdivision 1. [DEFINITIONS.] Except as may otherwise be 491.9 provided, the following words, when used in this section, shall 491.10 have the meanings herein ascribed to them. 491.11 (1) "Aggregate material" shall mean nonmetallic natural 491.12 mineral aggregate including, but not limited to sand, silica 491.13 sand, gravel, building stone, crushed rock, limestone, and 491.14 granite. Aggregate material shall not include dimension stone 491.15 and dimension granite. Aggregate material must be measured or 491.16 weighed after it has been extracted from the pit, quarry, or 491.17 deposit. 491.18 (2) "Person" shall mean any individual, firm, partnership, 491.19 corporation, organization, trustee, association, or other entity. 491.20 (3) "Operator" shall mean any person engaged in the 491.21 business of removing aggregate material from the surface or 491.22 subsurface of the soil, for the purpose of sale, either directly 491.23 or indirectly, through the use of the aggregate material in a 491.24 marketable product or service. 491.25 (4) "Extraction site" shall mean a pit, quarry, or deposit 491.26 containing aggregate material and any contiguous property to the 491.27 pit, quarry, or deposit which is used by the operator for 491.28 stockpiling the aggregate material. 491.29 (5) "Importer" shall mean any person who buys aggregate 491.30 material produced from a county not listed in paragraph (6) or 491.31 another state and causes the aggregate material to be imported 491.32 into a county in this state which imposes a tax on aggregate 491.33 material. 491.34 (6)(a) "County" shall mean the counties of Pope, Stearns, 491.35 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 491.36 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 492.1 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 492.2 Sibley, Hennepin, Washington, Chisago, and Ramsey. 492.3 (b) "County" also means any other county whose board has 492.4 voted after a public hearing to impose the tax under this 492.5 section, has notified the commissioner of the imposition of the 492.6 tax, and either (1) no reverse referendum under subdivision 9 492.7 has been requested, or (2) a referendum has been held and the 492.8 majority of the votes cast are in the affirmative. 492.9 [EFFECTIVE DATE.] This section is effective the day 492.10 following final enactment. 492.11 Sec. 13. Minnesota Statutes 2000, section 298.75, 492.12 subdivision 2, is amended to read: 492.13 Subd. 2. A county shall impose upon every importer and 492.14 operator a production taxequalup to ten cents per cubic yard 492.15 or up to seven cents per ton of aggregate material removed 492.16 except that the county board may decide not to impose this tax 492.17 if it determines that in the previous year operators removed 492.18 less than 20,000 tons or 14,000 cubic yards of aggregate 492.19 material from that county. The tax shall be imposed on 492.20 aggregate material produced in the county when the aggregate 492.21 material is transported from the extraction site or sold. When 492.22 aggregate material is stored in a stockpile within the state of 492.23 Minnesota and a public highway, road or street is not used for 492.24 transporting the aggregate material, the tax shall be imposed 492.25 either when the aggregate material is sold, or when it is 492.26 transported from the stockpile site, or when it is used from the 492.27 stockpile, whichever occurs first. The tax shall be imposed on 492.28 an importer when the aggregate material is imported into the 492.29 county that imposes the tax. 492.30 If the aggregate material is transported directly from the 492.31 extraction site to a waterway, railway, or another mode of 492.32 transportation other than a highway, road or street, the tax 492.33 imposed by this section shall be apportioned equally between the 492.34 county where the aggregate material is extracted and the county 492.35 to which the aggregate material is originally transported. If 492.36 that destination is not located in Minnesota, then the county 493.1 where the aggregate material was extracted shall receive all of 493.2 the proceeds of the tax. 493.3 [EFFECTIVE DATE.] This section is effective for aggregate 493.4 material sold, imported, transported, or used from a stockpile 493.5 after June 30, 2001. 493.6 Sec. 14. Minnesota Statutes 2000, section 298.75, is 493.7 amended by adding a subdivision to read: 493.8 Subd. 9. [REVERSE REFERENDUM.] The reverse referendum 493.9 procedure in this subdivision applies only if a county has 493.10 adopted an aggregate material removal production tax under 493.11 subdivision 1, paragraph (6)(b). 493.12 If, within 21 days after the public hearing and adoption of 493.13 the tax under subdivision 1, a petition signed by voters equal 493.14 in number to five percent of the votes cast in the county in the 493.15 last general election requesting a referendum on the imposition 493.16 of the tax is filed with the county auditor, the tax is not 493.17 effective until it has been submitted to the voters at a special 493.18 election and a majority of votes cast on the question of 493.19 approving the imposition of the tax are in the affirmative. The 493.20 commissioner of revenue shall prepare the form of the question 493.21 to be presented at the referendum. 493.22 The county shall notify the county auditor of the results 493.23 of the referendum. If the majority of the votes cast on the 493.24 question are in the affirmative, the tax imposed under 493.25 subdivision 1 takes effect. If the majority of the votes cast 493.26 on the question are in the negative, the tax does not take 493.27 effect. 493.28 [EFFECTIVE DATE.] This section is effective for aggregate 493.29 material removal production taxes first imposed after the day 493.30 following final enactment. 493.31 Sec. 15. [APPROPRIATION.] 493.32 The commissioner of revenue shall determine a state aid 493.33 amount equal to a tax of 16 cents per taxable ton of iron ore 493.34 concentrates for production years 2001, 2002, and 2003. There 493.35 is appropriated from the general fund to the commissioner an 493.36 amount equal to the state aid determined under this section in 494.1 each of fiscal years 2002, 2003, and 2004 which is added to the 494.2 taconite production tax distributions in 2002, 2003, and 2004 494.3 and must be distributed under Minnesota Statutes, section 494.4 298.28, as if the aid were production tax revenues. 494.5 ARTICLE 17 494.6 FEDERAL UPDATE 494.7 Section 1. Minnesota Statutes 2000, section 289A.02, 494.8 subdivision 7, is amended to read: 494.9 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 494.10 defined otherwise, "Internal Revenue Code" means the Internal 494.11 Revenue Code of 1986, as amended through December 31,19992000. 494.12 [EFFECTIVE DATE.] This section is effective the day 494.13 following final enactment. 494.14 Sec. 2. Minnesota Statutes 2000, section 290.01, 494.15 subdivision 19, is amended to read: 494.16 Subd. 19. [NET INCOME.] The term "net income" means the 494.17 federal taxable income, as defined in section 63 of the Internal 494.18 Revenue Code of 1986, as amended through the date named in this 494.19 subdivision, incorporating any elections made by the taxpayer in 494.20 accordance with the Internal Revenue Code in determining federal 494.21 taxable income for federal income tax purposes, and with the 494.22 modifications provided in subdivisions 19a to 19f. 494.23 In the case of a regulated investment company or a fund 494.24 thereof, as defined in section 851(a) or 851(g) of the Internal 494.25 Revenue Code, federal taxable income means investment company 494.26 taxable income as defined in section 852(b)(2) of the Internal 494.27 Revenue Code, except that: 494.28 (1) the exclusion of net capital gain provided in section 494.29 852(b)(2)(A) of the Internal Revenue Code does not apply; 494.30 (2) the deduction for dividends paid under section 494.31 852(b)(2)(D) of the Internal Revenue Code must be applied by 494.32 allowing a deduction for capital gain dividends and 494.33 exempt-interest dividends as defined in sections 852(b)(3)(C) 494.34 and 852(b)(5) of the Internal Revenue Code; and 494.35 (3) the deduction for dividends paid must also be applied 494.36 in the amount of any undistributed capital gains which the 495.1 regulated investment company elects to have treated as provided 495.2 in section 852(b)(3)(D) of the Internal Revenue Code. 495.3 The net income of a real estate investment trust as defined 495.4 and limited by section 856(a), (b), and (c) of the Internal 495.5 Revenue Code means the real estate investment trust taxable 495.6 income as defined in section 857(b)(2) of the Internal Revenue 495.7 Code. 495.8 The net income of a designated settlement fund as defined 495.9 in section 468B(d) of the Internal Revenue Code means the gross 495.10 income as defined in section 468B(b) of the Internal Revenue 495.11 Code. 495.12 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 495.13 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 495.14 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 495.15 Protection Act, Public Law Number 104-188, the provisions of 495.16 Public Law Number 104-117, the provisions of sections 313(a) and 495.17 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 495.18 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 495.19 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 495.20 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 495.21 Public Law Number 105-34, the provisions of section 6010 of the 495.22 Internal Revenue Service Restructuring and Reform Act of 1998, 495.23 Public Law Number 105-206, and the provisions of section 4003 of 495.24 the Omnibus Consolidated and Emergency Supplemental 495.25 Appropriations Act, 1999, Public Law Number 105-277, and the 495.26 provisions of section 318 of the Consolidated Appropriation Act 495.27 of 2001, Public Law Number 106-554, shall become effective at 495.28 the time they become effective for federal purposes. 495.29 The Internal Revenue Code of 1986, as amended through 495.30 December 31, 1996, shall be in effect for taxable years 495.31 beginning after December 31, 1996. 495.32 The provisions of sections 202(a) and (b), 221(a), 225, 495.33 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 495.34 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 495.35 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 495.36 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 496.1 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 496.2 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 496.3 7002, and 7003 of the Internal Revenue Service Restructuring and 496.4 Reform Act of 1998, Public Law Number 105-206, the provisions of 496.5 section 3001 of the Omnibus Consolidated and Emergency 496.6 Supplemental Appropriations Act, 1999, Public Law Number 496.7 105-277, and the provisions of section 3001 of the Miscellaneous 496.8 Trade and Technical Corrections Act of 1999, Public Law Number 496.9 106-36, and the provisions of section 316 of the Consolidated 496.10 Appropriation Act of 2001, Public Law Number 106-554, shall 496.11 become effective at the time they become effective for federal 496.12 purposes. 496.13 The Internal Revenue Code of 1986, as amended through 496.14 December 31, 1997, shall be in effect for taxable years 496.15 beginning after December 31, 1997. 496.16 The provisions of sections 5002, 6009, 6011, and 7001 of 496.17 the Internal Revenue Service Restructuring and Reform Act of 496.18 1998, Public Law Number 105-206, the provisions of section 9010 496.19 of the Transportation Equity Act for the 21st Century, Public 496.20 Law Number 105-178, the provisions of sections 1004, 4002, and 496.21 5301 of the Omnibus Consolidation and Emergency Supplemental 496.22 Appropriations Act, 1999, Public Law Number 105-277, the 496.23 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 496.24 Act of 1998, Public Law Number 105-369,andthe provisions of 496.25 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 496.26 Work Incentives Improvement Act of 1999, Public Law Number 496.27 106-170, the provisions of the Installment Tax Correction Act of 496.28 2000, Public Law Number 106-573, and the provisions of section 496.29 309 of the Consolidated Appropriation Act of 2001, Public Law 496.30 Number 106-554, shall become effective at the time they become 496.31 effective for federal purposes. 496.32 The Internal Revenue Code of 1986, as amended through 496.33 December 31, 1998, shall be in effect for taxable years 496.34 beginning after December 31, 1998. 496.35 The provisions of the FSC Repeal and Extraterritorial 496.36 Income Exclusion Act of 2000, Public Law Number 106-519, shall 497.1 become effective at the time it became effective for federal 497.2 purposes. 497.3 The Internal Revenue Code of 1986, as amended through 497.4 December 31, 1999, shall be in effect for taxable years 497.5 beginning after December 31, 1999. The provisions of sections 497.6 306 and 401 of the Consolidated Appropriation Act of 2001, 497.7 Public Law Number 106-554, shall become effective at the same 497.8 time it became effective for federal purposes. 497.9 The Internal Revenue Code of 1986, as amended through 497.10 December 31, 2000, shall be in effect for taxable years 497.11 beginning after December 31, 2000. 497.12 Except as otherwise provided, references to the Internal 497.13 Revenue Code in subdivisions 19a to 19g mean the code in effect 497.14 for purposes of determining net income for the applicable year. 497.15 [EFFECTIVE DATE.] This section is effective the day 497.16 following final enactment. 497.17 Sec. 3. Minnesota Statutes 2000, section 290.01, 497.18 subdivision 31, is amended to read: 497.19 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 497.20 defined otherwise, "Internal Revenue Code" means the Internal 497.21 Revenue Code of 1986, as amended through December 31,19992000. 497.22 [EFFECTIVE DATE.] This section is effective at the same 497.23 time and in the same manner as the federal changes made by the 497.24 FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 497.25 Public Law Number 106-519, and the Consolidated Appropriation 497.26 Act of 2001, Public Law Number 106-554, becomes effective. 497.27 Sec. 4. Minnesota Statutes 2000, section 290.191, 497.28 subdivision 5, is amended to read: 497.29 Subd. 5. [DETERMINATION OF SALES FACTOR.] For purposes of 497.30 this section, the following rules apply in determining the sales 497.31 factor. 497.32 (a) The sales factor includes all sales, gross earnings, or 497.33 receipts received in the ordinary course of the business, except 497.34 that the following types of income are not included in the sales 497.35 factor: 497.36 (1) interest; 498.1 (2) dividends; 498.2 (3) sales of capital assets as defined in section 1221 of 498.3 the Internal Revenue Code; 498.4 (4) sales of property used in the trade or business, except 498.5 sales of leased property of a type which is regularly sold as 498.6 well as leased; 498.7 (5) sales of debt instruments as defined in section 498.8 1275(a)(1) of the Internal Revenue Code or sales of stock;and498.9 (6) royalties, fees, or other like income of a type which 498.10 qualify for a subtraction from federal taxable income under 498.11 section 290.01, subdivision 19(d)(11); and 498.12 (7) all sales, gross earnings, or receipts used to generate 498.13 income excluded under section 114 of the Internal Revenue Code. 498.14 (b) Sales of tangible personal property are made within 498.15 this state if the property is received by a purchaser at a point 498.16 within this state, and the taxpayer is taxable in this state, 498.17 regardless of the f.o.b. point, other conditions of the sale, or 498.18 the ultimate destination of the property. 498.19 (c) Tangible personal property delivered to a common or 498.20 contract carrier or foreign vessel for delivery to a purchaser 498.21 in another state or nation is a sale in that state or nation, 498.22 regardless of f.o.b. point or other conditions of the sale. 498.23 (d) Notwithstanding paragraphs (b) and (c), when 498.24 intoxicating liquor, wine, fermented malt beverages, cigarettes, 498.25 or tobacco products are sold to a purchaser who is licensed by a 498.26 state or political subdivision to resell this property only 498.27 within the state of ultimate destination, the sale is made in 498.28 that state. 498.29 (e) Sales made by or through a corporation that is 498.30 qualified as a domestic international sales corporation under 498.31 section 992 of the Internal Revenue Code are not considered to 498.32 have been made within this state. 498.33 (f) Sales, rents, royalties, and other income in connection 498.34 with real property is attributed to the state in which the 498.35 property is located. 498.36 (g) Receipts from the lease or rental of tangible personal 499.1 property, including finance leases and true leases, must be 499.2 attributed to this state if the property is located in this 499.3 state and to other states if the property is not located in this 499.4 state. Receipts from the lease or rental of moving property 499.5 including, but not limited to, motor vehicles, rolling stock, 499.6 aircraft, vessels, or mobile equipment are included in the 499.7 numerator of the receipts factor to the extent that the property 499.8 is used in this state. The extent of the use of moving property 499.9 is determined as follows: 499.10 (1) A motor vehicle is used wholly in the state in which it 499.11 is registered. 499.12 (2) The extent that rolling stock is used in this state is 499.13 determined by multiplying the receipts from the lease or rental 499.14 of the rolling stock by a fraction, the numerator of which is 499.15 the miles traveled within this state by the leased or rented 499.16 rolling stock and the denominator of which is the total miles 499.17 traveled by the leased or rented rolling stock. 499.18 (3) The extent that an aircraft is used in this state is 499.19 determined by multiplying the receipts from the lease or rental 499.20 of the aircraft by a fraction, the numerator of which is the 499.21 number of landings of the aircraft in this state and the 499.22 denominator of which is the total number of landings of the 499.23 aircraft. 499.24 (4) The extent that a vessel, mobile equipment, or other 499.25 mobile property is used in the state is determined by 499.26 multiplying the receipts from the lease or rental of the 499.27 property by a fraction, the numerator of which is the number of 499.28 days during the taxable year the property was in this state and 499.29 the denominator of which is the total days in the taxable year. 499.30 (h) Royalties and other income not described in paragraph 499.31 (a), clause (6), received for the use of or for the privilege of 499.32 using intangible property, including patents, know-how, 499.33 formulas, designs, processes, patterns, copyrights, trade names, 499.34 service names, franchises, licenses, contracts, customer lists, 499.35 or similar items, must be attributed to the state in which the 499.36 property is used by the purchaser. If the property is used in 500.1 more than one state, the royalties or other income must be 500.2 apportioned to this state pro rata according to the portion of 500.3 use in this state. If the portion of use in this state cannot 500.4 be determined, the royalties or other income must be excluded 500.5 from both the numerator and the denominator. Intangible 500.6 property is used in this state if the purchaser uses the 500.7 intangible property or the rights therein in the regular course 500.8 of its business operations in this state, regardless of the 500.9 location of the purchaser's customers. 500.10 (i) Sales of intangible property are made within the state 500.11 in which the property is used by the purchaser. If the property 500.12 is used in more than one state, the sales must be apportioned to 500.13 this state pro rata according to the portion of use in this 500.14 state. If the portion of use in this state cannot be 500.15 determined, the sale must be excluded from both the numerator 500.16 and the denominator of the sales factor. Intangible property is 500.17 used in this state if the purchaser used the intangible property 500.18 in the regular course of its business operations in this state. 500.19 (j) Receipts from the performance of services must be 500.20 attributed to the state where the services are received. For 500.21 the purposes of this section, receipts from the performance of 500.22 services provided to a corporation, partnership, or trust may 500.23 only be attributed to a state where it has a fixed place of 500.24 doing business. If the state where the services are received is 500.25 not readily determinable or is a state where the corporation, 500.26 partnership, or trust receiving the service does not have a 500.27 fixed place of doing business, the services shall be deemed to 500.28 be received at the location of the office of the customer from 500.29 which the services were ordered in the regular course of the 500.30 customer's trade or business. If the ordering office cannot be 500.31 determined, the services shall be deemed to be received at the 500.32 office of the customer to which the services are billed. 500.33 [EFFECTIVE DATE.] This section is effective for 500.34 transactions after September 30, 2000. 500.35 Sec. 5. Minnesota Statutes 2000, section 290A.03, 500.36 subdivision 15, is amended to read: 501.1 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 501.2 means the Internal Revenue Code of 1986, as amended through 501.3 December 31,19992000. 501.4 [EFFECTIVE DATE.] This section is effective the day 501.5 following final enactment. 501.6 Sec. 6. Minnesota Statutes 2000, section 291.005, 501.7 subdivision 1, is amended to read: 501.8 Subdivision 1. Unless the context otherwise clearly 501.9 requires, the following terms used in this chapter shall have 501.10 the following meanings: 501.11 (1) "Federal gross estate" means the gross estate of a 501.12 decedent as valued and otherwise determined for federal estate 501.13 tax purposes by federal taxing authorities pursuant to the 501.14 provisions of the Internal Revenue Code. 501.15 (2) "Minnesota gross estate" means the federal gross estate 501.16 of a decedent after (a) excluding therefrom any property 501.17 included therein which has its situs outside Minnesota and (b) 501.18 including therein any property omitted from the federal gross 501.19 estate which is includable therein, has its situs in Minnesota, 501.20 and was not disclosed to federal taxing authorities. 501.21 (3) "Personal representative" means the executor, 501.22 administrator or other person appointed by the court to 501.23 administer and dispose of the property of the decedent. If 501.24 there is no executor, administrator or other person appointed, 501.25 qualified, and acting within this state, then any person in 501.26 actual or constructive possession of any property having a situs 501.27 in this state which is included in the federal gross estate of 501.28 the decedent shall be deemed to be a personal representative to 501.29 the extent of the property and the Minnesota estate tax due with 501.30 respect to the property. 501.31 (4) "Resident decedent" means an individual whose domicile 501.32 at the time of death was in Minnesota. 501.33 (5) "Nonresident decedent" means an individual whose 501.34 domicile at the time of death was not in Minnesota. 501.35 (6) "Situs of property" means, with respect to real 501.36 property, the state or country in which it is located; with 502.1 respect to tangible personal property, the state or country in 502.2 which it was normally kept or located at the time of the 502.3 decedent's death; and with respect to intangible personal 502.4 property, the state or country in which the decedent was 502.5 domiciled at death. 502.6 (7) "Commissioner" means the commissioner of revenue or any 502.7 person to whom the commissioner has delegated functions under 502.8 this chapter. 502.9 (8) "Internal Revenue Code" means the United States 502.10 Internal Revenue Code of 1986, as amended through December 31, 502.1119992000. 502.12 [EFFECTIVE DATE.] This section is effective the day 502.13 following final enactment. 502.14 ARTICLE 18 502.15 SEIZURES OF CONTRABAND 502.16 Section 1. Minnesota Statutes 2000, section 296A.24, 502.17 subdivision 1, is amended to read: 502.18 Subdivision 1. [SEIZURE.] The commissioner or authorized 502.19 agents may seize gasoline or special fuel being transported for 502.20 delivery in violation of section 296A.03, subdivision 1, and any 502.21 vehicle or other method of conveyance used for transporting the 502.22 gasoline or special fuel. Any untaxed motor vehicle fuel that 502.23 is received by a person other than a licensee is subject to 502.24 seizure along with the vehicle or other means of transportation 502.25 used to transport the motor vehicle fuel. Any motor vehicle 502.26 fuel, along with the transporting vehicle, brought into the 502.27 state of Minnesota by a transporter for use, distribution, 502.28 storage, or sale that is not supported by a manifest, bill of 502.29 lading, or invoice, reflecting the licensed distributor 502.30 responsible for the tax and/or fees is subject to seizure by the 502.31 Minnesota department of revenue. Property seized under this 502.32 subdivision is subject to forfeiture as provided insubdivisions502.33 subdivision 2and 3. 502.34 [EFFECTIVE DATE.] This section is effective for seizures 502.35 made on or after July 1, 2001. 502.36 Sec. 2. Minnesota Statutes 2000, section 296A.24, 503.1 subdivision 2, is amended to read: 503.2 Subd. 2. [DISPOSITION OF SEIZED PROPERTY.] (a) Within ten 503.3 days after the seizureof gasoline or special fuel, the person 503.4 making the seizure shalldeliverserve by certified mail an 503.5 inventory of the vehicle or property seizedtoon the person 503.6 from whom the seizure was made, if known, and on any person 503.7 known or believed to have any right, title, interest, or lien on 503.8 the vehicle or property, at the last known address, and file a 503.9 copy withthe office ofthe commissioner. The notice must 503.10 include an explanation of the right to demand a judicial 503.11 forfeiture determination. 503.12 (b) Withinten60 days after the date of service of the 503.13 inventory, which is the date of mailing, the person from whom 503.14 the vehicle or property was seized or any person claiming an 503.15 interest inthe propertyit may filewith the commissionera 503.16 demand for a judicial determination of whether the vehicle or 503.17 property was lawfully subject to seizure and forfeiture.The503.18commissioner, within 60 days of demand for a judicial503.19determination, shall begin an action in the district court of503.20the county where the seizure was made to determine the issue of503.21forfeiture.503.22(b) The action must be brought in the name of the state and503.23prosecuted by the county attorney or by the attorney503.24general.The demand must be in the form of a civil complaint 503.25 and must be filed with the court administrator in the county in 503.26 which the seizure occurred, together with proof of service of a 503.27 copy of the complaint on the commissioner of revenue, and the 503.28 standard filing fee for civil actions unless the petitioner has 503.29 the right to sue in forma pauperis under section 563.01. If the 503.30 value of the seized property or vehicle is $7,500 or less, the 503.31 claimant may file an action in conciliation court for its 503.32 recovery. If the value of the seized property or vehicle is 503.33 less than $500, the claimant does not have to pay the 503.34 conciliation court filing fee. 503.35 (c) The complaint must be captioned in the name of the 503.36 claimant as plaintiff and the seized property or vehicle as 504.1 defendant, and must state with specificity the grounds on which 504.2 the claimant alleges the property or vehicle was improperly 504.3 seized and the plaintiff's interest in the property or vehicle 504.4 seized. No responsive pleading is required of the commissioner 504.5 and no court fees may be charged for the commissioner's 504.6 appearance in the matter. The proceedings are governed by the 504.7 Rules of Civil Procedure. Notwithstanding any law to the 504.8 contrary, an action for the return of property or a vehicle 504.9 seized under this section may not be maintained by or on behalf 504.10 of any person who has been served with an inventory unless the 504.11 person has complied with this subdivision. The court shall hear 504.12 the action without a jury and shall try and determine the issues 504.13 of fact and law involved. 504.14(c)(d) When a judgment of forfeiture is entered, the 504.15 commissioner may, unless the judgment is stayed pending an 504.16 appeal, either: 504.17 (1) cause the forfeitedpropertygasoline or special fuel 504.18 to be destroyed; or 504.19 (2) causeitthe forfeited property in clause (1) or 504.20 vehicle to be sold at public auction as provided by 504.21 law.Proceeds of a sale, after deducting the expense of keeping504.22the gasoline or special fuel and costs of the sale, must be paid504.23into the state treasury. The commissioner shall reimburse504.24designees for costs incurred.After deducting the expense of 504.25 keeping the property and vehicle and the costs of the sale, the 504.26 commissioner shall pay from the funds collected all liens 504.27 according to their priority, which are established as being bona 504.28 fide and as existing without the lienor having any notice or 504.29 knowledge that the property or vehicle was being used or was 504.30 intended to be used for or in connection with any violation, and 504.31 shall pay the balance of the proceeds into the general fund. 504.32(d) If a demand for judicial determination is made and no504.33action is commenced as provided in this subdivision, the504.34property must be released by the commissioner and redelivered to504.35the person entitled to it.(e) If no demand for judicial 504.36 determination is made, the property or vehicle seized must be 505.1 considered forfeited to the state by operation of law and may be 505.2 disposed of by the commissioner as provided where there has been 505.3 a judgment of forfeiture.When the commissioner is satisfied505.4that a person from whom property is seized under this chapter505.5was acting in good faith and without intent to evade the tax,505.6the commissioner shall release the property seized, without505.7further legal proceedings.505.8 [EFFECTIVE DATE.] This section is effective for seizures 505.9 made on or after July 1, 2001. 505.10 Sec. 3. Minnesota Statutes 2000, section 297A.91, is 505.11 amended to read: 505.12 297A.91 [SEIZURE; COURT REVIEW.] 505.13 Subdivision 1. [SEIZURE OF PROPERTY USED IN ILLEGAL 505.14 TRANSPORT.] (a) If the retailer does not have a sales or use tax 505.15 permit and has been engaging in transporting personal property 505.16 into the state without payment of the tax, the commissioner of 505.17 revenue or the commissioner's agents may seize in the name of 505.18 the state any truck, automobile, or means of transportation not 505.19 owned or operated by a common carrier, used in the illegal 505.20 importation and transportation of any tangible personal property 505.21 by a retailer or the retailer's agent or employee. The 505.22 commissioner may demand the forfeiture and sale of the truck, 505.23 automobile, or other means of transportation together with the 505.24 property being transported illegally, unless the owner 505.25 establishes to the satisfaction of the commissioner or the court 505.26 that the owner had no notice or knowledge or reason to believe 505.27 that the vehicle was used or intended to be used in any such 505.28 violation. 505.29 (b) Withintwoten days after the seizure, the person 505.30 making the seizure shalldeliverserve by certified mail an 505.31 inventory of the vehicle and property seizedtoon the person 505.32 from whom the seizure was made, if known, andtoon any person 505.33 known or believed to have any right, title, interest, or lien on 505.34 the vehicle or property, at the last known address. The person 505.35 making the seizure shall also file a copy of the inventory with 505.36 the commissioner. The notice must include an explanation of the 506.1 right to demand a judicial forfeiture determination. 506.2 Subd. 2. [COURT REVIEW OF FORFEITURE.] (a) Withinten60 506.3 days after the date of service of the inventory, which is the 506.4 date of mailing, the person from whom the vehicle and property 506.5 were seized or any person claiming an interest in the vehicle or 506.6 property may filewith the commissionera demand for a judicial 506.7 determination of the question of whether the vehicle or property 506.8 was lawfully subject to seizure and forfeiture.The506.9commissioner, within 30 days, shall institute an action in the506.10district court of the county where the seizure was made to506.11determine the issue of forfeiture.506.12 (b)The action must be brought in the name of the state and506.13prosecuted by the county attorney or the attorney general.The 506.14 demand must be in the form of a civil complaint and must be 506.15 filed with the court administrator in the county in which the 506.16 seizure occurred, together with proof of service or a copy of 506.17 the complaint on the commissioner of revenue, and the standard 506.18 filing fee for civil actions unless the petitioner has the right 506.19 to sue in forma pauperis under section 563.01. If the value of 506.20 the seized property or vehicle is $7,500 or less, the claimant 506.21 may file an action in conciliation court for its recovery. If 506.22 the value of the seized property or vehicle is less than $500, 506.23 the claimant does not have to pay the conciliation court filing 506.24 fee. 506.25 (c) The complaint must be captioned in the name of the 506.26 claimant as plaintiff and the seized property or vehicle as 506.27 defendant, and must state with specificity the grounds on which 506.28 the claimant alleges the property or vehicle was improperly 506.29 seized and the plaintiff's interest in the property or vehicle 506.30 seized. No responsive pleading is required of the commissioner, 506.31 and no court fees may be charged for the commissioner's 506.32 appearance in the matter. The proceedings are governed by the 506.33 Rules of Civil Procedure. Notwithstanding any law to the 506.34 contrary, an action for the return of property or a vehicle 506.35 seized under this subdivision may not be maintained by or on 506.36 behalf of any person who has been served with an inventory 507.1 unless the person has complied with this subdivision. The court 507.2 shall hear the action without a jury and shall determine the 507.3 issues of fact and law involved. If a judgment of forfeiture is 507.4 entered and is not stayed pending an appeal, the commissioner 507.5 may have the forfeited vehicle and property sold at public 507.6 auction as provided by law. 507.7 Subd. 3. [TREATMENT OF SEIZED PROPERTY.]If a demand for507.8judicial determination is made and no action is commenced as507.9provided in this subdivision, the vehicle and property must be507.10released by the commissioner and redelivered to the person507.11entitled to it.If no demand for judicial determination is 507.12 made, the vehicle and property seized are considered forfeited 507.13 to the state by operation of law and may be disposed of by the 507.14 commissioner as if there were a judgment of forfeiture. The 507.15 forfeiture and sale of the automobile, truck, or other means of 507.16 transportation, and of the property being transported illegally 507.17 in it, are a penalty for the violation of this chapter. After 507.18 deducting the expense of keeping the vehicle and property, the 507.19 fee for seizure, and the costs of the sale, the commissioner 507.20 shall pay liens from the funds collected. The commissioner 507.21 shall pay all liens, according to their priority, that are 507.22 establishedat the hearingas being bona fide and as existing 507.23 without the lienor having any notice or knowledge that the 507.24 vehicle or property was being used or was intended to be used 507.25 for or in connection with any such violationas specified in the507.26order of the court. The commissioner shall pay the balance of 507.27 the proceeds into the state treasury to be credited to the 507.28 general fund. The state is not liable for any liens in excess 507.29 of the proceeds from the sale after allowable deductions. A 507.30 sale under this section frees the vehicle and property sold from 507.31 all liens.The order of the district court may be appealed as507.32in other civil cases.507.33 [EFFECTIVE DATE.] This section is effective for seizures 507.34 made on or after July 1, 2001. 507.35 Sec. 4. Minnesota Statutes 2000, section 297E.16, 507.36 subdivision 1, is amended to read: 508.1 Subdivision 1. [SEIZURE.] Contraband may be seized by the 508.2 commissioner or by any sheriff or other police officer, 508.3 hereinafter referred to as the "seizing authority," with or 508.4 without process, and is subject to forfeiture as provided in 508.5subdivisionssubdivision 2and 3. 508.6 [EFFECTIVE DATE.] This section is effective for seizures 508.7 made on or after July 1, 2001. 508.8 Sec. 5. Minnesota Statutes 2000, section 297E.16, 508.9 subdivision 2, is amended to read: 508.10 Subd. 2. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 508.11 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 508.12 seizure of alleged contraband described in section 349.2125, 508.13 subdivision 1, the person making the seizure shallmake508.14availableserve by certified mail an inventory of the property 508.15 seizedtoon the person from whom the property was seized, if 508.16 known, and on any person known or believed to have any right, 508.17 title, interest, or lien in the property, at the last known 508.18 address, and file a copy with the commissioner or the director 508.19 of alcohol and gambling enforcement. The notice must include an 508.20 explanation of the right to demand a judicial forfeiture 508.21 determination. 508.22 (b) Withinten60 days after the date of service of the 508.23 inventory, which is the date of mailing, the person from whom 508.24 the property was seized or any person claiming an interest in 508.25 the property may filewith the seizing authoritya demand for 508.26 judicial determination of whether the property was lawfully 508.27 subject to seizure and forfeiture.Within 60 days after the508.28date of filing of the demand, the seizing authority must bring508.29an action in the district court of the county where seizure was508.30made to determine the issue of forfeiture. The action must be508.31brought in the name of the state and be prosecuted by the county508.32attorney or by the attorney general.The demand must be in the 508.33 form of a civil complaint and must be filed with the court 508.34 administrator in the county in which the seizure occurred, 508.35 together with proof of service of a copy of the complaint on the 508.36 commissioner of revenue or the director of alcohol and gambling 509.1 enforcement, and the standard filing fee for civil actions 509.2 unless the petitioner has the right to sue in forma pauperis 509.3 under section 563.01. If the value of the seized property is 509.4 $7,500 or less, the claimant may file an action in conciliation 509.5 court for recovery of the property. If the value of the seized 509.6 property is less than $500, the claimant does not have to pay 509.7 the conciliation court filing fee. 509.8 (c) The complaint must be captioned in the name of the 509.9 claimant as plaintiff and the seized property as defendant, and 509.10 must state with specificity the grounds on which the claimant 509.11 alleges the property was improperly seized and the plaintiff's 509.12 interest in the property seized. No responsive pleading is 509.13 required of the commissioner or director, and no court fees may 509.14 be charged for the commissioner's or director's appearance in 509.15 the matter. The proceedings are governed by the Rules of Civil 509.16 Procedure. Notwithstanding any law to the contrary, an action 509.17 for the return of property seized under this section may not be 509.18 maintained by or on behalf of any person who has been served 509.19 with an inventory unless the person has complied with this 509.20 subdivision. The court shall hear the action without a jury and 509.21 determine the issues of fact and law involved. 509.22 (d) If a judgment of forfeiture is entered, the seizing 509.23 authority may, unless the judgment is stayed pending an appeal, 509.24 either (1) cause the forfeited property, other than a vehicle, 509.25 to be destroyed; or (2) cause it to be sold at a public auction 509.26 as provided by law. The person making a sale, after deducting 509.27 the expense of keeping the property, the fee for seizure, and 509.28 the costs of the sale, shall pay all liens according to their 509.29 priority, which are established as being bona fide and as 509.30 existing without the lienor having any notice or knowledge that 509.31 the property was being used or was intended to be used for or in 509.32 connection with the violation. The balance of the proceeds must 509.33 be paid 70 percent to the seizing authority for deposit as a 509.34 supplement to its operating fund or similar fund for official 509.35 use, and 20 percent to the county attorney or other prosecuting 509.36 agency that handled the court proceeding, if there is one, for 510.1 deposit as a supplement to its operating fund or similar fund 510.2 for prosecutorial purposes. The remaining ten percent of the 510.3 proceeds must be forwarded within 60 days after resolution of 510.4 the forfeiture to the department of human services to fund 510.5 programs for the treatment of compulsive gamblers. If there is 510.6 no prosecuting authority involved in the forfeiture, the 20 510.7 percent of the proceeds otherwise designated for the prosecuting 510.8 authority must be deposited into the general fund. 510.9If demand for judicial determination is made and no action510.10is commenced by the seizing authority as provided in this510.11subdivision, the property must be released by the seizing510.12authority and delivered to the person entitled to it.(e) If no 510.13 demand for judicial determination is made, the property seized 510.14 is considered forfeited to the seizing authority by operation of 510.15 law and may be disposed of by the seizing authority as provided 510.16 where there has been a judgment of forfeiture.When the seizing510.17authority is satisfied that a person from whom property is510.18seized was acting in good faith and without intent to evade the510.19tax imposed by section 297E.02, the seizing authority shall510.20release the property seized without further legal proceedings. 510.21 [EFFECTIVE DATE.] This section is effective for seizures 510.22 made on or after July 1, 2001. 510.23 Sec. 6. Minnesota Statutes 2000, section 297F.21, 510.24 subdivision 1, is amended to read: 510.25 Subdivision 1. [CONTRABAND DEFINED.] The following are 510.26 declared to be contraband and therefore subject to civil and 510.27 criminal penalties under this chapter: 510.28 (a) Cigarette packages which do not have stamps affixed to 510.29 them as provided in this chapter, including but not limited to 510.30 (i) packages with illegible stamps and packages with stamps that 510.31 are not complete or whole even if the stamps are legible, and 510.32 (ii) all devices for the vending of cigarettes in which packages 510.33 as defined in item (i) are found, including all contents 510.34 contained within the devices. 510.35 (b) A device for the vending of cigarettes and all packages 510.36 of cigarettes, where the device does not afford at least partial 511.1 visibility of contents. Where any package exposed to view does 511.2 not carry the stamp required by this chapter, it shall be 511.3 presumed that all packages contained in the device are unstamped 511.4 and contraband. 511.5 (c) A device for the vending of cigarettes to which the 511.6 commissioner or authorized agents have been denied access for 511.7 the inspection of contents. In lieu of seizure, the 511.8 commissioner or an agent may seal the device to prevent its use 511.9 until inspection of contents is permitted. 511.10 (d) A device for the vending of cigarettes which does not 511.11 carry the name and address of the owner, plainly marked and 511.12 visible from the front of the machine. 511.13 (e) A device including, but not limited to, motor vehicles, 511.14 trailers, snowmobiles, airplanes, and boats used with the 511.15 knowledge of the owner or of a person operating with the consent 511.16 of the owner for the storage or transportation of more than 511.17 5,000 cigarettes which are contraband under this subdivision. 511.18 When cigarettes are being transported in the course of 511.19 interstate commerce, or are in movement from either a public 511.20 warehouse to a distributor upon orders from a manufacturer or 511.21 distributor, or from one distributor to another, the cigarettes 511.22 are not contraband, notwithstanding the provisions of clause (a). 511.23 (f) A device including, but not limited to, motor vehicles, 511.24 trailers, snowmobiles, airplanes, and boats used with the 511.25 knowledge of the owner, or of a person operating with the 511.26 consent of the owner, for the storage or transportation of 511.27 untaxed tobacco products intended for sale in Minnesota other 511.28 than those in the possession of a licensed distributor on or 511.29 before the due date for payment of the tax under section 511.30 297F.09, subdivision 2. 511.31 (g) Cigarette packages or tobacco products obtained from an 511.32 unlicensed seller. 511.33(g)(h) Cigarette packages offered for sale or held as 511.34 inventory in violation of section 297F.20, subdivision 7. 511.35(h)(i) Tobacco products on which the tax has not been paid 511.36 by a licensed distributor. 512.1(i)(j) Any cigarette packages or tobacco products offered 512.2 for sale or held as inventory for which there is not an invoice 512.3 from a licensed seller as required under section 297F.13, 512.4 subdivision 4. 512.5(j)(k) Cigarette packages which have been imported into 512.6 the United States in violation of United States Code, title 26, 512.7 section 5754. All cigarettes held in violation of that section 512.8 shall be presumed to have entered the United States after 512.9 December 31, 1999, in the absence of proof to the contrary. 512.10 [EFFECTIVE DATE.] This section is effective for seizures 512.11 made on or after July 1, 2001. 512.12 Sec. 7. Minnesota Statutes 2000, section 297F.21, 512.13 subdivision 2, is amended to read: 512.14 Subd. 2. [SEIZURE.] Cigarettes, tobacco products, or other 512.15 property made contraband by subdivision 1 may be seized by the 512.16 commissioner or authorized agents or by any sheriff or other 512.17 police officer, with or without process, and are subject to 512.18 forfeiture as provided insubdivisionssubdivision 3and 4. 512.19 [EFFECTIVE DATE.] This section is effective for seizures 512.20 made on or after July 1, 2001. 512.21 Sec. 8. Minnesota Statutes 2000, section 297F.21, 512.22 subdivision 3, is amended to read: 512.23 Subd. 3. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 512.24 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 512.25 seizure of any alleged contraband, the person making the seizure 512.26 shallmake availableserve by certified mail an inventory of the 512.27 property seizedtoon the person from whom the seizure was made, 512.28 if known, and on any person known or believed to have any right, 512.29 title, interest, or lien in the property, at the last known 512.30 address, and file a copy with the commissioner. The notice must 512.31 include an explanation of the right to demand a judicial 512.32 forfeiture determination. 512.33 (b) Withinten60 days after the date of service of the 512.34 inventory, which is the date of mailing, the person from whom 512.35 the property was seized or any person claiming an interest in 512.36 the property may filewith the commissionera demand for a 513.1 judicial determination of the question as to whether the 513.2 property was lawfully subject to seizure and forfeiture.The513.3commissioner, within 60 days, shall institute an action in the513.4district court of the county where the seizure was made to513.5determine the issue of forfeiture.The demand must be in the 513.6 form of a civil complaint and must be filed with the court 513.7 administrator in the county in which the seizure occurred, 513.8 together with proof of service of a copy of the complaint on the 513.9 commissioner of revenue, and the standard filing fee for civil 513.10 actions unless the petitioner has the right to sue in forma 513.11 pauperis under section 563.01. If the value of the seized 513.12 property is $7,500 or less, the claimant may file an action in 513.13 conciliation court for recovery of the property. If the value 513.14 of the seized property is less than $500, the claimant does not 513.15 have to pay the conciliation court filing fee. 513.16 (c) The complaint must be captioned in the name of the 513.17 claimant as plaintiff and the seized property as defendant, and 513.18 must state with specificity the grounds on which the claimant 513.19 alleges the property was improperly seized and the plaintiff's 513.20 interest in the property seized. No responsive pleading is 513.21 required of the commissioner, and no court fees may be charged 513.22 for the commissioner's appearance in the matter. The 513.23 proceedings are governed by the Rules of Civil Procedure. 513.24 Notwithstanding any law to the contrary, an action for the 513.25 return of property seized under this section may not be 513.26 maintained by or on behalf of any person who has been served 513.27 with an inventory unless the person has complied with this 513.28 subdivision. The court shall decide whether the alleged 513.29 contraband is contraband, as defined in subdivision 1. 513.30(b) The action must be brought in the name of the state and513.31must be prosecuted by the county attorney or by the attorney513.32general.The court shall hear the action without a jury and 513.33 shall try and determine the issues of fact and law involved. 513.34(c)(d) When a judgment of forfeiture is entered, the 513.35 commissioner may, unless the judgment is stayed pending an 513.36 appeal, either: 514.1 (1) deliver the forfeitedpropertycigarette packages or 514.2 tobacco products to the commissioner of human services for use 514.3 by patients in state institutions; 514.4 (2) causeitthe property in clause (1) to be destroyed; or 514.5 (3) causeitthe forfeited property to be sold at public 514.6 auction as provided by law. 514.7 The person making a sale, after deducting the expense of keeping 514.8 the property, the fee for seizure, and the costs of the sale, 514.9 shall pay all liens according to their priority, which are 514.10 established as being bona fide and as existing without the 514.11 lienor having any notice or knowledge that the property was 514.12 being used or was intended to be used for or in connection with 514.13 the violation. The balance of the proceeds must be paid 75 514.14 percent to the department of revenue for deposit as a supplement 514.15 to its operating fund or similar fund for official use, and 25 514.16 percent to the county attorney or other prosecuting agency that 514.17 handled the court proceeding, if there is one, for deposit as a 514.18 supplement to its operating fund or similar fund for 514.19 prosecutorial purposes. If there is no prosecuting authority 514.20 involved in the forfeiture, the 25 percent of the proceeds 514.21 otherwise designated for the prosecuting authority must be 514.22 deposited into the general fund. 514.23(d) If a demand for judicial determination is made and no514.24action commenced as provided in this subdivision, the property514.25must be released by the commissioner and returned to the person514.26entitled to it.(e) If no demand for judicial determination is 514.27 made, the property seized is considered forfeited to the state 514.28 by operation of law and may be disposed of by the commissioner 514.29 as provided in the case of a judgment of forfeiture. 514.30 [EFFECTIVE DATE.] This section is effective for seizures 514.31 made on or after July 1, 2001. 514.32 Sec. 9. Minnesota Statutes 2000, section 297G.20, 514.33 subdivision 3, is amended to read: 514.34 Subd. 3. [SEIZURE.] Distilled spirits, wine, fermented 514.35 malt beverages, or other property made contraband by subdivision 514.36 1 may be seized by the commissioner of revenue or public safety 515.1 and their authorized agents or by any sheriff or other police 515.2 officer, with or without process, and are subject to forfeiture 515.3 as provided insubdivisionssubdivision 4and 5. 515.4 [EFFECTIVE DATE.] This section is effective for seizures 515.5 made on or after July 1, 2001. 515.6 Sec. 10. Minnesota Statutes 2000, section 297G.20, 515.7 subdivision 4, is amended to read: 515.8 Subd. 4. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 515.9 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 515.10 seizure of alleged contraband, the person making the seizure 515.11 shallmake availableserve by certified mail an inventory of the 515.12 property seizedtoon the person from whom the property was 515.13 seized, if known, and on any person known or believed to have 515.14 any right, title, interest, or lien in the property, at the last 515.15 known address, and file a copy with both the commissioners of 515.16 revenue and public safety. The notice must include an 515.17 explanation of the right to demand a judicial forfeiture 515.18 determination. 515.19 (b) Withinten60 days after the date of service of the 515.20 inventory, which is the date of mailing, the person from whom 515.21 the property was seized or any person claiming an interest in 515.22 the property may filewith the seizing authoritya demand for 515.23 judicial determination of whether the property was lawfully 515.24 subject to seizure and forfeiture.Within 60 days after the515.25date of the filing of the demand, the seizing authority must515.26bring an action in the district court of the county where515.27seizure was made to determine the issue of forfeiture.The 515.28 demand must be in the form of a civil complaint and must be 515.29 filed with the court administrator in the county in which the 515.30 seizure occurred, together with proof of service of a copy of 515.31 the complaint on the commissioner of revenue or public safety, 515.32 and the standard filing fee for civil actions unless the 515.33 petitioner has the right to sue in forma pauperis under section 515.34 563.01. If the value of the seized property or vehicle is 515.35 $7,500 or less, the claimant may file an action in conciliation 515.36 court for recovery of the property. If the value of the seized 516.1 property is less than $500, the claimant does not have to pay 516.2 the conciliation court filing fee. 516.3 (c) The complaint must be captioned in the name of the 516.4 claimant as plaintiff and the seized property as defendant, and 516.5 must state with specificity the grounds on which the claimant 516.6 alleges the property was improperly seized and the plaintiff's 516.7 interest in the property seized. No responsive pleading is 516.8 required of the commissioner of revenue or public safety and no 516.9 court fees may be charged for either commissioner's appearance 516.10 in the matter. The proceedings are governed by the Rules of 516.11 Civil Procedure. Notwithstanding any law to the contrary, an 516.12 action for the return of property seized under this section may 516.13 not be maintained by or on behalf of any person who has been 516.14 served with an inventory unless the person has complied with 516.15 this subdivision. 516.16(b) The action must be brought in the name of the state and516.17must be prosecuted by the county attorney or by the attorney516.18general.The court shall hear the action without a jury and 516.19 determine the issues of fact and law involved. 516.20(c)(d) If a judgment of forfeiture is entered, the seizing 516.21 authority may, unless the judgment is stayed pending an appeal, 516.22 either: 516.23 (1) cause the forfeited property, other than a vehicle, to 516.24 be destroyed; or 516.25 (2) cause it to be sold at a public auction as provided by 516.26 law. 516.27 The person making a sale, after deducting the expense of 516.28 keeping the property, the fee for seizure, and the costs of the 516.29 sale, shall pay all liens according to their priority, which are 516.30 established as being bona fide and as existing without the 516.31 lienor having any notice or knowledge that the property was 516.32 being used or was intended to be used for or in connection with 516.33 the violation. The balance of the proceeds must be paid 75 516.34 percent to the seizing authority for deposit as a supplement to 516.35 its operating fund or similar fund for official use, and 25 516.36 percent to the county attorney or other prosecuting agency that 517.1 handled the court proceeding, if there is one, for deposit as a 517.2 supplement to its operating fund or similar fund for 517.3 prosecutorial purposes. If there is no prosecuting authority 517.4 involved in the forfeiture, the 25 percent of the proceeds 517.5 otherwise designated for the prosecuting authority must be 517.6 deposited into the general fund. 517.7(d) If demand for judicial determination is made and no517.8action is commenced by the seizing authority as provided in this517.9subdivision, the property must be released by the seizing517.10authority and delivered to the person entitled to it.(e) If no 517.11 demand is made, the property seized is considered forfeited to 517.12 the seizing authority by operation of law and may be disposed of 517.13 by the seizing authority as provided for a judgment of 517.14 forfeiture.When the seizing authority is satisfied that a517.15person from whom property is seized was acting in good faith and517.16without intent to evade the tax imposed by this chapter, the517.17seizing authority shall release the property seized without517.18further legal proceedings.517.19 [EFFECTIVE DATE.] This section is effective for seizures 517.20 made on or after July 1, 2001. 517.21 Sec. 11. [REPEALER.] 517.22 Minnesota Statutes 2000, sections 296A.24, subdivision 3; 517.23 297E.16, subdivision 3; 297F.21, subdivision 4; and 297G.20, 517.24 subdivision 5, are repealed. 517.25 [EFFECTIVE DATE.] This section is effective for seizures 517.26 made on or after July 1, 2001. 517.27 ARTICLE 19 517.28 ELECTRONIC FILING AND PAYMENT 517.29 Section 1. Minnesota Statutes 2000, section 115B.24, 517.30 subdivision 2, is amended to read: 517.31 Subd. 2. [DECLARATIONS OF ESTIMATED TAX.]For 1983, every517.32generator of hazardous waste required to pay a tax pursuant to517.33section 115B.22 shall make a declaration of estimated hazardous517.34waste generated for the last six months of calendar year 1983 if517.35the tax can reasonably be estimated to exceed $500. The517.36declaration of the estimated tax shall be filed by October 15,518.11983. The amount of estimated tax with respect to which a518.2declaration is required shall be paid in two equal installments518.3by October 15, 1983 and January 15, 1984.For 1984 and 518.4 subsequent years, every generator of hazardous waste required to 518.5 pay a tax pursuant to section 115B.22 shall make a declaration 518.6 of estimated hazardous waste generated for the calendar year if 518.7 the tax can reasonably be expected to be in excess of $1,000. 518.8 The declaration of estimated tax shall be filed by March 15. 518.9 The amount of estimated tax with respect to which a declaration 518.10 is required shall be paid in four equal installments on or 518.11 before the 15th day of March, June, September, and December. 518.12 An amendment of a declaration may be filed in any interval 518.13 between installment dates prescribed above but only one 518.14 amendment may be filed in each interval. If an amendment of a 518.15 declaration is filed, the amount of each remaining installment 518.16 shall be the amount which would have been payable if the new 518.17 estimate had been made when the first estimate for the calendar 518.18 year was made, increased or decreased, as the case may be, by 518.19 the amount computed by dividing 518.20 (1) the difference between (A) the amount of estimated tax 518.21 required to be paid before the date on which the amendment was 518.22 made, and (B) the amount of estimated tax which would have been 518.23 required to be paid before that date if the new estimate had 518.24 been made when the first estimate was made, by 518.25 (2) the number of installments remaining to be paid on or 518.26 after the date on which the amendment is made. 518.27 The commissioner of revenue may grant a reasonable 518.28 extension of time for filing any declaration but the extension 518.29 shall not be for more than six months. 518.30 If the aggregate amount of estimated tax payments made 518.31 during a fiscal year ending June 30 is equal to or exceeds 518.32 $80,000, all estimated tax payments in the subsequent calendar 518.33 year must be paid by electronic meansof a funds transfer as518.34defined in section 336.4A-104, paragraph (a). The funds518.35transfer payment date, as defined in section 336.4A-401, must be518.36on or before the date the estimated tax payment is due. If the519.1date the estimated tax payment is due is not a funds transfer519.2business day, as defined in section 336.4A-105, paragraph (a),519.3clause (4), the payment date must be on or before the funds519.4transfer business day next following the date the estimated tax519.5payment is due. 519.6 [EFFECTIVE DATE.] This section is effective the day 519.7 following final enactment. 519.8 Sec. 2. Minnesota Statutes 2000, section 270.271, 519.9 subdivision 1, is amended to read: 519.10 Subdivision 1. [DATE OF DELIVERY.] When a document, 519.11 including a return, claim, or statement, is required to be 519.12 filed, or a payment is required to be made to the commissioner 519.13 within a prescribed period, or on or before a prescribed date, 519.14 and if the document or payment is delivered by electronic means 519.15 or by United States mail after the period or the date to the 519.16 place prescribed for filing or payment, then the date of 519.17 delivery or of payment is the date of the confirmation 519.18 time-and-date stamp of the transaction, if delivered by 519.19 electronic means, or the date of the United States postmark 519.20 stamped on the cover in which the document or payment is mailed, 519.21 if delivered by United States mailshall be considered the date519.22of delivery or of payment, as the case may be. 519.23 [EFFECTIVE DATE.] This section is effective for returns and 519.24 payments due on or after July 1, 2001. 519.25 Sec. 3. Minnesota Statutes 2000, section 270.271, 519.26 subdivision 3, is amended to read: 519.27 Subd. 3. [CONFIRMATION OF ELECTRONIC FILING AND PAYMENT 519.28 AND UNITED STATES POSTAL SERVICE POSTMARK.] The confirmation 519.29 numbers and confirmation time-and-date stamps received by the 519.30 taxpayer following electronic payment or filing is proof of the 519.31 payment authorization and filing dates. Only the postmark of 519.32 the United States Postal Service, rather than those of private 519.33 postage meters, qualifies as proof of timely mailing under this 519.34 section. If the document or payment is sent by United States 519.35 registered mail, the date of registration shall be treated as 519.36 the postmark date. If the document or payment is sent by United 520.1 States certified mail and the sender's receipt is postmarked by 520.2 the postal employee to whom the envelope containing such 520.3 document or payment is presented, the date of the United States 520.4 postmark on the receipt shall be treated as the postmark date of 520.5 the document or payment. 520.6 [EFFECTIVE DATE.] This section is effective for returns and 520.7 payments due on or after July 1, 2001. 520.8 Sec. 4. Minnesota Statutes 2000, section 270.771, is 520.9 amended to read: 520.10 270.771 [PAYMENTS REQUIRED TO BE MADEBY ELECTRONIC FUNDS520.11TRANSFERELECTRONICALLY.] 520.12 (a) If a taxpayer is required to make payment of a tax to 520.13 the commissioner by electronic meansof electronic funds520.14transfer as defined in section 336.4A-104, paragraph (a), the 520.15 taxpayer shall make all payments of all taxes and fees paid to 520.16 the commissioner by electronic meansof electronic funds520.17transfer. 520.18 (b) Paragraph (a) does not apply to payments required to be 520.19 made for individual income taxes under section 289A.20, 520.20 subdivision 1, paragraph (a), or 289A.25. 520.21 [EFFECTIVE DATE.] This section is effective the day 520.22 following final enactment. 520.23 Sec. 5. Minnesota Statutes 2000, section 270.78, is 520.24 amended to read: 520.25 270.78 [PENALTY FOR FAILURE TOMAKE PAYMENT BY ELECTRONIC520.26FUNDS TRANSFERPAY ELECTRONICALLY.] 520.27 In addition to other applicable penalties imposed by law, 520.28 after notification from the commissioner of revenue to the 520.29 taxpayer that payments for a tax administered by the 520.30 commissioner are required to be made by electronic meansof520.31electronic funds transfer, and the payments are remitted by some 520.32 other means, there is a penalty in the amount of five percent of 520.33 each payment that should have been remitted electronically. 520.34 After the commissioner's initial notification to the taxpayer 520.35 that payments are required to be made by electronic means, the 520.36 commissioner is not required to notify the taxpayer in 521.1 subsequent periods if the initial notification specified the 521.2 amount of tax liability at which a taxpayer is required to remit 521.3 payments by electronic means. The penalty can be abated under 521.4 the abatement procedures prescribed in section 270.07, 521.5 subdivision 6, if the failure to remit the payment 521.6 electronically is due to reasonable cause. The penalty bears 521.7 interest at the rate specified in section 270.75 from the due 521.8 date of the payment of the tax to the date of payment of the 521.9 penalty. 521.10 [EFFECTIVE DATE.] This section is effective the day 521.11 following final enactment. 521.12 Sec. 6. Minnesota Statutes 2000, section 287.12, is 521.13 amended to read: 521.14 287.12 [TAXES, HOW APPORTIONED.] 521.15 (a) All taxes paid to the county treasurer under the 521.16 provisions of sections 287.01 to 287.12 must be apportioned, 97 521.17 percent to the general fund of the state, and three percent to 521.18 the county revenue fund. 521.19 (b) On or before the 20th day of each month the county 521.20 treasurer shall determine and pay to the commissioner of revenue 521.21 for deposit in the state treasury and credit to the general fund 521.22 the state's portion of the receipts from the mortgage registry 521.23 tax during the preceding month subject to the electronicfunds521.24transferpayment requirements of section 270.771. The county 521.25 treasurer shall provide any related reports requested by the 521.26 commissioner of revenue. 521.27 [EFFECTIVE DATE.] This section is effective the day 521.28 following final enactment. 521.29 Sec. 7. Minnesota Statutes 2000, section 289A.02, is 521.30 amended by adding a subdivision to read: 521.31 Subd. 8. [ELECTRONIC MEANS.] "Electronic means" refers to 521.32 a method that is electronic, as defined in section 325L.02, 521.33 paragraph (e), and that is prescribed by the commissioner. 521.34 [EFFECTIVE DATE.] This section is effective the day 521.35 following final enactment. 521.36 Sec. 8. Minnesota Statutes 2000, section 289A.08, 522.1 subdivision 16, is amended to read: 522.2 Subd. 16. [TAX REFUND OR RETURN PREPARERS.] (a) A "tax 522.3 refund or return preparer," as defined in section 289A.60, 522.4 subdivision 13, paragraph (g), who prepared more than 500 522.5 Minnesota individual income tax returns for the prior calendar 522.6 year must file all Minnesota individual income tax returns 522.7 prepared for the current calendar year by electronic means. 522.8 (b)For tax returns prepared for the tax year beginning in522.92001, the "500" in paragraph (a) is reduced to 250.522.10(c) For tax returns prepared for tax years beginning after522.11December 31, 2001, the "500" in paragraph (a) is reduced to 100.522.12(d)Paragraph (a) does not apply to a return if the 522.13 taxpayer has indicated on the return that the taxpayer did not 522.14 want the return filed by electronic means. 522.15 [EFFECTIVE DATE.] This section is effective for taxable 522.16 years beginning with December 31, 2000. 522.17 Sec. 9. Minnesota Statutes 2000, section 289A.20, 522.18 subdivision 1, is amended to read: 522.19 Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME, 522.20 MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.] 522.21 (a) Individual income, fiduciary, mining company, and corporate 522.22 franchise taxes must be paid to the commissioner on or before 522.23 the date the return must be filed under section 289A.18, 522.24 subdivision 1, or the extended due date as provided in section 522.25 289A.19, unless an earlier date for payment is provided. 522.26 Notwithstanding any other law, a taxpayer whose unpaid 522.27 liability for income or corporate franchise taxes, as reflected 522.28 upon the return, is $1 or less need not pay the tax. 522.29 (b) Entertainment taxes must be paid on or before the date 522.30 the return must be filed under section 289A.18, subdivision 1. 522.31 (c) If a fiduciary administers 100 or more trusts, 522.32 fiduciary income taxes for all trusts administered by the 522.33 fiduciary must be paid byfunds transfer as defined in section522.34336.4A-104, paragraph (a). The funds transfer payment date, as522.35defined in section 336.4A-401, must be on or before the date the522.36tax payment is due. If the date the payment is due is not a523.1funds transfer business day, as defined in section 336.4A-105,523.2paragraph (a), clause (4), the payment date must be on or before523.3the funds transfer business day next following the date the523.4payment is dueelectronic means. 523.5 [EFFECTIVE DATE.] This section is effective the day 523.6 following final enactment. 523.7 Sec. 10. Minnesota Statutes 2000, section 289A.20, 523.8 subdivision 2, is amended to read: 523.9 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 523.10 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 523.11 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 523.12 (a) A tax required to be deducted and withheld during the 523.13 quarterly period must be paid on or before the last day of the 523.14 month following the close of the quarterly period, unless an 523.15 earlier time for payment is provided. A tax required to be 523.16 deducted and withheld from compensation of an entertainer and 523.17 from a payment to an out-of-state contractor must be paid on or 523.18 before the date the return for such tax must be filed under 523.19 section 289A.18, subdivision 2. Taxes required to be deducted 523.20 and withheld by partnerships and S corporations must be paid on 523.21 or before the date the return must be filed under section 523.22 289A.18, subdivision 2. 523.23 (b) An employer who, during the previous quarter, withheld 523.24 more than $1,500 of tax under section 290.92, subdivision 2a or 523.25 3, or 290.923, subdivision 2, must deposit tax withheld under 523.26 those sections with the commissioner within the time allowed to 523.27 deposit the employer's federal withheld employment taxes under 523.28 Treasury Regulation, section 31.6302-1, without regard to the 523.29 safe harbor or de minimis rules in subparagraph (f) or the 523.30 one-day rule in subsection (c), clause (3). Taxpayers must 523.31 submit a copy of their federal notice of deposit status to the 523.32 commissioner upon request by the commissioner. 523.33 (c) The commissioner may prescribe by rule other return 523.34 periods or deposit requirements. In prescribing the reporting 523.35 period, the commissioner may classify payors according to the 523.36 amount of their tax liability and may adopt an appropriate 524.1 reporting period for the class that the commissioner judges to 524.2 be consistent with efficient tax collection. In no event will 524.3 the duration of the reporting period be more than one year. 524.4 (d) If less than the correct amount of tax is paid to the 524.5 commissioner, proper adjustments with respect to both the tax 524.6 and the amount to be deducted must be made, without interest, in 524.7 the manner and at the times the commissioner prescribes. If the 524.8 underpayment cannot be adjusted, the amount of the underpayment 524.9 will be assessed and collected in the manner and at the times 524.10 the commissioner prescribes. 524.11 (e) If the aggregate amount of the tax withheld during a 524.12 fiscal year ending June 30 under section 290.92, subdivision 2a 524.13 or 3, is equal to or exceeds the amounts established for 524.14 remitting federal withheld taxes pursuant to the regulations 524.15 promulgated under section 6302(h) of the Internal Revenue Code, 524.16 the employer must remit each required deposit for wages paid in 524.17 the subsequent calendar year by electronic meansof a funds524.18transfer as defined in section 336.4A-104, paragraph (a). The524.19funds transfer payment date, as defined in section 336.4A-401,524.20must be on or before the date the deposit is due. If the date524.21the deposit is due is not a funds transfer business day, as524.22defined in section 336.4A-105, paragraph (a), clause (4), the524.23payment date must be on or before the funds transfer business524.24day next following the date the deposit is due. 524.25 (f) A third-party bulk filer as defined in section 290.92, 524.26 subdivision 30, paragraph (a), clause (2), who remits 524.27 withholding deposits must remit all deposits by electronic means 524.28of a funds transferas provided in paragraph (e), regardless of 524.29 the aggregate amount of tax withheld during a fiscal year for 524.30 all of the employers. 524.31 [EFFECTIVE DATE.] This section is effective the day 524.32 following final enactment. 524.33 Sec. 11. Minnesota Statutes 2000, section 289A.20, 524.34 subdivision 4, is amended to read: 524.35 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 524.36 chapter 297A are due and payable to the commissioner monthly on 525.1 or before the 20th day of the month following the month in which 525.2 the taxable event occurred, or following another reporting 525.3 period as the commissioner prescribes or as allowed under 525.4 section 289A.18, subdivision 4, paragraph (f), except that use 525.5 taxes due on an annual use tax return as provided under section 525.6 289A.11, subdivision 1, are payable by April 15 following the 525.7 close of the calendar year. 525.8 (b) A vendor having a liability of $120,000 or more during 525.9 a fiscal year ending June 30 must remit the June liability for 525.10 the next year in the following manner: 525.11 (1) Two business days before June 30 of the year, the 525.12 vendor must remit 62 percent of the estimated June liability to 525.13 the commissioner. 525.14 (2) On or before August 14 of the year, the vendor must pay 525.15 any additional amount of tax not remitted in June. 525.16 (c) A vendor having a liability of $120,000 or more during 525.17 a fiscal year ending June 30 must remit all liabilities on 525.18 returns due for periods beginning in the subsequent calendar 525.19 year by electronic meansof a funds transfer as defined in525.20section 336.4A-104, paragraph (a). The funds transfer payment525.21date, as defined in section 336.4A-401, must beon or before the 525.22 14th day of the month following the month in which the taxable 525.23 event occurred, or on or before the 14th day of the month 525.24 following the month in which the sale is reported under section 525.25 289A.18, subdivision 4, except for 62 percent of the estimated 525.26 June liability, which is due two business days before June 30. 525.27 The remaining amount of the June liability is due on August 14. 525.28If the date the tax is due is not a funds transfer business day,525.29as defined in section 336.4A-105, paragraph (a), clause (4), the525.30payment date must be on or before the funds transfer business525.31day next following the date the tax is due.525.32(d) If the vendor required to remit by electronic funds525.33transfer as provided in paragraph (c) is unable due to525.34reasonable cause to determine the actual sales and use tax due525.35on or before the due date for payment, the vendor may remit an525.36estimate of the tax owed using one of the following options:526.1(1) 100 percent of the tax reported on the previous month's526.2sales and use tax return;526.3(2) 100 percent of the tax reported on the sales and use526.4tax return for the same month in the previous calendar year; or526.5(3) 95 percent of the actual tax due.526.6Any additional amount of tax that is not remitted on or526.7before the due date for payment, must be remitted with the526.8return. If a vendor fails to remit the actual liability or does526.9not remit using one of the estimate options by the due date for526.10payment, the vendor must remit actual liability as provided in526.11paragraph (c) in all subsequent periods. This paragraph does526.12not apply to the June sales and use tax liability.526.13 [EFFECTIVE DATE.] This section is effective for payments 526.14 due on or after July 1, 2001. 526.15 Sec. 12. Minnesota Statutes 2000, section 289A.26, 526.16 subdivision 2a, is amended to read: 526.17 Subd. 2a. [ELECTRONICFUNDS TRANSFERPAYMENTS.] If the 526.18 aggregate amount of estimated tax payments made during a 526.19 calendar year is equal to or exceeds $20,000, all estimated tax 526.20 payments in the subsequent calendar year must be paid 526.21 by electronic meansof a funds transfer as defined in section526.22336.4A-104, paragraph (a). The funds transfer payment date, as526.23defined in section 336.4A-401, must be on or before the date the526.24estimated tax payment is due. If the date the estimated tax526.25payment is due is not a funds transfer business day, as defined526.26in section 336.4A-105, paragraph (a), clause (4), the payment526.27date must be on or before the funds transfer business day next526.28following the date the estimated tax payment is due. 526.29 [EFFECTIVE DATE.] This section is effective the day 526.30 following final enactment. 526.31 Sec. 13. Minnesota Statutes 2000, section 289A.60, 526.32 subdivision 21, is amended to read: 526.33 Subd. 21. [PENALTY FOR FAILURE TO MAKE PAYMENT BY 526.34 ELECTRONICFUNDS TRANSFERMEANS.] In addition to other 526.35 applicable penalties imposed by this section, after notification 526.36 from the commissioner to the taxpayer that payments are required 527.1 to be made by electronic meansof electronic funds transfer527.2 under section 289A.20, subdivision 2, paragraph (e), or 4, 527.3 paragraph(d)(c), or 289A.26, subdivision 2a, and the payments 527.4 are remitted by some other means, there is a penalty in the 527.5 amount of five percent of each payment that should have been 527.6 remitted electronically. After the commissioner's initial 527.7 notification to the taxpayer that payments are required to be 527.8 made by electronic means, the commissioner is not required to 527.9 notify the taxpayer in subsequent periods if the initial 527.10 notification specified the amount of tax liability at which a 527.11 taxpayer is required to remit payments by electronic means. The 527.12 penalty can be abated under the abatement procedures prescribed 527.13 in section 270.07, subdivision 6, if the failure to remit the 527.14 payment electronically is due to reasonable cause. 527.15 [EFFECTIVE DATE.] This section is effective the day 527.16 following final enactment. 527.17 Sec. 14. Minnesota Statutes 2000, section 295.55, 527.18 subdivision 4, is amended to read: 527.19 Subd. 4. [ELECTRONICFUNDS TRANSFERPAYMENTS.] A taxpayer 527.20 with an aggregate tax liability of $120,000 or more during a 527.21 fiscal year ending June 30,must remit all liabilities by 527.22 electronic meansof a funds transfer as defined in section527.23336.4A-104, paragraph (a),in the subsequent calendar year.The527.24funds transfer payment date, as defined in section 336.4A-401,527.25is on or before the date the tax is due. If the date the tax is527.26due is not a funds-transfer business day, as defined in section527.27336.4A-105, paragraph (a), clause (4), the payment date is on or527.28before the first funds-transfer business day after the date the527.29tax is due.527.30 [EFFECTIVE DATE.] This section is effective the day 527.31 following final enactment. 527.32 Sec. 15. Minnesota Statutes 2000, section 296A.15, 527.33 subdivision 7, is amended to read: 527.34 Subd. 7. [ELECTRONICFUNDS TRANSFERPAYMENT REQUIRED.] All 527.35 remittances must be made by electronic meansof electronic funds527.36transfer as defined in section 336.4A-104, paragraph (a). The528.1funds transfer payment date, as defined in section 336.4A-401,528.2must be on or before the date the remittance is due. If the528.3date the remittance is due is not a funds transfer business day,528.4as defined in section 336.4A-105, paragraph (a), clause (4), the528.5payment date must be on or before the funds transfer business528.6day next following the date the remittance is due. 528.7 [EFFECTIVE DATE.] This section is effective the day 528.8 following final enactment. 528.9 Sec. 16. Minnesota Statutes 2000, section 297E.02, 528.10 subdivision 4, is amended to read: 528.11 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 528.12 on the sale of each deal of pull-tabs and tipboards sold by a 528.13 distributor. The rate of the tax is 1.7 percent of the ideal 528.14 gross of the pull-tab or tipboard deal. The sales tax imposed 528.15 by chapter 297A on the sale of the pull-tabs and tipboards by 528.16 the distributor is imposed on the retail sales price less the 528.17 tax imposed by this subdivision. The retail sale of pull-tabs 528.18 or tipboards by the organization is exempt from taxes imposed by 528.19 chapter 297A and is exempt from all local taxes and license fees 528.20 except a fee authorized under section 349.16, subdivision 8. 528.21 (b) The liability for the tax imposed by this section is 528.22 incurred when the pull-tabs and tipboards are delivered by the 528.23 distributor to the customer or to a common or contract carrier 528.24 for delivery to the customer, or when received by the customer's 528.25 authorized representative at the distributor's place of 528.26 business, regardless of the distributor's method of accounting 528.27 or the terms of the sale. 528.28 The tax imposed by this subdivision is imposed on all sales 528.29 of pull-tabs and tipboards, except the following: 528.30 (1) sales to the governing body of an Indian tribal 528.31 organization for use on an Indian reservation; 528.32 (2) sales to distributors licensed under the laws of 528.33 another state or of a province of Canada, as long as all 528.34 statutory and regulatory requirements are met in the other state 528.35 or province; 528.36 (3) sales of promotional tickets as defined in section 529.1 349.12; and 529.2 (4) pull-tabs and tipboards sold to an organization that 529.3 sells pull-tabs and tipboards under the exemption from licensing 529.4 in section 349.166, subdivision 2. A distributor shall require 529.5 an organization conducting exempt gambling to show proof of its 529.6 exempt status before making a tax-exempt sale of pull-tabs or 529.7 tipboards to the organization. A distributor shall identify, on 529.8 all reports submitted to the commissioner, all sales of 529.9 pull-tabs and tipboards that are exempt from tax under this 529.10 subdivision. 529.11 (c) A distributor having a liability of $120,000 or more 529.12 during a fiscal year ending June 30 must remit all liabilities 529.13 in the subsequent calendar year bya funds transfer as defined529.14in section 336.4A-104, paragraph (a). The funds transfer529.15payment date, as defined in section 336.4A-401, must be on or529.16before the date the tax is due. If the date the tax is due is529.17not a funds transfer business day, as defined in section529.18336.4A-105, paragraph (a), clause (4), the payment date must be529.19on or before the funds transfer business day next following the529.20date the tax is dueelectronic means. 529.21 (d) Any customer who purchases deals of pull-tabs or 529.22 tipboards from a distributor may file an annual claim for a 529.23 refund or credit of taxes paid pursuant to this subdivision for 529.24 unsold pull-tab and tipboard tickets. The claim must be filed 529.25 with the commissioner on a form prescribed by the commissioner 529.26 by March 20 of the year following the calendar year for which 529.27 the refund is claimed. The refund must be filed as part of the 529.28 customer's February monthly return. The refund or credit is 529.29 equal to 1.7 percent of the face value of the unsold pull-tab or 529.30 tipboard tickets, provided that the refund or credit will be 529.31 1.75 percent of the face value of the unsold pull-tab or 529.32 tipboard tickets for claims for a refund or credit of taxes 529.33 filed on the February 2001 monthly return. The refund claimed 529.34 will be applied as a credit against tax owing under this chapter 529.35 on the February monthly return. If the refund claimed exceeds 529.36 the tax owing on the February monthly return, that amount will 530.1 be refunded. The amount refunded will bear interest pursuant to 530.2 section 270.76 from 90 days after the claim is filed. 530.3 [EFFECTIVE DATE.] This section is effective the day 530.4 following final enactment. 530.5 Sec. 17. Minnesota Statutes 2000, section 297F.09, 530.6 subdivision 7, is amended to read: 530.7 Subd. 7. [ELECTRONICFUNDS TRANSFERPAYMENT.] A cigarette 530.8 or tobacco products distributor having a liability of $120,000 530.9 or more during a fiscal year ending June 30 must remit all 530.10 liabilities in the subsequent calendar year by electronic means 530.11of a fund transfer as defined in section 336.4A-104, paragraph530.12(a). The funds transfer payment date, as defined in section530.13336.4A-401, must be on or before the date the tax is due. If530.14the date the tax is due is not a funds transfer business day, as530.15defined in section 336.4A-105, paragraph (a), clause (4), the530.16payment date must be on or before the funds transfer day530.17immediately following the date the tax is due. 530.18 [EFFECTIVE DATE.] This section is effective the day 530.19 following final enactment. 530.20 Sec. 18. Minnesota Statutes 2000, section 297G.09, 530.21 subdivision 6, is amended to read: 530.22 Subd. 6. [ELECTRONICFUNDS TRANSFERPAYMENTS.] A licensed 530.23 brewer, importer, or wholesaler having an excise tax liability 530.24 of $120,000 or more during a fiscal year ending June 30 must 530.25 remit all excise tax liabilities in the subsequent calendar year 530.26 by electronic meansof a funds transfer as defined in section530.27336.4A-104, paragraph (a). The funds transfer payment date, as530.28defined in section 336.4A-401, must be on or before the date the530.29excise tax is due. If the date the excise tax is due is not a530.30funds transfer business day, as defined in section 336.4A-105,530.31paragraph (a), clause (4), the payment date must be on or before530.32the funds transfer business day next following the date the530.33excise tax is due. 530.34 [EFFECTIVE DATE.] This section is effective the day 530.35 following final enactment. 530.36 Sec. 19. Minnesota Statutes 2000, section 297I.35, 531.1 subdivision 2, is amended to read: 531.2 Subd. 2. [ELECTRONICFUNDS TRANSFERPAYMENTS.] If the 531.3 aggregate amount of tax and surcharges due under this chapter 531.4 during a calendar year is equal to or exceeds $120,000, or if 531.5 the taxpayer is required to make payment of any other tax to the 531.6 commissioner by electronic meansof electronic funds transfer as531.7defined in section 336.4A-104, paragraph (a), then all tax and 531.8 surcharge payments in the subsequent calendar year must be paid 531.9 by electronic meansof a funds transfer as defined in section531.10336.4A-104, paragraph (a). The funds transfer payment date, as531.11defined in section 336.4A-104, must be on or before the date the531.12payment is due. If the date the payment is due is not a funds531.13transfer business day, as defined in section 336.4A-105,531.14paragraph (a), clause (4), the payment date must be on or before531.15the funds transfer business day next following the date the531.16payment is due. 531.17 [EFFECTIVE DATE.] This section is effective the day 531.18 following final enactment. 531.19 Sec. 20. Minnesota Statutes 2000, section 297I.85, 531.20 subdivision 7, is amended to read: 531.21 Subd. 7. [PENALTY FOR FAILURE TOMAKE PAYMENT BY531.22ELECTRONIC FUNDS TRANSFERPAY ELECTRONICALLY.] In addition to 531.23 other applicable penalties imposed by this section, if the 531.24 commissioner notifies the taxpayer that payments are required to 531.25 be made by electronic meansof electronic funds transfer, and 531.26 the payments are made by some other means, a penalty is 531.27 imposed. The amount of the penalty is equal to five percent of 531.28 each payment that should have been paid electronically. After 531.29 the commissioner's initial notification to the taxpayer that 531.30 payments are required to be made by electronic means, the 531.31 commissioner is not required to notify the taxpayer in 531.32 subsequent periods if the initial notification specified the 531.33 amount of tax liability at which a taxpayer is required to remit 531.34 payments by electronic means. The penalty may be abated under 531.35 the abatement procedures prescribed in section 270.07, 531.36 subdivision 6, if the failure to pay electronically is due to 532.1 reasonable cause. 532.2 [EFFECTIVE DATE.] This section is effective the day 532.3 following final enactment. 532.4 Sec. 21. Minnesota Statutes 2000, section 473.843, 532.5 subdivision 3, is amended to read: 532.6 Subd. 3. [PAYMENT OF FEE.] On or before the 20th day of 532.7 each month each operator shall pay the fee due under this 532.8 section for the previous month, using a form provided by the 532.9 commissioner of revenue. 532.10 An operator having a fee of $120,000 or more during a 532.11 fiscal year ending June 30 must pay all fees in the subsequent 532.12 calendar year by electronic meansof a funds transfer as defined532.13in section 336.4A-104, paragraph (a). The funds transfer532.14payment date, as defined in section 336.4A-401, must be on or532.15before the date the fee is due. If the date the fee is due is532.16not a funds transfer business day, as defined in section532.17336.4A-105, paragraph (a), clause (4), the payment date must be532.18on or before the funds transfer business day next following the532.19date the fee is due. 532.20 [EFFECTIVE DATE.] This section is effective the day 532.21 following final enactment. 532.22 ARTICLE 20 532.23 MISCELLANEOUS 532.24 Section 1. [12.38] [STATE AGENCIES; TEMPORARY WAIVER OF 532.25 FEES.] 532.26 Notwithstanding any law to the contrary, a state agency as 532.27 defined in section 16B.01, subdivision 2, with the approval of 532.28 the governor, may waive fees that would otherwise be charged for 532.29 agency services. The waiver of fees must be confined to 532.30 geographic areas within a disaster or emergency area as defined 532.31 in section 273.123, subdivision 1, and to the minimum periods of 532.32 time necessary to deal with the emergency situation. The 532.33 requirements of section 14.05, subdivision 4, do not apply to a 532.34 waiver made under this section. The agency must promptly report 532.35 the reasons for and the impact of any suspended fees to the 532.36 chairs of the legislative committees that oversee the policy and 533.1 budgetary affairs of the agency. 533.2 [EFFECTIVE DATE.] This section is effective the day 533.3 following final enactment and applies to disasters or 533.4 emergencies as defined in Minnesota Statutes, section 273.123, 533.5 subdivision 1, that occur after March 30, 2001. 533.6 Sec. 2. Minnesota Statutes 2000, section 16D.08, 533.7 subdivision 2, is amended to read: 533.8 Subd. 2. [POWERS.] (a) In addition to the collection 533.9 remedies available to private collection agencies in this state, 533.10 the commissioner, with legal assistance from the attorney 533.11 general, may utilize any statutory authority granted to a 533.12 referring agency for purposes of collecting debt owed to that 533.13 referring agency. The commissioner may also delegate to the 533.14 enterprise the tax collection remedies in sections 270.06, 533.15 clauses (7) and (17), excluding the power to subpoena witnesses; 533.16 270.66; 270.69, excluding subdivisions 7 and 13; 270.70, 533.17 excluding subdivision 14; 270.7001 to 270.72; and 290.92, 533.18 subdivision 23, except that a continuous wage levy under section 533.19 290.92, subdivision 23, is only effective for 70 days, unless no 533.20 competing wage garnishments, executions, or levies are served 533.21 within the 70-day period, in which case a wage levy is 533.22 continuous until a competing garnishment, execution, or levy is 533.23 served in the second or a succeeding 70-day period, in which 533.24 case a continuous wage levy is effective for the remainder of 533.25 that period. A debtor who qualifies for cancellation of 533.26 collection costs under section 16D.11, subdivision 3, clause 533.27 (1), can apply to the commissioner for reduction or release of a 533.28 continuous wage levy, if the debtor establishes that the debtor 533.29 needs all or a portion of the wages being levied upon to pay for 533.30 essential living expenses, such as food, clothing, shelter, 533.31 medical care, or expenses necessary for maintaining employment. 533.32 The commissioner's determination not to reduce or release a 533.33 continuous wage levy is appealable to district court. The word 533.34 "tax" or "taxes" when used in the tax collection statutes listed 533.35 in this subdivision also means debts referred under this chapter. 533.36 (b) For debts other than state taxesor, child support, or 534.1 student loans, before any of the tax collection remedies listed 534.2 in this subdivision can be used, except for the remedies in 534.3 section 270.06, clauses (7) and (17), if the referring agency 534.4 has not already obtained a judgment or filed a lien, the 534.5 commissioner must first obtain a judgment against the debtor. 534.6 For student loans when the referring agency has not obtained a 534.7 judgment or filed a lien, before using the tax collection 534.8 remedies listed in this subdivision, except for the remedies in 534.9 section 270.06, clauses (7) and (17), the commissioner shall 534.10 give the debtor 30 days' notice in writing, which may be served 534.11 in any manner permitted in section 270.68 for service of a 534.12 summons and complaint. The notice must advise the debtor of the 534.13 debtor's right to request that the commissioner commence a court 534.14 action, and that if no such request is made within 30 days after 534.15 service of the notice, the commissioner may use these tax 534.16 collection remedies. If a timely request is made, the 534.17 commissioner shall obtain a judgment before using these tax 534.18 collection remedies. 534.19 [EFFECTIVE DATE.] This section is effective for student 534.20 loans referred to the commissioner for collection on or after 534.21 July 1, 2001. 534.22 Sec. 3. Minnesota Statutes 2000, section 144.3831, 534.23 subdivision 2, is amended to read: 534.24 Subd. 2. [COLLECTION AND PAYMENT OF FEE.] The public water 534.25 supply described in subdivision 1 shall: 534.26 (1) collect the fees assessed on its service connections; 534.27 (2) pay the department ofrevenuehealth an amount 534.28 equivalent to the fees based on the total number of service 534.29 connections. The service connections for each public water 534.30 supply described in subdivision 1 shall be verified every four 534.31 years by the department of health; and 534.32 (3) pay one-fourth of the total yearly fee to the 534.33 department ofrevenuehealth each calendar quarter. The first 534.34 quarterly payment is due on or before September 30, 1992. In 534.35 lieu of quarterly payments, a public water supply described in 534.36 subdivision 1 with fewer than 50 service connections may make a 535.1 single annual payment by June 30 each year, starting in 1993. 535.2 The fees payable to the department ofrevenuehealth shall be 535.3 deposited in the state treasury as nondedicated state government 535.4 special revenue fund revenues. 535.5 [EFFECTIVE DATE.] This section is effective the day 535.6 following final enactment. 535.7 Sec. 4. Minnesota Statutes 2000, section 270.06, is 535.8 amended to read: 535.9 270.06 [POWERS AND DUTIES.] 535.10 The commissioner of revenue shall: 535.11 (1) have and exercise general supervision over the 535.12 administration of the assessment and taxation laws of the state, 535.13 over assessors, town, county, and city boards of review and 535.14 equalization, and all other assessing officers in the 535.15 performance of their duties, to the end that all assessments of 535.16 property be made relatively just and equal in compliance with 535.17 the laws of the state; 535.18 (2) confer with, advise, and give the necessary 535.19 instructions and directions to local assessors and local boards 535.20 of review throughout the state as to their duties under the laws 535.21 of the state; 535.22 (3) direct proceedings, actions, and prosecutions to be 535.23 instituted to enforce the laws relating to the liability and 535.24 punishment of public officers and officers and agents of 535.25 corporations for failure or negligence to comply with the 535.26 provisions of the laws of this state governing returns of 535.27 assessment and taxation of property, and cause complaints to be 535.28 made against local assessors, members of boards of equalization, 535.29 members of boards of review, or any other assessing or taxing 535.30 officer, to the proper authority, for their removal from office 535.31 for misconduct or negligence of duty; 535.32 (4) require county attorneys to assist in the commencement 535.33 of prosecutions in actions or proceedings for removal, 535.34 forfeiture and punishment for violation of the laws of this 535.35 state in respect to the assessment and taxation of property in 535.36 their respective districts or counties; 536.1 (5) require town, city, county, and other public officers 536.2 to report information as to the assessment of property, 536.3 collection of taxes received from licenses and other sources, 536.4 and such other information as may be needful in the work of the 536.5 department of revenue, in such form and upon such blanks as the 536.6 commissioner may prescribe; 536.7 (6) require individuals, copartnerships, companies, 536.8 associations, and corporations to furnish information concerning 536.9 their capital, funded or other debt, current assets and 536.10 liabilities, earnings, operating expenses, taxes, as well as all 536.11 other statements now required by law for taxation purposes; 536.12 (7) subpoena witnesses, at a time and place reasonable 536.13 under the circumstances, to appear and give testimony, and to 536.14 produce books, records, papers and documents for inspection and 536.15 copying relating to any matter which the commissioner may have 536.16 authority to investigate or determine; 536.17 (8) issue a subpoena which does not identify the person or 536.18 persons with respect to whose liability the subpoena is issued, 536.19 but only if (a) the subpoena relates to the investigation of a 536.20 particular person or ascertainable group or class of persons, 536.21 (b) there is a reasonable basis for believing that such person 536.22 or group or class of persons may fail or may have failed to 536.23 comply with any law administered by the commissioner, (c) the 536.24 information sought to be obtained from the examination of the 536.25 records (and the identity of the person or persons with respect 536.26 to whose liability the subpoena is issued) is not readily 536.27 available from other sources, (d) the subpoena is clear and 536.28 specific as to the information sought to be obtained, and (e) 536.29 the information sought to be obtained is limited solely to the 536.30 scope of the investigation. Provided further that the party 536.31 served with a subpoena which does not identify the person or 536.32 persons with respect to whose tax liability the subpoena is 536.33 issued shall have the right, within 20 days after service of the 536.34 subpoena, to petition the district court for the judicial 536.35 district in which lies the county in which that party is located 536.36 for a determination as to whether the commissioner of revenue 537.1 has complied with all the requirements in (a) to (e), and thus, 537.2 whether the subpoena is enforceable. If no such petition is 537.3 made by the party served within the time prescribed, the 537.4 subpoena shall have the force and effect of a court order; 537.5 (9) cause the deposition of witnesses residing within or 537.6 without the state, or absent therefrom, to be taken, upon notice 537.7 to the interested party, if any, in like manner that depositions 537.8 of witnesses are taken in civil actions in the district court, 537.9 in any matter which the commissioner may have authority to 537.10 investigate or determine; 537.11 (10) investigate the tax laws of other states and countries 537.12 and to formulate and submit to the legislature such legislation 537.13 as the commissioner may deem expedient to prevent evasions of 537.14 assessment and taxing laws, and secure just and equal taxation 537.15 and improvement in the system of assessment and taxation in this 537.16 state; 537.17 (11) consult and confer with the governor upon the subject 537.18 of taxation, the administration of the laws in regard thereto, 537.19 and the progress of the work of the department of revenue, and 537.20 furnish the governor, from time to time, such assistance and 537.21 information as the governor may require relating to tax matters; 537.22 (12) transmit to the governor, on or before the third 537.23 Monday in December of each even-numbered year, and to each 537.24 member of the legislature, on or before November 15 of each 537.25 even-numbered year, the report of the department of revenue for 537.26 the preceding years, showing all the taxable property in the 537.27 state and the value of the same, in tabulated form; 537.28 (13) inquire into the methods of assessment and taxation 537.29 and ascertain whether the assessors faithfully discharge their 537.30 duties, particularly as to their compliance with the laws 537.31 requiring the assessment of all property not exempt from 537.32 taxation; 537.33 (14) administer and enforce the assessment and collection 537.34 of state taxes and fees, including the use of any remedy 537.35 available to nongovernmental creditors, and, from time to time, 537.36 make, publish, and distribute rules for the administration and 538.1 enforcement of assessments and fees administered by the 538.2 commissioner and state tax laws. The rules have the force of 538.3 law; 538.4 (15) prepare blank forms for the returns required by state 538.5 tax law and distribute them throughout the state, furnishing 538.6 them subject to charge on application; 538.7 (16) prescribe rules governing the qualification and 538.8 practice of agents, attorneys, or other persons representing 538.9 taxpayers before the commissioner. The rules may require that 538.10 those persons, agents, and attorneys show that they are of good 538.11 character and in good repute, have the necessary qualifications 538.12 to give taxpayers valuable services, and are otherwise competent 538.13 to advise and assist taxpayers in the presentation of their case 538.14 before being recognized as representatives of taxpayers. After 538.15 due notice and opportunity for hearing, the commissioner may 538.16 suspend anddisbarbar from further practice before the 538.17 commissioner any person, agent, or attorney who is shown to be 538.18 incompetent or disreputable, who refuses to comply with the 538.19 rules, or who with intent to defraud, willfully or knowingly 538.20 deceives, misleads, or threatens a taxpayer or prospective 538.21 taxpayer, by words, circular, letter, or by advertisement. This 538.22 clause does not curtail the rights of individuals to appear in 538.23 their own behalf or partners or corporations' officers to appear 538.24 in behalf of their respective partnerships or corporations; 538.25 (17) appoint agents as the commissioner considers necessary 538.26 to make examinations and determinations. The agents have the 538.27 rights and powers conferred on the commissioner to subpoena, 538.28 examine, and copy books, records, papers, or memoranda, subpoena 538.29 witnesses, administer oaths and affirmations, and take 538.30 testimony. In addition to administrative subpoenas of the 538.31 commissioner and the agents, upon demand of the commissioner or 538.32 an agent, the court administrator of any district court shall 538.33 issue a subpoena for the attendance of a witness or the 538.34 production of books, papers, records, or memoranda before the 538.35 agent for inspection and copying. Disobedience of a court 538.36 administrator's subpoena shall be punished by the district court 539.1 of the district in which the subpoena is issued, or in the case 539.2 of a subpoena issued by the commissioner or an agent, by the 539.3 district court of the district in which the party served with 539.4 the subpoena is located, in the same manner as contempt of the 539.5 district court; 539.6 (18) appoint and employ additional help, purchase supplies 539.7 or materials, or incur other expenditures in the enforcement of 539.8 state tax laws as considered necessary. The salaries of all 539.9 agents and employees provided for in this chapter shall be fixed 539.10 by the appointing authority, subject to the approval of the 539.11 commissioner of administration; 539.12 (19) execute and administer any agreement with the 539.13 secretary of the treasury of the United States or a 539.14 representative of another state regarding the exchange of 539.15 information and administration of the tax laws; 539.16 (20) administer and enforce the provisions of sections 539.17 325D.30 to 325D.42, the Minnesota Unfair Cigarette Sales Act; 539.18 (21) authorize the use of unmarked motor vehicles to 539.19 conduct seizures or criminal investigations pursuant to the 539.20 commissioner's authority; and 539.21 (22) exercise other powers and perform other duties 539.22 required of or imposed upon the commissioner of revenue by law. 539.23 [EFFECTIVE DATE.] This section is effective the day 539.24 following final enactment. 539.25 Sec. 5. Minnesota Statutes 2000, section 270.07, 539.26 subdivision 3, is amended to read: 539.27 Subd. 3. [ADDITIONAL POWERS OF COMMISSIONER.] 539.28 Notwithstanding any other provision of law the commissioner of 539.29 revenue may, 539.30 (a) based upon the administrative costs of processing, 539.31 determine minimum standards for the determination of additional 539.32 tax for which an order shall be issued, and 539.33 (b) based upon collection costs as compared to the amount 539.34 of tax involved, determine minimum standards of collection, and 539.35 (c) based upon the administrative costs of processing, 539.36 determine the minimum amount of refunds for which an order shall 540.1 be issued and refund made where no claim therefor has been 540.2 filed, and 540.3 (d) cancel any amounts below these minimum standards 540.4 determined under (a) and (b) hereof, and 540.5 (e) based upon the inability of a taxpayer to pay a 540.6 delinquent tax liability, abate the liability if the taxpayer 540.7 agrees to perform uncompensated public service work for a state 540.8 agency, a political subdivision or public corporation of this 540.9 state, or a nonprofit educational, medical, or social service 540.10 agency. The department of corrections shall administer the work 540.11 program. No benefits under chapter 176 or 268 shall be 540.12 available, but a claim authorized under section 3.739 may be 540.13 made by the taxpayer. The state may not enter into any 540.14 agreement that has the purpose of or results in the displacement 540.15 of public employees by a delinquent taxpayer under this 540.16 section. The state must certify to the appropriate bargaining 540.17 agent or employees, as applicable, that the work performed by a 540.18 delinquent taxpayer will not result in the displacement of 540.19 currently employed workers or layoff from a substantially 540.20 equivalent position, including partial displacement such as 540.21 reduction in hours of nonovertime work, wages, or other 540.22 employment benefits, and 540.23 (f) based on a showing of reasonable cause: (1) reissue an 540.24 uncashed rebate warrant or check that has lapsed under any 540.25 provision of law relating to rebates; or (2) reissue an uncashed 540.26 tax refund warrant or check that has not lapsed by law, but has 540.27 been reported to the commissioner of commerce as abandoned 540.28 property under the Uniform Disposition of Unclaimed Property Act 540.29 in sections 345.31 to 345.60. The authority to reissue warrants 540.30 or checks under this paragraph is limited to five years after 540.31 the date of issuance of the original warrant or check. 540.32 [EFFECTIVE DATE.] This section is effective the day 540.33 following final enactment. 540.34 Sec. 6. [270.277] [NOTICES TO HOLDERS OF POWERS OF 540.35 ATTORNEY.] 540.36 If a taxpayer has executed a written power of attorney, in 541.1 a form prescribed by the commissioner, the commissioner shall 541.2 allow the taxpayer to elect, in writing, that all notices and 541.3 correspondence between the department of revenue and the 541.4 taxpayer will be sent to the holder of the power of attorney. 541.5 Sec. 7. Minnesota Statutes 2000, section 270.60, 541.6 subdivision 4, is amended to read: 541.7 Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner 541.8 shall pay to a county in which an Indian gaming casino is 541.9 located ten percent of the state share of all taxes generated 541.10 from activities on reservations and collected under a tax 541.11 agreement under this section with the tribal government for the 541.12 reservation located in the county. If the tribe has casinos 541.13 located in more than one county, the payment must be divided 541.14 equally among the counties in which the casinos are located. 541.15 (b)A county is a qualified county under this subdivision541.16if one of the following conditions is met:541.17(1) the county's per capita income is less than 80 percent541.18of the state per capita personal income, based on the most541.19recent estimates made by the United States Bureau of Economic541.20Analysis; or541.21(2) 30 percent or more of the total market value of real541.22property in the county is exempt from ad valorem taxation.541.23(c)The commissioner shall make the payments required under 541.24 this subdivision by February 28 of the year following the year 541.25 the taxes are collected. 541.26(d)(c) An amount sufficient to make the payments 541.27 authorized by this subdivision, not to exceed $1,100,000 in any541.28fiscal year,is annually appropriated from the general fund to 541.29 the commissioner.If the authorized payments exceed the amount541.30of the appropriation, the commissioner shall first541.31proportionately reduce the payments to counties other than541.32qualified counties so that the total amount equals the541.33appropriation. If the authorized payments to qualified counties541.34also exceed the amount of the appropriation, the commissioner541.35shall then proportionately reduce the rate so that the total541.36amount to be paid to qualified counties equals the appropriation.542.1 [EFFECTIVE DATE.] This section is effective for payments 542.2 made after December 31, 2001. 542.3 Sec. 8. Minnesota Statutes 2000, section 270.60, is 542.4 amended by adding a subdivision to read: 542.5 Subd. 5. [FEES; APPROPRIATION.] (a) The commissioner may 542.6 enter into an agreement with the governing body of any federally 542.7 recognized Indian reservation in Minnesota concerning fees 542.8 administered by the commissioner that are paid by the tribe, 542.9 members of the tribe, or persons who conduct business with the 542.10 tribe, or otherwise imposed on on-reservation activities. The 542.11 agreement may provide for the refund or sharing of the fee. The 542.12 commissioner may make any payments required by the agreement 542.13 from the fees collected. 542.14 (b) Each head of an agency, board, or other governmental 542.15 entity that administers a program that is funded by fees 542.16 administered by the commissioner may sign an agreement entered 542.17 into by the commissioner under this subdivision. An agreement 542.18 is not valid until signed by the head of each agency, board, or 542.19 other governmental entity that administers a program funded by 542.20 the particular fee covered in an agreement and by the 542.21 commissioner of revenue. 542.22 (c) There is annually appropriated to the commissioner of 542.23 revenue from the funds for which the fees are collected the 542.24 amounts necessary to make payments as provided in this 542.25 subdivision. 542.26 [EFFECTIVE DATE.] This section is effective the day 542.27 following final enactment and applies to all fees administered 542.28 by the commissioner of revenue for which timely claims for 542.29 refund have been, or can be, filed. 542.30 Sec. 9. [270.691] [PUBLICATION OF NAMES OF DELINQUENT 542.31 TAXPAYERS.] 542.32 Subdivision 1. [COMMISSIONER MAY PUBLISH.] (a) 542.33 Notwithstanding any other law, the commissioner may publish a 542.34 list or lists of taxpayers who owe delinquent taxes or fees 542.35 administered by the commissioner, and who meet the requirements 542.36 of paragraph (b). 543.1 (b) For purposes of this section, a taxpayer may be 543.2 included on a list if: 543.3 (1) the taxes or fees owed remain unpaid at least 180 days 543.4 after the dates they were due; 543.5 (2) the taxpayer's total liability for the taxes and fees, 543.6 including penalties, interest, and other charges, is at least 543.7 $5,000; and 543.8 (3) a tax lien has been filed or a judgment for the 543.9 liability has been entered against the taxpayer before notice is 543.10 given under subdivision 3. 543.11 (c) In the case of listed taxpayers that are business 543.12 entities, the commissioner may also list the names of 543.13 responsible persons assessed pursuant to section 270.101 for 543.14 listed liabilities, who are not protected from publication by 543.15 subdivision 2, and for whom the requirements of paragraph (b) 543.16 are satisfied with regard to the personal assessment. 543.17 Subd. 2. [REQUIRED AND EXCLUDED TAXPAYERS.] (a) The 543.18 commissioner may publish lists of some or all of the taxpayers 543.19 described in subdivision 1. A list must include the taxpayers 543.20 with the largest unpaid liabilities of the kind used to define 543.21 the list, subject to the limitations of paragraphs (b) and (c). 543.22 (b) For the purposes of this section, a tax or fee is not 543.23 delinquent if: 543.24 (1) an administrative or court action contesting the amount 543.25 or validity of the taxpayer's liability has been filed or served 543.26 and is unresolved at the time when notice would be given under 543.27 subdivision 3; 543.28 (2) an appeal period to contest the liability has not 543.29 expired; or 543.30 (3) the liability is subject to a payment agreement and 543.31 there is no delinquency in the payments required under the 543.32 agreement. 543.33 (c) Unpaid liabilities are not subject to publication if: 543.34 (1) the commissioner is in the process of reviewing or 543.35 adjusting the liability; 543.36 (2) the taxpayer is a debtor in a bankruptcy proceeding and 544.1 the automatic stay is in effect; 544.2 (3) the commissioner has been notified that the taxpayer is 544.3 deceased; or 544.4 (4) the time period for collecting the taxes or fees has 544.5 expired. 544.6 Subd. 3. [NOTICE TO TAXPAYER.] (a) At least 30 days before 544.7 publishing the name of a delinquent taxpayer, the commissioner 544.8 shall mail a written notice to the taxpayer, detailing the 544.9 amount and nature of each liability and the intended publication 544.10 of the information listed in subdivision 4 related to the 544.11 liability. The notice must be mailed by first class and 544.12 certified mail addressed to the last known address of the 544.13 taxpayer. The notice must include information regarding the 544.14 exceptions listed in subdivision 2 and must state that the 544.15 taxpayer's information will not be published if the taxpayer 544.16 pays the delinquent obligation, enters into an agreement to pay, 544.17 or provides information establishing that subdivision 2 544.18 prohibits publication of the taxpayer's name. 544.19 (b) After at least 30 days has elapsed since the notice was 544.20 mailed and the delinquent tax or fee has not been paid and the 544.21 taxpayer has not proved to the commissioner that subdivision 2 544.22 prohibits publication, the commissioner may publish in a list of 544.23 delinquent taxpayers the information about the taxpayer that is 544.24 listed in subdivision 4. 544.25 Subd. 4. [FORM OF LIST.] The list may be published by any 544.26 medium or method. The list must contain the name, address, type 544.27 of tax or fee, and period for which payment is due for each 544.28 liability, including penalties, interest, and other charges owed 544.29 by each listed delinquent taxpayer. 544.30 Subd. 5. [REMOVAL FROM LIST.] The commissioner shall 544.31 remove the name of a taxpayer from the list of delinquent 544.32 taxpayers after the commissioner receives written notice of and 544.33 verifies any of the following facts about the liability in 544.34 question: 544.35 (1) the taxpayer has contacted the commissioner and 544.36 arranged resolution of the liability; 545.1 (2) an active bankruptcy proceeding has been initiated for 545.2 the liability; 545.3 (3) a bankruptcy proceeding concerning the liability has 545.4 resulted in discharge of the liability; or 545.5 (4) the commissioner has written off the liability. 545.6 Subd. 6. [NAMES PUBLISHED IN ERROR.] If the commissioner 545.7 publishes a name under subdivision 1 in error, the taxpayer 545.8 whose name was erroneously published has a right to request a 545.9 retraction and apology. If the taxpayer so requests, the 545.10 commissioner shall publish a retraction and apology 545.11 acknowledging that the taxpayer's name was published in error. 545.12 The retraction and apology must appear in the same medium and 545.13 the same format as the original list that contained the name 545.14 listed in error. 545.15 [EFFECTIVE DATE.] This section is effective the day 545.16 following final enactment for all liabilities owing on that date 545.17 for which the statute of limitations for collection has not 545.18 expired, and all liabilities arising after that date. 545.19 Sec. 10. Minnesota Statutes 2000, section 270.70, 545.20 subdivision 13, is amended to read: 545.21 Subd. 13. [LEVY AND SALE BY SHERIFF.] If any tax payable 545.22 to the commissioner of revenue or to the department of revenue 545.23 is not paid as provided in subdivision 2, the commissioner may,545.24within five years after the date of assessment of the545.25tax, within the time periods provided in subdivision 1 for 545.26 collection of taxes, delegate the authority granted by 545.27 subdivision 1, by means of issuing a warrant to the sheriff of 545.28 any county of the state commanding the sheriff, as agent for the 545.29 commissioner, to levy upon and sell the real and personal 545.30 property of the person liable for the payment or collection of 545.31 the tax and to levy upon the rights to property of that person 545.32 within the county, or to levy upon and seize any property within 545.33 the county on which there is a lien provided in section 270.69, 545.34 and to return the warrant to the commissioner and pay to the 545.35 commissioner the money collected by virtue thereof by a time to 545.36 be therein specified not less than 60 days from the date of the 546.1 warrant. The sheriff shall proceed thereunder to levy upon and 546.2 seize any property of the person and to levy upon the rights to 546.3 property of the person within the county (except the person's 546.4 homestead or that property which is exempt from execution 546.5 pursuant to section 550.37), or to levy upon and seize any 546.6 property within the county on which there is a lien provided in 546.7 section 270.69. For purposes of the preceding sentence, the 546.8 term "tax" shall include any penalty, interest and costs 546.9 properly payable. The sheriff shall then sell so much of the 546.10 property levied upon as is required to satisfy the taxes, 546.11 interest, and penalties, together with the sheriff's costs; but 546.12 the sales, and the time and manner of redemption therefrom, 546.13 shall, to the extent not provided in sections 270.701 to 546.14 270.709, be governed by chapter 550. The proceeds of the sales, 546.15 less the sheriff's costs, shall be turned over to the 546.16 commissioner, who shall then apply the proceeds as provided in 546.17 section 270.708. 546.18 [EFFECTIVE DATE.] This section is effective the day 546.19 following final enactment for all taxes for which issuance of a 546.20 warrant under this subdivision has not been barred as of that 546.21 date. 546.22 Sec. 11. Minnesota Statutes 2000, section 270.73, 546.23 subdivision 1, is amended to read: 546.24 Subdivision 1. [POSTING, NOTICE.] Pursuant to the 546.25 authority to disclose under section 270B.12, subdivision 4, the 546.26 commissioner shall, by the 15th of each month, submit to the 546.27 commissioner of public safety a list of all taxpayers who are 546.28 required to pay, withhold, or collect the tax imposed by section 546.29 290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or 546.30 297A.02, or local sales and use tax payable to the commissioner 546.31 of revenue, or a local option tax administered and collected by 546.32 the commissioner of revenue, and who are ten days or more 546.33 delinquent in either filing a tax return or paying the tax. 546.34 The commissioner of revenue is under no obligation to list 546.35 a taxpayer whose business is inactive. At least ten days before 546.36 notifying the commissioner of public safety, the commissioner of 547.1 revenue shall notify the taxpayer of the intended action. 547.2 The commissioner of public safety shall post the list in 547.3 the same manner as provided in section 340A.318, subdivision 3. 547.4 The list will prominently show the date of posting. If a 547.5 taxpayer previously listed files all returns and pays all taxes 547.6 then due, the commissioner shall notify the commissioner of 547.7 public safety within two business days. 547.8 [EFFECTIVE DATE.] This section is effective for lists 547.9 submitted to the commissioner of public safety on or after the 547.10 day following final enactment. 547.11 Sec. 12. Minnesota Statutes 2000, section 270A.11, is 547.12 amended to read: 547.13 270A.11 [DATA PRIVACY.] 547.14 Private and confidential data on individuals may be 547.15 exchanged among the department, the taxpayer's rights advocate, 547.16 the attorney general, the claimant agency, and the debtor as 547.17 necessary to accomplish and effectuate the intent of sections 547.18 270A.01 to 270A.12, as provided by section 13.05, subdivision 4, 547.19 clause (b). The department may disclose to the claimant agency 547.20 only the debtor's name, address, social security number and the 547.21 amount of the refund, and in the case of a joint return, the 547.22 name of the debtor's spouse. Any person employed by, or 547.23 formerly employed by, a claimant agency who discloses any such 547.24 information for any other purpose, shall be subject to the civil 547.25 and criminal penalties of section 270B.18. Data collected by 547.26 the department from claimant agencies relating to claims filed 547.27 under this chapter are private data on individuals. 547.28 [EFFECTIVE DATE.] This section is effective the day 547.29 following final enactment. 547.30 Sec. 13. Minnesota Statutes 2000, section 270B.02, 547.31 subdivision 2, is amended to read: 547.32 Subd. 2. [PROTECTED NONPUBLIC DATA.] The following are 547.33 protected nonpublic data as defined in section 13.02, 547.34 subdivision 13: 547.35 (1) criteria for determining which computer processed 547.36 returns are selected for audit; 548.1 (2) criteria for determining which returns are selected for 548.2 an in-depth audit;and548.3 (3) criteria for determining which accounts receivable 548.4 balances below a stated amount are written off or canceled; and 548.5 (4) criteria or information used in determining which 548.6 alleged criminal violations of any law administered by the 548.7 commissioner are selected for criminal investigation. 548.8 [EFFECTIVE DATE.] This section is effective the day 548.9 following final enactment. 548.10 Sec. 14. Minnesota Statutes 2000, section 270B.02, 548.11 subdivision 3, is amended to read: 548.12 Subd. 3. [CONFIDENTIAL DATA ON INDIVIDUALS; PROTECTED 548.13 NONPUBLIC DATA.] (a) Except as provided in paragraph (b), the 548.14 name or existence of an informer, informer letters, and other 548.15unsoliciteddata, in whatever form, given to the department of 548.16 revenue by a person, other than the data subject, who informs 548.17 that a specific taxpayer is not or may not be in compliance with 548.18 tax laws, or nontax laws administered by the department of 548.19 revenue, including laws not listed in section 270B.01, 548.20 subdivision 8, are confidential data on individuals or protected 548.21 nonpublic data as defined in section 13.02, subdivisions 3 and 548.22 13. 548.23 (b) Data under paragraph (a) may be disclosed with the 548.24 consent of the informer or upon a written finding by a court 548.25 that the information provided by the informer was false and that 548.26 there is evidence that the information was provided in bad 548.27 faith. This subdivision does not alter disclosure 548.28 responsibilities or obligations under the rules of criminal 548.29 procedure. 548.30 [EFFECTIVE DATE.] This section is effective the day 548.31 following final enactment. 548.32 Sec. 15. Minnesota Statutes 2000, section 270B.03, 548.33 subdivision 6, is amended to read: 548.34 Subd. 6. [INVESTIGATIVE DATA.] For purposes of any law 548.35 administered by the department of revenue, including laws not 548.36 listed in section 270B.01, subdivision 8, investigative data 549.1 collected or created by the department of revenue in order to 549.2 prepare a case against a person, whether known or unknown, for 549.3 the commission of a crime is confidential or protected nonpublic 549.4 during an investigation. When the investigation becomes 549.5 inactive, as defined in section 13.82, subdivision 5, the 549.6classifications otherwise applicable under any other laws become549.7effectivedata is private or nonpublic. 549.8 [EFFECTIVE DATE.] This section is effective the day 549.9 following final enactment. 549.10 Sec. 16. [289A.395] [LIMITATIONS; DISASTER AREAS.] 549.11 Subdivision 1. [EXTENSION OF TIME.] The limitations of 549.12 time provided by this chapter, chapter 290 relating to income 549.13 taxes, chapter 271 relating to the tax court for filing returns, 549.14 paying taxes, claiming refunds, commencing action thereon, 549.15 appealing to the tax court from orders relating to income taxes, 549.16 and the filing of petitions under chapter 278 are extended by 45 549.17 days for individuals residing in areas designated a disaster or 549.18 emergency area, if the time period for which the area is so 549.19 designated includes at least one of the 30 days immediately 549.20 preceding the time limit. For purposes of this section, 549.21 "disaster or emergency area" has the meaning given in section 549.22 273.123, subdivision 1. 549.23 Subd. 2. [INTEREST AND PENALTIES.] Interest on tax must 549.24 not be assessed or collected from an individual with respect to 549.25 whom, and for the period during which, the limitations of time 549.26 are extended as provided in subdivision 1. A penalty shall not 549.27 be assessed or collected from an individual for failure during 549.28 that period to perform an act required by the laws described in 549.29 subdivision 1. 549.30 Subd. 3. [ABATEMENT.] The commissioner of revenue shall 549.31 abate penalties and interest on withholding taxes and 549.32 declarations under section 290.92, and on sales taxes deposits 549.33 and returns under chapters 289A and 297B for failure to pay 549.34 amounts or file returns between the date due and 45 days after 549.35 the date due, if: 549.36 (1) the taxpayer is a resident in the area designated under 550.1 subdivision 1, or the taxpayer's business operations are located 550.2 in the area designated in subdivision 1, and the taxpayer's 550.3 ability to file returns or declarations or pay the taxes is 550.4 affected by the disaster; and 550.5 (2) the taxpayer files all required returns and 550.6 declarations and pays all tax amounts due on or before the 45th 550.7 day following the due date. 550.8 Subd. 4. [APPLICABILITY.] Nothing in this section reduces 550.9 the time within which an act is required or permitted under 550.10 chapter 271; 289A; 290; 297A; or 297B. 550.11 [EFFECTIVE DATE.] This section is effective the day 550.12 following final enactment and applies to disasters or 550.13 emergencies as defined in Minnesota Statutes, section 273.123, 550.14 subdivision 1, that occur after March 30, 2001. 550.15 Sec. 17. Minnesota Statutes 2000, section 289A.60, 550.16 subdivision 7, is amended to read: 550.17 Subd. 7. [PENALTY FOR FRIVOLOUS RETURN.] Ifan individual550.18 a taxpayer files what purports to be a tax returnrequired by550.19chapter 290or a claim for refund but which does not contain 550.20 information on which the substantial correctness of 550.21 theassessmentpurported return or claim for refund may be 550.22 judged or contains information that on its face shows that the 550.23assessmentpurported return or claim for refund is substantially 550.24 incorrect and the conduct is due to a position that is frivolous 550.25 or a desire that appears on the purported return or claim for 550.26 refund to delay or impede the administration of Minnesota tax 550.27 laws, then the individual shall pay a penalty of $500. In a 550.28 proceeding involving the issue of whether or not a person is 550.29 liable for this penalty, the burden of proof is on the 550.30 commissioner. 550.31 [EFFECTIVE DATE.] This section is effective for returns or 550.32 claims for refunds filed on or after the day following final 550.33 enactment. 550.34 Sec. 18. Minnesota Statutes 2000, section 345.41, is 550.35 amended to read: 550.36 345.41 [REPORT OF ABANDONED PROPERTY.] 551.1 (a) Every person holding funds or other property, tangible 551.2 or intangible, presumed abandoned under sections 345.31 to 551.3 345.60 shall report annually to the commissioner with respect to 551.4 the property as hereinafter provided. 551.5 (b) The report shall be verified and shall include: 551.6 (1) except with respect to traveler's checks and money 551.7 orders, the name, if known, and last known address, if any, of 551.8 each person appearing from the records of the holder to be the 551.9 owner of any property of the value of $100 or more presumed 551.10 abandoned under sections 345.31 to 345.60; 551.11 (2) in case of unclaimed funds of life insurance 551.12 corporations, the full name of the policyholder, insured or 551.13 annuitant and that person's last known address according to the 551.14 life insurance corporation's records; 551.15 (3) the nature and identifying number, if any, or 551.16 description of the property and the amount appearing from the 551.17 records to be due, except that items of value under $100 each 551.18 may be reported in aggregate; 551.19 (4) the date when the property became payable, demandable 551.20 or returnable, and the date of the last transaction with the 551.21 owner with respect to the property; and 551.22 (5) other information which the commissioner prescribes by 551.23 rule as necessary for the administration of sections 345.31 to 551.24 345.60. 551.25 (c) If the person holding property presumed abandoned is a 551.26 successor to other persons who previously held the property for 551.27 the owner, or if the holder has changed a name while holding the 551.28 property, the holder shall file with the report all prior known 551.29 names and addresses of each holder of the property. 551.30 (d) The report shall be filed before November 1 of each 551.31 year as of June 30 next preceding, but the report of life 551.32 insurance corporations shall be filed before October 1 of each 551.33 year as of December 31 next preceding. The commissioner may 551.34 postpone the reporting date upon written request by any person 551.35 required to file a report. 551.36 (e) Not more than 120 days before filing the report 552.1 required by this section, the holder in possession of property 552.2 abandoned and subject to custody as unclaimed property under 552.3 this chapter shall send written notice to the presumed owner at 552.4 that owner's last known address informing the owner that the 552.5 holder is in possession of property subject to this chapter and 552.6 advising the owner of the steps necessary to prevent abandonment 552.7 if: 552.8 (1) the holder has in its records an address for the 552.9 presumed owner that the holder's records do not disclose to be 552.10 inaccurate; 552.11 (2) the claim of the apparent owner is not barred by the 552.12 statute of limitations; and 552.13 (3) the property has a value of $100 or more. 552.14 (f) Verification, if made by a partnership, shall be 552.15 executed by a partner; if made by an unincorporated association 552.16 or private corporation, by an officer, and if made by a public 552.17 corporation, by its chief fiscal officer. 552.18 (g) Holders of property described in section 345.32 shall 552.19 not impose any charges against property which is described in 552.20 section 345.32, clause (a), (b) or (c). 552.21 (h) Any person who has possession of property which the 552.22 person has reason to believe will be reportable in the future as 552.23 unclaimed property may, with the permission of the commissioner, 552.24 report and deliver such property prior to the date required for 552.25 reporting in accordance with this section. 552.26 (i) Before the last day of each calendar year, the 552.27 commissioner of revenue shall report to the commissioner as 552.28 unclaimed property under this section any uncashed checks or 552.29 warrants for overpayments of taxes that were issued more than 552.30 one year before the end of the calendar quarter immediately 552.31 preceding the end of the calendar year. 552.32 [EFFECTIVE DATE.] This section is effective August 1, 2001. 552.33 Sec. 19. Minnesota Statutes 2000, section 345.42, is 552.34 amended by adding a subdivision to read: 552.35 Subd. 5. [UNCASHED TAX REFUNDS.] The commissioner of 552.36 revenue shall notify the commissioner of any checks or warrants 553.1 reported under section 345.41 that the commissioner of revenue 553.2 has reissued under section 270.07, subdivision 3, clause (f). 553.3 The commissioner shall remove the item from any future 553.4 publication of lists or notifications of owners of abandoned 553.5 property. 553.6 [EFFECTIVE DATE.] This section is effective August 1, 2001. 553.7 Sec. 20. [471.699] [EXTENSION OF FINANCIAL REPORT FILING 553.8 TIME LIMITS; DISASTER AREAS.] 553.9 The time limit by which financial reports are required to 553.10 be filed under section 471.697 or 471.698, is extended by 90 553.11 days for any city or town located in whole or in part within a 553.12 disaster or emergency area as defined in section 273.123, 553.13 subdivision 1, if the time period for which the area is so 553.14 designated includes at least one of the 30 days immediately 553.15 preceding the time limit. 553.16 [EFFECTIVE DATE.] This section is effective the day 553.17 following final enactment. 553.18 Sec. 21. Laws 1998, chapter 389, article 16, section 35, 553.19 subdivision 1, is amended to read: 553.20 Subdivision 1. [BAT STUDY.] $100,000 is appropriated from 553.21 the general fund for fiscal year 1999 to the legislative 553.22 coordinating commission to study alternative methods of taxing 553.23 business. The appropriations under this section and under Laws 553.24 1997, chapter 231, article 5, section 18, subdivision 3, are 553.25 available in fiscal years 2000 and20012003. 553.26 Sec. 22. [APPROPRIATION.] 553.27 The following amounts are appropriated to the commissioner 553.28 of revenue from the general fund to administer this act: 553.29 (1) $2,050,000 in fiscal year 2002; and 553.30 (2) $900,000 in fiscal year 2003. 553.31 These are one-time appropriations and are not added to the 553.32 base, except $175,000 for each year for assessment training and 553.33 education (regional representatives) is added to the budget base. 553.34 Sec. 23. [REPEALER.] 553.35 Minnesota Statutes 2000, section 290A.18, subdivision 2, is 553.36 repealed. 554.1 [EFFECTIVE DATE.] This section is effective the day 554.2 following final enactment.