Minnesota Legislature
HF 2498
3rd Engrossment - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
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 reducing certain utility taxes and requiring a 1.26 corresponding rate reduction; changing certain 1.27 provisions relating to biomass facilities; providing 1.28 for disposition of local lodging tax proceeds; 1.29 providing priorities for disposition of production tax 1.30 proceeds by the iron range resources and 1.31 rehabilitation board; providing for certain payments 1.32 in lieu of taxes; reducing rates on lawful gambling 1.33 taxes; reducing rates on solid waste management taxes; 1.34 providing for state takeover of certain costs of 1.35 district court administration and out-of-home 1.36 placement; providing for uniform sales and use tax 1.37 administration; providing for taxation and incentive 1.38 payments on forest lands; providing for electronic 1.39 filing and payment of taxes; changing procedures for 1.40 disposition of seized contraband; abolishing certain 1.41 health care provider taxes and health plan premium 1.42 taxes; providing for deposit of certain tobacco 1.43 settlement and cigarette tax proceeds to the health 1.44 care access fund; changing tax increment financing 1.45 provisions and authorizing certain grants, duration 1.46 extensions, and expenditures; requiring registration 2.1 of tax increment financing consultants; creating a 2.2 health care access fund reserve; reducing the tax on 2.3 life insurance premiums; increasing property tax 2.4 refunds and changing calculation of rent constituting 2.5 property taxes for purposes of property tax refunds; 2.6 reducing taconite production tax and occupation tax 2.7 rates; providing special authority to certain 2.8 political subdivisions; authorizing special taxing 2.9 districts; changing and clarifying tax administration, 2.10 collection, enforcement, interest, and penalty 2.11 provisions; changing revenue recapture provisions; 2.12 authorizing abatements and waivers of fees and certain 2.13 taxes in disaster areas; changing and imposing fees; 2.14 changing debt collection provisions for student loans; 2.15 providing certain duties and powers to the 2.16 commissioner of revenue; authorizing publication of 2.17 names of certain delinquent taxpayers; authorizing 2.18 border city allocations; changing provisions relating 2.19 to tax-forfeited lands and providing for tax-forfeited 2.20 lands transfers; defining terms; classifying data; 2.21 establishing a legislative commission; requiring 2.22 studies; imposing a criminal penalty; appropriating 2.23 money; amending Minnesota Statutes 2000, sections 2.24 16D.08, subdivision 2; 62J.041, subdivision 1; 2.25 62Q.095, subdivision 6; 69.021, subdivision 5; 84.922, 2.26 by adding a subdivision; 88.49, subdivisions 5, 9a; 2.27 88.491, subdivision 2; 97A.065, subdivision 2; 2.28 103D.905, subdivision 3; 115B.24, subdivision 2; 2.29 123B.55; 126C.01, subdivision 3; 126C.13, subdivision 2.30 4; 126C.17, by adding a subdivision; 144.3831, 2.31 subdivision 2; 168.013, subdivision 1a; 174.24, 2.32 subdivision 3b; 179A.101, subdivision 1; 179A.102, 2.33 subdivision 6; 179A.103, subdivision 1; 214.16, 2.34 subdivisions 2, 3; 216B.2424, subdivision 5; 239.101, 2.35 subdivision 3; 260.765, by adding a subdivision; 2.36 260.771, by adding a subdivision; 270.06; 270.07, 2.37 subdivision 3; 270.11, by adding a subdivision; 2.38 270.12, subdivision 2; 270.271, subdivisions 1, 3; 2.39 270.60, subdivision 4, by adding a subdivision; 2.40 270.70, subdivision 13; 270.73, subdivision 1; 2.41 270.771; 270.78; 270A.03, subdivisions 5, 7; 270A.11; 2.42 270B.01, subdivision 8; 270B.02, subdivisions 2, 3; 2.43 270B.03, subdivision 6; 270B.14, subdivision 1; 2.44 271.01, subdivision 5; 271.21, subdivision 2; 272.02, 2.45 subdivisions 9, 10, 22, by adding subdivisions; 2.46 273.061, subdivisions 1, 2, 8; 273.072, subdivision 1; 2.47 273.11, subdivisions 1a, 14, by adding subdivisions; 2.48 273.1104, subdivision 2; 273.111, subdivision 4; 2.49 273.121; 273.124, subdivisions 8, 13, 14; 273.13, 2.50 subdivisions 22, 23, 24, 25, 31; 273.1392; 273.1393; 2.51 273.1398, subdivisions 1a, 4a, by adding subdivisions; 2.52 274.01, subdivision 1; 274.13, subdivision 1; 275.02; 2.53 275.065, subdivisions 1, 3, 5a, 6, 8, by adding a 2.54 subdivision; 275.066; 275.07, subdivision 1; 275.16; 2.55 275.62, subdivision 1; 275.70, subdivision 5, by 2.56 adding subdivisions; 276.04, subdivision 2; 276.11, 2.57 subdivision 1; 276A.01, subdivision 3; 276A.06, 2.58 subdivision 3; 282.01, subdivisions 1a, 1b; 282.04, 2.59 subdivision 2; 287.035; 287.04; 287.08; 287.12; 2.60 287.13, by adding a subdivision; 287.20, subdivisions 2.61 2, 9; 287.21, subdivision 1; 287.28; 289A.02, 2.62 subdivision 7, by adding a subdivision; 289A.08, 2.63 subdivision 16; 289A.11, subdivision 1; 289A.12, 2.64 subdivision 3; 289A.18, subdivision 4; 289A.20, 2.65 subdivisions 1, 2, 4; 289A.26, subdivision 2a; 2.66 289A.31, subdivision 7; 289A.50, subdivisions 2, 2a; 2.67 289A.60, subdivisions 7, 21; 290.01, subdivisions 6b, 2.68 7, 19, 19b, 19c, 19d, 22, 29, 31, by adding a 2.69 subdivision; 290.014, subdivision 5; 290.05, 2.70 subdivision 1; 290.06, subdivisions 2c, 22; 290.067, 2.71 subdivisions 1, 2, 2b; 290.0671, subdivisions 1, 1a, 3.1 7; 290.0674, subdivisions 1, 2; 290.0675, subdivisions 3.2 1, 3; 290.068, subdivisions 1, 3, 4; 290.091, 3.3 subdivisions 2, 3; 290.0921, subdivisions 1, 2, 3, 6; 3.4 290.0922, subdivision 2; 290.093; 290.095, subdivision 3.5 2; 290.17, subdivisions 1, 4; 290.191, subdivisions 2, 3.6 3; 290.21, subdivision 4; 290.9725; 290A.03, 3.7 subdivisions 6, 11, 12, 13, 15; 290A.04, subdivisions 3.8 2, 2a, 4; 290A.15; 291.005, subdivision 1; 295.55, 3.9 subdivision 4; 296A.15, subdivisions 1, 7; 296A.16, 3.10 subdivision 2; 296A.21, subdivisions 1, 4; 296A.24, 3.11 subdivisions 1, 2; 297A.01, subdivision 3; 297A.07, 3.12 subdivision 3; 297A.25, subdivisions 3, 11, 28; 3.13 297A.61, subdivisions 2, 3, 4, 6, 7, 9, 10, 12, 14, 3.14 16, 17, 19, 22, 23, by adding subdivisions; 297A.62, 3.15 subdivision 3; 297A.64, subdivisions 3, 4; 297A.66, 3.16 subdivisions 1, 3; 297A.67, subdivisions 2, 8, 23, 24, 3.17 25, by adding subdivisions; 297A.68, subdivisions 2, 3.18 3, 5, 11, 13, 14, 18, 25, by adding subdivisions; 3.19 297A.69, subdivision 2; 297A.70, subdivisions 1, 2, 3, 3.20 4, 7, 8, 10, 13, 14; 297A.71, subdivisions 3, 6, by 3.21 adding subdivisions; 297A.72, subdivision 1; 297A.75; 3.22 297A.77, subdivision 1; 297A.80; 297A.82, subdivision 3.23 3, by adding a subdivision; 297A.89, subdivision 1; 3.24 297A.90, subdivision 1; 297A.91; 297A.92, subdivision 3.25 2; 297A.94; 297A.99, subdivisions 7, 9, 11; 297B.03; 3.26 297B.09, subdivision 1; 297E.02, subdivisions 1, 4, 6; 3.27 297E.16, subdivisions 1, 2; 297F.09, subdivision 7; 3.28 297F.10, subdivision 1; 297F.16, subdivision 4; 3.29 297F.20, subdivision 3; 297F.21, subdivisions 1, 2, 3; 3.30 297G.09, subdivision 6; 297G.15, subdivision 4; 3.31 297G.16, subdivisions 5, 7; 297G.20, subdivisions 3, 3.32 4; 297H.02, subdivision 2; 297H.03, subdivision 2; 3.33 297H.04, subdivision 2, by adding a subdivision; 3.34 297H.05; 297H.06, by adding a subdivision; 297H.13, by 3.35 adding a subdivision; 297I.05, by adding a 3.36 subdivision; 297I.15, by adding a subdivision; 3.37 297I.20; 297I.35, subdivision 2; 297I.40, subdivisions 3.38 1, 2, 7; 297I.85, subdivision 7; 298.01, subdivisions 3.39 3, 3a, 3b, 4, 4a, 4c; 298.22, subdivision 2, by adding 3.40 a subdivision; 298.225, subdivision 1; 298.24, 3.41 subdivision 1; 298.27; 298.28, subdivisions 6, 9a; 3.42 298.2961, subdivision 2; 298.75, subdivisions 1, 2, by 3.43 adding a subdivision; 299D.03, subdivision 5; 345.41; 3.44 345.42, by adding a subdivision; 349.19, subdivision 3.45 2a; 357.021, subdivision 1a; 461.12, by adding a 3.46 subdivision; 469.040, subdivision 5; 469.169, by 3.47 adding a subdivision; 469.1732, subdivision 1; 3.48 469.174, subdivisions 1, 3, 10, 10a, 12, 25; 469.175, 3.49 subdivisions 1, 3, 6, 6b, by adding a subdivision; 3.50 469.176, subdivisions 1b, 1c, 1e, 3, 4, 4g, by adding 3.51 a subdivision; 469.1763, subdivision 6; 469.177, 3.52 subdivisions 1, 11, by adding a subdivision; 469.1771, 3.53 subdivision 1; 469.178, by adding a subdivision; 3.54 469.1791, subdivisions 1, 3, 9; 469.1812, subdivision 3.55 2; 469.1813, subdivisions 4, 6; 469.190, subdivision 3.56 3; 469.202, subdivision 2; 473.388, subdivisions 4, 7; 3.57 473.446, subdivision 1, by adding a subdivision; 3.58 473.843, subdivision 3; 473F.08, subdivision 3; 3.59 473H.10, subdivision 3; 475.58, subdivision 1; 3.60 477A.011, subdivisions 35, 36; 477A.0121, by adding a 3.61 subdivision; 477A.0122, by adding a subdivision; 3.62 477A.013, subdivisions 1, 9; 477A.03, subdivision 2, 3.63 by adding a subdivision; 477A.12; 477A.14; 480.181, 3.64 subdivision 1; 487.33, subdivision 5; 574.34, 3.65 subdivision 1; Laws 1986, chapter 396, section 5; Laws 3.66 1997, chapter 231, article 10, section 25; Laws 1998, 3.67 chapter 389, article 16, section 35, subdivision 1; 3.68 Laws 1999, chapter 216, article 7, section 46, 3.69 subdivision 3; Laws 1999, chapter 243, article 4, 3.70 section 19; Laws 2000, chapter 490, article 8, section 3.71 17; Laws 2000, chapter 490, article 11, section 26; 4.1 proposing coding for new law in Minnesota Statutes, 4.2 chapters 3; 12; 16A; 62Q; 103B; 116J; 123B; 144F; 245; 4.3 256L; 270; 272; 273; 275; 290; 290A; 295; 296A; 297A; 4.4 469; 471; 473; 477A; 480; 484; proposing coding for 4.5 new law as Minnesota Statutes, chapters 126C; 216B; 4.6 290C; repealing Minnesota Statutes 2000, sections 4.7 13.4967, subdivision 3; 16A.1521; 16A.76; 62T.10; 4.8 126C.13, subdivisions 1, 2, 3; 144.1484, subdivision 4.9 2; 256L.02, subdivision 3; 270.31; 270.32; 270.33; 4.10 270.34; 270.35; 270.36; 270.37; 270.38; 270.39; 4.11 273.13, subdivision 24a; 273.1382; 273.1399; 275.078; 4.12 275.08, subdivision 1e; 289A.60, subdivision 15; 4.13 290.06, subdivisions 25, 26; 290.0673; 290.095, 4.14 subdivisions 1a, 7; 290.191, subdivision 4; 290.21, 4.15 subdivision 3; 290.23; 290.25; 290.31, subdivisions 2, 4.16 2a, 3, 4, 5, 19; 290.35; 290.9726, subdivision 7; 4.17 290A.04, subdivision 2j; 290A.18, subdivision 2; 4.18 295.50; 295.51; 295.52; 295.53; 295.54; 295.55; 4.19 295.56; 295.57; 295.58; 295.582; 295.59; 296A.16, 4.20 subdivision 6; 296A.24, subdivision 3; 297A.61, 4.21 subdivision 16; 297A.62, subdivision 2; 297A.64, 4.22 subdivision 1; 297A.68, subdivision 21; 297A.71, 4.23 subdivisions 2, 15, 16, 21; 297B.032; 297E.16, 4.24 subdivision 3; 297F.21, subdivision 4; 297G.20, 4.25 subdivision 5; 297I.05, subdivisions 5, 8; 297I.30, 4.26 subdivision 3; 298.01, subdivisions 3c, 3d, 4d, 4e; 4.27 469.1732, subdivision 2; 469.1734, subdivision 4; 4.28 469.1782, subdivision 1; 473.446, subdivision 8; Laws 4.29 1988, chapter 426, section 1; Laws 1988, chapter 702, 4.30 section 16; Laws 1992, chapter 511, article 2, section 4.31 52, as amended; Laws 1996, chapter 471, article 8, 4.32 section 45; Laws 1999, chapter 243, article 6, section 4.33 14; Laws 1999, chapter 243, article 6, section 15; 4.34 Laws 2000, chapter 490, article 6, section 17; 4.35 Minnesota Rules, parts 8120.0200; 8120.0500; 4.36 8120.0700; 8120.0900; 8120.1300; 8120.1600; 8120.2000; 4.37 8120.2100; 8120.2200; 8120.2300; 8120.2500; 8120.2700; 4.38 8120.2800; 8120.3000; 8120.3200; 8120.4300; 8120.4400; 4.39 8120.4500; 8120.4600; 8120.4900; 8120.5000; 8120.5100; 4.40 8120.5300. 4.41 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 4.42 ARTICLE 1 4.43 SALES TAX REBATE 4.44 Section 1. [STATEMENT OF PURPOSE.] 4.45 (a) The state of Minnesota derives revenues from a variety 4.46 of taxes, fees, and other sources, including the state sales tax. 4.47 (b) It is fair and reasonable to refund the existing state 4.48 budget surplus in the form of a rebate of nonbusiness consumer 4.49 sales taxes paid by individuals in calendar year 1999. 4.50 (c) Information concerning the amount of sales tax paid at 4.51 various income levels is contained in the Minnesota tax 4.52 incidence report, which is written by the commissioner of 4.53 revenue and presented to the legislature according to Minnesota 4.54 Statutes, section 270.0682. 4.55 (d) It is fair and reasonable to use information contained 5.1 in the Minnesota tax incidence report to determine the 5.2 proportionate share of the sales tax rebate due each eligible 5.3 taxpayer since no effective or practical mechanism exists for 5.4 determining the amount of actual sales tax paid by each eligible 5.5 individual. 5.6 Sec. 2. [SALES TAX REBATE.] 5.7 Subdivision 1. [ELIGIBILITY; REBATE BASED ON INCOME.] An 5.8 individual who was a resident of Minnesota for any part of 1999, 5.9 and filed a 1999 Minnesota income tax return on or before 5.10 November 30, 2001, and had a tax liability before refundable 5.11 credits on that return of at least $1 and who was not allowed to 5.12 be claimed as a dependent on a 1999 federal income tax return 5.13 filed by another person is eligible for a sales tax rebate based 5.14 on income under either subdivision 2 or 3. 5.15 Subd. 2. [MARRIED JOINT AND HEAD OF HOUSEHOLD FILERS.] The 5.16 sales tax rebate for taxpayers who qualify under subdivision 1 5.17 and are married filing joint or head of household filers is 5.18 computed according to the following schedule: 5.19 Income Sales Tax Rebate 5.20 less than $2,500 $237 5.21 at least $2,500 but less than $5,000 $295 5.22 at least $5,000 but less than $10,000 $309 5.23 at least $10,000 but less than $15,000 $341 5.24 at least $15,000 but less than $20,000 $386 5.25 at least $20,000 but less than $25,000 $417 5.26 at least $25,000 but less than $30,000 $445 5.27 at least $30,000 but less than $35,000 $483 5.28 at least $35,000 but less than $40,000 $526 5.29 at least $40,000 but less than $45,000 $571 5.30 at least $45,000 but less than $50,000 $606 5.31 at least $50,000 but less than $60,000 $621 5.32 at least $60,000 but less than $70,000 $648 5.33 at least $70,000 but less than $80,000 $706 5.34 at least $80,000 but less than $90,000 $762 5.35 at least $90,000 but less than $100,000 $825 5.36 at least $100,000 but less than $120,000 $894 6.1 at least $120,000 but less than $140,000 $979 6.2 at least $140,000 but less than $160,000 $1,058 6.3 at least $160,000 but less than $180,000 $1,133 6.4 at least $180,000 but less than $200,000 $1,204 6.5 at least $200,000 but less than $400,000 $1,540 6.6 at least $400,000 but less than $600,000 $2,026 6.7 at least $600,000 but less than $800,000 $2,431 6.8 at least $800,000 but less than $1,000,000 $2,787 6.9 $1,000,000 and over $3,250 6.10 Subd. 3. [SINGLE AND MARRIED SEPARATE FILERS.] The sales 6.11 tax rebate for individuals who qualify under subdivision 1 as 6.12 single or married filing separately is computed according to the 6.13 following schedule: 6.14 Income Sales Tax Rebate 6.15 less than $2,500 $120 6.16 at least $2,500 but less than $5,000 $126 6.17 at least $5,000 but less than $10,000 $168 6.18 at least $10,000 but less than $15,000 $200 6.19 at least $15,000 but less than $20,000 $231 6.20 at least $20,000 but less than $25,000 $258 6.21 at least $25,000 but less than $30,000 $311 6.22 at least $30,000 but less than $40,000 $335 6.23 at least $40,000 but less than $50,000 $370 6.24 at least $50,000 but less than $70,000 $474 6.25 at least $70,000 but less than $100,000 $657 6.26 at least $100,000 but less than $140,000 $792 6.27 at least $140,000 but less than $200,000 $956 6.28 at least $200,000 but less than $400,000 $1,295 6.29 at least $400,000 but less than $600,000 $1,625 6.30 $600,000 and over $1,625 6.31 Subd. 4. [NONRESIDENTS.] Individuals who were not 6.32 residents of Minnesota for any part of 1999 and who paid more 6.33 than $10 in Minnesota sales tax under Minnesota Statutes, 6.34 chapter 297A on nonbusiness consumer purchases in that year 6.35 qualify for a rebate under this subdivision only. Qualifying 6.36 nonresidents must file a claim for rebate on a form prescribed 7.1 by the commissioner by November 30, 2001. The claim must 7.2 include receipts showing the Minnesota sales tax paid and the 7.3 date of the sale. Taxes paid on purchases allowed in the 7.4 computation of federal taxable income or reimbursed by an 7.5 employer are not eligible for the rebate. The commissioner 7.6 shall determine the qualifying taxes paid and rebate the lesser 7.7 of: 7.8 (1) 41.25 percent of that amount; or 7.9 (2) the maximum amount for which the claimant would have 7.10 been eligible as determined under subdivision 2 if the taxpayer 7.11 filed the 1999 federal income tax return as a married taxpayer 7.12 filing jointly or head of household, or as determined under 7.13 subdivision 3 for other taxpayers. 7.14 Subd. 5. [DEFINITION OF INCOME.] "Income," for purposes of 7.15 this section other than subdivision 4, is taxable income as 7.16 defined in section 63 of the Internal Revenue Code of 1986, as 7.17 amended through December 31, 1998, plus the sum of any additions 7.18 to federal taxable income for the taxpayer under Minnesota 7.19 Statutes, section 290.01, subdivision 19a, and reported on the 7.20 original 1999 income tax return, including subsequent 7.21 adjustments to that return made within the time limits specified 7.22 in subdivision 12. For an individual who was a resident of 7.23 Minnesota for less than the entire year, the sales tax rebate 7.24 equals the sales tax rebate calculated under subdivision 2 or 3 7.25 multiplied by the percentage determined pursuant to Minnesota 7.26 Statutes, section 290.06, subdivision 2c, paragraph (e), as 7.27 calculated on the original 1999 income tax return, including 7.28 subsequent adjustments to that return made within the time 7.29 limits specified in subdivision 12. For purposes of subdivision 7.30 4, "income" is taxable income as defined in section 63 of the 7.31 Internal Revenue Code of 1986, as amended through December 31, 7.32 1998, and reported on the taxpayer's original federal tax return 7.33 for the first taxable year beginning after December 31, 1998. 7.34 Subd. 6. [SOCIAL SECURITY AND PUBLIC PENSION 7.35 RECIPIENTS.] (a) An individual qualifies for a rebate of $120 7.36 under this subdivision if the individual: 8.1 (1) was a resident of Minnesota for all of calendar year 8.2 1999; 8.3 (2) is not eligible for a rebate under subdivision 7; 8.4 (3) attained the age of 18 on or before December 31, 1999; 8.5 and 8.6 (4)(i) received social security benefits as defined in 8.7 section 86(d)(1) of the Internal Revenue Code of 1986, as 8.8 amended through December 31, 2000, in calendar year 1999; or 8.9 (ii) received federal, state, or local public pension or 8.10 disability benefits in calendar year 1999. 8.11 (b) An individual or married couple who qualifies for a 8.12 rebate under both this subdivision and subdivision 1 is eligible 8.13 for the rebate under whichever subdivision provides a larger 8.14 amount. 8.15 (c) If the Social Security Administration, Railroad 8.16 Retirement Board, or the administrator of a public pension is 8.17 paying benefits to a recipient by electronic funds transfers in 8.18 calendar year 2001, the commissioner may pay the rebate under 8.19 this subdivision through electronic funds transfer to the same 8.20 financial institution and into the same account into which those 8.21 benefits are transferred in calendar year 2001. 8.22 (d) For purposes of this subdivision, "public pension plan 8.23 administrator" means (1) a state and local public pension 8.24 administrator, (2) the federal Civil Service Retirement System, 8.25 (3) the United States Department of Defense for the military 8.26 retirement and survivors benefit programs, and (4) the Federal 8.27 Employees Retirement System. 8.28 (e) A state and local public pension administrator is an 8.29 entity paying benefits under a pension plan enumerated in 8.30 Minnesota Statutes, section 356.20, subdivision 2. Each state 8.31 and local public pension administrator shall provide to the 8.32 commissioner of revenue, in a form the commissioner prescribes, 8.33 a list of individuals to whom it pays benefits that meet the 8.34 requirements of paragraph (a), clauses (1) and (3). 8.35 Subd. 7. [DEPENDENTS.] An individual who: 8.36 (1) was allowed to be claimed as a dependent on a 1999 9.1 federal income tax return filed by another person; 9.2 (2) would have otherwise been eligible for a rebate under 9.3 subdivision 1; and 9.4 (3) reported earned income as defined in section 9.5 32(c)(2)(A)(i) of the Internal Revenue Code, 9.6 is eligible for a rebate under this subdivision only. The 9.7 rebate under this subdivision equals 35 percent of the amount 9.8 allowed under the schedule in subdivision 3 based on the 9.9 individual's income. For an individual who was a resident of 9.10 Minnesota for less than the entire year, the sales tax rebate 9.11 equals the rebate calculated under this subdivision multiplied 9.12 by the percentage determined pursuant to Minnesota Statutes, 9.13 section 290.06, subdivision 2c, paragraph (e), as calculated on 9.14 the original 1999 income tax return. 9.15 Subd. 8. [CREDIT RECIPIENTS.] An individual who 9.16 (1) was a resident of Minnesota for any part of 1999; 9.17 (2) was not eligible for a rebate under subdivision 1, 6, 9.18 or 7; 9.19 (3) was not allowed to be claimed as a dependent on a 1999 9.20 federal income tax return by another person; and 9.21 (4)(i) claimed a refund under Minnesota Statutes, chapter 9.22 290A, for property taxes paid in 2000 or rent constituting 9.23 property taxes paid in 1999 before November 30, 2001; or 9.24 (ii) filed a 1999 Minnesota income tax return before 9.25 November 30, 2001, in order to 9.26 (A) claim a credit under Minnesota Statutes, section 9.27 290.067, 290.0671, or 290.0674; 9.28 (B) claim a refund of withheld taxes; or 9.29 (C) claim a refund of estimated taxes, 9.30 is eligible for a rebate under this subdivision only. For 9.31 married couples filing joint returns and heads of households, 9.32 the rebate equals the minimum amount in subdivision 2. For 9.33 single filers and married individuals filing separate returns 9.34 and for rebates based on refunds under Minnesota Statutes, 9.35 chapter 290A, the rebate equals the minimum amount in 9.36 subdivision 3. For an individual who was a resident of 10.1 Minnesota for less than the entire year, the sales tax rebate 10.2 equals the rebate calculated under this subdivision multiplied 10.3 by the percentage determined under Minnesota Statutes, section 10.4 290.06, subdivision 2c, paragraph (e), as calculated on the 10.5 original 1999 income tax return. Notwithstanding the provisions 10.6 of Minnesota Statutes 2000, section 289A.60, subdivision 12, an 10.7 individual who files a property tax refund claim for property 10.8 taxes paid in 2000 or rent constituting property taxes paid in 10.9 1999 after August 15, 2001, and before November 30, 2001, is 10.10 eligible for a refund under Minnesota Statutes, chapter 290A, 10.11 and a rebate under this subdivision. 10.12 Subd. 9. [FISCAL YEAR TAXPAYERS.] For a fiscal year 10.13 taxpayer, the dates in subdivisions 1 through 4 are extended one 10.14 month for each month in calendar year 1999 that occurred prior 10.15 to the start of the individual's 1999 fiscal tax year. 10.16 Subd. 10. [PAYMENT TO STATE.] (a) A taxpayer receiving a 10.17 rebate under this section may endorse and return the rebate 10.18 check to the state and designate that the returned rebate be 10.19 deposited in one or more of the following accounts for use only 10.20 for the purposes designated in this subdivision: 10.21 (1) an account for the basic sliding fee child care program 10.22 for child care assistance to families administered by the 10.23 commissioner of children, families, and learning under Minnesota 10.24 Statutes, section 119B.03; 10.25 (2) an account for kindergarten through grade 12 education 10.26 purposes, such as reducing instructor-to-student ratios and 10.27 paying increased heating fuel costs for school facilities, to be 10.28 administered by the commissioner of children, families, and 10.29 learning; 10.30 (3) the affordable rental investment fund to be used by the 10.31 housing finance agency for family rental housing assistance 10.32 under Minnesota Statutes, section 462A.21, subdivision 8b; 10.33 (4) the contaminated site cleanup and development account 10.34 to be used by the commissioner of trade and economic development 10.35 for contamination cleanup development grants under Minnesota 10.36 Statutes, sections 116J.551 to 116J.556; 11.1 (5) an account to provide funding for public transit and 11.2 highway improvement projects to reduce congestion to be 11.3 administered by the commissioner of transportation; 11.4 (6) an account to increase funding for the University of 11.5 Minnesota and the Minnesota state colleges and universities 11.6 under Minnesota Statutes, section 136F.01, as appropriated by 11.7 law; and 11.8 (7) an account to provide a fund for reimbursement of 11.9 nursing homes, licensed under Minnesota Statutes, chapter 144A, 11.10 for increased heating fuel costs to be administered by the 11.11 commissioner of human services. 11.12 (b) The rebate check must be accompanied by a notice 11.13 prepared by the commissioner of revenue that explains the 11.14 taxpayer's option to endorse the check to the state and explains 11.15 the uses of the funds that the taxpayer may designate. In 11.16 preparing the notice, the commissioner of revenue shall consult 11.17 with the commissioners or agencies that administer the funds or 11.18 accounts. The notice must also explain that a taxpayer may cash 11.19 the rebate check and mail a contribution of any amount to the 11.20 state and that the contribution must be used for the option or 11.21 options under paragraph (a) as designated by the taxpayer. The 11.22 notice must contain in bold print the address to which the 11.23 endorsed check or a state contribution may be mailed. 11.24 (c) Funds endorsed and mailed to the state and 11.25 contributions mailed to the state under this subdivision must be 11.26 deposited by the commissioner of finance in the fund or account 11.27 designated and are appropriated to the agency or commissioner 11.28 designated by the taxpayer or contributor for use as provided in 11.29 this subdivision. Funds appropriated under this paragraph are 11.30 available until expended. 11.31 (d) Funds appropriated under this subdivision are in 11.32 addition to any funds appropriated for the purposes given in 11.33 this subdivision and may not be used for any other purposes 11.34 including the reduction of any other appropriations. Funds 11.35 appropriated to a commissioner or agency under this subdivision 11.36 are not included in the department's or agency's budget base. 12.1 Subd. 11. [PAYMENT DATES; INTEREST.] The commissioner of 12.2 revenue shall begin paying sales tax rebates by 90 days after 12.3 final enactment of this act. Sales tax rebates not paid by 12.4 January 1, 2002, bear interest at the rate specified in 12.5 Minnesota Statutes, section 270.75. 12.6 Subd. 12. [NO ADJUSTMENTS AFTER PROCESSING.] A sales tax 12.7 rebate may not be adjusted based on changes to a 1999 income tax 12.8 return that are made by order of assessment after the date the 12.9 rebate is processed, or made by the taxpayer that are filed with 12.10 the commissioner of revenue after that date. 12.11 Subd. 13. [JOINT REBATE RULES.] Individuals who filed a 12.12 joint income tax return for 1999 must receive a joint sales tax 12.13 rebate. After the sales tax rebate has been issued, but before 12.14 the check has been cashed, either joint claimant may request a 12.15 separate check for one-half of the joint sales tax rebate. 12.16 Notwithstanding anything in this section to the contrary, if 12.17 prior to payment, the commissioner has been notified that 12.18 persons who filed a joint 1999 income tax return are living at 12.19 separate addresses, as indicated on their 2000 income tax return 12.20 or otherwise, the commissioner may issue separate checks to each 12.21 person. The amount payable to each person is one-half of the 12.22 total joint rebate. 12.23 Subd. 14. [DECEASED INDIVIDUALS.] If a rebate is received 12.24 by the estate of a deceased individual after the probate estate 12.25 has been closed, and if the original rebate check is returned to 12.26 the commissioner with a copy of the decree of descent or final 12.27 account of the estate, social security numbers, and addresses of 12.28 the beneficiaries, the commissioner may issue separate checks in 12.29 proportion to their share in the residuary estate in the names 12.30 of the residuary beneficiaries of the estate. 12.31 Subd. 15. [APPLICATION OF OTHER LAW.] (a) The sales tax 12.32 rebate is a "Minnesota tax law" for purposes of Minnesota 12.33 Statutes, section 270B.01, subdivision 8. 12.34 (b) The sales tax rebate is "an overpayment of any tax 12.35 collected by the commissioner" for purposes of Minnesota 12.36 Statutes, section 270.07, subdivision 5. For purposes of this 13.1 subdivision, a joint sales tax rebate is payable to each spouse 13.2 equally. 13.3 (c) The sales tax rebate is a refund subject to revenue 13.4 recapture under Minnesota Statutes, chapter 270A. The 13.5 commissioner of revenue shall remit the entire refund to the 13.6 claimant agency, which shall, upon the request of the spouse who 13.7 does not owe the debt, refund one-half of the joint sales tax 13.8 rebate to the spouse who does not owe the debt. 13.9 Subd. 16. [LAPSE OF ENTITLEMENT.] If the commissioner of 13.10 revenue cannot locate an individual entitled to a sales tax 13.11 rebate by July 1, 2003, or if an individual to whom a sales tax 13.12 rebate was issued has not cashed the check by July 1, 2003, the 13.13 right to the sales tax rebate lapses and the check must be 13.14 deposited in the general fund. 13.15 Subd. 17. [CLAIMS FOR UNPAID REBATES.] Individuals 13.16 entitled to a sales tax rebate pursuant to subdivision 1, 6, 7, 13.17 or 8 but who did not receive one, and individuals who receive a 13.18 sales tax rebate that was not correctly computed, must file a 13.19 claim with the commissioner before July 1, 2002, in a form 13.20 prescribed by the commissioner. These claims must be treated as 13.21 if they are a claim for refund under Minnesota Statutes, section 13.22 289A.50, subdivisions 4 and 7. 13.23 Subd. 18. [APPROPRIATION.] The rebate is a reduction of 13.24 fiscal year 2001 sales tax revenues. The amount necessary to 13.25 make the sales tax rebates and interest provided in this section 13.26 is appropriated from the general fund to the commissioner of 13.27 revenue in fiscal year 2001 and is available until June 30, 2003. 13.28 Subd. 19. [ILLEGALLY CASHED CHECKS.] If a sales tax rebate 13.29 check is cashed by someone other than the payee or payees of the 13.30 check, and the commissioner of revenue determines that the check 13.31 has been forged or improperly endorsed or the commissioner 13.32 determines that a rebate was overstated or erroneously issued, 13.33 the commissioner may issue an order of assessment for the amount 13.34 of the check or the amount the check is overstated against the 13.35 person or persons cashing it. The assessment must be made 13.36 within two years after the check is cashed, but if cashing the 14.1 check constitutes theft under Minnesota Statutes, section 14.2 609.52, or forgery under Minnesota Statutes, section 609.631, 14.3 the assessment can be made at any time. The assessment may be 14.4 appealed administratively and judicially. The commissioner may 14.5 take action to collect the assessment in the same manner as 14.6 provided by Minnesota Statutes, chapter 289A, for any other 14.7 order of the commissioner assessing tax. 14.8 Subd. 20. [AUTHORITY TO CONTRACT WITH VENDOR.] 14.9 Notwithstanding Minnesota Statutes, sections 9.031, 16A.40, 14.10 16B.49, 16B.50, and any other law to the contrary, the 14.11 commissioner of revenue may take whatever actions the 14.12 commissioner deems necessary to pay the rebates required by this 14.13 section, and may, in consultation with the commissioner of 14.14 finance and the state treasurer, contract with a private vendor 14.15 or vendors to process, print, and mail the rebate checks or 14.16 warrants required under this section and receive and disburse 14.17 state funds to pay those checks or warrants. 14.18 Subd. 21. [ELECTRONIC PAYMENT.] The commissioner may pay 14.19 rebates required by this section by electronic funds transfer to 14.20 individuals who requested that their 2000 individual income tax 14.21 refund be paid through electronic funds transfer. The 14.22 commissioner may make the electronic funds transfer payments to 14.23 the same financial institution and into the same account as the 14.24 2000 individual income tax refund. 14.25 Subd. 22. [ADJUSTMENTS.] Before payment, the commissioner 14.26 of revenue shall adjust the rebate as follows: 14.27 the rebates calculated in subdivisions 2, 3, 4, 6, 7, and 8 14.28 must be proportionately reduced to account for 1999 income tax 14.29 returns that are filed on or after January 1, 2001, but before 14.30 June 1, 2001, so that the estimated amount of sales tax rebates 14.31 payable under subdivisions 2, 3, 4, 6, 7, and 8 on the date the 14.32 rebate is processed does not exceed $856,280,000. The 14.33 adjustment under this subdivision is not a rule subject to 14.34 Minnesota Statutes, chapter 14. 14.35 Sec. 3. [APPROPRIATIONS.] 14.36 (a) $500,000 for fiscal year 2001 and $800,000 for fiscal 15.1 year 2002 is appropriated from the general fund to the 15.2 commissioner of revenue to administer the sales tax rebate in 15.3 this article. Any unencumbered balance remaining on June 30, 15.4 2001, does not cancel but is available for expenditure by the 15.5 commissioner of revenue until June 30, 2002. Notwithstanding 15.6 Minnesota Statutes, section 16A.285, the commissioner of revenue 15.7 may not use this appropriation for any purpose other than 15.8 administering the sales tax rebate. This is a one-time 15.9 appropriation and may not be added to the agency's budget base. 15.10 (b) $278,000 for fiscal year 2001, and $123,000 for fiscal 15.11 year 2002 are appropriated from the general fund to the state 15.12 treasurer to pay the cost of clearing sales tax rebate checks 15.13 through commercial banks. This is a one-time appropriation and 15.14 may not be added to the budget base. 15.15 Sec. 4. [EFFECTIVE DATE.] 15.16 Sections 1 to 3 are effective the day following final 15.17 enactment. 15.18 ARTICLE 2 15.19 PROPERTY TAX REFORM 15.20 Section 1. [16A.88] [TRANSIT FUND.] 15.21 The transit fund is established within the state treasury. 15.22 At least 5.5 percent of the appropriations from the fund must be 15.23 used for the funding of transit systems outside the metropolitan 15.24 area under section 174.24. Appropriations from the fund may 15.25 also be used for the funding of transit systems within the 15.26 metropolitan area under sections 473.405 to 473.449. Revenues 15.27 in this fund may not be used for the purposes of funding capital 15.28 or operating expenses related to the operation of a light rail 15.29 line or a commuter rail line. 15.30 [EFFECTIVE DATE.] This section is effective July 1, 2002. 15.31 Sec. 2. Minnesota Statutes 2000, section 123B.55, is 15.32 amended to read: 15.33 123B.55 [DEBT SERVICE LEVY.] 15.34 A district may levy the amounts necessary to make payments 15.35 for bonds issued and for interest on them, including the bonds 15.36 and interest on them, issued as authorized by Minnesota Statutes 16.1 1974, section 275.125, subdivision 3, clause (7)(C); and the 16.2 amounts necessary for repayment of debt service loans and 16.3 capital loans, minus the amount of debt service equalization 16.4 revenue of the district and the district's tax base replacement 16.5 aid under section 123B.551. 16.6 [EFFECTIVE DATE.] This section is effective for taxes 16.7 payable in 2003 and subsequent years. 16.8 Sec. 3. [123B.551] [ELECTRIC GENERATION TAX BASE 16.9 REPLACEMENT DEBT SERVICE AID.] 16.10 Each school district is eligible for tax base replacement 16.11 debt service aid for taxes payable in 2003 and subsequent years 16.12 equal to 0.7 percent of the assessment year 2001 taxable market 16.13 value of property classified as class 3(4) under section 273.13, 16.14 subdivision 24, multiplied by the district's local tax rate for 16.15 bonded debt for taxes payable in 2002. In the case of districts 16.16 having debt under multiple debt issues, an aid amount must be 16.17 separately determined for each issue. Debt aid for each debt 16.18 issue must be paid annually as long as the bonds for the debt 16.19 issue remain outstanding. 16.20 [EFFECTIVE DATE.] This section is effective for taxes 16.21 payable in 2003 and subsequent years. 16.22 Sec. 4. Minnesota Statutes 2000, section 126C.01, 16.23 subdivision 3, is amended to read: 16.24 Subd. 3. [REFERENDUM MARKET VALUE.] "Referendum market 16.25 value" means the market value of all taxable property,except16.26thatexcluding property classified as class 2 or class 4c under 16.27 section 273.13. The portion of class 2a property consisting of 16.28 the house, garage, and surrounding one acre of land of an 16.29 agricultural homestead is included in referendum market value. 16.30 Any class of property, or any portion of a class of 16.31 property,withthat is included in the definition of referendum 16.32 market value and that has a class rate of less than one percent 16.33 under section 273.13 shall have a referendum market value equal 16.34 to its net tax capacity multiplied by 100. 16.35 [EFFECTIVE DATE.] This section is effective for taxes 16.36 payable in 2002 and subsequent years. 17.1 Sec. 5. Minnesota Statutes 2000, section 126C.13, 17.2 subdivision 4, is amended to read: 17.3 Subd. 4. [GENERAL EDUCATION AID.] A district's general 17.4 education aid is the sum of the following amounts: 17.5 (1)the product of (i) the difference between thegeneral 17.6 education revenue, excluding transition revenue and supplemental 17.7 revenue, and the general education levy, times (ii) the ratio of17.8the actual amount levied to the permitted levy; 17.9 (2) transition aid according to section 126C.10, 17.10 subdivision 22; 17.11 (3) supplemental aid according to section 127A.49; 17.12 (4) shared time aid according to section 126C.01, 17.13 subdivision 7; and 17.14 (5) referendum aid according to section 126C.17. 17.15 [EFFECTIVE DATE.] This section is effective for taxes 17.16 payable in 2002 and thereafter. 17.17 Sec. 6. Minnesota Statutes 2000, section 126C.17, is 17.18 amended by adding a subdivision to read: 17.19 Subd. 7a. [REFERENDUM TAX BASE REPLACEMENT AID.] For each 17.20 school district, for each separately authorized referendum levy, 17.21 the commissioner of revenue, in consultation with the 17.22 commissioner of children, families, and learning, shall certify 17.23 the amount of the referendum levy in taxes payable year 2001 17.24 levied against property classified as class 2 or class 4c, 17.25 excluding the portion of the tax paid by the portion of class 2a 17.26 property consisting of the house, garage, and surrounding one 17.27 acre of land. The resulting amount must be used to reduce the 17.28 district's referendum levy amount otherwise determined, and must 17.29 be paid to the district each year that the referendum authority 17.30 remains in effect. The aid payable under this subdivision must 17.31 be subtracted from the district's referendum equalization aid 17.32 under subdivision 7. 17.33 For the purposes of this subdivision, the referendum levy 17.34 with the latest year of expiration is assumed to be at the 17.35 highest level of equalization, and the referendum levy with the 17.36 earliest year of expiration is assumed to be at the lowest level 18.1 of equalization. 18.2 [EFFECTIVE DATE.] This section is effective for taxes 18.3 payable in 2002 and subsequent years. 18.4 Sec. 7. Minnesota Statutes 2000, section 174.24, 18.5 subdivision 3b, is amended to read: 18.6 Subd. 3b. [OPERATING ASSISTANCE.] (a) The commissioner 18.7 shall determine the total operating cost of any public transit 18.8 system receiving or applying for assistance in accordance with 18.9 generally accepted accounting principles. To be eligible for 18.10 financial assistance, an applicant or recipient shall provide to 18.11 the commissioner all financial records and other information and 18.12 shall permit any inspection reasonably necessary to determine 18.13 total operating cost and correspondingly the amount of 18.14 assistance which may be paid to the applicant or recipient. 18.15 Where more than one county or municipality contributes 18.16 assistance to the operation of a public transit system, the 18.17 commissioner shall identify one as lead agency for the purpose 18.18 of receiving moneys under this section. 18.19 (b) Prior to distributing operating assistance to eligible 18.20 recipients for any contract period, the commissioner shall place 18.21 all recipients into one of the following classifications: large 18.22 urbanized area service, urbanized area service, small urban area 18.23 service, rural area service, and elderly and handicapped 18.24 service. The commissioner shall distribute funds under this 18.25 section so that the percentage of total operating cost paid by 18.26 any recipient from local sources will not exceed the percentage 18.27 for that recipient's classification, except as provided in an 18.28 undue hardship case. The percentages shall be: for large 18.29 urbanized area service,5035 percent; for urbanized area 18.30 service and small urban area service,4025 percent; for rural 18.31 area service,3525 percent; and for elderly and handicapped 18.32 service,3525 percent. The remainder of the total operating 18.33 cost will be paid from state funds less any assistance received 18.34 by the recipient from any federal source. For purposes of this 18.35 subdivision "local sources" means all local sources of funds and 18.36 includes all operating revenue, tax levies,and contributions 19.1 from public funds, except that the commissioner may exclude from 19.2 the total assistance contract revenues derived from operations 19.3 the cost of which is excluded from the computation of total 19.4 operating cost. Any taxing jurisdiction receiving assistance 19.5 under this section must not use property tax levies to finance 19.6 transit services. 19.7 (c) If a recipient informs the commissioner in writing 19.8 after the establishment of these percentages but prior to the 19.9 distribution of financial assistance for any year that paying 19.10 its designated percentage of total operating cost from local 19.11 sources will cause undue hardship, the commissioner may reduce 19.12 the percentage to be paid from local sources by the recipient 19.13 and increase the percentage to be paid from local sources by one 19.14 or more other recipients inside or outside the classification, 19.15 provided that no recipient shall have its percentage thus 19.16 reduced or increased for more than two years successively. If 19.17 for any year the funds appropriated to the commissioner to carry 19.18 out the purposes of this section are insufficient to allow the 19.19 commissioner to pay the state share of total operating cost as 19.20 provided in this paragraph, the commissioner shall reduce the 19.21 state share in each classification to the extent necessary. 19.22 [EFFECTIVE DATE.] This section is effective for transit 19.23 services provided and property taxes payable in calendar year 19.24 2002 and subsequent years. 19.25 Sec. 8. [216B.1646] [RATE REDUCTION.] 19.26 By March 1, 2002, any electric utility subject to rate 19.27 regulation by the public utilities commission shall file with 19.28 the commission an amendment to the tariffed rates of the utility 19.29 to reflect the reduced amount of the utility's property tax on 19.30 the personal property of its electric generation, transmission, 19.31 or distribution system from taxes payable in 2001 to taxes 19.32 payable in 2002. The commission shall submit the information 19.33 from the utility containing its property tax savings to the 19.34 commissioner of revenue for review. The commissioner of revenue 19.35 shall within 30 days notify the commission as to the accuracy of 19.36 the property tax data submitted by the utility. The commission 20.1 may only approve the amendment to the tariffed rates if it finds 20.2 that, to the extent feasible, each dollar of property tax 20.3 reduction retroactive to January 1, 2002, results in a dollar of 20.4 savings to the utility's customers. 20.5 For purposes of this section, "personal property" means 20.6 tools, implements, and machinery of the generating plant, and 20.7 also includes transformers, transmission lines, distribution 20.8 lines, or any other tools, implements, and machinery that are 20.9 part of an electric substation, wherever located. 20.10 Sec. 9. Minnesota Statutes 2000, section 270.12, 20.11 subdivision 2, is amended to read: 20.12 Subd. 2. [MEETING DATES; DUTIES.] The board shall meet 20.13 annually between April 15 and June 30 at the office of the 20.14 commissioner of revenue and examine and compare the returns of 20.15 the assessment of the property in the several counties, and 20.16 equalize the same so that all the taxable property in the state 20.17 shall be assessed at its market value, subject to the following 20.18 rules: 20.19 (1) The board shall add to the aggregate valuation of the 20.20 real property of every county, which the board believes to be 20.21 valued below its market value in money, such percent as will 20.22 bring the same to its market value in money; 20.23 (2) The board shall deduct from the aggregate valuation of 20.24 the real property of every county, which the board believes to 20.25 be valued above its market value in money, such percent as will 20.26 reduce the same to its market value in money; 20.27 (3) If the board believes the valuation for a part of a 20.28 class determined by a range of market value under clause (8) or 20.29 otherwise, a class, or classes of the real property of any town 20.30 or district in any county, or the valuation for a part of a 20.31 class, a class, or classes of the real property of any county 20.32 not in towns or cities, should be raised or reduced, without 20.33 raising or reducing the other real property of such county, or 20.34 without raising or reducing it in the same ratio, the board may 20.35 add to, or take from, the valuation of a part of a class, a 20.36 class, or classes in any one or more of such towns or cities, or 21.1 of the property not in towns or cities, such percent as the 21.2 board believes will raise or reduce the same to its market value 21.3 in money; 21.4 (4) The board shall add to the aggregate valuation of any 21.5 part of a class, a class, or classes of personal property of any 21.6 county, town, or city, which the board believes to be valued 21.7 below the market value thereof, such percent as will raise the 21.8 same to its market value in money; 21.9 (5) The board shall take from the aggregate valuation of 21.10 any part of a class, a class, or classes of personal property in 21.11 any county, town or city, which the board believes to be valued 21.12 above the market value thereof, such percent as will reduce the 21.13 same to its market value in money; 21.14 (6) The board shall not reduce the aggregate valuation of 21.15 all the property of the state, as returned by the several county 21.16 auditors, more than one percent on the whole valuation thereof; 21.17 (7) When it would be of assistance in equalizing values the 21.18 board may require any county auditor to furnish statements 21.19 showing assessments of real and personal property of any 21.20 individuals, firms, or corporations within the county. The 21.21 board shall consider and equalize such assessments and may 21.22 increase the assessment of individuals, firms, or corporations 21.23 above the amount returned by the county board of equalization 21.24 when it shall appear to be undervalued, first giving notice to 21.25 such persons of the intention of the board so to do, which 21.26 notice shall fix a time and place of hearing. The board shall 21.27 not decrease any such assessment below the valuation placed by 21.28 the county board of equalization; 21.29 (8) In equalizing values pursuant to this section, the 21.30 board shall utilize a 12-month assessment/sales ratio study 21.31 conducted by the department of revenue containing only sales 21.32 that are filed in the county auditor's office under section 21.33 272.115, by November 1 of the previous year and that occurred 21.34 between October 1 of the year immediately preceding the previous 21.35 year and September 30 of the previous year. 21.36 The assessment/sales ratio study may separate the values of 22.1 residential property into market value categories. The board 22.2 may adjust the market value categories and the number of 22.3 categories as necessary to create an adequate sample size for 22.4 each market value category. The board may determine the 22.5 adequate sample size. The board may adjust the relative share 22.6 of market value assigned to land value versus building value, in 22.7 the case of property classes subject to the state general tax 22.8 under section 275.025. To the extent practicable, the 22.9 methodology used in preparing the assessment/sales ratio study 22.10 must be consistent with the most recent Standard on Assessment 22.11 Sales Ratio Studies published by the assessment standards 22.12 committee of the International Association of Assessing 22.13 Officers. The board may determine the geographic area used in 22.14 preparing the study to accurately equalize values. A sales 22.15 ratio study separating residential property into market value 22.16 categories may not be used as the basis for a petition under 22.17 chapter 278. 22.18 The sales prices used in the study must be discounted for 22.19 terms of financing. The board shall use the median ratio as the 22.20 statistical measure of the level of assessment for any 22.21 particular category of property; and 22.22 (9) The board shall receive from each county the estimated 22.23 market values on the assessment date falling within the study 22.24 period for all parcels by magnetic tape or other medium as 22.25 prescribed by the commissioner of revenue. 22.26 [EFFECTIVE DATE.] This section is effective January 1, 2003. 22.27 Sec. 10. Minnesota Statutes 2000, section 273.13, 22.28 subdivision 22, is amended to read: 22.29 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision 22.30 23, real estate which is residential and used for homestead 22.31 purposes is class 1. The market value of class 1a property must 22.32 be determined based upon the value of the house, garage, and 22.33 land. 22.34The first $76,000 of market value ofClass 1a property has 22.35 a net class rate of one percent of its market value; and the22.36market value of class 1a property that exceeds $76,000 has a23.1class rate of 1.65 percent of its market value. 23.2 (b) Class 1b property includes homestead real estate or 23.3 homestead manufactured homes used for the purposes of a 23.4 homestead by 23.5 (1) any blind person, or the blind person and the blind 23.6 person's spouse; or 23.7 (2) any person, hereinafter referred to as "veteran," who: 23.8 (i) served in the active military or naval service of the 23.9 United States; and 23.10 (ii) is entitled to compensation under the laws and 23.11 regulations of the United States for permanent and total 23.12 service-connected disability due to the loss, or loss of use, by 23.13 reason of amputation, ankylosis, progressive muscular 23.14 dystrophies, or paralysis, of both lower extremities, such as to 23.15 preclude motion without the aid of braces, crutches, canes, or a 23.16 wheelchair; and 23.17 (iii) has acquired a special housing unit with special 23.18 fixtures or movable facilities made necessary by the nature of 23.19 the veteran's disability, or the surviving spouse of the 23.20 deceased veteran for as long as the surviving spouse retains the 23.21 special housing unit as a homestead; or 23.22 (3) any person who: 23.23 (i) is permanently and totally disabled and 23.24 (ii) receives 90 percent or more of total household income, 23.25 as defined in section 290A.03, subdivision 5, from 23.26 (A) aid from any state as a result of that disability; or 23.27 (B) supplemental security income for the disabled; or 23.28 (C) workers' compensation based on a finding of total and 23.29 permanent disability; or 23.30 (D) social security disability, including the amount of a 23.31 disability insurance benefit which is converted to an old age 23.32 insurance benefit and any subsequent cost of living increases; 23.33 or 23.34 (E) aid under the federal Railroad Retirement Act of 1937, 23.35 United States Code Annotated, title 45, section 228b(a)5; or 23.36 (F) a pension from any local government retirement fund 24.1 located in the state of Minnesota as a result of that 24.2 disability; or 24.3 (G) pension, annuity, or other income paid as a result of 24.4 that disability from a private pension or disability plan, 24.5 including employer, employee, union, and insurance plans and 24.6 (iii) has household income as defined in section 290A.03, 24.7 subdivision 5, of $50,000 or less; or 24.8 (4) any person who is permanently and totally disabled and 24.9 whose household income as defined in section 290A.03, 24.10 subdivision 5, is 275 percent or less of the federal poverty 24.11 level. 24.12 Property is classified and assessed under clause (4) only 24.13 if the government agency or income-providing source certifies, 24.14 upon the request of the homestead occupant, that the homestead 24.15 occupant satisfies the disability requirements of this paragraph. 24.16 Property is classified and assessed pursuant to clause (1) 24.17 only if the commissioner of economic security certifies to the 24.18 assessor that the homestead occupant satisfies the requirements 24.19 of this paragraph. 24.20 Permanently and totally disabled for the purpose of this 24.21 subdivision means a condition which is permanent in nature and 24.22 totally incapacitates the person from working at an occupation 24.23 which brings the person an income. The first $32,000 market 24.24 value of class 1b property has a net class rate of .45 percent 24.25 of its market value. The remaining market value of class 1b 24.26 property has a net class rate using the rates for class 1 or 24.27 class 2a property, whichever is appropriate, of similar market 24.28 value. 24.29 (c) Class 1c property is commercial use real property that 24.30 abuts a lakeshore line and is devoted to temporary and seasonal 24.31 residential occupancy for recreational purposes but not devoted 24.32 to commercial purposes for more than 250 days in the year 24.33 preceding the year of assessment, and that includes a portion 24.34 used as a homestead by the owner, which includes a dwelling 24.35 occupied as a homestead by a shareholder of a corporation that 24.36 owns the resort or a partner in a partnership that owns the 25.1 resort, even if the title to the homestead is held by the 25.2 corporation or partnership. For purposes of this clause, 25.3 property is devoted to a commercial purpose on a specific day if 25.4 any portion of the property, excluding the portion used 25.5 exclusively as a homestead, is used for residential occupancy 25.6 and a fee is charged for residential occupancy. Class 1c 25.7 property has a class rate of one percent of total market value 25.8 with the following limitation: the area of the property must 25.9 not exceed 100 feet of lakeshore footage for each cabin or 25.10 campsite located on the property up to a total of 800 feet and 25.11 500 feet in depth, measured away from the lakeshore. If any 25.12 portion of the class 1c resort property is classified as class 25.13 4c under subdivision 25, the entire property must meet the 25.14 requirements of subdivision 25, paragraph (d), clause (1), to 25.15 qualify for class 1c treatment under this paragraph. 25.16 (d) Class 1d property includes structures that meet all of 25.17 the following criteria: 25.18 (1) the structure is located on property that is classified 25.19 as agricultural property under section 273.13, subdivision 23; 25.20 (2) the structure is occupied exclusively by seasonal farm 25.21 workers during the time when they work on that farm, and the 25.22 occupants are not charged rent for the privilege of occupying 25.23 the property, provided that use of the structure for storage of 25.24 farm equipment and produce does not disqualify the property from 25.25 classification under this paragraph; 25.26 (3) the structure meets all applicable health and safety 25.27 requirements for the appropriate season; and 25.28 (4) the structure is not salable as residential property 25.29 because it does not comply with local ordinances relating to 25.30 location in relation to streets or roads. 25.31 The market value of class 1d property has the same class 25.32 rates as class 1a property under paragraph (a). 25.33 [EFFECTIVE DATE.] This section is effective for taxes 25.34 payable in 2002 and subsequent years. 25.35 Sec. 11. Minnesota Statutes 2000, section 273.13, 25.36 subdivision 23, is amended to read: 26.1 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural 26.2 land including any improvements that is homesteaded. The market 26.3 value of the house and garage and immediately surrounding one 26.4 acre of land has the same class rates as class 1a property under 26.5 subdivision 22. The value of the remaining land including 26.6 improvements up to$115,000 has a net class rate of 0.35 percent26.7of market value. The value of class 2a property over $115,00026.8of market value up to and including$600,000 market value has a 26.9 net class rate of0.80.55 percent of market value. The 26.10 remaining property over $600,000 market value has a class rate 26.11 of1.20one percent of market value. 26.12 (b) Class 2b property is (1) real estate, rural in 26.13 character and used exclusively for growing trees for timber, 26.14 lumber, and wood and wood products; (2) real estate that is not 26.15 improved with a structure and is used exclusively for growing 26.16 trees for timber, lumber, and wood and wood products, if the 26.17 owner has participated or is participating in a cost-sharing 26.18 program for afforestation, reforestation, or timber stand 26.19 improvement on that particular property, administered or 26.20 coordinated by the commissioner of natural resources; (3) real 26.21 estate that is nonhomestead agricultural land; or (4) a landing 26.22 area or public access area of a privately owned public use 26.23 airport. Class 2b property has a net class rate of1.20one 26.24 percent of market value. 26.25 (c) Agricultural land as used in this section means 26.26 contiguous acreage of ten acres or more, used during the 26.27 preceding year for agricultural purposes. "Agricultural 26.28 purposes" as used in this section means the raising or 26.29 cultivation of agricultural products or enrollment in the 26.30 Reinvest in Minnesota program under sections 103F.501 to 26.31 103F.535 or the federal Conservation Reserve Program as 26.32 contained in Public Law Number 99-198. Contiguous acreage on 26.33 the same parcel, or contiguous acreage on an immediately 26.34 adjacent parcel under the same ownership, may also qualify as 26.35 agricultural land, but only if it is pasture, timber, waste, 26.36 unusable wild land, or land included in state or federal farm 27.1 programs. Agricultural classification for property shall be 27.2 determined excluding the house, garage, and immediately 27.3 surrounding one acre of land, and shall not be based upon the 27.4 market value of any residential structures on the parcel or 27.5 contiguous parcels under the same ownership. 27.6 (d) Real estate, excluding the house, garage, and 27.7 immediately surrounding one acre of land, of less than ten acres 27.8 which is exclusively and intensively used for raising or 27.9 cultivating agricultural products, shall be considered as 27.10 agricultural land. 27.11 Land shall be classified as agricultural even if all or a 27.12 portion of the agricultural use of that property is the leasing 27.13 to, or use by another person for agricultural purposes. 27.14 Classification under this subdivision is not determinative 27.15 for qualifying under section 273.111. 27.16 The property classification under this section supersedes, 27.17 for property tax purposes only, any locally administered 27.18 agricultural policies or land use restrictions that define 27.19 minimum or maximum farm acreage. 27.20 (e) The term "agricultural products" as used in this 27.21 subdivision includes production for sale of: 27.22 (1) livestock, dairy animals, dairy products, poultry and 27.23 poultry products, fur-bearing animals, horticultural and nursery 27.24 stock described in sections 18.44 to 18.61, fruit of all kinds, 27.25 vegetables, forage, grains, bees, and apiary products by the 27.26 owner; 27.27 (2) fish bred for sale and consumption if the fish breeding 27.28 occurs on land zoned for agricultural use; 27.29 (3) the commercial boarding of horses if the boarding is 27.30 done in conjunction with raising or cultivating agricultural 27.31 products as defined in clause (1); 27.32 (4) property which is owned and operated by nonprofit 27.33 organizations used for equestrian activities, excluding racing; 27.34 (5) game birds and waterfowl bred and raised for use on a 27.35 shooting preserve licensed under section 97A.115; 27.36 (6) insects primarily bred to be used as food for animals; 28.1and28.2 (7) trees, grown for sale as a crop, and not sold for 28.3 timber, lumber, wood, or wood products; and 28.4 (8) maple syrup, grown by a person licensed by the 28.5 Minnesota department of agriculture under chapter 28A as a food 28.6 processor. 28.7 (f) If a parcel used for agricultural purposes is also used 28.8 for commercial or industrial purposes, including but not limited 28.9 to: 28.10 (1) wholesale and retail sales; 28.11 (2) processing of raw agricultural products or other goods; 28.12 (3) warehousing or storage of processed goods; and 28.13 (4) office facilities for the support of the activities 28.14 enumerated in clauses (1), (2), and (3), 28.15 the assessor shall classify the part of the parcel used for 28.16 agricultural purposes as class 1b, 2a, or 2b, whichever is 28.17 appropriate, and the remainder in the class appropriate to its 28.18 use. The grading, sorting, and packaging of raw agricultural 28.19 products for first sale is considered an agricultural purpose. 28.20 A greenhouse or other building where horticultural or nursery 28.21 products are grown that is also used for the conduct of retail 28.22 sales must be classified as agricultural if it is primarily used 28.23 for the growing of horticultural or nursery products from seed, 28.24 cuttings, or roots and occasionally as a showroom for the retail 28.25 sale of those products. Use of a greenhouse or building only 28.26 for the display of already grown horticultural or nursery 28.27 products does not qualify as an agricultural purpose. 28.28 The assessor shall determine and list separately on the 28.29 records the market value of the homestead dwelling and the one 28.30 acre of land on which that dwelling is located. If any farm 28.31 buildings or structures are located on this homesteaded acre of 28.32 land, their market value shall not be included in this separate 28.33 determination. 28.34 (g) To qualify for classification under paragraph (b), 28.35 clause (4), a privately owned public use airport must be 28.36 licensed as a public airport under section 360.018. For 29.1 purposes of paragraph (b), clause (4), "landing area" means that 29.2 part of a privately owned public use airport properly cleared, 29.3 regularly maintained, and made available to the public for use 29.4 by aircraft and includes runways, taxiways, aprons, and sites 29.5 upon which are situated landing or navigational aids. A landing 29.6 area also includes land underlying both the primary surface and 29.7 the approach surfaces that comply with all of the following: 29.8 (i) the land is properly cleared and regularly maintained 29.9 for the primary purposes of the landing, taking off, and taxiing 29.10 of aircraft; but that portion of the land that contains 29.11 facilities for servicing, repair, or maintenance of aircraft is 29.12 not included as a landing area; 29.13 (ii) the land is part of the airport property; and 29.14 (iii) the land is not used for commercial or residential 29.15 purposes. 29.16 The land contained in a landing area under paragraph (b), clause 29.17 (4), must be described and certified by the commissioner of 29.18 transportation. The certification is effective until it is 29.19 modified, or until the airport or landing area no longer meets 29.20 the requirements of paragraph (b), clause (4). For purposes of 29.21 paragraph (b), clause (4), "public access area" means property 29.22 used as an aircraft parking ramp, apron, or storage hangar, or 29.23 an arrival and departure building in connection with the airport. 29.24 (h) Class 2c property consists of any parcel or contiguous 29.25 parcels of unimproved real estate, excluding agricultural land 29.26 classified under this subdivision that meets all the criteria in 29.27 clauses (1) to (5): 29.28 (1) the property consists of at least 200 contiguous feet 29.29 of unimproved real estate that borders a meandered lake as 29.30 defined in section 103G.005, subdivision 15, paragraph (a), 29.31 clause (3); 29.32 (2) the unimproved real estate is located within 400 feet 29.33 from the ordinary high water elevation of the public waters. 29.34 For purposes of this clause, "unimproved" means that the 29.35 property, or that portion of the property qualifying under this 29.36 paragraph, contains no structures, that there are no docks or 30.1 landings on its shoreline, and that the natural terrain and 30.2 vegetation has not been disturbed, or has been restored to 30.3 native vegetation; 30.4 (3) the property is either (i) the homestead of the owner, 30.5 the owner's spouse, or the owner or spouse's son or daughter, or 30.6 (ii) has been in possession of the owner, the owner's spouse, or 30.7 the owner or spouse's son or daughter for a period of at least 30.8 seven years prior to application for benefits under this 30.9 section; 30.10 (4) the owner files an application with the county assessor 30.11 by July 1 for classification under this paragraph for the 30.12 subsequent assessment year; and 30.13 (5) the owner of the property signs a covenant agreement 30.14 and files the covenant with the county assessor in the county 30.15 where the property is located. The covenant agreement must 30.16 include all of the following: 30.17 (i) legal description of the area to which the covenant 30.18 applies; 30.19 (ii) name and address of the owner; 30.20 (iii) a statement that the land described in the covenant 30.21 must be kept as undeveloped land for the duration of the 30.22 covenant; 30.23 (iv) a statement that the landowner may initiate expiration 30.24 of the covenant agreement by notifying the county assessor, in 30.25 writing, with the date of expiration which must be at least 30.26 eight years from the date of the expiration notice; 30.27 (v) a statement that the covenant is binding on the owner 30.28 or owner's successor or assignee and runs with the land; and 30.29 (vi) a witnessed signature of the owner covenanting to keep 30.30 the land in its undeveloped state as it existed on the date the 30.31 covenant was signed. 30.32 Upon expiration of a covenant agreement in clause (5), the 30.33 property which is sold is subject to additional taxes. The 30.34 amount of additional taxes due on the property equals the 30.35 difference between the taxes actually levied and the taxes that 30.36 would have been imposed if the property had been valued and 31.1 classified as if class 2c did not apply. The additional taxes 31.2 must be extended against the property on the tax list for the 31.3 current year, provided, however, that no interest or penalties 31.4 shall be levied on the additional taxes if timely paid, and 31.5 provided further, that the additional taxes must only be levied 31.6 with respect to the last seven years that the property has been 31.7 valued and assessed under this section. For purposes of this 31.8 subdivision, "timely paid" means paid (i) within 60 days after 31.9 notification from the county that the property no longer 31.10 qualifies, or (ii) prior to the recording of the conveyance of 31.11 the property, whichever is earlier. 31.12 The tax imposed under this paragraph is a lien on the 31.13 property assessed to the same extent and for the same duration 31.14 as other real property taxes. The tax must be extended by the 31.15 county auditor and, when payable, be collected and distributed 31.16 in the same manner provided by law for the collection and 31.17 distribution of other property taxes. 31.18 Class 2c has a class rate of 0.6 percent of market value. 31.19 [EFFECTIVE DATE.] This section is effective for the 2001 31.20 assessment and thereafter, for taxes payable in 2002 and 31.21 thereafter. For taxes payable in 2002, the date for filing an 31.22 application with the county assessor under this section, 31.23 paragraph (h), clause (4), is September 1, 2001. 31.24 Sec. 12. Minnesota Statutes 2000, section 273.13, 31.25 subdivision 24, is amended to read: 31.26 Subd. 24. [CLASS 3.] (a) Commercial and industrial 31.27 property and utility real and personal property is class 3a. 31.28 (1) Except as otherwise provided, each parcel of 31.29 commercial, industrial, or utility real property has a class 31.30 rate of2.41.5 percent of the first tier of market value, and 31.313.4two percent of the remaining market value. In the case of 31.32 contiguous parcels of property owned by the same person or 31.33 entity, only the value equal to the first-tier value of the 31.34 contiguous parcels qualifies for the reduced class rate, except 31.35 that contiguous parcels owned by the same person or entity shall 31.36 be eligible for the first-tier value class rate on each separate 32.1 business operated by the owner of the property, provided the 32.2 business is housed in a separate structure. For the purposes of 32.3 this subdivision, the first tier means the 32.4 first$150,000$200,000 of market value. Real property owned in 32.5 fee by a utility for transmission line right-of-way shall be 32.6 classified at the class rate for the higher tier. 32.7 For purposes of this subdivision, parcels are considered to 32.8 be contiguous even if they are separated from each other by a 32.9 road, street, waterway, or other similar intervening type of 32.10 property. Connections between parcels that consist of power 32.11 lines or pipelines do not cause the parcels to be contiguous. 32.12 Property owners who have contiguous parcels of property that 32.13 constitute separate businesses that may qualify for the 32.14 first-tier class rate shall notify the assessor by July 1, for 32.15 treatment beginning in the following taxes payable year. 32.16 (2) Notwithstanding clauses (1) and (2), all railroad 32.17 operating property and all personal property that is: (i) part 32.18 of an electric generation, transmission, or distribution system; 32.19 or (ii) part of a pipeline system transporting or distributing 32.20 water, gas, crude oil, or petroleum products; and (iii) not 32.21 described in clause (3) or (4),has a class rateis subject to 32.22 the class rates as provided under clause (1) for the first tier 32.23 of market value and the remaining market value. In the case of 32.24 multiple parcels in one county that are owned by one person or 32.25 entity, only one first tier amount is eligible for the reduced 32.26 rate. 32.27 (3) The entire market value of personal property that is: 32.28 (i) tools, implements, and machinery of an electricgeneration,32.29 transmission,or distribution system; (ii) tools, implements, 32.30 and machinery of a pipeline system transporting or distributing 32.31 water, gas, crude oil, or petroleum products; or (iii) the mains 32.32 and pipes used in the distribution of steam or hot or chilled 32.33 water for heating or cooling buildings, has a class rate as 32.34 provided under clause (1) for the remaining market value in 32.35 excess of the first tier. For purposes of this section 32.36 "personal property" has the meaning given in section 272.028, 33.1 subdivision 4. 33.2 (4) The entire market value of personal property consisting 33.3 of attached machinery located at an electric generating station 33.4 that is part of an electric generating system has a class rate 33.5 as provided under clause (1) for the first tier of market value. 33.6 (b) Employment property defined in section 469.166, during 33.7 the period provided in section 469.170, shall constitute class 33.8 3b. The class rates for class 3b property are determined under 33.9 paragraph (a). 33.10(c)(1) Subject to the limitations of clause (2), structures33.11which are (i) located on property classified as class 3a, (ii)33.12constructed under an initial building permit issued after33.13January 2, 1996, (iii) located in a transit zone as defined33.14under section 473.3915, subdivision 3, (iv) located within the33.15boundaries of a school district, and (v) not primarily used for33.16retail or transient lodging purposes, shall have a class rate33.17equal to the lesser of 2.975 percent or the class rate of the33.18second tier of the commercial property rate under paragraph (a)33.19on any portion of the market value that does not qualify for the33.20first tier class rate under paragraph (a). As used in item (v),33.21a structure is primarily used for retail or transient lodging33.22purposes if over 50 percent of its square footage is used for33.23those purposes. A class rate equal to the lesser of 2.97533.24percent or the class rate of the second tier of the commercial33.25property class rate under paragraph (a) shall also apply to33.26improvements to existing structures that meet the requirements33.27of items (i) to (v) if the improvements are constructed under an33.28initial building permit issued after January 2, 1996, even if33.29the remainder of the structure was constructed prior to January33.302, 1996. For the purposes of this paragraph, a structure shall33.31be considered to be located in a transit zone if any portion of33.32the structure lies within the zone. If any property once33.33eligible for treatment under this paragraph ceases to remain33.34eligible due to revisions in transit zone boundaries, the33.35property shall continue to receive treatment under this33.36paragraph for a period of three years.34.1(2) This clause applies to any structure qualifying for the34.2transit zone reduced class rate under clause (1) on January 2,34.31999, or any structure meeting any of the qualification criteria34.4in item (i) and otherwise qualifying for the transit zone34.5reduced class rate under clause (1). Such a structure continues34.6to receive the transit zone reduced class rate until the34.7occurrence of one of the events in item (ii). Property34.8qualifying under item (i)(D), that is located outside of a city34.9of the first class, qualifies for the transit zone reduced class34.10rate as provided in that item. Property qualifying under item34.11(i)(E) qualifies for the transit zone reduced class rate as34.12provided in that item.34.13(i) A structure qualifies for the rate in this clause if it34.14is:34.15(A) property for which a building permit was issued before34.16December 31, 1998; or34.17(B) property for which a building permit was issued before34.18June 30, 2001, if:34.19(I) at least 50 percent of the land on which the structure34.20is to be built has been acquired or is the subject of signed34.21purchase agreements or signed options as of March 15, 1998, by34.22the entity that proposes construction of the project or an34.23affiliate of the entity;34.24(II) signed agreements have been entered into with one34.25entity or with affiliated entities to lease for the account of34.26the entity or affiliated entities at least 50 percent of the34.27square footage of the structure or the owner of the structure34.28will occupy at least 50 percent of the square footage of the34.29structure; and34.30(III) one of the following requirements is met:34.31the project proposer has submitted the completed data34.32portions of an environmental assessment worksheet by December34.3331, 1998; or34.34a notice of determination of adequacy of an environmental34.35impact statement has been published by April 1, 1999; or34.36an alternative urban areawide review has been completed by35.1April 1, 1999; or35.2(C) property for which a building permit is issued before35.3July 30, 1999, if:35.4(I) at least 50 percent of the land on which the structure35.5is to be built has been acquired or is the subject of signed35.6purchase agreements as of March 31, 1998, by the entity that35.7proposes construction of the project or an affiliate of the35.8entity;35.9(II) a signed agreement has been entered into between the35.10building developer and a tenant to lease for its own account at35.11least 200,000 square feet of space in the building;35.12(III) a signed letter of intent is entered into by July 1,35.131998, between the building developer and the tenant to lease the35.14space for its own account; and35.15(IV) the environmental review process required by state law35.16was commenced by December 31, 1998;35.17(D) property for which an irrevocable letter of credit with35.18a housing and redevelopment authority was signed before December35.1931, 1998. The structure shall receive the transit zone reduced35.20class rate during construction and for the duration of time that35.21the original tenants remain in the building. Any unoccupied net35.22leasable square footage that is not leased within 36 months35.23after the certificate of occupancy has been issued for the35.24building shall not be eligible to receive the reduced class35.25rate. This reduced class rate applies only if a qualifying35.26entity continues to own the property;35.27(E) property, located in a city of the first class, and for35.28which the building permits for the excavation, the parking ramp,35.29and the office tower were issued prior to April 1, 1999, shall35.30receive the reduced class rate during construction and for the35.31first five assessment years immediately following its initial35.32occupancy provided that, when completed, at least 25 percent of35.33the net leasable square footage must be occupied by a qualifying35.34entity each year during this time period. In order to receive35.35the reduced class rate on the structure in any subsequent35.36assessment years, at least 50 percent of the rentable square36.1footage must be occupied by a qualifying entity. This reduced36.2class rate applies only if a qualifying entity continues to own36.3the property.36.4(ii) A structure specified by this clause, other than a36.5structure qualifying under clause (i)(D) or (E), shall continue36.6to receive the transit zone reduced class rate until the36.7occurrence of one of the following events:36.8(A) if the structure upon initial occupancy will be owner36.9occupied by the entity initially constructing the structure or36.10an affiliated entity, the structure receives the reduced class36.11rate until the structure ceases to be at least 50 percent36.12occupied by the entity or an affiliated entity, provided, if the36.13portion of the structure occupied by that entity or an affiliate36.14of the entity is less than 85 percent, the transit zone class36.15rate reduction for the portion of structure not so occupied36.16terminates upon the leasing of such space to any nonaffiliated36.17entity; or36.18(B) if the structure is leased by a single entity or36.19affiliated entity at the time of initial occupancy, the36.20structure shall receive the reduced class rate until the36.21structure ceases to be at least 50 percent occupied by the36.22entity or an affiliated entity, provided, if the portion of the36.23structure occupied by that entity or an affiliate of the entity36.24is less than 85 percent, the transit zone class rate reduction36.25for the portion of structure not so occupied shall terminate36.26upon the leasing of such space to any nonaffiliated entity; or36.27(C) if the structure meets the criteria in item (i)(C), the36.28structure shall receive the reduced class rate until the36.29expiration of the initial lease term of the applicable tenants.36.30Percentages occupied or leased shall be determined based36.31upon net leasable square footage in the structure. The assessor36.32shall allocate the value of the structure in the same fashion as36.33provided in the general law for portions of any structure36.34receiving and not receiving the transit tax class reduction as a36.35result of this clause.36.36(3) For purposes of paragraph (c), "qualifying entity"37.1means the entity owning the property on September 1, 2000, or an37.2affiliate of an entity that owned the property on September 1,37.32000.37.4 [EFFECTIVE DATE.] This section is effective for taxes 37.5 payable in 2002 and subsequent years. 37.6 Sec. 13. Minnesota Statutes 2000, section 273.13, 37.7 subdivision 25, is amended to read: 37.8 Subd. 25. [CLASS 4.] (a) Class 4a is residential real 37.9 estate containing four or more units and used or held for use by 37.10 the owner or by the tenants or lessees of the owner as a 37.11 residence for rental periods of 30 days or more. Class 4a also 37.12 includes hospitals licensed under sections 144.50 to 144.56, 37.13 other than hospitals exempt under section 272.02, and contiguous 37.14 property used for hospital purposes, without regard to whether 37.15 the property has been platted or subdivided. Class 4a property 37.16in a city with a population of 5,000 or less, that is (1)37.17located outside of the metropolitan area, as defined in section37.18473.121, subdivision 2, or outside any county contiguous to the37.19metropolitan area, and (2) whose city boundary is at least 1537.20miles from the boundary of any city with a population greater37.21than 5,000 has a class rate of 2.15 percent of market value.37.22All other class 4a propertyhas a class rate of2.41.5 percent 37.23 of market value for taxes payable in 2002, 1.25 percent of 37.24 market value for taxes payable in 2003, and one percent of 37.25 market value for taxes payable in 2004 and subsequent years, 37.26 except that class 4a property consisting of a structure for 37.27 which construction commenced after June 30, 2001, has a class 37.28 rate of one percent of market value for taxes payable in 2003 37.29 and subsequent years.For purposes of this paragraph,37.30population has the same meaning given in section 477A.011,37.31subdivision 3.37.32 (b) Class 4b includes: 37.33 (1) residential real estate containing less than four units 37.34 that does not qualify as class 4bb, other than seasonal 37.35 residential, and recreational; 37.36 (2) manufactured homes not classified under any other 38.1 provision; 38.2 (3) a dwelling, garage, and surrounding one acre of 38.3 property on a nonhomestead farm classified under subdivision 23, 38.4 paragraph (b) containing two or three units; 38.5 (4) unimproved property that is classified residential as 38.6 determined under subdivision 33. 38.7 Class 4b property has a class rate of1.651.5 percent of 38.8 market value for taxes payable in 2002, 1.25 percent of market 38.9 value for taxes payable in 2003, and one percent of market value 38.10 for taxes payable in 2004 and subsequent years. 38.11 (c) Class 4bb includes: 38.12 (1) nonhomestead residential real estate containing one 38.13 unit, other than seasonal residential, and recreational; and 38.14 (2) a single family dwelling, garage, and surrounding one 38.15 acre of property on a nonhomestead farm classified under 38.16 subdivision 23, paragraph (b). 38.17 Class 4bb has a class rate of1.2one percent on the first 38.18 $76,000 of market value and a class rate of1.651.5 percent of 38.19 its market value that exceeds $76,000 for taxes payable in 2002, 38.20 1.25 percent of market value for taxes payable in 2003, and one 38.21 percent of market value for taxes payable in 2004 and subsequent 38.22 years. 38.23 Property that has been classified as seasonal recreational 38.24 residential property at any time during which it has been owned 38.25 by the current owner or spouse of the current owner does not 38.26 qualify for class 4bb. 38.27 (d) Class 4c property includes: 38.28 (1) except as provided in subdivision 22, paragraph (c), 38.29 real property devoted to temporary and seasonal residential 38.30 occupancy for recreation purposes, including real property 38.31 devoted to temporary and seasonal residential occupancy for 38.32 recreation purposes and not devoted to commercial purposes for 38.33 more than 250 days in the year preceding the year of 38.34 assessment. For purposes of this clause, property is devoted to 38.35 a commercial purpose on a specific day if any portion of the 38.36 property is used for residential occupancy, and a fee is charged 39.1 for residential occupancy. In order for a property to be 39.2 classified as class 4c, seasonal recreational residential for 39.3 commercial purposes, at least 40 percent of the annual gross 39.4 lodging receipts related to the property must be from business 39.5 conducted during 90 consecutive days and either (i) at least 60 39.6 percent of all paid bookings by lodging guests during the year 39.7 must be for periods of at least two consecutive nights; or (ii) 39.8 at least 20 percent of the annual gross receipts must be from 39.9 charges for rental of fish houses, boats and motors, 39.10 snowmobiles, downhill or cross-country ski equipment, or charges 39.11 for marina services, launch services, and guide services, or the 39.12 sale of bait and fishing tackle. For purposes of this 39.13 determination, a paid booking of five or more nights shall be 39.14 counted as two bookings. Class 4c also includes commercial use 39.15 real property used exclusively for recreational purposes in 39.16 conjunction with class 4c property devoted to temporary and 39.17 seasonal residential occupancy for recreational purposes, up to 39.18 a total of two acres, provided the property is not devoted to 39.19 commercial recreational use for more than 250 days in the year 39.20 preceding the year of assessment and is located within two miles 39.21 of the class 4c property with which it is used. Class 4c 39.22 property classified in this clause also includes the remainder 39.23 of class 1c resorts provided that the entire property including 39.24 that portion of the property classified as class 1c also meets 39.25 the requirements for class 4c under this clause; otherwise the 39.26 entire property is classified as class 3. Owners of real 39.27 property devoted to temporary and seasonal residential occupancy 39.28 for recreation purposes and all or a portion of which was 39.29 devoted to commercial purposes for not more than 250 days in the 39.30 year preceding the year of assessment desiring classification as 39.31 class 1c or 4c, must submit a declaration to the assessor 39.32 designating the cabins or units occupied for 250 days or less in 39.33 the year preceding the year of assessment by January 15 of the 39.34 assessment year. Those cabins or units and a proportionate 39.35 share of the land on which they are located will be designated 39.36 class 1c or 4c as otherwise provided. The remainder of the 40.1 cabins or units and a proportionate share of the land on which 40.2 they are located will be designated as class 3a. The owner of 40.3 property desiring designation as class 1c or 4c property must 40.4 provide guest registers or other records demonstrating that the 40.5 units for which class 1c or 4c designation is sought were not 40.6 occupied for more than 250 days in the year preceding the 40.7 assessment if so requested. The portion of a property operated 40.8 as a (1) restaurant, (2) bar, (3) gift shop, and (4) other 40.9 nonresidential facility operated on a commercial basis not 40.10 directly related to temporary and seasonal residential occupancy 40.11 for recreation purposes shall not qualify for class 1c or 4c; 40.12 (2) qualified property used as a golf course if: 40.13 (i) it is open to the public on a daily fee basis. It may 40.14 charge membership fees or dues, but a membership fee may not be 40.15 required in order to use the property for golfing, and its green 40.16 fees for golfing must be comparable to green fees typically 40.17 charged by municipal courses; and 40.18 (ii) it meets the requirements of section 273.112, 40.19 subdivision 3, paragraph (d). 40.20 A structure used as a clubhouse, restaurant, or place of 40.21 refreshment in conjunction with the golf course is classified as 40.22 class 3a property; 40.23 (3) real property up to a maximum of one acre of land owned 40.24 by a nonprofit community service oriented organization; provided 40.25 that the property is not used for a revenue-producing activity 40.26 for more than six days in the calendar year preceding the year 40.27 of assessment and the property is not used for residential 40.28 purposes on either a temporary or permanent basis. For purposes 40.29 of this clause, a "nonprofit community service oriented 40.30 organization" means any corporation, society, association, 40.31 foundation, or institution organized and operated exclusively 40.32 for charitable, religious, fraternal, civic, or educational 40.33 purposes, and which is exempt from federal income taxation 40.34 pursuant to section 501(c)(3), (10), or (19) of the Internal 40.35 Revenue Code of 1986, as amended through December 31, 1990. For 40.36 purposes of this clause, "revenue-producing activities" shall 41.1 include but not be limited to property or that portion of the 41.2 property that is used as an on-sale intoxicating liquor or 3.2 41.3 percent malt liquor establishment licensed under chapter 340A, a 41.4 restaurant open to the public, bowling alley, a retail store, 41.5 gambling conducted by organizations licensed under chapter 349, 41.6 an insurance business, or office or other space leased or rented 41.7 to a lessee who conducts a for-profit enterprise on the 41.8 premises. Any portion of the property which is used for 41.9 revenue-producing activities for more than six days in the 41.10 calendar year preceding the year of assessment shall be assessed 41.11 as class 3a. The use of the property for social events open 41.12 exclusively to members and their guests for periods of less than 41.13 24 hours, when an admission is not charged nor any revenues are 41.14 received by the organization shall not be considered a 41.15 revenue-producing activity; 41.16 (4) post-secondary student housing of not more than one 41.17 acre of land that is owned by a nonprofit corporation organized 41.18 under chapter 317A and is used exclusively by a student 41.19 cooperative, sorority, or fraternity for on-campus housing or 41.20 housing located within two miles of the border of a college 41.21 campus; 41.22 (5) manufactured home parks as defined in section 327.14, 41.23 subdivision 3; 41.24 (6) real property that is actively and exclusively devoted 41.25 to indoor fitness, health, social, recreational, and related 41.26 uses, is owned and operated by a not-for-profit corporation, and 41.27 is located within the metropolitan area as defined in section 41.28 473.121, subdivision 2; and 41.29 (7) a leased or privately owned noncommercial aircraft 41.30 storage hangar not exempt under section 272.01, subdivision 2, 41.31 and the land on which it is located, provided that: 41.32 (i) the land is on an airport owned or operated by a city, 41.33 town, county, metropolitan airports commission, or group 41.34 thereof; and 41.35 (ii) the land lease, or any ordinance or signed agreement 41.36 restricting the use of the leased premise, prohibits commercial 42.1 activity performed at the hangar. 42.2 If a hangar classified under this clause is sold after June 42.3 30, 2000, a bill of sale must be filed by the new owner with the 42.4 assessor of the county where the property is located within 60 42.5 days of the sale. 42.6 Class 4c property has a class rate of1.65one percent of 42.7 market value, except that(i) each parcel of seasonal42.8residential recreational property not used for commercial42.9purposes has the same class rates as class 4bb property, (ii)42.10 manufactured home parks assessed under clause (5) have the same 42.11 class rate as class 4b property, and (iii) property described in42.12paragraph (d), clause (4), has the same class rate as the rate42.13applicable to the first tier of class 4bb nonhomestead42.14residential real estate under paragraph (c). 42.15 (e) Class 4d property is qualifying low-income rental 42.16 housing certified to the assessor by the housing finance agency 42.17 under sections 273.126 and 462A.071. Class 4d includes land in 42.18 proportion to the total market value of the building that is 42.19 qualifying low-income rental housing. For all properties 42.20 qualifying as class 4d, the market value determined by the 42.21 assessor must be based on the normal approach to value using 42.22 normal unrestricted rents. 42.23 Class 4d property has a class rate ofone0.9 percent of 42.24 market value for taxes payable in 2002, 0.95 percent of market 42.25 value for taxes payable in 2003, and one percent of market value 42.26 for taxes payable in 2004 and thereafter. 42.27 [EFFECTIVE DATE.] This section is effective for taxes 42.28 payable in 2002 and subsequent years. 42.29 Sec. 14. Minnesota Statutes 2000, section 273.13, 42.30 subdivision 31, is amended to read: 42.31 Subd. 31. [CLASS 5.] Class 5 property includes: 42.32 (1) unmined iron ore and low-grade iron-bearing formations 42.33 as defined in section 273.14; and 42.34 (2) all other property not otherwise classified. 42.35 Class 5 property has a class rate of3.4two percent of 42.36 market value. 43.1 [EFFECTIVE DATE.] This section is effective for taxes 43.2 payable in 2002 and subsequent years. 43.3 Sec. 15. [273.1384] [HOMESTEAD AND AGRICULTURAL CREDITS.] 43.4 Subdivision 1. [HOMESTEAD CREDIT.] Each county auditor 43.5 shall determine a homestead credit amount for each property 43.6 classified as class 1 residential homestead or class 2a 43.7 agricultural homestead within the county equal to 37 percent of 43.8 net tax capacity, to a maximum of $256 per homestead. In the 43.9 case of an agricultural or resort homestead, only the net tax 43.10 capacity of the house, garage, and surrounding one acre of land 43.11 shall be used in determining the property's homestead credit 43.12 amount. The credit may not exceed the net tax on the property 43.13 after subtraction of all other credits under section 273.1393. 43.14 Subd. 2. [AGRICULTURAL CREDIT.] Property classified as 43.15 class 2a agricultural homestead is eligible for an agricultural 43.16 credit. The credit is equal to 0.2 percent of the taxable 43.17 market value of the property, excluding the market value 43.18 attributable to the house, garage, and surrounding one acre of 43.19 land, up to a maximum of $368 per homestead. 43.20 Subd. 3. [CREDIT APPLICATION.] The credits under this 43.21 section must be used to proportionately reduce the net tax 43.22 capacity-based property tax payable to all taxing jurisdictions, 43.23 after subtraction of all other credits under section 273.1393. 43.24 Subd. 4. [CREDIT REIMBURSEMENT.] The county auditor shall 43.25 certify the amount of tax reductions granted under this section 43.26 to the commissioner of revenue on the abstracts of tax lists 43.27 submitted under section 275.29. The commissioner of revenue 43.28 shall verify the credit amounts reported, and shall make 43.29 payments directly to the affected taxing jurisdictions other 43.30 than school districts in two equal installments on September 15 43.31 and December 26 each year. The commissioner of revenue shall 43.32 certify the total of the tax reductions granted under this 43.33 section for each school district to the commissioner of 43.34 children, families, and learning before September 1 of each 43.35 taxes payable year. The commissioner of children, families, and 43.36 learning shall reimburse each affected school district for the 44.1 amount of the property tax reductions allowed under this section 44.2 as provided in section 273.1392. 44.3 Subd. 5. [APPROPRIATION.] An amount sufficient to pay the 44.4 credit reimbursements provided under this section for school 44.5 districts, intermediate school districts, or any group of school 44.6 districts levying as a single taxing entity, is annually 44.7 appropriated from the general fund to the commissioner of 44.8 children, families, and learning. An amount sufficient to pay 44.9 the credit reimbursements provided under this section for 44.10 counties, cities, towns, and special taxing districts is 44.11 annually appropriated from the general fund to the commissioner 44.12 of revenue. A jurisdiction's aid amount may be increased or 44.13 decreased based on any prior year adjustments for homestead 44.14 credit or other property tax credit or aid programs. 44.15 [EFFECTIVE DATE.] This section is effective for taxes 44.16 payable in 2002 and subsequent years. 44.17 Sec. 16. Minnesota Statutes 2000, section 273.1392, is 44.18 amended to read: 44.19 273.1392 [PAYMENT; SCHOOL DISTRICTS.] 44.20 The amounts of conservation tax credits under section 44.21 273.119; disaster or emergency reimbursement under section 44.22 273.123; attached machinery aid under section 273.138;homestead44.23credit under section 273.13homestead and agricultural credits 44.24 under section 273.1384; aids and credits under section 273.1398; 44.25 wetlands reimbursement under section 275.295; enterprise zone 44.26 property credit payments under section 469.171; and metropolitan 44.27 agricultural preserve reduction under section 473H.10 for school 44.28 districts, shall be certified to the department of children, 44.29 families, and learning by the department of revenue. The 44.30 amounts so certified shall be paid according to section 127A.45, 44.31 subdivisions 9 and 13. 44.32 [EFFECTIVE DATE.] This section is effective for aids and 44.33 credits payable in 2002 and thereafter. 44.34 Sec. 17. Minnesota Statutes 2000, section 273.1393, is 44.35 amended to read: 44.36 273.1393 [COMPUTATION OF NET PROPERTY TAXES.] 45.1 Notwithstanding any other provisions to the contrary, "net" 45.2 property taxes are determined by subtracting the credits in the 45.3 order listed from the gross tax: 45.4 (1) disaster credit as provided in section 273.123; 45.5 (2) powerline credit as provided in section 273.42; 45.6 (3) agricultural preserves credit as provided in section 45.7 473H.10; 45.8 (4) enterprise zone credit as provided in section 469.171; 45.9 (5) disparity reduction credit; 45.10 (6) conservation tax credit as provided in section 273.119; 45.11 (7)educationhomesteadcreditand agricultural credits as 45.12 provided in section273.1382273.1384; 45.13 (8) taconite homestead credit as provided in section 45.14 273.135; and 45.15 (9) supplemental homestead credit as provided in section 45.16 273.1391. 45.17 The combination of all property tax credits must not exceed 45.18 the gross tax amount. 45.19 [EFFECTIVE DATE.] This section is effective for taxes 45.20 payable in 2002 and subsequent years. 45.21 Sec. 18. Minnesota Statutes 2000, section 273.1398, 45.22 subdivision 1a, is amended to read: 45.23 Subd. 1a. [TAX BASE DIFFERENTIAL.](a)For aids payable in 45.2420002003, for county governments only, the tax base 45.25 differential is:45.26(1) 0.450.7 percent of the assessment year19982001 45.27 taxable market value of class2a agricultural homestead45.28property, excluding the house, garage, and surrounding one acre45.29of land, between $115,000 and $600,000 and over 320 acres, minus45.30the value over $600,000 that is less than 320 acres; plus45.31(2) 0.5 percent of the assessment year 1998 taxable market45.32value of noncommercial seasonal recreational residential45.33property over $75,000 in value; plus45.34(3) for purposes of computing the fiscal disparity45.35adjustment only, 0.2 percent of the assessment year 1998 taxable45.36market value of class 3 commercial-industrial property over46.1$150,000.46.2(b) For the purposes of the distribution of homestead and46.3agricultural credit aid for aids payable in 2000, the46.4commissioner of revenue shall use the best information available46.5as of June 30, 1999, to make an estimate of the value described46.6in paragraph (a), clause (1). The commissioner shall adjust the46.7distribution of homestead and agricultural credit aid for aids46.8payable in 2001 and subsequent years if new information46.9regarding the value described in paragraph (a), clause (1),46.10becomes available after June 30, 19993(4) electric generation 46.11 attached machinery property under section 273.13, subdivision 24. 46.12 Sec. 19. Minnesota Statutes 2000, section 273.1398, is 46.13 amended by adding a subdivision to read: 46.14 Subd. 2e. [HOMESTEAD AND AGRICULTURAL AID FOR CITIES, 46.15 TOWNS, AND SPECIAL TAXING DISTRICTS.] Notwithstanding the 46.16 provisions of subdivision 2, the amount of homestead and 46.17 agricultural credit aid for a statutory or home rule charter 46.18 city, town, school district, or special taxing district for aid 46.19 payable in calendar year 2002 and thereafter is zero. 46.20 [EFFECTIVE DATE.] This section is effective for aids 46.21 payable in 2002 and future years. 46.22 Sec. 20. Minnesota Statutes 2000, section 275.02, is 46.23 amended to read: 46.24 275.02 [STATE LEVY, EXCEPTIONSFOR BONDED DEBT; 46.25 CERTIFICATION OF TAX RATE.] 46.26TheA state tax for bonded debt pursuant to the Minnesota 46.27 Constitution, article XI, shall be levied on the tax capacity of 46.28 all taxable property in the state. The rate of the tax shall be 46.29 certified by the state auditor to each county auditor on or 46.30 before November151 annually. The tax under this section is 46.31 not treated as a local tax rate under 469.177. 46.32 Sec. 21. [275.025] [STATE GENERAL TAX.] 46.33 Subdivision 1. [LEVY AMOUNT.] The state general levy is 46.34 levied against commercial-industrial property and seasonal 46.35 recreational property, as defined in this section. The state 46.36 general levy is $429,400,000 for taxes payable in 2002. For 47.1 taxes payable in subsequent years, the levy is increased each 47.2 year by multiplying the amount for the prior year by the sum of 47.3 one plus the rate of increase, if any, in the implicit price 47.4 deflator for government consumption expenditures and gross 47.5 investment for state and local governments prepared by the 47.6 Bureau of Economic Analysts of the United States Department of 47.7 Commerce for the 12-month period ending March 31 of the year 47.8 prior to the year the taxes are payable. The tax under this 47.9 section is not treated as a local tax rate under section 469.177. 47.10 Subd. 2. [COMMERCIAL-INDUSTRIAL TAX CAPACITY.] For the 47.11 purposes of this section, "commercial-industrial tax capacity" 47.12 means the tax capacity of all taxable property classified as 47.13 class 3 or class 5(1) under section 273.13, except for electric 47.14 generation attached machinery under class 3(4) and property 47.15 described in section 473.625. "Adjusted commercial-industrial 47.16 tax capacity" means commercial-industrial tax capacity using 47.17 market values for the previous year and class rates for the 47.18 current year adjusted by countywide sales ratios for the 47.19 relevant classes of property determined under section 127A.48. 47.20 County commercial-industrial tax capacity amounts are not 47.21 adjusted for the captured net tax capacity of a tax increment 47.22 financing district under section 469.177, subdivision 2, the net 47.23 tax capacity of transmission lines deducted from a local 47.24 government's total net tax capacity under section 273.425, or 47.25 fiscal disparities contribution and distribution net tax 47.26 capacities under chapter 276A or 473F. 47.27 Subd. 3. [COMMERCIAL-INDUSTRIAL LAND TAX CAPACITY.] For 47.28 the purposes of this section, "commercial-industrial land tax 47.29 capacity" means the estimated market value of the land value of 47.30 all taxable property classified as class 3 or class 5 under 47.31 section 273.13 excluding property described in section 473.625. 47.32 "Adjusted commercial-industrial land tax capacity" means 47.33 commercial-industrial land tax capacity adjusted by countywide 47.34 sales ratios for the relevant classes of property determined 47.35 under section 127A.48. County commercial-industrial land tax 47.36 capacity amounts are not adjusted for the captured net tax 48.1 capacity of a tax increment financing district under section 48.2 469.177, subdivision 2, the net tax capacity of transmission 48.3 lines deducted from a local government's total net tax capacity 48.4 under section 273.425, or fiscal disparities contribution and 48.5 distribution net tax capacities under chapter 276A or 473F. 48.6 Subd. 4. [SEASONAL RECREATIONAL TAX CAPACITY.] For the 48.7 purposes of this section, "seasonal recreational tax capacity" 48.8 means the tax capacity of all class 4c(1) and 4c(2) property 48.9 under section 273.13, subdivision 25, except that the first 48.10 $80,000 of market value of each noncommercial class 4c(1) 48.11 property shall have a tax capacity equal to one-half of the tax 48.12 capacity specified in section 273.13, subdivision 25. "Adjusted 48.13 seasonal recreational tax capacity" means seasonal recreational 48.14 tax capacity using market values for the previous year and class 48.15 rates for the current year adjusted by countywide sales ratios 48.16 for the relevant class of property determined under section 48.17 127A.48. 48.18 Subd. 5. [APPORTIONMENT AND LEVY OF STATE GENERAL TAX; 48.19 TAXES PAYABLE IN 2002.] For taxes payable in 2002, the state 48.20 general tax must be distributed among the counties by applying a 48.21 uniform rate to each county's adjusted commercial-industrial tax 48.22 capacity and its adjusted seasonal recreational tax capacity. 48.23 Within each county, the tax must be levied by applying a uniform 48.24 rate against commercial-industrial tax capacity and seasonal 48.25 recreational tax capacity. 48.26 Subd. 6. [APPORTIONMENT AND LEVY OF STATE GENERAL TAX; 48.27 TAXES PAYABLE IN 2003 AND SUBSEQUENT YEARS.] (a) For taxes 48.28 payable in 2003 and subsequent years, the state general levy 48.29 must first be apportioned into a commercial-industrial share and 48.30 a seasonal recreational share, in proportion to the share of the 48.31 state general tax levied on each of those classes in 2002. The 48.32 commercial-industrial apportionment must be further divided into 48.33 a regular commercial-industrial share and a 48.34 commercial-industrial land share. For taxes payable in 2003, 48.35 100 percent must be apportioned to the regular 48.36 commercial-industrial share. For taxes payable in 2004, 90 49.1 percent must be apportioned to the regular commercial-industrial 49.2 share and 10 percent to the commercial-industrial land share. 49.3 In each succeeding year, an additional ten percent must be 49.4 shifted from regular commercial-industrial to 49.5 commercial-industrial land; for taxes payable in 2013 and 49.6 thereafter the full amount of the commercial-industrial share 49.7 must be levied upon commercial-industrial land. 49.8 (b) For each of the component shares of the state general 49.9 levy determined in paragraph (a), the tax must be distributed 49.10 among the counties by applying a uniform rate to each county's 49.11 adjusted tax capacity for the relevant class. Within each 49.12 county, each component share of the tax must be levied by 49.13 applying a uniform rate against the relevant tax capacity for 49.14 that share of the levy. 49.15 [EFFECTIVE DATE.] This section is effective for taxes 49.16 payable in 2002 and subsequent years. 49.17 Sec. 22. Minnesota Statutes 2000, section 276.11, 49.18 subdivision 1, is amended to read: 49.19 Subdivision 1. [GENERALLY.] As soon as practical after the 49.20 settlement day determined in section 276.09, the county 49.21 treasurer shall pay to the state treasurer or the treasurer of a 49.22 town, city, school district, or special district, on the warrant 49.23 of the county auditor, all receipts of taxes levied by the 49.24 taxing district and deliver up all orders and other evidences of 49.25 indebtedness of the taxing district, taking triplicate receipts 49.26 for them. The treasurer shall file one of the receipts with the 49.27 county auditor, and shall return one by mail on the day of its 49.28 receipt to the clerk of the town, city, school district, or 49.29 special district to which payment was made. The clerk shall 49.30 keep the receipt in the clerk's office. Upon written request of 49.31 the taxing district, to the extent practicable, the county 49.32 treasurer shall make partial payments of amounts collected 49.33 periodically in advance of the next settlement and 49.34 distribution. A statement prepared by the county treasurer must 49.35 accompany each payment. It must state the years for which taxes 49.36 included in the payment were collected and, for each year, the 50.1 amount of the taxes and any penalties on the tax. Upon written 50.2 request of a taxing district, except school districts, the 50.3 county treasurer shall pay at least 70 percent of the estimated 50.4 collection within 30 days after the settlement date determined 50.5 in section 276.09. Within seven business days after the due 50.6 date, or 28 calendar days after the postmark date on the 50.7 envelopes containing real or personal property tax statements, 50.8 whichever is latest, the county treasurer shall pay to the 50.9 treasurer of the school districts 50 percent of the estimated 50.10 collections arising from taxes levied by and belonging to the 50.11 school district, unless the school district elects to receive 50 50.12 percent of the estimated collections arising from taxes levied 50.13 by and belonging to the school district after making a 50.14 proportionate reduction to reflect any loss in collections as 50.15 the result of any delay in mailing tax statements. In that 50.16 case, 50 percent of those adjusted, estimated collections shall 50.17 be paid by the county treasurer to the treasurer of the school 50.18 district within seven business days of the due date. The 50.19 remaining 50 percent of the estimated collections must be paid 50.20 to the treasurer of the school district within the next seven 50.21 business days of the later of the dates in the preceding 50.22 sentence, unless the school district elects to receive the 50.23 remainder of its estimated collections after a proportionate 50.24 reduction has been made to reflect any loss in collections as 50.25 the result of any delay in mailing tax statements. In that 50.26 case, the remaining 50 percent of those adjusted, estimated 50.27 collections shall be paid by the county treasurer to the 50.28 treasurer of the school district within 14 days of the due 50.29 date. The treasurer shall pay the balance of the amounts 50.30 collected to the state within 35 days, or to a municipal 50.31 corporation or other body within 60 days after the settlement 50.32 date determined in section 276.09. After 45 days interest at an 50.33 annual rate of eight percent accrues and must be paid to the 50.34 taxing district. Interest must be paid upon appropriation from 50.35 the general revenue fund of the county. If not paid, it may be 50.36 recovered by the taxing district, in a civil action. 51.1 [EFFECTIVE DATE.] This section is effective for taxes 51.2 payable in 2002 and subsequent years. 51.3 Sec. 23. Minnesota Statutes 2000, section 276A.06, 51.4 subdivision 3, is amended to read: 51.5 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 51.6 apportion the levy of each governmental unit in the county in 51.7 the manner prescribed by this subdivision. The auditor shall: 51.8 (a) by August 20 of 1997 and each subsequent year, 51.9 determine the areawide portion of the levy for each governmental 51.10 unit by multiplying the local tax rate of the governmental unit 51.11 for the preceding levy year times the distribution value set 51.12 forth in subdivision 2, clause (b);and51.13 (b) by September 5 of 1997 and each subsequent year, 51.14 determine the local portion of the current year's levy by 51.15 subtracting the resulting amount from clause (a) from the 51.16 governmental unit's current year's levy; and 51.17 (c) for determinations made under paragraph (a) in the case 51.18 of school districts, for taxes payable in 2002, exclude the 51.19 general education tax rate from the local tax rate for the 51.20 preceding levy year. 51.21 [EFFECTIVE DATE.] This section is effective the day 51.22 following final enactment. 51.23 Sec. 24. Minnesota Statutes 2000, section 297B.09, 51.24 subdivision 1, is amended to read: 51.25 Subdivision 1. [GENERAL FUND SHARE.] Money collected and 51.26 received under this chapter must be deposited as provided in 51.27 this subdivision. 51.28 Thirty-two percent of the money collected and received must 51.29 be deposited in the highway user tax distribution fund, and. 51.30 Nineteen and one-half percent must be deposited in the transit 51.31 fund under section 16A.88. The remaining6848.5 percent of the 51.32 money must be deposited in the general fund. 51.33 [EFFECTIVE DATE.] This section is effective July 1, 2002. 51.34 Sec. 25. Minnesota Statutes 2000, section 473.388, 51.35 subdivision 4, is amended to read: 51.36 Subd. 4. [FINANCIAL ASSISTANCE.] The councilmaymust 52.1 grant the requested financial assistance if it determines that 52.2 the proposed service is intended to replace the service to the 52.3 applying city or town or combination thereof by the council and 52.4 that the proposed service will meet the needs of the applicant 52.5 at least as efficiently and effectively as the existing service. 52.6 The amount of assistance which the council may provide 52.7 under this section may notexceed the sum ofbe less than: 52.8 (a)the portion of the available local transit funds which52.9the applicant proposes to use to subsidize the proposed52.10servicethe grants received under this subdivision by the 52.11 applicant in calendar year 2001 and the tax revenues for transit 52.12 services levied within the city or town, whether by the city or 52.13 town itself or by the metropolitan council, for taxes payable in 52.14 2001;andtimes 52.15 (b)an amount of financial assistance bearing an identical52.16proportional relationship to the amount under clause (a) as the52.17total amount of funds used by the council to fund its transit52.18operations bears tothe ratio of the total appropriation to the 52.19 council for nondebt transit operations in the current fiscal 52.20 year to the sum of the total appropriation to the council for 52.21 nondebt transit operations in fiscal year 2001 and the total 52.22 amount of taxes collected by the council under section 52.23 473.446 and the opt-out municipalities under this section in 52.24 calendar year 2001, including the portion of homestead and 52.25 agricultural credit aid under section 273.1398 attributable to 52.26 the nondebt transit levy. The council shall pay the amount to 52.27 be provided to the recipient from the funds the council would 52.28 otherwise use to fund its transit operations. 52.29For purposes of this section, "available local transit52.30funds" means 90 percent of the tax revenues which would accrue52.31to the council from the tax it levies under section 473.446 in52.32the applicant city or town or combination thereof.52.33 For purposes of this section, "tax revenues" in the city or 52.34 town means the sum of the following: 52.35 (1) the nondebt spread levy, which is the total of the 52.36 taxes extended by application of the local tax rate for nondebt 53.1 purposes on the taxable net tax capacity; 53.2 (2) the portion of the fiscal disparity distribution levy 53.3 under section 473F.08, subdivision 3, attributable to nondebt 53.4 purposes; and 53.5 (3) the portion of the homestead credit and agricultural 53.6 credit aid and disparity reduction aid amounts under section 53.7 273.1398, subdivisions 2 and 3, attributable to nondebt purposes. 53.8 Tax revenues do not include the state feathering 53.9 reimbursement under section 473.446. 53.10 [EFFECTIVE DATE.] This section is effective for calendar 53.11 year 2002 and subsequent years. 53.12 Sec. 26. Minnesota Statutes 2000, section 473.388, 53.13 subdivision 7, is amended to read: 53.14 Subd. 7. [LOCAL LEVY OPTION.](a)A statutory or home rule 53.15 charter city or town that is eligible for assistance under this 53.16 section, in lieu of receiving the assistance,may levy a taxfor53.17payment of the operating and capital expenditures for transit53.18and other related activities and to providefor payment of 53.19 obligations issued by the municipality forsuch purposes,53.20provided that the tax must be sufficient to maintain the level53.21of transit service provided in the municipality in the previous53.22yearcapital expenditures for transit and other related 53.23 activities, provided that property taxes were pledged to satisfy 53.24 the obligations, and provided that legislative appropriations 53.25 are insufficient to satisfy the obligations. 53.26(b) The transit tax revenues derived by the municipality53.27may not exceed:53.28(1) for the first transit levy year and any subsequent53.29transit levy year immediately following a year in which the53.30municipality declines to make the levy, the maximum available53.31local transit funds for the municipality for taxes payable in53.32the current year under section 473.446, calculated as if the53.33percentage of transit tax revenues for the municipality were 8853.34percent instead of 90 percent, and multiplied by the53.35municipality's market value adjustment ratio; and53.36(2) for taxes levied in any year that immediately follows a54.1year in which the municipality elects to levy under this54.2subdivision, the maximum transit tax that the municipality may54.3have levied in the previous year under this subdivision,54.4multiplied by the municipality's market value adjustment ratio.54.5The commissioner of revenue shall certify the54.6municipality's levy limitation under this subdivision to the54.7municipality by June 1 of the levy year. The tax must be54.8accumulated and kept in a separate fund to be known as the54.9"replacement transit fund."54.10(c) To enable the municipality to receive revenues54.11described in clauses (2) and (3) of the definition of "tax54.12revenues" in subdivision 4, that would otherwise be lost if the54.13municipality's transit tax levy was not treated as a successor54.14levy to that made by the council under section 473.446:54.15(1) in the first transit levy year and any subsequent54.16transit levy year immediately following a year in which the54.17municipality declined to make the levy, 88 percent of the54.18council's nondebt spread levy for the current taxes payable year54.19shall be treated as levied by the municipality, and not the54.20council, for purposes of section 473F.08, subdivision 3, for the54.21purpose of determining its local tax rate for the preceding54.22year; and54.23(2) 88 percent of the revenues described in clause (3) of54.24the definition of "tax revenues" in subdivision 4, payable in54.25the first transit levy year, or payable in any subsequent54.26transit levy year following a year in which a municipality54.27declined to make the levy, shall be permanently transferred from54.28the council to the municipality. If a municipality levies a tax54.29under this subdivision in one year, but declines to levy in a54.30subsequent year, the aid transferred under this clause shall be54.31transferred back to the council.54.32(d) Any transit taxes levied under this subdivision are not54.33subject to, or counted towards, any limit hereafter imposed by54.34law on the levy of taxes upon taxable property within any54.35municipality unless the law specifically includes the transit54.36tax.55.1(e) This subdivision is consistent with the transit55.2redesign plan. Eligible municipalities opting to levy the55.3transit tax under this subdivision shall continue to meet the55.4regional performance standards established by the council.55.5(f) Within the designated Americans with Disabilities Act55.6area, metro mobility remains the obligation of the state.55.7(g) For purposes of this subdivision, "transit levy year"55.8is any year in which the municipality elects to levy under this55.9subdivision.55.10(h) A municipality may not levy taxes under this55.11subdivision in any year unless it notifies the council and the55.12commissioner of revenue of its intent to levy before July 1 of55.13the levy year. The notification must include the amount of the55.14municipality's proposed transit tax for the current levy year.55.15After June 30 in the levy year, a municipality's decision to55.16levy or not levy taxes under this subdivision is irrevocable for55.17that levy year.55.18 [EFFECTIVE DATE.] This section is effective for taxes 55.19 payable in 2002 and subsequent years. 55.20 Sec. 27. Minnesota Statutes 2000, section 473.446, 55.21 subdivision 1, is amended to read: 55.22 Subdivision 1. [WITHIN TRANSIT TAXING DISTRICT.] For the 55.23 purposes of sections 473.405 to 473.449 and the metropolitan 55.24 transit system, except as otherwise provided in this subdivision 55.25 and subdivision 1b, the council shall levy each year upon all 55.26 taxable property within the metropolitan transit taxing 55.27 district, defined in subdivision 2, a transit tax consisting of: 55.28 (a)an amount which shall be used for payment of the55.29expenses of operating transit and paratransit service and to55.30provide for payment of obligations issued by the council under55.31section 473.436, subdivision 6;55.32(b)anadditionalamount, if any, the council determines to 55.33 be necessary to provide for the full and timely payment of its 55.34 certificates of indebtedness and other obligations outstanding 55.35 on July 1, 1985, to which property taxes under this section have 55.36 been pledged; and 56.1(c)(b) an additional amount necessary to provide full and 56.2 timely payment of certificates of indebtedness, bonds, including 56.3 refunding bonds or other obligations issued or to be issued 56.4 under section 473.39 by the council for purposes of acquisition 56.5 and betterment of property and other improvements of a capital 56.6 nature and to which the council has specifically pledged tax 56.7 levies under this clause. 56.8The property tax levied by the council for general purposes56.9under paragraph (a) must not exceed the following amount for the56.10years specified:56.11(1) for taxes payable in 1995, the council's property tax56.12levy limitation for general transit purposes is equal to the56.13former regional transit board's property tax levy limitation for56.14general transit purposes under this subdivision, for taxes56.15payable in 1994, multiplied by an index for market valuation56.16changes equal to the total market valuation of all taxable56.17property located within the metropolitan transit taxing district56.18for the current taxes payable year divided by the total market56.19valuation of all taxable property located within the56.20metropolitan transit taxing district for the previous taxes56.21payable year; and56.22(2) for taxes payable in 1996 and subsequent years, the56.23product of (i) the council's property tax levy limitation for56.24general transit purposes for the previous year determined under56.25this subdivision before reduction by the amount levied by any56.26municipality in the previous year under section 473.388,56.27subdivision 7, multiplied by (ii) an index for market valuation56.28changes equal to the total market valuation of all taxable56.29property located within the metropolitan transit taxing district56.30for the current taxes payable year divided by the total market56.31valuation of all taxable property located within the56.32metropolitan transit taxing district for the previous taxes56.33payable year, minus the amount levied by any municipality in the56.34current levy year under section 473.388, subdivision 7.56.35The portion of the property tax levy for transit district56.36operating purposes attributable to a municipality that has57.1exercised a local levy option under section 473.388, subdivision57.27, is the amount as determined under subdivision 1b. The57.3portion of the property tax levy for transit district operating57.4purposes attributable to the remaining municipalities within the57.5transit district is found by subtracting the portions57.6attributable to the municipalities that have exercised a local57.7levy option under section 473.388, subdivision 7.57.8For the taxes payable year 1995, the index for market57.9valuation changes shall be multiplied by an amount equal to the57.10sum of the regional transit board's property tax levy limitation57.11for the taxes payable year 1994 and $160,665. The $160,66557.12increase shall be a permanent adjustment to the levy limit base57.13used in determining the regional transit board's property tax57.14levy limitation for general purposes for subsequent taxes57.15payable years.57.16For the purpose of determining the council's property tax57.17levy limitation for general transit purposes under this57.18subdivision, "total market valuation" means the total market57.19valuation of all taxable property within the metropolitan57.20transit taxing district without valuation adjustments for fiscal57.21disparities (chapter 473F), tax increment financing (sections57.22469.174 to 469.179), and high voltage transmission lines57.23(section 273.425).57.24The county auditor shall reduce the tax levied pursuant to57.25this section and section 473.388 on all property within57.26statutory and home rule charter cities and towns that receive57.27full-peak service and limited off-peak service by an amount57.28equal to the tax levy that would be produced by applying a rate57.29of 0.510 percent of net tax capacity on the property. The57.30county auditor shall reduce the tax levied pursuant to this57.31section and section 473.388 on all property within statutory and57.32home rule charter cities and towns that receive limited peak57.33service by an amount equal to the tax levy that would be57.34produced by applying a rate of 0.765 percent of net tax capacity57.35on the property. The amounts so computed by the county auditor57.36shall be submitted to the commissioner of revenue as part of the58.1abstracts of tax lists required to be filed with the58.2commissioner under section 275.29. Any prior year adjustments58.3shall also be certified in the abstracts of tax lists. The58.4commissioner shall review the certifications to determine their58.5accuracy and may make changes in the certification as necessary58.6or return a certification to the county auditor for58.7corrections. The commissioner shall pay to the council and to58.8the municipalities levying under section 473.388, subdivision 7,58.9the amounts certified by the county auditors on the dates58.10provided in section 273.1398, apportioned between the council58.11and the municipality in the same proportion as the total transit58.12levy is apportioned within the municipality. There is annually58.13appropriated from the general fund in the state treasury to the58.14department of revenue the amounts necessary to make these58.15payments.58.16For the purposes of this subdivision, "full-peak and58.17limited off-peak service" means peak period regular route58.18service, plus weekday midday regular route service at intervals58.19longer than 60 minutes on the route with the greatest frequency;58.20and "limited peak period service" means peak period regular58.21route service only.58.22For the purposes of property taxes payable in the following58.23year, the council shall annually determine which cities and58.24towns qualify for the 0.510 percent or 0.765 percent tax58.25capacity rate reduction and shall certify this list to the58.26county auditor of the county wherein such cities and towns are58.27located on or before September 15. No changes may be made to58.28the annual list after September 15.58.29 [EFFECTIVE DATE.] This section is effective for taxes 58.30 payable in 2002 and subsequent years. 58.31 Sec. 28. Minnesota Statutes 2000, section 473.446, is 58.32 amended by adding a subdivision to read: 58.33 Subd. 1c. [TRANSIT LEVY AFTER 2001.] Notwithstanding any 58.34 other provision of this section, beginning with taxes payable in 58.35 2002, the council may levy the transit tax authorized under 58.36 subdivision 1 only for the purpose of providing for the full and 59.1 timely payment of bonds, certificates of indebtedness, and other 59.2 obligations issued by the council, to which property taxes have 59.3 been pledged. 59.4 [EFFECTIVE DATE.] This section is effective for taxes 59.5 payable in 2002 and subsequent years. 59.6 Sec. 29. Minnesota Statutes 2000, section 473F.08, 59.7 subdivision 3, is amended to read: 59.8 Subd. 3. [APPORTIONMENT OF LEVY.] The county auditor shall 59.9 apportion the levy of each governmental unit in the auditor's 59.10 county in the manner prescribed by this subdivision. The 59.11 auditor shall: 59.12 (a) by August 20, determine the areawide portion of the 59.13 levy for each governmental unit by multiplying the local tax 59.14 rate of the governmental unit for the preceding levy year times 59.15 the distribution value set forth in subdivision 2, clause (b); 59.16and59.17 (b) by September 5, determine the local portion of the 59.18 current year's levy by subtracting the resulting amount from 59.19 clause (a) from the governmental unit's current year's levy.; 59.20 (c) for determinations made under clause (a) in the case of 59.21 school districts, for taxes payable in 2002, exclude the general 59.22 education tax rate from the local tax rate for the preceding 59.23 levy year; 59.24 (d) for determinations made under clause (a) in the case of 59.25 the metropolitan council, for taxes payable in 2002, exclude the 59.26 transit operating tax rate from the local tax rate for the 59.27 preceding levy year; and 59.28 (e) for determinations made under clause (a) in the case of 59.29 transit opt-out cities, for taxes payable in 2002, exclude the 59.30 opt-out transit rate from the local tax rate for the preceding 59.31 levy year. 59.32 [EFFECTIVE DATE.] This section is effective the day 59.33 following final enactment. 59.34 Sec. 30. Minnesota Statutes 2000, section 477A.011, 59.35 subdivision 35, is amended to read: 59.36 Subd. 35. [TAX EFFORT RATE.] "Tax effort rate" means the 60.1 sum of (1) the net levy for all cities plus (2) the total aid 60.2 payments to all cities under section 273.1398 in the previous 60.3 year; divided by the sum of the city net tax capacity for all 60.4 cities. For purposes of this section, "net levy" means the city 60.5 levy, after all adjustments, used for calculating the local tax 60.6 rate under section 275.08 for taxes payable in the year prior to 60.7 the aid distribution. The fiscal disparity distribution levy 60.8 under chapter 276A or 473F is included in net levy. 60.9 [EFFECTIVE DATE.] This section is effective for aids 60.10 payable in 2002 and future years. 60.11 Sec. 31. Minnesota Statutes 2000, section 477A.011, 60.12 subdivision 36, is amended to read: 60.13 Subd. 36. [CITY AID BASE.] (a) Except as provided in 60.14 paragraphs (b) to(n)(q), "city aid base" means, for each city, 60.15 the sum of the local government aid and equalization aid it was 60.16 originally certified to receive in calendar year 1993 under 60.17 Minnesota Statutes 1992, section 477A.013, subdivisions 3 and 5, 60.18 and the amount of disparity reduction aid it received in 60.19 calendar year 1993 under Minnesota Statutes 1992, section 60.20 273.1398, subdivision 3. 60.21 (b) For aids payable in 1996 and thereafter, a city that in 60.22 1992 or 1993 transferred an amount from governmental funds to 60.23 its sewer and water fund, which amount exceeded its net levy for 60.24 taxes payable in the year in which the transfer occurred, has a 60.25 "city aid base" equal to the sum of (i) its city aid base, as 60.26 calculated under paragraph (a), and (ii) one-half of the 60.27 difference between its city aid distribution under section 60.28 477A.013, subdivision 9, for aids payable in 1995 and its city 60.29 aid base for aids payable in 1995. 60.30 (c) The city aid base for any city with a population less 60.31 than 500 is increased by $40,000 for aids payable in calendar 60.32 year 1995 and thereafter, and the maximum amount of total aid it 60.33 may receive under section 477A.013, subdivision 9, paragraph 60.34 (c), is also increased by $40,000 for aids payable in calendar 60.35 year 1995 only, provided that: 60.36 (i) the average total tax capacity rate for taxes payable 61.1 in 1995 exceeds 200 percent; 61.2 (ii) the city portion of the tax capacity rate exceeds 100 61.3 percent; and 61.4 (iii) its city aid base is less than $60 per capita. 61.5 (d) The city aid base for a city is increased by $20,000 in 61.6 1998 and thereafter and the maximum amount of total aid it may 61.7 receive under section 477A.013, subdivision 9, paragraph (c), is 61.8 also increased by $20,000 in calendar year 1998 only, provided 61.9 that: 61.10 (i) the city has a population in 1994 of 2,500 or more; 61.11 (ii) the city is located in a county, outside of the 61.12 metropolitan area, which contains a city of the first class; 61.13 (iii) the city's net tax capacity used in calculating its 61.14 1996 aid under section 477A.013 is less than $400 per capita; 61.15 and 61.16 (iv) at least four percent of the total net tax capacity, 61.17 for taxes payable in 1996, of property located in the city is 61.18 classified as railroad property. 61.19 (e) The city aid base for a city is increased by $200,000 61.20 in 1999 and thereafter and the maximum amount of total aid it 61.21 may receive under section 477A.013, subdivision 9, paragraph 61.22 (c), is also increased by $200,000 in calendar year 1999 only, 61.23 provided that: 61.24 (i) the city was incorporated as a statutory city after 61.25 December 1, 1993; 61.26 (ii) its city aid base does not exceed $5,600; and 61.27 (iii) the city had a population in 1996 of 5,000 or more. 61.28 (f) The city aid base for a city is increased by $450,000 61.29 in 1999 to 2008 and the maximum amount of total aid it may 61.30 receive under section 477A.013, subdivision 9, paragraph (c), is 61.31 also increased by $450,000 in calendar year 1999 only, provided 61.32 that: 61.33 (i) the city had a population in 1996 of at least 50,000; 61.34 (ii) its population had increased by at least 40 percent in 61.35 the ten-year period ending in 1996; and 61.36 (iii) its city's net tax capacity for aids payable in 1998 62.1 is less than $700 per capita. 62.2 (g) Beginning in20022004, the city aid base for a city is 62.3 equal to the sum of its city aid base in20012003 and the 62.4 amount of additional aid it was certified to receive under 62.5 section 477A.06 in20012003. For20022004 only, the maximum 62.6 amount of total aid a city may receive under section 477A.013, 62.7 subdivision 9, paragraph (c), is also increased by the amount it 62.8 was certified to receive under section 477A.06 in20012003. 62.9 (h) The city aid base for a city is increased by $150,000 62.10 for aids payable in 2000 and thereafter, and the maximum amount 62.11 of total aid it may receive under section 477A.013, subdivision 62.12 9, paragraph (c), is also increased by $150,000 in calendar year 62.13 2000 only, provided that: 62.14 (1) the city has a population that is greater than 1,000 62.15 and less than 2,500; 62.16 (2) its commercial and industrial percentage for aids 62.17 payable in 1999 is greater than 45 percent; and 62.18 (3) the total market value of all commercial and industrial 62.19 property in the city for assessment year 1999 is at least 15 62.20 percent less than the total market value of all commercial and 62.21 industrial property in the city for assessment year 1998. 62.22 (i) The city aid base for a city is increased by $200,000 62.23 in 2000 and thereafter, and the maximum amount of total aid it 62.24 may receive under section 477A.013, subdivision 9, paragraph 62.25 (c), is also increased by $200,000 in calendar year 2000 only, 62.26 provided that: 62.27 (1) the city had a population in 1997 of 2,500 or more; 62.28 (2) the net tax capacity of the city used in calculating 62.29 its 1999 aid under section 477A.013 is less than $650 per 62.30 capita; 62.31 (3) the pre-1940 housing percentage of the city used in 62.32 calculating 1999 aid under section 477A.013 is greater than 12 62.33 percent; 62.34 (4) the 1999 local government aid of the city under section 62.35 477A.013 is less than 20 percent of the amount that the formula 62.36 aid of the city would have been if the need increase percentage 63.1 was 100 percent; and 63.2 (5) the city aid base of the city used in calculating aid 63.3 under section 477A.013 is less than $7 per capita. 63.4 (j) The city aid base for a city is increased by $225,000 63.5 in calendar years 2000 to 2002 and the maximum amount of total 63.6 aid it may receive under section 477A.013, subdivision 9, 63.7 paragraph (c), is also increased by $225,000 in calendar year 63.8 2000 only, provided that: 63.9 (1) the city had a population of at least 5,000; 63.10 (2) its population had increased by at least 50 percent in 63.11 the ten-year period ending in 1997; 63.12 (3) the city is located outside of the Minneapolis-St. Paul 63.13 metropolitan statistical area as defined by the United States 63.14 Bureau of the Census; and 63.15 (4) the city received less than $30 per capita in aid under 63.16 section 477A.013, subdivision 9, for aids payable in 1999. 63.17 (k) The city aid base for a city is increased by $102,000 63.18 in 2000 and thereafter, and the maximum amount of total aid it 63.19 may receive under section 477A.013, subdivision 9, paragraph 63.20 (c), is also increased by $102,000 in calendar year 2000 only, 63.21 provided that: 63.22 (1) the city has a population in 1997 of 2,000 or more; 63.23 (2) the net tax capacity of the city used in calculating 63.24 its 1999 aid under section 477A.013 is less than $455 per 63.25 capita; 63.26 (3) the net levy of the city used in calculating 1999 aid 63.27 under section 477A.013 is greater than $195 per capita; and 63.28 (4) the 1999 local government aid of the city under section 63.29 477A.013 is less than 38 percent of the amount that the formula 63.30 aid of the city would have been if the need increase percentage 63.31 was 100 percent. 63.32 (l) The city aid base for a city is increased by $32,000 in 63.33 2001 and thereafter, and the maximum amount of total aid it may 63.34 receive under section 477A.013, subdivision 9, paragraph (c), is 63.35 also increased by $32,000 in calendar year 2001 only, provided 63.36 that: 64.1 (1) the city has a population in 1998 that is greater than 64.2 200 but less than 500; 64.3 (2) the city's revenue need used in calculating aids 64.4 payable in 2000 was greater than $200 per capita; 64.5 (3) the city net tax capacity for the city used in 64.6 calculating aids available in 2000 was equal to or less than 64.7 $200 per capita; 64.8 (4) the city aid base of the city used in calculating aid 64.9 under section 477A.013 is less than $65 per capita; and 64.10 (5) the city's formula aid for aids payable in 2000 was 64.11 greater than zero. 64.12 (m) The city aid base for a city is increased by $7,200 in 64.13 2001 and thereafter, and the maximum amount of total aid it may 64.14 receive under section 477A.013, subdivision 9, paragraph (c), is 64.15 also increased by $7,200 in calendar year 2001 only, provided 64.16 that: 64.17 (1) the city had a population in 1998 that is greater than 64.18 200 but less than 500; 64.19 (2) the city's commercial industrial percentage used in 64.20 calculating aids payable in 2000 was less than ten percent; 64.21 (3) more than 25 percent of the city's population was 60 64.22 years old or older according to the 1990 census; 64.23 (4) the city aid base of the city used in calculating aid 64.24 under section 477A.013 is less than $15 per capita; and 64.25 (5) the city's formula aid for aids payable in 2000 was 64.26 greater than zero. 64.27 (n) The city aid base for a city is increased by $45,000 in 64.28 2001 and thereafter, and the maximum amount of total aid it may 64.29 receive under section 477A.013, subdivision 9, paragraph (c), is 64.30 also increased by $45,000 in calendar year 2001 only, provided 64.31 that: 64.32 (1) the net tax capacity of the city used in calculating 64.33 its 2000 aid under section 477A.013 is less than $810 per 64.34 capita; 64.35 (2) the population of the city declined more than two 64.36 percent between 1988 and 1998; 65.1 (3) the net levy of the city used in calculating 2000 aid 65.2 under section 477A.013 is greater than $240 per capita; and 65.3 (4) the city received less than $36 per capita in aid under 65.4 section 477A.013, subdivision 9, for aids payable in 2000. 65.5 (o) The city aid base for a city is increased by $150,000 65.6 in calendar years 2002 to 2011 and the maximum amount of total 65.7 aid it may receive under section 477A.013, subdivision 9, 65.8 paragraph (c), is also increased by $150,000 in calendar year 65.9 2002 only, provided that: 65.10 (1) the city had a population of at least 3,000 but no more 65.11 than 4,000 in 1999; 65.12 (2) its home county is located within the seven-county 65.13 metropolitan area; 65.14 (3) its pre-1940 housing percentage is less than 15 65.15 percent; and 65.16 (4) its city net tax capacity per capita for taxes payable 65.17 in 2000 is less than $900 per capita. 65.18 (p) The city aid base for a city with a population greater 65.19 than 50,000 which is located outside of the seven-county 65.20 metropolitan area is increased in 2002 and thereafter, and the 65.21 maximum amount of total aid it may receive under section 65.22 477A.013, subdivision 9, paragraph (b) or (c), is also increased 65.23 in calendar year 2002 only, by an amount equal to the lesser of: 65.24 (1) the total population of the city's metropolitan 65.25 statistical area, as defined by the United States Bureau of the 65.26 Census, which resides outside of the city, multiplied by $25; or 65.27 (2) $1,000,000. 65.28 (q) The city aid base for a city for aid payable in 2003 is 65.29 increased by 0.7 percent of the assessment year 2001 taxable 65.30 market value of property classified as class 3(4) under section 65.31 273.13, subdivision 24, multiplied by the city's local tax rate 65.32 for taxes payable in 2002. 65.33 [EFFECTIVE DATE.] This section is effective beginning with 65.34 aids payable in 2002. 65.35 Sec. 32. Minnesota Statutes 2000, section 477A.013, 65.36 subdivision 1, is amended to read: 66.1 Subdivision 1. [TOWNS.] In1994 each town that had levied66.2for taxes payable in the prior year a local tax rate of at least66.3.008 shall receive a distribution equal to the amount it66.4received in 1993 under this section before any nonpermanent66.5reductions made under section 477A.0132. In 1995 each town that66.6had levied for taxes payable in 1993 a local tax rate of at66.7least .008 shall receive a distribution equal to 102 percent of66.8the amount it received in 1994 under this section before any66.9increases or reductions under sections 16A.711, subdivision 5,66.10and 477A.0132. In 1996 and subsequent years each town that had66.11levied for taxes payable in 1993 a local tax rate of at least66.12.008 shall receive a distribution equal to the amount it66.13received in the previous year under this section, adjusted for66.14inflation as provided under section 477A.03, subdivision 32002, 66.15 no town is eligible for a distribution under this subdivision. 66.16 In 2003 and subsequent years, each town is eligible to receive 66.17 aid under this subdivision equal to 0.7 percent of the 66.18 assessment year 2001 taxable market value of property classified 66.19 as class 3(4) under section 273.13, subdivision 24, multiplied 66.20 by the town's local tax rate for taxes payable in 2002. 66.21 [EFFECTIVE DATE.] This section is effective for aids 66.22 payable in 2002 and subsequent years. 66.23 Sec. 33. Minnesota Statutes 2000, section 477A.013, 66.24 subdivision 9, is amended to read: 66.25 Subd. 9. [CITY AID DISTRIBUTION.] (a) In calendar year 66.2619942002 and thereafter, each city shall receive an aid 66.27 distribution equal to the sum of (1) the city formula aid under 66.28 subdivision 8, and (2) its city aid base. 66.29 (b) The percentage increase for a first class city in 66.30 calendar year 1995 and thereafter shall not exceed the 66.31 percentage increase in the sum of the aid to all cities under 66.32 this section in the current calendar year compared to the sum of 66.33 the aid to all cities in the previous year. For aids payable in 66.34 2002 only, the amount of the aid paid to a first class city 66.35 shall not exceed its aid amount for calendar year 2001 by more 66.36 than the greater of (1) 22 percent of its aid amount under this 67.1 section in 2001, or (2) 70 percent of its aid payment in 67.2 calendar year 2001 under section 273.1398, subdivision 2. 67.3 (c) For aids payable in all years except 2002, the total 67.4 aid for any city, except a first class city, shall not exceed 67.5 the sum of (1) ten percent of the city's net levy for the year 67.6 prior to the aid distribution plus (2) its total aid in the 67.7 previous year before any increases or decreases undersections67.8 section16A.711, subdivision 5, and477A.0132. For aids payable 67.9 in 2002 only, the total aid for any city, except a first class 67.10 city, shall not exceed the sum of (1) 50 percent of the city's 67.11 net levy for the year prior to the aid distribution plus (2) its 67.12 total aid in the previous year before any increases or decreases 67.13 under section 477A.0132. 67.14(d) Notwithstanding paragraph (c), in 1995 only, for cities67.15which in 1992 or 1993 transferred an amount from governmental67.16funds to their sewer and water fund in an amount greater than67.17their net levy for taxes payable in the year in which the67.18transfer occurred, the total aid shall not exceed the sum of (1)67.1920 percent of the city's net levy for the year prior to the aid67.20distribution plus (2) its total aid in the previous year before67.21any increases or decreases under sections 16A.711, subdivision67.225, and 477A.0132.67.23 [EFFECTIVE DATE.] This section is effective for aids 67.24 payable in 2002 and future years. 67.25 Sec. 34. Minnesota Statutes 2000, section 477A.03, 67.26 subdivision 2, is amended to read: 67.27 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 67.28 discharge the duties imposed by sections 477A.011 to 477A.014 is 67.29 annually appropriated from the general fund to the commissioner 67.30 of revenue. 67.31 (b) Aid payments to counties under section 477A.0121 are 67.32 limited to $20,265,000 in 1996. Aid payments to counties under 67.33 section 477A.0121 are limited to $27,571,625 in 1997. For aid 67.34 payable in 1998 and thereafter, the total aids paid under 67.35 section 477A.0121 are the amounts certified to be paid in the 67.36 previous year, adjusted for inflation as provided under 68.1 subdivision 3. 68.2 (c)(i) For aids payable in 1998 and thereafter, the total 68.3 aids paid to counties under section 477A.0122 are the amounts 68.4 certified to be paid in the previous year, adjusted for 68.5 inflation as provided under subdivision 3. 68.6 (ii) Aid payments to counties under section 477A.0122 in 68.7 2000 are further increased by an additional $20,000,000 in 2000. 68.8 (d) Aid payments to cities in19992002 under section 68.9 477A.013, subdivision 9, are limited 68.10 to$380,565,489$512,701,366.For aids payable in 2000, the68.11total aids paid under section 477A.013, subdivision 9, are the68.12amounts certified to be paid in the previous year, adjusted for68.13inflation as provided in subdivision 3, and increased by the68.14amount necessary to effectuate Laws 1999, chapter 243, article68.155, section 48, paragraph (b).For aids payable in2001 through68.16 2003, the total aids paid under section 477A.013, subdivision 9, 68.17 are the amounts certified to be paid in the previous year, 68.18 adjusted for inflation as provided under subdivision 3, and 68.19 increased by an amount equal to the amounts calculated under 68.20 sections 477A.011, subdivision 36, paragraph (q), and 477A.07, 68.21 subdivision 3, for 2003. For aids payable in 2004, the total 68.22 aids paid under section 477A.013, subdivision 9, are the amounts 68.23 certified to be paid in the previous year, adjusted for 68.24 inflation as provided under subdivision 3, and increased by the 68.25 amount certified to be paid in 2003 under section 477A.06, and 68.26 increased by an amount equal to the amounts calculated under 68.27 section 477A.07, subdivision 3, for 2004. For aids payable in 68.28 2005 and thereafter, the total aids paid under section 477A.013, 68.29 subdivision 9, are the amounts certified to be paid in the 68.30 previous year, adjusted for inflation as provided under 68.31 subdivision 3. The additional amount authorized under 68.32 subdivision 4 is not included when calculating the appropriation 68.33 limits under this paragraph. 68.34 [EFFECTIVE DATE.] This section is effective for aids 68.35 payable in 2002 and future years. 68.36 Sec. 35. [477A.07] [RENTAL HOUSING TAX BASE REPLACEMENT 69.1 AID.] 69.2 Subdivision 1. [AID AMOUNT.] Each county and city is 69.3 eligible for aid equal to the amount by which (i) 0.25 percent 69.4 of the assessment year 2001 taxable market value of class 4a, 69.5 class 4b, and that portion of class 4bb property in excess of 69.6 $76,000 in market value, as defined in section 273.13, 69.7 subdivision 25, exceeds (ii) 0.4 percent of the jurisdiction's 69.8 total taxable net tax capacity for taxes payable in 2002, 69.9 multiplied by the jurisdiction's average tax rate for taxes 69.10 payable in 2002. 69.11 Subd. 2. [COUNTY AID.] Each county's aid amount determined 69.12 under subdivision 1 must be permanently added to the county's 69.13 homestead and agricultural credit aid base under section 69.14 273.1398 for aid payable in 2003, and the same amount must be 69.15 permanently added to the county's homestead and agricultural 69.16 credit aid base for aid payable in 2004. 69.17 Subd. 3. [CITY AID.] Each city's aid amount determined 69.18 under subdivision 1 must be permanently added to its city aid 69.19 base under section 477A.011, subdivision 36, for aid payable in 69.20 2003, and the same amount must be permanently added to its city 69.21 aid base for aid payable in 2004. 69.22 Subd. 4. [APPROPRIATION INCREASE.] The total aid amount 69.23 payable to cities under section 477A.03, subdivision 2, 69.24 paragraph (d), is permanently increased by the total amount 69.25 payable to all cities under subdivision 3 for aid payable in 69.26 2003 and increased again by the same amount for aid payable in 69.27 2004. 69.28 [EFFECTIVE DATE.] This section is effective for aids 69.29 payable in 2003 and subsequent years. 69.30 Sec. 36. [ELECTRIC GENERATION TAX BASE REPLACEMENT AID.] 69.31 For taxes payable in 2002 only, the county auditor shall 69.32 compute all local tax rates as if the class rate for class 3(4) 69.33 property under Minnesota Statutes, section 273.13, subdivision 69.34 24, was 2.2 percent. In determining the actual property tax due 69.35 and payable on class 3(4) property, the actual class rate must 69.36 be used. Each local taxing jurisdiction is entitled to aid 70.1 equal to the difference between the property tax levied upon 70.2 class 3(4) property and the amount that would have been levied 70.3 had the class rate been 2.2 percent. 70.4 The auditor shall report the amount of aid to which each 70.5 local jurisdiction is entitled under this subdivision to the 70.6 commissioner of revenue in a manner prescribed by the 70.7 commissioner. The commissioner shall verify the accuracy of the 70.8 amounts reported and shall make payments to local governments 70.9 other than school districts in two equal installments on 70.10 September 15, 2002, and on December 26, 2002. Payments to school 70.11 districts must be certified to the commissioner of children, 70.12 families, and learning and paid under Minnesota Statutes, 70.13 section 273.1392. 70.14 [EFFECTIVE DATE.] This section is effective for taxes 70.15 payable in 2002. 70.16 Sec. 37. [TIF GRANTS; APPROPRIATIONS.] 70.17 Subdivision 1. [TIF GRANTS.] (a) The commissioner of 70.18 revenue shall pay grants to municipalities in calendar years 70.19 2003, 2004, and 2005 for deficits in tax increment financing 70.20 districts caused by the changes in class rates and the 70.21 elimination of the state-determined general education property 70.22 tax levy under this article. To qualify for a grant under this 70.23 section, a municipality must impose the special tax under 70.24 Minnesota Statutes, section 469.1791, to the extent permitted by 70.25 law for the taxes payable year in which the grant is to be 70.26 paid. Municipalities must submit applications for the grants in 70.27 a form prescribed by the commissioner no later than August 1 for 70.28 grants payable during the calendar year. The maximum grant 70.29 equals the lesser of: 70.30 (1) for taxes payable in the year before the grant is paid, 70.31 the reduction in the tax increment financing district's revenues 70.32 derived from increment resulting from the class rate changes and 70.33 the elimination of the state-determined general education 70.34 property tax levy under this article; or 70.35 (2) the amount due during the calendar year to pay: 70.36 (i) bonds issued before June 2, 2001, and 71.1 (ii) binding contracts entered into before June 2, 2001, 71.2 less 71.3 (iii) the municipality's total tax increments, including 71.4 unspent increments from previous years; and less 71.5 (iv) the amount of the special tax imposed under Minnesota 71.6 Statutes, section 469.1791 for taxes payable in the year the 71.7 grant is to be paid. 71.8 (b) The commissioner of revenue may require applicants for 71.9 grants under this section to provide any information the 71.10 commissioner deems appropriate. The commissioner shall 71.11 calculate the amount under paragraph (a), clause (2), based on 71.12 the reports for the tax increment financing district or 71.13 districts filed with the state auditor on or before August 1 of 71.14 the year in which the grant is to be paid and the special tax 71.15 information provided by the county auditor. 71.16 (c) This section applies only to deficits in tax increment 71.17 districts for which: 71.18 (1) the request for certification was made before June 2, 71.19 2001; and 71.20 (2) all timely reports have been filed with the state 71.21 auditor, as required by Minnesota Statutes, section 469.175. 71.22 (d) The commissioner shall pay the grants under this 71.23 section by December 26 of the year. 71.24 (e) For the purposes of this section, "tax increments" and 71.25 "revenues derived from tax increments" have the meanings given 71.26 in Minnesota Statutes, section 469.174, subdivision 25, except 71.27 that the definition applies to all tax increment districts, 71.28 regardless of when the request for certification was made and 71.29 regardless of when the revenues were received, notwithstanding 71.30 the effective date of Minnesota Statutes, section 469.174, 71.31 subdivision 25. 71.32 Subd. 2. [APPROPRIATION.] $169,600,000 is appropriated 71.33 from the general fund to the commissioner of revenue in fiscal 71.34 year 2002 and $25,000,000 for fiscal year 2003 to make grants 71.35 under this section. The appropriations do not lapse at the end 71.36 of a fiscal year or biennium and are available until this 72.1 section expires. If the amount of grant entitlements for a year 72.2 exceeds the amount available for grants, the commissioner shall 72.3 reduce each grant proportionately so the total does not exceed 72.4 the amount available. 72.5 Subd. 3. [EXPIRATION.] This section expires on January 1, 72.6 2006. 72.7 [EFFECTIVE DATE.] This section is effective January 1, 72.8 2002, and thereafter. 72.9 Sec. 38. [ASSESSMENT GUIDELINES.] 72.10 The commissioner of revenue shall develop instructional 72.11 materials and issue guidelines by December 31, 2002, to assist 72.12 assessors in determining the appropriate split between the 72.13 portion of market value attributable to land and the portion 72.14 attributable to buildings, in the case of properties subject to 72.15 the state general tax on commercial-industrial property under 72.16 Minnesota Statutes, section 275.025. 72.17 [EFFECTIVE DATE.] This section is effective July 1, 2001. 72.18 Sec. 39. [APPROPRIATION.] 72.19 (a) $6,000,000 is appropriated from the transit fund to the 72.20 commissioner of transportation to finance nonmetropolitan 72.21 transit systems under Minnesota Statutes, section 174.24, for 72.22 fiscal year 2003. Grants to recipient systems in calendar year 72.23 2002 must include all funding necessary to compensate for the 72.24 elimination of levy authority under section 7. 72.25 (b) $105,200,000 is appropriated from the transit fund to 72.26 the metropolitan council to finance transit operating expenses 72.27 for fiscal year 2003. One-half of the appropriation to the 72.28 council must be paid on July 15, 2002, and the remaining 72.29 one-half must be paid on December 15, 2002. 72.30 [EFFECTIVE DATE.] This section is effective July 1, 2002. 72.31 Sec. 40. [REPEALER.] 72.32 Minnesota Statutes 2000, sections 126C.13, subdivisions 1, 72.33 2, and 3; 273.13, subdivision 24a; 273.1382; 275.08, subdivision 72.34 1e; and 473.446, subdivision 8, are repealed. 72.35 [EFFECTIVE DATE.] This section is effective for taxes 72.36 payable in 2002 and subsequent years. 73.1 ARTICLE 3 73.2 STATE TAKEOVER OF COUNTY SERVICES 73.3 Section 1. Minnesota Statutes 2000, section 97A.065, 73.4 subdivision 2, is amended to read: 73.5 Subd. 2. [FINES AND FORFEITED BAIL.] (a) Fines and 73.6 forfeited bail collected from prosecutions of violations of: 73.7 the game and fish laws; sections 84.091 to 84.15; sections 84.81 73.8 to 84.91; section 169A.20, when the violation involved an 73.9 off-road recreational vehicle as defined in section 169A.03, 73.10 subdivision 16; chapter 348; and any other law relating to wild 73.11 animals or aquatic vegetation, must be paid to the treasurer of 73.12 the county where the violation is prosecuted. The county 73.13 treasurer shall submit one-half of the receipts to the 73.14 commissioner and credit the balance to the county general 73.15 revenue fund except as provided in paragraphs (b), (c), and 73.16 (d). In a county in a judicial district under section 480.181, 73.17 subdivision 1, paragraph (b),as added in Laws 1999, chapter73.18216, article 7, section 26,the share that would otherwise go to 73.19 the county under this paragraph must be submitted to the state 73.20 treasurer for deposit in the state treasury and credited to the 73.21 general fund. 73.22 (b) The commissioner must reimburse a county, from the game 73.23 and fish fund, for the cost of keeping prisoners prosecuted for 73.24 violations under this section if the county board, by 73.25 resolution, directs: (1) the county treasurer to submit all 73.26 fines and forfeited bail to the commissioner; and (2) the county 73.27 auditor to certify and submit monthly itemized statements to the 73.28 commissioner. 73.29 (c) The county treasurer shall submit one-half of the 73.30 receipts collected under paragraph (a) from prosecutions of 73.31 violations of sections 84.81 to 84.91, and 169A.20, except 73.32 receipts that are surcharges imposed under section 357.021, 73.33 subdivision 6, to the commissioner and credit the balance to the 73.34 county general fund. The commissioner shall credit these 73.35 receipts to the snowmobile trails and enforcement account in the 73.36 natural resources fund. 74.1 (d) The county treasurer shall indicate the amount of the 74.2 receipts that are surcharges imposed under section 357.021, 74.3 subdivision 6, and shall submit all of those receipts to the 74.4 state treasurer. 74.5 [EFFECTIVE DATE.] This section is effective July 1, 2003, 74.6 in the first and fourth districts; July 1, 2004, in the third 74.7 and sixth districts; and July 1, 2005, in the second and tenth 74.8 districts. 74.9 Sec. 2. Minnesota Statutes 2000, section 179A.101, 74.10 subdivision 1, is amended to read: 74.11 Subdivision 1. [COURT EMPLOYEE UNITS.] (a) The state court 74.12 administrator shall meet and negotiate with the exclusive 74.13 representative of each of the units specified in this section. 74.14 The units provided in this section are the only appropriate 74.15 units for court employees. Court employees, unless otherwise 74.16 excluded, are included within the units which include the 74.17 classifications to which they are assigned for purposes of 74.18 compensation. Initial assignment of classifications to 74.19 bargaining units shall be made by the state court administrator 74.20 by August 15, 1999of the year preceding the year in which the 74.21 state assumes the cost of court administration in the judicial 74.22 district in which the bargaining unit is located. An exclusive 74.23 representative may appeal the initial assignment decision of the 74.24 state court administrator by filing a petition with the 74.25 commissioner within 45 days of being certified as the exclusive 74.26 representative for a judicial district. The units in this 74.27 subdivision are the appropriate units of court employees. 74.28 (b) The judicial district unit consists of clerical, 74.29 administrative, and technical employees of a judicial district 74.30 under section 480.181, subdivision 1, paragraph (b), or of two 74.31 or more of these districts that are represented by the same 74.32 employee organization or one or more subordinate bodies of the 74.33 same employee organization. The judicial district unit includes 74.34 individuals, not otherwise excluded, whose work is typically 74.35 clerical or secretarial in nature, including nontechnical data 74.36 recording and retrieval and general office work, and 75.1 individuals, not otherwise excluded, whose work is not typically 75.2 manual and which requires specialized knowledge or skills 75.3 acquired through two-year academic programs or equivalent 75.4 experience or on-the-job training. 75.5 (c) The appellate courts unit consists of clerical, 75.6 administrative, and technical employees of the court of appeals 75.7 and clerical, administrative, and technical employees of the 75.8 supreme court. The appellate courts unit includes individuals, 75.9 not otherwise excluded, whose work is typically clerical or 75.10 secretarial in nature, including nontechnical data recording and 75.11 retrieval and general office work, and individuals, not 75.12 otherwise excluded, whose work is not typically manual and which 75.13 requires specialized knowledge or skills acquired through 75.14 two-year academic programs or equivalent experience or 75.15 on-the-job training. 75.16 (d) The court employees professional employee unit consists 75.17 of professional employees, not otherwise excluded, that are 75.18 employed by the supreme court, the court of appeals, or a 75.19 judicial district under section 480.181, subdivision 1, 75.20 paragraph (b). 75.21 (e) The court employees court reporter unit consists of 75.22 court reporters not otherwise excluded who are employed by a 75.23 judicial district under section 480.181, subdivision 1, 75.24 paragraph (a). 75.25 (f) Notwithstanding any provision of this chapter or any 75.26 other law to the contrary, judges may appoint and remove court 75.27 reporters at their pleasure. 75.28 (g) Copies of collective bargaining agreements entered into 75.29 under this section must be submitted to the legislative 75.30 coordinating commission for the commission's information. 75.31 [EFFECTIVE DATE.] This section is effective July 1, 2003, 75.32 in the first and fourth districts; July 1, 2004, in the third 75.33 and sixth districts; and July 1, 2005, in the second and tenth 75.34 districts. 75.35 Sec. 3. Minnesota Statutes 2000, section 179A.102, 75.36 subdivision 6, is amended to read: 76.1 Subd. 6. [CONTRACT AND REPRESENTATION RESPONSIBILITIES.] 76.2 (a) Notwithstanding the provisions of section 179A.101, the 76.3 exclusive representatives of units of court employees certified 76.4 prior to the effective date of the judicial district coming 76.5 under section 480.181, subdivision 1, paragraph (b), remain 76.6 responsible for administration of their contracts and for other 76.7 contractual duties and have the right to dues and fair share fee 76.8 deduction and other contractual privileges and rights until a 76.9 contract is agreed upon with the state court administrator for a 76.10 new unit established under section 179A.101or until June 30,76.112001, whichever is earlier. Exclusive representatives of court 76.12 employees certified after the effective date of this section in 76.13 the judicial district are immediately upon certification 76.14 responsible for bargaining on behalf of employees within the 76.15 unit. They are also responsible for administering grievances 76.16 arising under previous contracts covering employees included 76.17 within the unit which remain unresolvedon June 30, 2001, or76.18 upon agreement with the state court administrator on a contract 76.19 for a new unit established under section 179A.101, whichever is76.20earlier. Where the employer does not object, these 76.21 responsibilities may be varied by agreement between the outgoing 76.22 and incoming exclusive representatives. All other rights and 76.23 duties of representation begin on July 1, 2001of the year in 76.24 which the state assumes the funding of court administration in 76.25 the judicial district, except that exclusive representatives 76.26 certified after the effective date of this section shall 76.27 immediately, upon certification, have the right to all employer 76.28 information and all forms of access to employees within the 76.29 bargaining unit which would be permitted to the current contract 76.30 holder, including the rights in section 179A.07, subdivision 6. 76.31 This section does not affect an existing collective bargaining 76.32 contract. Incoming exclusive representatives of court employees 76.33 from judicial districts that come under section 480.181, 76.34 subdivision 1, paragraph (b), are immediately, upon 76.35 certification, responsible for bargaining on behalf of all 76.36 previously unrepresented employees assigned to their units. All 77.1 other rights and duties of exclusive representatives begin on 77.2 July 1, 2001of the year in which the state assumes the funding 77.3 of court administration in the judicial district. 77.4 (b) Nothing in this act or Laws 1999, chapter 216, article 77.5 7, sections 3 to 15, prevents an exclusive representative 77.6 certified after the effectivedate of sections 3 to 15dates of 77.7 those provisions from assessing fair share or dues deductions 77.8 immediately upon certification for employees in a unit 77.9 established under section 179A.101 if the employees were 77.10 unrepresented for collective bargaining purposes before that 77.11 certification. 77.12 [EFFECTIVE DATE.] This section is effective July 1, 2003, 77.13 in the first and fourth districts; July 1, 2004, in the third 77.14 and sixth districts; and July 1, 2005, in the second and tenth 77.15 districts. 77.16 Sec. 4. Minnesota Statutes 2000, section 179A.103, 77.17 subdivision 1, is amended to read: 77.18 Subdivision 1. [CONTRACTS.] Contracts for the period 77.19 commencing July 1, 2000,of the year in which the state assumes 77.20 the cost of court administration in the judicial district for 77.21 the judicial district court employeesof judicial districts that77.22are under section 480.181, subdivision 1, paragraph (b),must be 77.23 negotiated with the state court administrator. Negotiations for 77.24 those contracts may begin any time after July 1, 1999of the 77.25 year before the state assumes the cost, and may be initiated by 77.26 either party notifying the other of the desire to begin the 77.27 negotiating process. Negotiations are subject to this chapter. 77.28 [EFFECTIVE DATE.] This section is effective July 1, 2003, 77.29 in the first and fourth districts; July 1, 2004, in the third 77.30 and sixth districts; and July 1, 2005, in the second and tenth 77.31 districts. 77.32 Sec. 5. [245.775] [REIMBURSEMENT OF COUNTY FOR CERTAIN 77.33 OUT-OF-HOME PLACEMENTS.] 77.34 (a) The commissioner shall reimburse a county for 30 77.35 percent of the nonfederal share of the cost of out-of-home 77.36 placement. For purposes of this section, "out-of-home 78.1 placement" means the placement of a child in a child caring 78.2 institution or shelter licensed under Minnesota Rules, parts 78.3 9545.0905 to 9545.1125, in a group home licensed under Minnesota 78.4 Rules, parts 9545.1400 to 9545.1500, in family foster care or 78.5 group family foster care licensed under Minnesota Rules, parts 78.6 9545.0010 to 9545.0260, or a correctional facility pursuant to a 78.7 court order when a county social services agency is assigned 78.8 financial responsibility for the placement. For purposes of 78.9 this section, "out-of-home placement" includes voluntary and 78.10 tribal court-ordered placement of an Indian child under sections 78.11 260.765 and 260.771. For purposes of this section, 78.12 "commissioner" means the commissioner of revenue. 78.13 (b) The manner for making the reimbursement for costs under 78.14 paragraph (a) to the county is as follows: 78.15 (1) beginning in July 2002, and annually thereafter, the 78.16 commissioner will forecast out-of-home placements for each 78.17 calendar year and make payments as follows: 78.18 (i) in July of each year, the commissioner will make a 78.19 payment to a county to cover 12 percent of the county's 78.20 anticipated nonfederal costs of out-of-home placements for that 78.21 calendar year; 78.22 (ii) in September of each year, the commissioner will make 78.23 an additional payment, if necessary, to a county so that this 78.24 payment and the payment in item (i) reflect 30 percent of the 78.25 actual expenditures by the county of the nonfederal costs of 78.26 out-of-home placements for that county for the period January 78.27 through June of that calendar year; 78.28 (iii) in December of each year, the commissioner will make 78.29 a payment to a county which, when added to the payments in items 78.30 (i) and (ii), reflects 27 percent of the county's anticipated 78.31 nonfederal costs of out-of-home placements for that calendar 78.32 year; and 78.33 (iv) in March of the calendar year following the payments 78.34 made in items (i) to (iii), the commissioner will settle up with 78.35 each county by making an additional payment to or recovering 78.36 money from the county as necessary to reconcile the net amount 79.1 of the payments received by the county under items (i) to (iii) 79.2 with the total reimbursement to be made to the county under 79.3 paragraph (c). 79.4 (c) The total reimbursement to the county under paragraph 79.5 (b) shall be the lesser of: 79.6 (1) 30 percent; or 79.7 (2) a lesser percentage, so that total payments under this 79.8 section and sections 260.765, subdivision 2a, and 260.771, 79.9 subdivision 4a, equal the maximum appropriation allowed under 79.10 section 245.776, 79.11 of the actual expenditures by the county of the nonfederal costs 79.12 of out-of-home placements for the calendar year. 79.13 [EFFECTIVE DATE.] This section is effective beginning with 79.14 out-of-home placement costs incurred in calendar year 2002. 79.15 Sec. 6. [245.776] [ANNUAL APPROPRIATION.] 79.16 A sum sufficient to discharge the duties imposed by 79.17 sections 245.775; 260.765, subdivision 2a; and 260.771, 79.18 subdivision 4a, is annually appropriated from the general fund 79.19 to the commissioner of human services. The payments under these 79.20 sections are limited to $49,400,000 in fiscal year 2003. The 79.21 payments under these sections in fiscal year 2004 and thereafter 79.22 are limited to an amount equal to: 79.23 (1) the maximum allowed appropriation under this section in 79.24 the previous calendar year, multiplied by 79.25 (2) one plus the percentage increase in the implicit price 79.26 deflator for government consumption expenditures and gross 79.27 investment for state and local governments prepared by the 79.28 Bureau of Economic Analysis of the United States Department of 79.29 Commerce for the 12-month period ending March 31 of the previous 79.30 year. 79.31 Sec. 7. Minnesota Statutes 2000, section 260.765, is 79.32 amended by adding a subdivision to read: 79.33 Subd. 2a. [REIMBURSEMENT FOR A PORTION OF COSTS.] When an 79.34 Indian child is voluntarily placed in foster care by a tribal 79.35 social services agency, the commissioner shall reimburse 30 79.36 percent of the nonfederal share of the costs of the placement. 80.1 The mechanism for reimbursement must be the same used for county 80.2 reimbursement of out-of-home placement costs under section 80.3 245.775. 80.4 [EFFECTIVE DATE.] This section is effective beginning with 80.5 foster care costs incurred after January 1, 2002. 80.6 Sec. 8. Minnesota Statutes 2000, section 260.771, is 80.7 amended by adding a subdivision to read: 80.8 Subd. 4a. [REIMBURSEMENT FOR A PORTION OF COSTS.] When an 80.9 Indian child is placed by a tribal social services agency 80.10 according to tribal court order, the commissioner shall 80.11 reimburse 30 percent of the nonfederal share of the costs of the 80.12 placement. The mechanism for reimbursement must be the same 80.13 used for county reimbursement of out-of-home placement costs 80.14 under section 245.775. 80.15 [EFFECTIVE DATE.] This section is effective beginning with 80.16 out-of-home placement costs incurred after January 1, 2002. 80.17 Sec. 9. Minnesota Statutes 2000, section 273.1398, 80.18 subdivision 4a, is amended to read: 80.19 Subd. 4a. [AID OFFSET FOR COURT COSTS.] (a) By July 15,80.201999of the year preceding the year in which the state assumes 80.21 the cost of court administration in the judicial district as 80.22 specified under section 480.183, the supreme court shall 80.23 determine and certify to the commissioner of revenue for each 80.24 county, other than counties located in the eighth judicial80.25district,the county's share of the costs assumed in the 80.26 judicial districts specified underLaws 1999, chapter 216,80.27article 7,section 480.183, subdivision 1, during the succeeding 80.28 fiscal yearbeginning July 1, 2000,. 80.29 (b) The amount certified in paragraph (a) shall be equal to 80.30 the following: 80.31 (i) 103 percent of the required court administration 80.32 expenditures as defined under section 480.183, subdivision 3, 80.33 for calendar year 2003, as determined under subdivision 4b, 80.34 paragraph (a); plus 80.35 (ii) the required mandated court services expenditures as 80.36 defined under section 480.183, subdivision 4, for the calendar 81.1 year in which the court transfer will occur, as determined under 81.2 subdivision 4b, paragraph (b); plus 81.3 (iii) an adjustment for any cumulative percentage increase 81.4 in salary expenditures as defined under section 480.183, 81.5 subdivision 2, in excess of the maintenance of effort percentage 81.6 for the county, as determined under subdivision 4b, paragraph 81.7 (d); less 81.8 (iv) an amount equal to the county's share of transferred 81.9 fines collected by the district courts in the county during the 81.10 calendar year19982003. 81.11 The court and the county may, if both parties agree, 81.12 negotiate and certify an amount higher than the amount 81.13 calculated under this paragraph. 81.14 (c) For purposes of this subdivision, the adjustment in 81.15 paragraph (b), clause (iii), shall be equal to: 81.16 (1) the sum of the court administration expenditures as 81.17 defined under section 480.183, subdivision 3, required under 81.18 subdivision 4b, paragraph (a), plus the temporary aid payment 81.19 under subdivision 4c; multiplied by 81.20 (2) the difference between (i) the cumulative percentage 81.21 increase in actual and anticipated salary settlements for court 81.22 employees from July 1, 2001, until the date of the court 81.23 transfer and (ii) the maintenance of effort percent of the 81.24 county for the year in which the court transfer occurs, as 81.25 determined under subdivision 4b, paragraph (d). 81.26(b)(d) Payments to a county under subdivision 2 or section 81.27 273.166 for the calendar year2000in which the state assumes 81.28 the cost of court administration and mandated services as 81.29 defined under section 480.183, subdivisions 4 and 5, in the 81.30 judicial district must be permanently reduced by an amount equal 81.31 to 75 percent of the net cost to the state for assumption of 81.32 district court costs as certified in paragraph (a). 81.33(c)(e) Payments to a county under subdivision 2 or section 81.34 273.166 for the calendar year2001after the calendar year in 81.35 which the state assumes the cost of court administration and 81.36 mandated services as defined under section 480.183, subdivisions 82.1 4 and 5, in the judicial district must be permanently reduced by 82.2 an amount equal to 25 percent of the net cost to the state for 82.3 assumption of district court costs as certified in paragraph (a). 82.4(d)(f) Payments to a county under subdivision 2 for 82.5 calendar year 2001 are permanently increased by an amount equal 82.6 to 7.5 percent of the county's share of transferred fines 82.7 collected by the district courts in the county during calendar 82.8 year 1998, as determined under paragraph (a). If the amount 82.9 determined in paragraph (a) exceeds the amount of aid a county 82.10 is scheduled to be paid under subdivision 2 in 2000, then the 82.11 county shall not receive an aid increase under this paragraph. 82.12 [EFFECTIVE DATE.] This section is effective the day 82.13 following final enactment. 82.14 Sec. 10. Minnesota Statutes 2000, section 273.1398, is 82.15 amended by adding a subdivision to read: 82.16 Subd. 4b. [COURT EXPENDITURES; MAINTENANCE OF EFFORT.] (a) 82.17 Until the costs of court administration as defined under section 82.18 480.183, subdivision 3, in a county have been transferred to the 82.19 state, each county in a judicial district transferring court 82.20 administration costs to state funding after July 1, 2001, shall 82.21 budget for the funding of these costs an amount at least equal 82.22 to the certified budget amount for calendar year 2001 multiplied 82.23 by the maintenance of effort percent for each year from 2001 to 82.24 2003. The county shall budget, fund, and authorize expenditures 82.25 not less than the amount calculated under this paragraph plus 82.26 the temporary aid amount under subdivision 4c for maintenance of 82.27 effort of administrative costs. 82.28 (b) Until the costs of mandated court services as defined 82.29 under section 480.183, subdivision 4, in a county have been 82.30 transferred to the state, each county in a judicial district 82.31 transferring the costs of mandated court services to state 82.32 funding after July 1, 2001, shall budget for the funding of 82.33 these costs an amount at least equal to the certified budgeted 82.34 amount for calendar year 2001 multiplied by the maintenance of 82.35 effort percent from 2001 to the year of the transfer. The 82.36 county shall budget, fund, and authorize expenditures not less 83.1 than the amount calculated under this paragraph for maintenance 83.2 of effort of mandated services. 83.3 (c) By July 1, 2001, the court shall certify to each county 83.4 in the judicial district its cost of court administration and 83.5 its cost of mandated services as defined under section 480.183, 83.6 subdivisions 3 and 4, based on 2001 budgets. In making that 83.7 determination, the court shall exclude the budget costs of the 83.8 county for the following categories: 83.9 (1) rent; 83.10 (2) examiner of titles; 83.11 (3) civil court appointed attorneys for civil matters; and 83.12 (4) hospitalization costs. 83.13 (d) For purposes of this subdivision, a county's 83.14 "maintenance of effort percent" is equal to one plus the average 83.15 annual percent increase in court operating expenditures for all 83.16 counties in that judicial district for the period from 1996 to 83.17 1999, as reported in the annual state auditor reports on 83.18 revenues, expenditures, and debt for Minnesota counties, raised 83.19 to a power equal to the difference between the budget year and 83.20 2001. The annual percentage under this paragraph must be 83.21 rounded to the nearest one-tenth of one percent. 83.22 [EFFECTIVE DATE.] This section is effective the day 83.23 following final enactment. 83.24 Sec. 11. Minnesota Statutes 2000, section 273.1398, is 83.25 amended by adding a subdivision to read: 83.26 Subd. 4c. [TEMPORARY AID; COURT ADMINISTRATION COSTS.] For 83.27 calendar years 2004 and 2005, each county in a judicial district 83.28 that has not been transferred to the state by January 1 of that 83.29 year shall receive additional homestead and agricultural credit 83.30 aid. This amount is in addition to the amount calculated under 83.31 subdivision 2 and must not be included in the definition of 83.32 homestead and agricultural credit base under subdivision 1, 83.33 paragraph (j). The amount of additional aid is equal to the 83.34 difference between (1) the amount budgeted for court 83.35 administration costs in 2001 as determined under subdivision 4b, 83.36 paragraph (c), multiplied by the maintenance of effort percent 84.1 for the calendar year as determined under subdivision 4b, 84.2 paragraph (d), and (2) the amount calculated under subdivision 84.3 4b, paragraph (a), for calendar year 2003. This additional aid 84.4 must be used only to fund court administration expenditures as 84.5 defined in section 480.183, subdivision 3. This amount must be 84.6 added to the state court's base budget in the year when the 84.7 court in that judicial district in which the county is located 84.8 is transferred to the state. 84.9 [EFFECTIVE DATE.] This section is effective the day 84.10 following final enactment. 84.11 Sec. 12. Minnesota Statutes 2000, section 273.1398, is 84.12 amended by adding a subdivision to read: 84.13 Subd. 4d. [JUDICIAL DISTRICT MANDATED COURT SERVICES 84.14 AID.] (a) Mandated court services aid as provided in section 84.15 477A.0121, subdivision 4a, must be used to assist judicial 84.16 districts in the transition from the property tax funding to the 84.17 state funding of mandated court services as defined in section 84.18 480.183, subdivision 3, for the remaining judicial districts. 84.19 (b) The mandated court services aid shall be provided only 84.20 for aids payable in calendar years 2001 to 2004 to the court for 84.21 those judicial districts that have not been transferred to the 84.22 state by January 1 of those calendar years. The mandated court 84.23 services aid will be as follows: 84.24 (1) for the first judicial district, $372,757 for fiscal 84.25 year 2002 and $590,970 for fiscal year 2003; 84.26 (2) for the fourth judicial district, $674,264 for fiscal 84.27 year 2002 and $1,068,975 for fiscal year 2003; 84.28 (3) for the third judicial district, $473,562 for fiscal 84.29 year 2002 and $750,785 in each year for fiscal years 2003 and 84.30 2004; 84.31 (4) for the sixth judicial district, $121,287 for fiscal 84.32 year 2002 and $192,288 in each year for fiscal years 2003 and 84.33 2004; 84.34 (5) for the second judicial district, $277,237 for fiscal 84.35 year 2002 and $439,530 in each year for fiscal years 2003 to 84.36 2005; and 85.1 (6) for the tenth judicial district, $422,891 for fiscal 85.2 year 2002 and $670,453 in each year for fiscal years 2003 to 85.3 2005. 85.4 (c) The mandated court services aid as contained in 85.5 paragraph (b) must be added to the state court's base budget for 85.6 subsequent fiscal years. 85.7 [EFFECTIVE DATE.] This section is effective the day 85.8 following final enactment. 85.9 Sec. 13. Minnesota Statutes 2000, section 273.1398, is 85.10 amended by adding a subdivision to read: 85.11 Subd. 4e. [JUDICIAL DISTRICT STATE TAKEOVER TRANSITION 85.12 AID.] (a) Judicial district state takeover transition aid as 85.13 provided in section 477A.0121, subdivision 4a, must be used to 85.14 assist in the transition from the property tax funding to the 85.15 state funding of district court administration costs for the 85.16 remaining judicial districts. This aid is temporary and is 85.17 intended to finance those costs for accounting and human 85.18 resources which are necessary for the state court to expend to 85.19 prepare for the transfer of districts to the state. 85.20 (b) The transition aid must be provided only for the two 85.21 years prior to the scheduled state takeover under section 85.22 480.183, subdivision 1. The transition aid will be as follows: 85.23 (1) $152,000 for fiscal year 2002; 85.24 (2) $442,000 for fiscal year 2003; 85.25 (3) $428,000 for fiscal year 2004; and 85.26 (4) $276,000 for fiscal year 2005. 85.27 (c) The transition aid in paragraph (b) must not be added 85.28 to the state court's base budget for any subsequent fiscal years. 85.29 [EFFECTIVE DATE.] This section is effective the day 85.30 following final enactment. 85.31 Sec. 14. Minnesota Statutes 2000, section 273.1398, is 85.32 amended by adding a subdivision to read: 85.33 Subd. 4f. [AID OFFSET FOR OUT-OF-HOME PLACEMENT 85.34 COSTS.] For aid payable in 2002, each county's aid under 85.35 subdivision 2 must be permanently reduced by an amount equal to 85.36 30 percent of the county's estimated 2002 nonfederal 86.1 expenditures for out-of-home placements, as defined in section 86.2 245.775. The counties shall provide all information requested 86.3 by the commissioner of human services necessary to allow the 86.4 commissioner to estimate and certify these nonfederal costs to 86.5 the commissioner of revenue by September 1, 2001. The aid 86.6 reduction under this subdivision must be made prior to any aid 86.7 reductions for the state takeover of courts contained in this 86.8 article. 86.9 [EFFECTIVE DATE.] This section is effective the day after 86.10 final enactment, for aids payable beginning in 2002. 86.11 Sec. 15. Minnesota Statutes 2000, section 299D.03, 86.12 subdivision 5, is amended to read: 86.13 Subd. 5. [FINES AND FORFEITED BAIL MONEY.] (a) All fines 86.14 and forfeited bail money, from traffic and motor vehicle law 86.15 violations, collected from persons apprehended or arrested by 86.16 officers of the state patrol, shall be paid by the person or 86.17 officer collecting the fines, forfeited bail money or 86.18 installments thereof, on or before the tenth day after the last 86.19 day of the month in which these moneys were collected, to the 86.20 county treasurer of the county where the violation occurred. 86.21 Three-eighths of these receipts shall be credited to the general 86.22 revenue fund of the county, except that in a county in a 86.23 judicial district under section 480.181, subdivision 1, 86.24 paragraph (b),as added in Laws 1999, chapter 216, article 7,86.25section 26,this three-eighths share must be transmitted to the 86.26 state treasurer for deposit in the state treasury and credited 86.27 to the general fund. The other five-eighths of these receipts 86.28 shall be transmitted by that officer to the state treasurer 86.29 andshall be credited as follows:86.30(1) In the fiscal year ending June 30, 1991, the first86.31$275,000 in money received by the state treasurer after June 4,86.321991, must be credited to the transportation services fund, and86.33the remainder in the fiscal year credited to the trunk highway86.34fund.86.35(2) In fiscal year 1992, the first $215,000 in money86.36received by the state treasurer in the fiscal year must be87.1credited to the transportation services fund, and the remainder87.2credited to the trunk highway fund.87.3(3) In fiscal year 1993 and subsequent years, the entire87.4amount received by the state treasurermust be credited to the 87.5 trunk highway fund. If, however, the violation occurs within a 87.6 municipality and the city attorney prosecutes the offense, and a 87.7 plea of not guilty is entered, one-third of the receipts shall 87.8 be credited to the general revenue fund of the county, one-third 87.9 of the receipts shall be paid to the municipality prosecuting 87.10 the offense, and one-third shall be transmitted to the state 87.11 treasurer as provided in this subdivision. All costs of 87.12 participation in a nationwide police communication system 87.13 chargeable to the state of Minnesota shall be paid from 87.14 appropriations for that purpose. 87.15 (b) Notwithstanding any other provisions of law, all fines 87.16 and forfeited bail money from violations of statutes governing 87.17 the maximum weight of motor vehicles, collected from persons 87.18 apprehended or arrested by employees of the state of Minnesota, 87.19 by means of stationary or portable scales operated by these 87.20 employees, shall be paid by the person or officer collecting the 87.21 fines or forfeited bail money, on or before the tenth day after 87.22 the last day of the month in which the collections were made, to 87.23 the county treasurer of the county where the violation 87.24 occurred. Five-eighths of these receipts shall be transmitted 87.25 by that officer to the state treasurer and shall be credited to 87.26 the highway user tax distribution fund. Three-eighths of these 87.27 receipts shall be credited to the general revenue fund of the 87.28 county, except that in a county in a judicial district under 87.29 section 480.181, subdivision 1, paragraph (b),as added in Laws87.301999, chapter 216, article 7, section 26,this three-eighths 87.31 share must be transmitted to the state treasurer for deposit in 87.32 the state treasury and credited to the general fund. 87.33 [EFFECTIVE DATE.] This section is effective July 1, 2003, 87.34 in the first and fourth districts; July 1, 2004, in the third 87.35 and sixth districts; and July 1, 2005, in the second and tenth 87.36 districts. 88.1 Sec. 16. Minnesota Statutes 2000, section 357.021, 88.2 subdivision 1a, is amended to read: 88.3 Subd. 1a. [TRANSMITTAL OF FEES TO STATE TREASURER.] (a) 88.4 Every person, including the state of Minnesota and all bodies 88.5 politic and corporate, who shall transact any business in the 88.6 district court, shall pay to the court administrator of said 88.7 court the sundry fees prescribed in subdivision 2. Except as 88.8 provided in paragraph (d), the court administrator shall 88.9 transmit the fees monthly to the state treasurer for deposit in 88.10 the state treasury and credit to the general fund. 88.11 (b) In a county which has a screener-collector position, 88.12 fees paid by a county pursuant to this subdivision shall be 88.13 transmitted monthly to the county treasurer, who shall apply the 88.14 fees first to reimburse the county for the amount of the salary 88.15 paid for the screener-collector position. The balance of the 88.16 fees collected shall then be forwarded to the state treasurer 88.17 for deposit in the state treasury and credited to the general 88.18 fund. In a county in a judicial district under section 480.181, 88.19 subdivision 1, paragraph (b),as added in Laws 1999, chapter88.20216, article 7, section 26,which has a screener-collector 88.21 position, the fees paid by a county shall be transmitted monthly 88.22 to the state treasurer for deposit in the state treasury and 88.23 credited to the general fund. A screener-collector position for 88.24 purposes of this paragraph is an employee whose function is to 88.25 increase the collection of fines and to review the incomes of 88.26 potential clients of the public defender, in order to verify 88.27 eligibility for that service. 88.28 (c) No fee is required under this section from the public 88.29 authority or the party the public authority represents in an 88.30 action for: 88.31 (1) child support enforcement or modification, medical 88.32 assistance enforcement, or establishment of parentage in the 88.33 district court, or in a proceeding under section 484.702; 88.34 (2) civil commitment under chapter 253B; 88.35 (3) the appointment of a public conservator or public 88.36 guardian or any other action under chapters 252A and 525; 89.1 (4) wrongfully obtaining public assistance under section 89.2 256.98 or 256D.07, or recovery of overpayments of public 89.3 assistance; 89.4 (5) court relief under chapter 260; 89.5 (6) forfeiture of property under sections 169A.63 and 89.6 609.531 to 609.5317; 89.7 (7) recovery of amounts issued by political subdivisions or 89.8 public institutions under sections 246.52, 252.27, 256.045, 89.9 256.25, 256.87, 256B.042, 256B.14, 256B.15, 256B.37, 260B.331, 89.10 and 260C.331, or other sections referring to other forms of 89.11 public assistance; 89.12 (8) restitution under section 611A.04; or 89.13 (9) actions seeking monetary relief in favor of the state 89.14 pursuant to section 16D.14, subdivision 5. 89.15 (d) The fees collected for child support modifications 89.16 under subdivision 2, clause (13), must be transmitted to the 89.17 county treasurer for deposit in the county general fund. The 89.18 fees must be used by the county to pay for child support 89.19 enforcement efforts by county attorneys. 89.20 [EFFECTIVE DATE.] This section is effective July 1, 2003, 89.21 in the first and fourth districts; July 1, 2004, in the third 89.22 and sixth districts; and July 1, 2005, in the second and tenth 89.23 districts. 89.24 Sec. 17. Minnesota Statutes 2000, section 477A.0121, is 89.25 amended by adding a subdivision to read: 89.26 Subd. 4a. [COURT TAKEOVER; MANDATED SERVICES AND 89.27 TRANSITION COSTS.] For calendar years 2001 to 2004, an amount 89.28 equal to the sum of the additional aid in section 477A.03, 89.29 subdivision 6, shall be retained by the commissioner of revenue 89.30 and transferred to the state court system to fund the mandated 89.31 court services aid in section 273.1398, subdivision 4d, and the 89.32 judicial district state takeover transition aid in section 89.33 273.1398, subdivision 4e. 89.34 [EFFECTIVE DATE.] This section is effective for aids 89.35 payable in calendar years 2001 to 2004. 89.36 Sec. 18. Minnesota Statutes 2000, section 477A.0122, is 90.1 amended by adding a subdivision to read: 90.2 Subd. 4a. [REDUCTIONS FOR INSUFFICIENT HOMESTEAD AND 90.3 AGRICULTURAL CREDIT AID.] If the reductions to a county's aid 90.4 under section 273.1398, subdivisions 4a and 4f, exceed the 90.5 amount of homestead and agricultural credit aid payable to the 90.6 county under section 273.1398, subdivision 2, for the year of 90.7 the reduction, the county's aid under subdivision 4 must be 90.8 permanently reduced by the excess reduction amount in the year 90.9 of the reduction. The aid a county receives under this section 90.10 may not be less than zero. 90.11 [EFFECTIVE DATE.] This section is effective for aids 90.12 payable in 2002 and thereafter. 90.13 Sec. 19. Minnesota Statutes 2000, section 477A.03, 90.14 subdivision 2, is amended to read: 90.15 Subd. 2. [ANNUAL APPROPRIATION.] (a) A sum sufficient to 90.16 discharge the duties imposed by sections 477A.011 to 477A.014 is 90.17 annually appropriated from the general fund to the commissioner 90.18 of revenue. 90.19 (b) Aid payments to counties under section 477A.0121 are 90.20 limited to $20,265,000 in 1996. Aid payments to counties under 90.21 section 477A.0121 are limited to $27,571,625 in 1997. For aid 90.22 payable in 1998 and thereafter, the total aids paid under 90.23 section 477A.0121 are the amounts certified to be paid in the 90.24 previous year, adjusted for inflation as provided under 90.25 subdivision 3. The additional amount authorized under 90.26 subdivision 6 is not included when calculating the appropriation 90.27 limits under this paragraph. 90.28 (c)(i) For aids payable in19982002 and thereafter, the 90.29 total aids paid to counties under section 477A.0122 are the 90.30 amounts certified to be paid in the previous year, adjusted for 90.31 inflation as provided under subdivision 3, and less any 90.32 reduction required under section 477A.0122, subdivision 4a, in 90.33 the current year. 90.34 (ii) Aid payments to counties under section 477A.0122 in 90.35 2000 are further increased by an additional $20,000,000 in 2000. 90.36 (d) Aid payments to cities in 1999 under section 477A.013, 91.1 subdivision 9, are limited to $380,565,489. For aids payable in 91.2 2000, the total aids paid under section 477A.013, subdivision 9, 91.3 are the amounts certified to be paid in the previous year, 91.4 adjusted for inflation as provided in subdivision 3, and 91.5 increased by the amount necessary to effectuate Laws 1999, 91.6 chapter 243, article 5, section 48, paragraph (b). For aids 91.7 payable in 2001 through 2003, the total aids paid under section 91.8 477A.013, subdivision 9, are the amounts certified to be paid in 91.9 the previous year, adjusted for inflation as provided under 91.10 subdivision 3. For aids payable in 2004, the total aids paid 91.11 under section 477A.013, subdivision 9, are the amounts certified 91.12 to be paid in the previous year, adjusted for inflation as 91.13 provided under subdivision 3, and increased by the amount 91.14 certified to be paid in 2003 under section 477A.06. For aids 91.15 payable in 2005 and thereafter, the total aids paid under 91.16 section 477A.013, subdivision 9, are the amounts certified to be 91.17 paid in the previous year, adjusted for inflation as provided 91.18 under subdivision 3. The additional amount authorized under 91.19 subdivision 4 is not included when calculating the appropriation 91.20 limits under this paragraph. 91.21 [EFFECTIVE DATE.] Paragraph (b) is effective for aids 91.22 payable in calendar years 2001 to 2004. Paragraph (c) is 91.23 effective for aids payable in 2002 and thereafter. 91.24 Sec. 20. Minnesota Statutes 2000, section 477A.03, is 91.25 amended by adding a subdivision to read: 91.26 Subd. 6. [ADDITIONAL MONEY FOR COUNTY CRIMINAL JUSTICE 91.27 AID.] For the calendar years 2001 to 2004, the limit on the 91.28 appropriation for aids paid under section 477A.0121, as 91.29 determined in subdivision 2, paragraph (b), is increased by: 91.30 (1) $2,494,000 in calendar year 2001; 91.31 (2) $4,155,000 in calendar year 2002; 91.32 (3) $2,481,000 in calendar year 2003; and 91.33 (4) $1,386,000 in calendar year 2004. 91.34 [EFFECTIVE DATE.] This section is effective for aids 91.35 payable in calendar years 2001 to 2004. 91.36 Sec. 21. Minnesota Statutes 2000, section 480.181, 92.1 subdivision 1, is amended to read: 92.2 Subdivision 1. [STATE EMPLOYEES; COMPENSATION.] (a) 92.3 District court referees, judicial officers, court reporters, law 92.4 clerks, district administration staff, other than district 92.5 administration staff in the second and fourth judicial 92.6 districts, guardian ad litem program coordinators and staff, and 92.7 other court employees under paragraph (b), are state employees 92.8 and are governed by the judicial branch personnel rules adopted 92.9 by the supreme court. The supreme court, in consultation with 92.10 the conference of chief judges, shall establish the salary range 92.11 of these employees under the judicial branch personnel rules. 92.12 In establishing the salary ranges, the supreme court shall 92.13 consider differences in the cost of living in different areas of 92.14 the state. 92.15 (b) The court administrator and employees of the court 92.16 administrator who are in the fifth, seventh, eighth, or ninth 92.17 judicial district are state employees. The court administrator 92.18 and employees of the court administrator in the remaining 92.19 judicial districts become state employees as follows: 92.20 (1) effective July 1, 2003, for the first and fourth 92.21 judicial districts; 92.22 (2) effective July 1, 2004, for the third and sixth 92.23 judicial districts; and 92.24 (3) effective July 1, 2005, for the second and tenth 92.25 judicial districts. 92.26 Sec. 22. [480.1811] [POST-RETIREMENT BENEFIT COSTS.] 92.27 Where court administration, guardian ad litem, or 92.28 interpreter employees elect to retain county insurance benefits 92.29 under section 480.181 after July 1, 2001, and the county 92.30 provides those employees post-retirement insurance benefits 92.31 prior to July 1, 2001, the county shall pay the post-retirement 92.32 cost of those benefits. 92.33 [EFFECTIVE DATE.] This section is effective the day 92.34 following final enactment. 92.35 Sec. 23. [480.183] [JUDICIAL DISTRICTS; SCHEDULED DATES OF 92.36 STATE TRANSFER; DEFINITION OF SERVICES.] 93.1 Subdivision 1. [DATE OF STATE TRANSFER.] The mandated 93.2 court services and court administration expenditures as defined 93.3 in this section for the remaining judicial districts shall be 93.4 transferred to the state according to the following schedule: 93.5 (1) effective July 1, 2003, the first and fourth judicial 93.6 districts; 93.7 (2) effective July 1, 2004, the third and sixth judicial 93.8 districts; and 93.9 (3) effective July 1, 2005, the second and tenth judicial 93.10 districts. 93.11 Subd. 2. [DEFINITION; SALARY EXPENDITURES.] "Salary 93.12 expenditures" means the salary of court administration 93.13 employees, including salaries, related fringe benefits, and 93.14 insurance, granted to court and other county employees in 93.15 collective bargaining or county pay plans. 93.16 Subd. 3. [DEFINITION; COURT ADMINISTRATION 93.17 EXPENDITURES.] "Court administration expenditures" means the 93.18 total expenditures of (1) salary expenditures as defined under 93.19 subdivision 2 and (2) other related administrative operating 93.20 expenditures. 93.21 Subd. 4. [DEFINITION; MANDATED COURT SERVICES.] "Mandated 93.22 court services" means services for: 93.23 (1) guardian ad litem; 93.24 (2) interpreter; 93.25 (3) Minnesota Rules, parts 9525.0900 to 9525.1020 (rule 93.26 20); 93.27 (4) civil commitment examination, not including 93.28 hospitalization or treatment costs, for mental commitments and 93.29 related proceedings under chapter 253B; and 93.30 (5) in forma pauperis costs. 93.31 [EFFECTIVE DATE.] This section is effective the day 93.32 following final enactment. 93.33 Sec. 24. [484.77] [FACILITIES.] 93.34 The county board in each county shall provide suitable 93.35 facilities for court purposes at the county seat, or at other 93.36 locations agreed upon by the district court and the county. The 94.1 county shall also be responsible for the costs of renting, 94.2 maintaining, operating, remodeling, insuring, and renovating 94.3 those facilities occupied by the court. 94.4 [EFFECTIVE DATE.] This section is effective the day 94.5 following final enactment. 94.6 Sec. 25. Minnesota Statutes 2000, section 487.33, 94.7 subdivision 5, is amended to read: 94.8 Subd. 5. [ALLOCATION.] The court administrator shall 94.9 provide the county treasurer with the name of the municipality 94.10 or other subdivision of government where the offense was 94.11 committed which employed or provided by contract the arresting 94.12 or apprehending officer and the name of the municipality or 94.13 other subdivision of government which employed the prosecuting 94.14 attorney or otherwise provided for prosecution of the offense 94.15 for each fine or penalty and the total amount of fines or 94.16 penalties collected for each municipality or other subdivision 94.17 of government. On or before the last day of each month, the 94.18 county treasurer shall pay over to the treasurer of each 94.19 municipality or subdivision of government within the county all 94.20 fines or penalties for parking violations for which complaints 94.21 and warrants have not been issued and one-third of all fines or 94.22 penalties collected during the previous month for offenses 94.23 committed within the municipality or subdivision of government 94.24 from persons arrested or issued citations by officers employed 94.25 by the municipality or subdivision or provided by the 94.26 municipality or subdivision by contract. An additional 94.27 one-third of all fines or penalties shall be paid to the 94.28 municipality or subdivision of government providing prosecution 94.29 of offenses of the type for which the fine or penalty is 94.30 collected occurring within the municipality or subdivision, 94.31 imposed for violations of state statute or of an ordinance, 94.32 charter provision, rule or regulation of a city whether or not a 94.33 guilty plea is entered or bail is forfeited. Except as provided 94.34 in section 299D.03, subdivision 5, or as otherwise provided by 94.35 law, all other fines and forfeitures and all fees and statutory 94.36 court costs collected by the court administrator shall be paid 95.1 to the county treasurer of the county in which the funds were 95.2 collected who shall dispense them as provided by law. In a 95.3 county in a judicial district under section 480.181, subdivision 95.4 1, paragraph (b),as added in Laws 1999, chapter 216, article 7,95.5section 26,all other fines, forfeitures, fees, and statutory 95.6 court costs must be paid to the state treasurer for deposit in 95.7 the state treasury and credited to the general fund. 95.8 [EFFECTIVE DATE.] This section is effective July 1, 2003, 95.9 in the first and fourth districts; July 1, 2004, in the third 95.10 and sixth districts; and July 1, 2005, in the second and tenth 95.11 districts. 95.12 Sec. 26. Minnesota Statutes 2000, section 574.34, 95.13 subdivision 1, is amended to read: 95.14 Subdivision 1. [GENERAL.] Fines and forfeitures not 95.15 specially granted or appropriated by law shall be paid into the 95.16 treasury of the county where they are incurred, except in a 95.17 county in a judicial district under section 480.181, subdivision 95.18 1, paragraph (b), as added in Laws 1999, chapter 216, article 7, 95.19 section 26, or section 480.181, subdivision 1, the fines and 95.20 forfeitures must be deposited in the state treasury and credited 95.21 to the general fund. 95.22 [EFFECTIVE DATE.] This section is effective July 1, 2003, 95.23 in the first and fourth districts; July 1, 2004, in the third 95.24 and sixth districts; and July 1, 2005, in the second and tenth 95.25 districts. 95.26 Sec. 27. Laws 1999, chapter 216, article 7, section 46, 95.27 subdivision 3, is amended to read: 95.28 Subd. 3. [MISCELLANEOUS COST.] The provisions of sections 95.29 1, 2, and 18 to 45, relating to the state takeover of court 95.30 interpreter costs, guardian ad litem costs, rule 20 and mental 95.31 commitment examination costs, and in forma pauperis costs are 95.32 effective January 1, 2000, in the eighth judicial district; July 95.33 1, 2000, in the fifth, seventh, and ninth judicial districts; 95.34 andJuly 1, 2001,on the date court administration expenditures 95.35 and costs of mandated court services as defined under Minnesota 95.36 Statutes, section 480.183, subdivisions 4 and 5, are transferred 96.1 to the state under Minnesota Statutes, section 480.183, 96.2 subdivision 1, in the remaining judicial districts. 96.3 [EFFECTIVE DATE.] This section is effective the day 96.4 following final enactment. 96.5 Sec. 28. [TRANSITIONAL PROVISIONS.] 96.6 Subdivision 1. [TRANSFER OF PROPERTY.] The title to 96.7 personal property that is used by employees being transferred to 96.8 state employment under this article in the scope of their 96.9 employment is transferred to the state when they become state 96.10 employees. 96.11 Subd. 2. [RULES.] The supreme court, in consultation with 96.12 the conference of chief judges, may adopt rules to implement 96.13 this article. 96.14 Subd. 3. [BUDGETS.] Notwithstanding any law to the 96.15 contrary, the fiscal year budgets for the year in which the 96.16 state assumes the cost of court administration in the judicial 96.17 district for the court administrators' offices being transferred 96.18 to state employment under this article, including the number of 96.19 complement positions and salaries, must be submitted by the 96.20 court administrators to the supreme court. The budgets must 96.21 include the current levels of funding and positions at the time 96.22 of submission as well as any requests for increases in funding 96.23 and positions. 96.24 [EFFECTIVE DATE.] This section is effective July 1, 2003, 96.25 in the first and fourth districts; July 1, 2004, in the third 96.26 and sixth districts; and July 1, 2005, in the second and tenth 96.27 districts. 96.28 Sec. 29. [APPROPRIATION.] 96.29 The supreme court general fund appropriation base is 96.30 increased by $48,040,000 in fiscal year 2004 and by an 96.31 additional $19,452,000 in fiscal year 2005. In fiscal years 96.32 2006 and 2007 the supreme court may request additional base 96.33 adjustments to reflect the transfer of the remaining judicial 96.34 districts. 96.35 ARTICLE 4 96.36 LEVY LIMITS 97.1 Section 1. Minnesota Statutes 2000, section 275.16, is 97.2 amended to read: 97.3 275.16 [COUNTY AUDITOR TO FIX AMOUNT OF LEVY.] 97.4 If any such municipality shall return to the county auditor 97.5 a levy greater than permitted by chapters 123A, 123B, 126C, 97.6 136C, and 136Dand, sections 275.124 to 275.16, and 275.70 to 97.7 275.74, such county auditor shall extend only such amount of 97.8 taxes as the limitations herein prescribed will permit; 97.9 provided, if such levy shall include any levy for the payment of 97.10 bonded indebtedness or judgments, such levies for bonded 97.11 indebtedness or judgments shall be extended in full, and the 97.12 remainder of the levies shall be reduced so that the total 97.13 thereof, including levies for bonds and judgments, shall not 97.14 exceed such amount as the limitations herein prescribed will 97.15 permit. 97.16 Sec. 2. Minnesota Statutes 2000, section 275.62, 97.17 subdivision 1, is amended to read: 97.18 Subdivision 1. [REPORT ON TAXES LEVIED.] The commissioner 97.19 of revenue shall establish procedures for the annual reporting 97.20 of local government levies. Each local governmental unit shall 97.21 submit a report to the commissioner by December 30 of the year 97.22 in which the tax is levied. A local governmental unit is 97.23 required to file this report only for levy years in which it is 97.24 not subject to levy limits under sections 275.70 to 275.74. The 97.25 report shall include, but is not limited to, information on the 97.26 amount of the tax levied by the governmental unit for the 97.27 following purposes: 97.28 (1)debt, which includes taxes levied for the purposes97.29defined in Minnesota Statutes 1991 Supplement, section 275.50,97.30subdivision 5, clauses (b), (c), (d), and (e);97.31(2) social services and related programs, which include97.32taxes levied for the purposes defined in Minnesota Statutes 199197.33Supplement, section 275.50, subdivision 5, clauses (a), (j), and97.34(v);97.35(3) libraries, which include taxes levied for the purposes97.36defined in Minnesota Statutes 1991 Supplement, section 275.50,98.1subdivision 5, clause (n);98.2(4) for counties only, the amount of levy needed to fund98.3increased county costs associated with the welfare reform under98.4Laws 1997, chapter 85, including increased administration and98.5program costs of the income maintenance programs and also98.6related support services as they relate directly to the welfare98.7reformthe amounts levied for each of the purposes listed in 98.8 section 275.70, subdivision 5; and 98.9(5)(2) other levies, which include the taxes levied for 98.10 all purposes not included in clause (1), (2), (3), or (4). 98.11 Sec. 3. Minnesota Statutes 2000, section 275.70, is 98.12 amended by adding a subdivision to read: 98.13 Subdivision 1. [APPLICATION.] For the purposes of sections 98.14 275.70 to 275.74, the following terms have the meanings given 98.15 them, unless provided otherwise. 98.16 Sec. 4. Minnesota Statutes 2000, section 275.70, is 98.17 amended by adding a subdivision to read: 98.18 Subd. 2. [IMPLICIT PRICE DEFLATOR.] "Implicit price 98.19 deflator" means the implicit price deflator for government 98.20 consumption expenditures and gross investment for state and 98.21 local governments prepared by the bureau of economic analysis of 98.22 the United States Department of Commerce for the 12-month period 98.23 ending March 31 of the levy year. 98.24 Sec. 5. Minnesota Statutes 2000, section 275.70, is 98.25 amended by adding a subdivision to read: 98.26 Subd. 3. [LOCAL GOVERNMENTAL UNIT.] "Local governmental 98.27 unit" means a county, or a statutory or home rule charter city 98.28 with a population greater than 2,500. 98.29 Sec. 6. Minnesota Statutes 2000, section 275.70, is 98.30 amended by adding a subdivision to read: 98.31 Subd. 4. [POPULATION; NUMBER OF HOUSEHOLDS.] "Population" 98.32 or "number of households" means the population or number of 98.33 households for the local governmental unit as established by the 98.34 last federal census, by a census taken under section 275.14, or 98.35 by an estimate made by the metropolitan council or by the state 98.36 demographer under section 4A.02, whichever is most recent as to 99.1 the stated date of the count or estimate up to and including 99.2 June 1 of the current levy year. 99.3 Sec. 7. Minnesota Statutes 2000, section 275.70, 99.4 subdivision 5, is amended to read: 99.5 Subd. 5. [SPECIAL LEVIES.] "Special levies" means those 99.6 portions of ad valorem taxes levied by a local governmental unit 99.7 for the following purposes or in the following manner: 99.8 (1) to pay the costs of the principal and interest on 99.9 bonded indebtedness or to reimburse for the amount of liquor 99.10 store revenues used to pay the principal and interest due on 99.11 municipal liquor store bonds in the year preceding the year for 99.12 which the levy limit is calculated; 99.13 (2) to pay the costs of principal and interest on 99.14 certificates of indebtedness issued for any corporate purpose 99.15 except for the following: 99.16 (i) tax anticipation or aid anticipation certificates of 99.17 indebtedness; 99.18 (ii) certificates of indebtedness issued under sections 99.19 298.28 and 298.282; 99.20 (iii) certificates of indebtedness used to fund current 99.21 expenses or to pay the costs of extraordinary expenditures that 99.22 result from a public emergency; or 99.23 (iv) certificates of indebtedness used to fund an 99.24 insufficiency in tax receipts or an insufficiency in other 99.25 revenue sources; 99.26 (3) to provide for the bonded indebtedness portion of 99.27 payments made to another political subdivision of the state of 99.28 Minnesota; 99.29 (4) to fund payments made to the Minnesota state armory 99.30 building commission under section 193.145, subdivision 2, to 99.31 retire the principal and interest on armory construction bonds; 99.32 (5)for unreimbursed expenses related to flooding that99.33occurred during the first half of calendar year 1997, as allowed99.34by the commissioner of revenue under section 275.74, paragraph99.35(b);99.36(6) for local units of government located in an area100.1designated by the Federal Emergency Management Agency pursuant100.2to a major disaster declaration issued for Minnesota by100.3President Clinton after April 1, 1997, and before June 11, 1997,100.4for the amount of tax dollars lost due to abatements authorized100.5under section 273.123, subdivision 7, and Laws 1997, chapter100.6231, article 2, section 64, to the extent that they are related100.7to the major disaster and to the extent that neither the state100.8or federal government reimburses the local government for the100.9amount lost;100.10(7)property taxes approved by voters which are levied 100.11 against the referendum market value as provided under section 100.12 275.61; 100.13(8) to fund matching requirements needed to qualify for100.14federal or state grants or programs to the extent that either100.15(i) the matching requirement exceeds the matching requirement in100.16calendar year 1997, or (ii) it is a new matching requirement100.17that didn't exist prior to 1998;100.18(9)(6) to pay the expenses reasonably and necessarily 100.19 incurred in preparing for or repairing the effects of natural 100.20 disaster including the occurrence or threat of widespread or 100.21 severe damage, injury, or loss of life or property resulting 100.22 from natural causes, in accordance with standards formulated by 100.23 the emergency services division of the state department of 100.24 public safety, as allowed by the commissioner of revenue under 100.25 section 275.74, paragraph (b); 100.26(10) for the amount of tax revenue lost due to abatements100.27authorized under section 273.123, subdivision 7, for damage100.28related to the tornadoes of March 29, 1998, to the extent that100.29neither the state or federal government provides reimbursement100.30for the amount lost;100.31(11)(7) pay amounts required to correct an error in the 100.32 levy certified to the county auditor by a city or county in a 100.33 levy year, but only to the extent that when added to the 100.34 preceding year's levy it is not in excess of an applicable 100.35 statutory, special law or charter limitation, or the limitation 100.36 imposed on the governmental subdivision by sections 275.70 to 101.1 275.74 in the preceding levy year; 101.2(12)(8) to pay an abatement under section 469.1815; 101.3(13) to pay the employer contribution to the local101.4government correctional service retirement plan under section101.5353E.03, subdivision 2, to the extent that the employer101.6contribution exceeds 5.49 percent of total salary;101.7(14) to pay the operating or maintenance costs of a county101.8jail as authorized in section 641.01 or 641.262, or of a101.9correctional facility as defined in section 241.021, subdivision101.101, paragraph (5), to the extent that the county can demonstrate101.11to the commissioner of revenue that the amount has been included101.12in the county budget as a direct result of a rule, minimum101.13requirement, minimum standard, or directive of the department of101.14corrections, or to pay the operating or maintenance costs of a101.15regional jail as authorized in section 641.262. For purposes of101.16this clause, a district court order is not a rule, minimum101.17requirement, minimum standard, or directive of the department of101.18corrections. If the county utilizes this special levy, any101.19amount levied by the county in the previous levy year for the101.20purposes specified under this clause and included in the101.21county's previous year's levy limitation computed under section101.22275.71, shall be deducted from the levy limit base under section101.23275.71, subdivision 2, when determining the county's current101.24year levy limitation. The county shall provide the necessary101.25information to the commissioner of revenue for making this101.26determination;101.27(15)(9) to pay for operation of a lake improvement 101.28 district, as authorized under section 103B.555. If the county 101.29 utilizes this special levy, any amount levied by the county in 101.30 the previous levy year for the purposes specified under this 101.31 clause and included in the county's previous year's levy 101.32 limitation computed under section 275.71 shall be deducted from 101.33 the levy limit base under section 275.71, subdivision 2, when 101.34 determining the county's current year levy limitation. The 101.35 county shall provide the necessary information to the 101.36 commissioner of revenue for making this determination;and102.1(16)(10) to repay a state or federal loan used to fund the 102.2 direct or indirect required spending by the local government due 102.3 to a state or federal transportation project or other state or 102.4 federal capital project. This authority may only be used if the 102.5 project is not a local government initiative; and 102.6 (11) to pay for court administration and mandated court 102.7 services costs as required under section 273.1398, subdivision 102.8 4b; however, for taxes levied to pay for these costs in the year 102.9 in which the court financing is transferred to the state, the 102.10 amount under this section is limited to one-third of the aid 102.11 reduction under section 273.1398, subdivision 4a. 102.12 [EFFECTIVE DATE.] This section is effective beginning with 102.13 taxes levied in 2001, payable in 2002. 102.14 Sec. 8. [275.71] [LEVY LIMITS.] 102.15 Subdivision 1. [LIMIT ON LEVIES.] Notwithstanding any 102.16 other provision of law or municipal charter to the contrary 102.17 which authorize ad valorem taxes in excess of the limits 102.18 established by sections 275.70 to 275.74, the provisions of this 102.19 section apply to local governmental units for all purposes other 102.20 than those for which special levies and special assessments are 102.21 made. 102.22 Subd. 2. [LEVY LIMIT BASE.] (a) The levy limit base for a 102.23 local governmental unit for taxes levied in 2001 is equal to the 102.24 sum of its adjusted levy limit base for taxes levied in 1999 102.25 plus the amount it levied in 1999 under Minnesota Statutes 1999 102.26 Supplement, section 275.70, subdivision 5, clauses (8), (13), 102.27 and (14), multiplied by: 102.28 (1) one plus the percentage growth in the implicit price 102.29 deflator for the 12-month period ending March 30, 2000; 102.30 (2) one plus a percentage equal to the annual percentage 102.31 increase in the estimated number of households, if any, for the 102.32 most recent 12-month period that was available on July 1, 2000; 102.33 and 102.34 (3) one plus a percentage equal to 50 percent of the 102.35 percentage increase in the taxable market value of the 102.36 jurisdiction due to new construction of class 3 property, as 103.1 defined in section 273.13, subdivision 24, for the most recent 103.2 year for which data is available as of July 1, 2000. 103.3 For a county in a judicial district for which financing has 103.4 not been transferred to the state by January 1, 2001, the levy 103.5 limit base for 2001 is reduced by the amount of the county's 103.6 2001 budget for court administration costs and mandated services 103.7 costs, as certified under section 273.1398, subdivision 4b, 103.8 paragraph (c). 103.9 For a governmental unit receiving assistance in 2002 under 103.10 section 174.24, subdivision 3b, the levy limit base for 2001 is 103.11 reduced by an amount equal to the amount of the governmental 103.12 unit's taxes payable 2001 transit services levy. The 103.13 governmental unit must provide the commissioner of revenue with 103.14 sufficient information to make this determination. 103.15 If a governmental unit was not subject to levy limits for 103.16 taxes levied in 1999, the commissioner of revenue shall request 103.17 information from the local governmental unit and calculate a 103.18 1999 adjusted levy limit base equal to the amount it levied for 103.19 nondebt purposes in 1999, plus the amount of aids it was 103.20 certified to receive in calendar year 1999 under sections 103.21 273.1398, 298.28, 298.282, and 477A.011 to 477A.03, prior to any 103.22 aid reductions under section 273.1399, subdivision 5. 103.23 (b) The levy limit base for a local governmental unit for 103.24 taxes levied in 2002 is equal to its adjusted levy limit base in 103.25 the previous year, subject to any adjustments under section 103.26 275.72. 103.27 Subd. 3. [ADJUSTED LEVY LIMIT BASE.] (a) For taxes levied 103.28 in 2001 and 2002, the adjusted levy limit is equal to the levy 103.29 limit base computed under subdivision 2 or section 275.72, 103.30 multiplied by: 103.31 (1) one plus a percentage equal to the percentage growth in 103.32 the implicit price deflator; 103.33 (2) one plus a percentage equal to the percentage increase 103.34 in number of households, if any, for the most recent 12-month 103.35 period for which data is available; and 103.36 (3) one plus a percentage equal to 50 percent of the 104.1 percentage increase in the taxable market value of the 104.2 jurisdiction due to new construction of class 3 property, as 104.3 defined in section 273.13, subdivision 24, for the most recent 104.4 year for which data is available. 104.5 (b) For counties only, for taxes levied in 2001, the 104.6 adjusted levy limit base is permanently reduced by an amount 104.7 equal to the aid reduction under section 273.1398, subdivision 104.8 4f. For counties only, for taxes levied in 2001 and 2002, the 104.9 adjusted levy limit base is also reduced by any amount of levy 104.10 reduction required under section 275.07, subdivision 1, 104.11 paragraph (b), clause (ii). 104.12 Subd. 4. [PROPERTY TAX LEVY LIMIT.] Notwithstanding any 104.13 other provision of a municipal charter which limits ad valorem 104.14 taxes to a lesser amount, or which would require a separate 104.15 voter approval for any increase, for taxes levied in 2001 and 104.16 2002, the property tax levy limit for a local governmental unit 104.17 is equal to the greater of (1) its adjusted levy limit base 104.18 determined under subdivision 3 plus any additional levy 104.19 authorized under section 275.73, which is levied against net tax 104.20 capacity, reduced by the sum of (i) the total amount of aids 104.21 that the local governmental unit is certified to receive under 104.22 sections 477A.011 to 477A.014, except for the amount under 104.23 section 477A.011, subdivision 36, clause (o), (ii) homestead and 104.24 agricultural aids it is certified to receive under section 104.25 273.1398, (iii) taconite aids under sections 298.28 and 298.282 104.26 including any aid which was required to be placed in a special 104.27 fund for expenditure in the next succeeding year, and (iv) 104.28 low-income housing aid under sections 477A.06 and 477A.065; or 104.29 (2) the amount the local governmental unit levied in 2000 minus 104.30 the amount of the levy used for the purposes listed in section 104.31 275.70, subdivision 5, as determined by the commissioner of 104.32 revenue under section 275.74, subdivision 3. 104.33 Subd. 5. [LEVIES IN EXCESS OF LEVY LIMITS.] If the levy 104.34 made by a city or county exceeds the levy limit provided in 104.35 sections 275.70 to 275.74, except when the excess levy is due to 104.36 the rounding of the rate in accordance with section 275.28, the 105.1 county auditor shall only extend the amount of taxes permitted 105.2 under sections 275.70 to 275.74, as provided for in section 105.3 275.16. 105.4 Sec. 9. [275.72] [LEVY LIMIT ADJUSTMENTS FOR CONSOLIDATION 105.5 AND ANNEXATION.] 105.6 Subdivision 1. [ADJUSTMENTS FOR CONSOLIDATION.] If all of 105.7 the area included in two or more local governmental units is 105.8 consolidated, merged, or otherwise combined to constitute a 105.9 single governmental unit, the levy limit base for the resulting 105.10 governmental unit in the first levy year in which the 105.11 consolidation is effective shall be equal to (1) the highest tax 105.12 rate in any of the merging governmental units in the previous 105.13 year multiplied by the net tax capacity of all the merging 105.14 governmental units in the previous year, minus (2) the sum of 105.15 all levies in the merging governmental units in the previous 105.16 year that qualify as special levies under section 275.70, 105.17 subdivision 5. 105.18 Subd. 2. [ADJUSTMENTS FOR ANNEXATION.] If a local 105.19 governmental unit increases its tax base through annexation of 105.20 an area which is not the area of an entire local governmental 105.21 unit and the area of annexation contains a population of 50 or 105.22 more, the levy limit base of the local governmental unit in the 105.23 first year in which the annexation is effective shall be equal 105.24 to its levy limit base established before the adjustment under 105.25 section 275.71, subdivision 3, for the current levy year 105.26 multiplied by the ratio of the net tax capacity in the local 105.27 governmental unit after the annexation compared to its net tax 105.28 capacity before the annexation. 105.29 Subd. 3. [ADJUSTMENTS FOR CHANGES IN SERVICE LEVELS.] If a 105.30 local governmental unit, as a result of an annexation agreement 105.31 prior to January 1, 1999, has different tax rates in various 105.32 parts of the jurisdiction due to different service levels, it 105.33 may petition the commissioner of revenue to adjust its levy 105.34 limits established under section 275.71. The commissioner shall 105.35 adjust the levy limits to reflect scheduled changes in tax rates 105.36 related to increasing service levels in areas currently 106.1 receiving less city services. The local governmental unit shall 106.2 provide the commissioner with any information the commissioner 106.3 deems necessary in making the levy limit adjustment. 106.4 Subd. 4. [TRANSFER OF GOVERNMENTAL FUNCTIONS.] If a 106.5 function or service of one local governmental unit is 106.6 transferred to another local governmental unit, the levy limits 106.7 established under section 275.71 must be adjusted by the 106.8 commissioner of revenue in such manner so as to fairly and 106.9 equitably reflect the reduced or increased property tax burden 106.10 resulting from the transfer. The aggregate of the adjusted 106.11 limitations must not exceed the aggregate of the limitations 106.12 prior to adjustment. 106.13 Subd. 5. [EFFECTIVE DATE FOR LEVY LIMITS PURPOSES.] 106.14 Annexations, mergers, and shifts in services and functional 106.15 responsibilities that are effective by June 30 of the levy year 106.16 are included in the calculation of the levy limit for that levy 106.17 year. Annexations, mergers, and shifts in services and 106.18 functional responsibilities that are effective after June 30 of 106.19 a levy year are not included in the calculation of the levy 106.20 limit until the subsequent levy year. 106.21 Sec. 10. [275.73] [ELECTIONS FOR ADDITIONAL LEVIES.] 106.22 Subdivision 1. [ADDITIONAL LEVY AUTHORIZATION.] 106.23 Notwithstanding the provisions of sections 275.70 to 275.72, but 106.24 subject to other law or charter provisions establishing other 106.25 limitations on the amount of property taxes a local governmental 106.26 unit may levy, a local governmental unit may levy an additional 106.27 levy in any amount which is approved by the majority of voters 106.28 of the governmental unit voting on the question at a general or 106.29 special election. Notwithstanding section 275.61, any levy 106.30 authorized under this section must be levied against net tax 106.31 capacity unless the levy required voter approval under another 106.32 general or special law or any charter provisions. When the 106.33 governing body of the local governmental unit resolves to 106.34 increase the levy pursuant to this section, it shall provide for 106.35 submission of the proposition of an additional levy at a general 106.36 or special election. Notice of the election must be given in 107.1 the manner required by law. The notice must state the purpose 107.2 and the maximum yearly amount of the additional levy. 107.3 Subd. 2. [LEVY EFFECTIVE DATE.] An additional levy 107.4 approved under subdivision 1 at a general or special election 107.5 held prior to September 1 in any levy year may be levied in that 107.6 same levy year and subsequent levy years. An additional levy 107.7 approved under subdivision 1 at a general or special election 107.8 held after August 31 in any levy year shall not be levied in 107.9 that same levy but may be levied in subsequent levy years. 107.10 Sec. 11. [275.74] [STATE REGULATION OF LEVIES.] 107.11 Subdivision 1. [CALCULATION AND NOTIFICATION.] The 107.12 commissioner of revenue shall make all necessary calculations 107.13 for determining levy limits for local governmental units and 107.14 notify the affected governmental units of their levy limits 107.15 directly by August 1 of each levy year. The local governmental 107.16 units shall, upon request, provide the commissioner with any 107.17 information needed to make the calculations. The local 107.18 governmental unit shall report by August 31, in a manner 107.19 prescribed by the commissioner, the maximum amount of taxes it 107.20 plans to levy for each of the purposes listed under special 107.21 levies and any additional levy authorized under section 275.73, 107.22 along with any necessary documentation. The commissioner shall 107.23 review the proposed special levies and make any adjustments 107.24 needed. The commissioner's decision is final. The final 107.25 allowed special levy amounts and any levy limit adjustments must 107.26 be certified back to the local governments by December 10. In 107.27 addition, the commissioner of revenue shall notify all county 107.28 auditors on or before five working days after December 20 of the 107.29 sum of the levy limit plus the total of allowed special levies 107.30 for each local governmental unit located within their boundaries 107.31 so that they may fix the levies as required in section 275.16. 107.32 The local governmental units shall provide the commissioner of 107.33 revenue with all information that the commissioner deems 107.34 necessary to make the calculations provided for in sections 107.35 275.70 to 275.73. 107.36 Subd. 2. [AUTHORIZATION FOR SPECIAL LEVIES.] A local 108.1 governmental unit may request authorization to levy for 108.2 unreimbursed costs for other natural disasters under section 108.3 275.70, subdivision 5, clause (6). The local governmental unit 108.4 shall submit a request to levy under section 275.70, subdivision 108.5 5, clause (6), to the commissioner of revenue by September 15 of 108.6 the levy year and the request must include information 108.7 documenting the estimated unreimbursed costs. The commissioner 108.8 of revenue may grant levy authority, up to the amount requested 108.9 based on the documentation submitted. All decisions of the 108.10 commissioner are final. 108.11 Subd. 3. [AUTHORIZATION TO USE 2000 LEVY AMOUNT.] A local 108.12 governmental unit may request authorization to levy the amount 108.13 determined under section 275.71, subdivision 4, clause (2). The 108.14 local governmental unit shall submit the request to the 108.15 commissioner by August 31 of the levy year and shall include the 108.16 information required by the commissioner to determine the amount 108.17 of the levy under section 275.71, subdivision 4, clause (2). 108.18 The commissioner may grant levy authority up to the amount 108.19 requested based on the documentation submitted. All decisions 108.20 of the commissioner are final. 108.21 ARTICLE 5 108.22 REVERSE REFERENDA 108.23 TAXES PAYABLE 2004 AND THEREAFTER 108.24 Section 1. Minnesota Statutes 2000, section 275.065, 108.25 subdivision 3, is amended to read: 108.26 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 108.27 county auditor shall prepare and the county treasurer shall 108.28 deliver after November 10 and on or before November2417 each 108.29 year, by first class mail to each taxpayer at the address listed 108.30 on the county's current year's assessment roll, a notice of 108.31 proposed property taxes. 108.32 (b) The commissioner of revenue shall prescribe the form of 108.33 the notice. 108.34 (c) The notice must inform taxpayers that it contains the 108.35 amount of property taxes each taxing authority proposes to 108.36 collect for taxes payable the following year. In the case of a 109.1 town, or in the case of the state determined portion of the 109.2 school district levy, the final tax amount will be its proposed 109.3 tax. The notice must clearly state that each taxing authority, 109.4 including regional library districts established under section 109.5 134.201, and including the metropolitan taxing districts as 109.6 defined in paragraph (i), but excluding all other special taxing 109.7 districts, cities with a population of 500 or less, and towns, 109.8willmust hold a public meeting to receive public testimony on 109.9 the proposed budget and proposed or final property tax levy, or, 109.10 in case of a school district, on the current budget and proposed 109.11 property tax levy.ItIn the case of a county or a city with a 109.12 population over 500, a public hearing is not required if the 109.13 county's or city's proposed property tax levy has not increased 109.14 over the levy amount certified by the county or city under 109.15 section 275.07, subdivision 1, for the previous year. The 109.16 notice must clearly state the time and place of each taxing 109.17 authority's meetingandif one is to be held. It must also 109.18 state an address where comments will be received by mail, 109.19 whether or not a public hearing is held. 109.20 (d) The notice must state for each parcel: 109.21 (1) the market value of the property as determined under 109.22 section 273.11, and used for computing property taxes payable in 109.23 the following year and for taxes payable in the current year as 109.24 each appears in the records of the county assessor on November 1 109.25 of the current year; and, in the case of residential property, 109.26 whether the property is classified as homestead or 109.27 nonhomestead. The notice must clearly inform taxpayers of the 109.28 years to which the market values apply and that the values are 109.29 final values; 109.30 (2) the items listed below, shown separately by county, 109.31 city or town, state determined school tax net of the education 109.32 homestead credit under section 273.1382, voter approved school 109.33 levy, other local school levy, and the sum of the special taxing 109.34 districts, and as a total of all taxing authorities: 109.35 (i) the actual tax for taxes payable in the current year; 109.36 (ii) the tax change due to spending factors, defined as the 110.1 proposed tax minus the constant spending tax amount; 110.2 (iii) the tax change due to other factors, defined as the 110.3 constant spending tax amount minus the actual current year tax; 110.4 and 110.5 (iv) the proposed tax amount. 110.6 In the case of a town or the state determined school tax, 110.7 the final tax shall also be its proposed tax unless the town 110.8 changes its levy at a special town meeting under section 110.9 365.52. If a school district has certified under section 110.10 126C.17, subdivision 9, that a referendum will be held in the 110.11 school district at the November general election, the county 110.12 auditor must note next to the school district's proposed amount 110.13 that a referendum is pending and that, if approved by the 110.14 voters, the tax amount may be higher than shown on the notice. 110.15 In the case of the city of Minneapolis, the levy for the 110.16 Minneapolis library board and the levy for Minneapolis park and 110.17 recreation shall be listed separately from the remaining amount 110.18 of the city's levy. In the case of a parcel where tax increment 110.19 or the fiscal disparities areawide tax under chapter 276A or 110.20 473F applies, the proposed tax levy on the captured value or the 110.21 proposed tax levy on the tax capacity subject to the areawide 110.22 tax must each be stated separately and not included in the sum 110.23 of the special taxing districts; and 110.24 (3) the increase or decrease between the total taxes 110.25 payable in the current year and the total proposed taxes, 110.26 expressed as a percentage. 110.27 For purposes of this section, the amount of the tax on 110.28 homesteads qualifying under the senior citizens' property tax 110.29 deferral program under chapter 290B is the total amount of 110.30 property tax before subtraction of the deferred property tax 110.31 amount. 110.32 (e) The notice must clearly state that the proposed or 110.33 final taxes do not include the following: 110.34 (1) special assessments; 110.35 (2) levies approved by the voters after the date the 110.36 proposed taxes are certified, including bond referenda, school 111.1 district levy referenda, and levy limit increase referenda; 111.2 (3) amounts necessary to pay cleanup or other costs due to 111.3 a natural disaster occurring after the date the proposed taxes 111.4 are certified; 111.5 (4) amounts necessary to pay tort judgments against the 111.6 taxing authority that become final after the date the proposed 111.7 taxes are certified; and 111.8 (5) the contamination tax imposed on properties which 111.9 received market value reductions for contamination. 111.10 (f) Except as provided in subdivision 7, failure of the 111.11 county auditor to prepare or the county treasurer to deliver the 111.12 notice as required in this section does not invalidate the 111.13 proposed or final tax levy or the taxes payable pursuant to the 111.14 tax levy. 111.15 (g) If the notice the taxpayer receives under this section 111.16 lists the property as nonhomestead, and satisfactory 111.17 documentation is provided to the county assessor by the 111.18 applicable deadline, and the property qualifies for the 111.19 homestead classification in that assessment year, the assessor 111.20 shall reclassify the property to homestead for taxes payable in 111.21 the following year. 111.22 (h) In the case of class 4 residential property used as a 111.23 residence for lease or rental periods of 30 days or more, the 111.24 taxpayer must either: 111.25 (1) mail or deliver a copy of the notice of proposed 111.26 property taxes to each tenant, renter, or lessee; or 111.27 (2) post a copy of the notice in a conspicuous place on the 111.28 premises of the property. 111.29 The notice must be mailed or posted by the taxpayer by 111.30 November2718 or within three days of receipt of the notice, 111.31 whichever is later. A taxpayer may notify the county treasurer 111.32 of the address of the taxpayer, agent, caretaker, or manager of 111.33 the premises to which the notice must be mailed in order to 111.34 fulfill the requirements of this paragraph. 111.35 (i) For purposes of this subdivision, subdivisions 5a and 111.36 6, "metropolitan special taxing districts" means the following 112.1 taxing districts in the seven-county metropolitan area that levy 112.2 a property tax for any of the specified purposes listed below: 112.3 (1) metropolitan council under section 473.132, 473.167, 112.4 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 112.5 (2) metropolitan airports commission under section 473.667, 112.6 473.671, or 473.672; and 112.7 (3) metropolitan mosquito control commission under section 112.8 473.711. 112.9 For purposes of this section, any levies made by the 112.10 regional rail authorities in the county of Anoka, Carver, 112.11 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 112.12 398A shall be included with the appropriate county's levy and 112.13 shall be discussed at that county's public hearing, if held. 112.14 (j) If a statutory or home rule charter city or a town has 112.15 exercised the local levy option provided by section 473.388, 112.16 subdivision 7, it may include in the notice of its proposed 112.17 taxes the amount of its proposed taxes attributable to its 112.18 exercise of the option. In the first year of the city or town's 112.19 exercise of this option, the statement shall include an estimate 112.20 of the reduction of the metropolitan council's tax on the parcel 112.21 due to exercise of that option. The metropolitan council's levy 112.22 shall be adjusted accordingly. 112.23 [EFFECTIVE DATE.] This section is effective for notices 112.24 prepared in 2003 and thereafter. 112.25 Sec. 2. Minnesota Statutes 2000, section 275.065, 112.26 subdivision 5a, is amended to read: 112.27 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 112.28 population of more than 2,500, county, a metropolitan special 112.29 taxing district as defined in subdivision 3, paragraph (i), a 112.30 regional library district established under section 134.201, or 112.31 school district shall advertise in a newspaper a notice of its 112.32 intent to adopt a budget and property tax levy or, in the case 112.33 of a school district, to review its current budget and proposed 112.34 property taxes payable in the following year, at a public 112.35 hearing. In the case of a county or city that has a population 112.36 over 2,500, if its proposed property tax levy has not increased 113.1 over its levy amount certified under section 275.07, subdivision 113.2 1, for the previous year, no public hearing is required. The 113.3 notice must be published not less than two business days nor 113.4 more than six business days before the hearing, if required due 113.5 to a levy increase. Even if a hearing is not required, counties 113.6 and cities must continue to place an advertisement in the 113.7 newspaper informing taxpayers of the proposed budget and levy 113.8 amounts. 113.9 The advertisement must be at least one-eighth page in size 113.10 of a standard-size or a tabloid-size newspaper. The 113.11 advertisement must not be placed in the part of the newspaper 113.12 where legal notices and classified advertisements appear. The 113.13 advertisement must be published in an official newspaper of 113.14 general circulation in the taxing authority. The newspaper 113.15 selected must be one of general interest and readership in the 113.16 community, and not one of limited subject matter. The 113.17 advertisement must appear in a newspaper that is published at 113.18 least once per week. 113.19 For purposes of this section, the metropolitan special 113.20 taxing district's advertisement must only be published in the 113.21 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 113.22 (b) The advertisement for school districts, metropolitan 113.23 special taxing districts, and regional library districts must be 113.24 in the following form, except that the notice for a school 113.25 district may include references to the current budget in regard 113.26 to proposed property taxes. 113.27 "NOTICE OF 113.28 PROPOSED PROPERTY TAXES 113.29 (School District/Metropolitan 113.30 Special Taxing District/Regional 113.31 Library District) of ......... 113.32 The governing body of ........ will soon hold budget hearings 113.33 and vote on the property taxes for (metropolitan special taxing 113.34 district/regional library district services that will be 113.35 provided in (year)/school district services that will be 113.36 provided in (year) and (year)). 114.1 NOTICE OF PUBLIC HEARING: 114.2 All concerned citizens are invited to attend a public hearing 114.3 and express their opinions on the proposed (school 114.4 district/metropolitan special taxing district/regional library 114.5 district) budget and property taxes, or in the case of a school 114.6 district, its current budget and proposed property taxes, 114.7 payable in the following year. The hearing will be held on 114.8 (Month/Day/Year) at (Time) at (Location, Address)." 114.9 (c)(1) If the city's or county's proposed property tax levy 114.10 has increased over its previous year's certified levy, the 114.11 advertisementfor cities and countiesmust be in the following 114.12 form. 114.13 "NOTICE OF PROPOSED 114.14 TOTAL BUDGET AND PROPERTY TAXES 114.15 The (city/county) governing body or board of commissioners will 114.16 hold a public hearing to discuss the budget and to vote on the 114.17 amount of property taxes to collect for services the 114.18 (city/county) will provide in (year). 114.19 114.20 SPENDING: The total budget amounts below compare 114.21 (city's/county's) (year) total actual budget with the amount the 114.22 (city/county) proposes to spend in (year). 114.23 114.24 (Year) Total Proposed (Year) Change from 114.25 Actual Budget Budget (Year)-(Year) 114.26 114.27 $....... $....... ...% 114.28 114.29 TAXES: The property tax amounts below compare that portion of 114.30 the current budget levied in property taxes in (city/county) for 114.31 (year) with the property taxes the (city/county) proposes to 114.32 collect in (year). 114.33 114.34 (Year) Property Proposed (Year) Change from 114.35 Taxes Property Taxes (Year)-(Year) 114.36 115.1 $....... $....... ...% 115.2 115.3 ATTEND THE PUBLIC HEARING 115.4 All (city/county) residents are invited to attend the public 115.5 hearing of the (city/county) to express your opinions on the 115.6 budget and the proposed amount of (year) property taxes. The 115.7 hearing will be held on: 115.8 (Month/Day/Year/Time) 115.9 (Location/Address) 115.10 If the discussion of the budget cannot be completed, a time and 115.11 place for continuing the discussion will be announced at the 115.12 hearing. You are also invited to send your written comments to: 115.13 (City/County) 115.14 (Location/Address)" 115.15 (2) If no hearing is required under this section for the 115.16 city or county, its advertisement must be in the following 115.17 form. The advertisement must clearly state that because the 115.18 proposed property tax levy amount is equal to or less than the 115.19 taxing authority's previous year's actual property tax levy, no 115.20 public hearing is required by law. 115.21 "NOTICE OF PROPOSED 115.22 TOTAL BUDGET AND PROPERTY TAXES 115.23 Although no public hearing will be held, the (city/county) 115.24 governing body or board of commissioners is planning to adopt 115.25 the following budget and property tax levy. 115.26 115.27 SPENDING: The total budget amounts below compare 115.28 (city's/county's) (year) total actual budget with the amount 115.29 (city/county) proposes to spend in (year). 115.30 115.31 (Year) Total Proposed (Year) Change from 115.32 Actual Budget Budget (Year)-(Year) 115.33 115.34 $....... $....... ...% 115.35 115.36 TAXES: The property tax amounts below compare that portion of 116.1 the current budget levied in property taxes in (city/county) for 116.2 (year) with the property taxes (city/county) proposes to collect 116.3 in (year). 116.4 116.5 (Year) Property Proposed (Year) Change from 116.6 Taxes Property Taxes (Year)-(Year) 116.7 116.8 $....... $....... ...% 116.9 Although no public hearing will be held, you are invited to 116.10 send any written comments to: 116.11 (City/County) 116.12 (Location/Address)" 116.13 (3) If the city's governing body or county board of 116.14 commissioners decides to hold a public hearing on the proposed 116.15 budget and levy, even though the proposed levy is equal to or 116.16 less than the previous year's certified levy amount, the 116.17 advertisement format in clause (2) must be used. 116.18 (d) For purposes of this subdivision, the budget amounts 116.19 listed on the advertisement mean: 116.20 (1) for cities, the total government fund expenditures, as 116.21 defined by the state auditor under section 471.6965, less any 116.22 expenditures for improvements or services that are specially 116.23 assessed or charged under chapter 429, 430, 435, or the 116.24 provisions of any other law or charter; and 116.25 (2) for counties, the total government fund expenditures, 116.26 as defined by the state auditor under section 375.169, less any 116.27 expenditures for direct payments to recipients or providers for 116.28 the human service aids listed below: 116.29 (i) Minnesota family investment program under chapters 256J 116.30 and 256K; 116.31 (ii) medical assistance under sections 256B.041, 116.32 subdivision 5, and 256B.19, subdivision 1; 116.33 (iii) general assistance medical care under section 116.34 256D.03, subdivision 6; 116.35 (iv) general assistance under section 256D.03, subdivision 116.36 2; 117.1 (v) emergency assistance under section 256J.48; 117.2 (vi) Minnesota supplemental aid under section 256D.36, 117.3 subdivision 1; 117.4 (vii) preadmission screening under section 256B.0911, and 117.5 alternative care grants under section 256B.0913; 117.6 (viii) general assistance medical care claims processing, 117.7 medical transportation and related costs under section 256D.03, 117.8 subdivision 4; 117.9 (ix) medical transportation and related costs under section 117.10 256B.0625, subdivisions 17 to 18a; 117.11 (x) group residential housing under section 256I.05, 117.12 subdivision 8, transferred from programs in clauses (iv) and 117.13 (vi); or 117.14 (xi) any successor programs to those listed in clauses (i) 117.15 to (x). 117.16 (e) A city with a population of over 500 but not more than 117.17 2,500 must advertise by posted notice as defined in section 117.18 645.12, subdivision 1. The advertisement must be posted at the 117.19 time provided in paragraph (a). It must be in the form required 117.20 in paragraph (b). 117.21 (f) For purposes of this subdivision, the population of a 117.22 city is the most recent population as determined by the state 117.23 demographer under section 4A.02. 117.24 (g) The commissioner of revenue, subject to the approval of 117.25 the chairs of the house and senate tax committees, shall 117.26 prescribe the form and format of the advertisement. 117.27 [EFFECTIVE DATE.] This section is effective for newspaper 117.28 advertisements in 2003 and thereafter. 117.29 Sec. 3. Minnesota Statutes 2000, section 275.065, 117.30 subdivision 6, is amended to read: 117.31 Subd. 6. [PUBLIC HEARING; ADOPTION OF BUDGET AND LEVY.] 117.32 (a) For purposes of this section, the following terms shall have 117.33 the meanings given: 117.34 (1) "Initial hearing" means the first and primary hearing 117.35 held to discuss the taxing authority's proposed budget and 117.36 proposed property tax levy for taxes payable in the following 118.1 year, or, for school districts, the current budget and the 118.2 proposed property tax levy for taxes payable in the following 118.3 year. 118.4 (2) "Continuation hearing" means a hearing held to complete 118.5 the initial hearing, if the initial hearing is not completed on 118.6 its scheduled date. 118.7 (3) "Subsequent hearing" means the hearing held to adopt 118.8 the taxing authority's final property tax levy, and, in the case 118.9 of taxing authorities other than school districts, the final 118.10 budget, for taxes payable in the following year. 118.11 (b) Between November2919 and December2010, the 118.12 governing bodies of a city that has a population over 500, 118.13 county, metropolitan special taxing districts as defined in 118.14 subdivision 3, paragraph (i), and regional library districts 118.15 shall each hold an initial public hearing to discuss and seek 118.16 public comment on its final budget and property tax levy for 118.17 taxes payable in the following year, and the governing body of 118.18 the school district shall hold an initial public hearing to 118.19 review its current budget and proposed property tax levy for 118.20 taxes payable in the following year. The metropolitan special 118.21 taxing districts shall be required to hold only a single joint 118.22 initial public hearing, the location of which will be determined 118.23 by the affected metropolitan agencies. 118.24 (c) The initial hearing must be held after 5:00 p.m. if 118.25 scheduled on a day other than Saturday. No initial hearing may 118.26 be held on a Sunday. 118.27 (d) At the initial hearing under this subdivision, the 118.28 percentage increase in property taxes proposed by the taxing 118.29 authority, if any, and the specific purposes for which property 118.30 tax revenues are being increased must be discussed. During the 118.31 discussion, the governing body shall hear comments regarding a 118.32 proposed increase and explain the reasons for the proposed 118.33 increase. The public shall be allowed to speak and to ask 118.34 questions. At the public hearing, the school district must also 118.35 provide and discuss information on the distribution of its 118.36 revenues by revenue source, and the distribution of its spending 119.1 by program area. 119.2 (e) If the initial hearing is not completed on its 119.3 scheduled date, the taxing authority must announce, prior to 119.4 adjournment of the hearing, the date, time, and place for the 119.5 continuation of the hearing. The continuation hearing must be 119.6 held at least five business days but no more than14ten 119.7 business days after the initial hearing. A continuation hearing 119.8 may not be held later than December2010 except as provided in 119.9 paragraphs (f) and (g). A continuation hearing must be held 119.10 after 5:00 p.m. if scheduled on a day other than Saturday. No 119.11 continuation hearing may be held on a Sunday. 119.12 (f) The governing body of a county shall hold its initial 119.13 hearing on the firstThursdayTuesday in December each year, and 119.14 may hold additional initial hearings on other dates before 119.15 December2010 if necessary for the convenience of county 119.16 residents. If the county needs a continuation of its hearing, 119.17 the continuation hearing shall be held on thethirdsecond 119.18 Tuesday in December even if that second Tuesday is after 119.19 December 10.If the third Tuesday in December falls on December119.2021, the county's continuation hearing shall be held on Monday,119.21December 20.119.22 (g) The metropolitan special taxing districts shall hold a 119.23 joint initial public hearing on the first Wednesday of 119.24 December. A continuation hearing, if necessary, shall be held 119.25 on the second Wednesday of December even if that second 119.26 Wednesday is after December 10. 119.27 (h) The county auditor shall provide for the coordination 119.28 of initial and continuation hearing dates for all school 119.29 districts and cities within the county to prevent conflicts 119.30 under clauses (i) and (j). 119.31 (i) By August 10, each school board and the board of the 119.32 regional library district shall certify to the county auditors 119.33 of the counties in which the school district or regional library 119.34 district is located the dates on which it elects to hold its 119.35 initial hearing and any continuation hearing. If a school board 119.36 or regional library district does not certify these dates by 120.1 August 10, the auditor will assign the initial and continuation 120.2 hearing dates. The dates elected or assigned must not conflict 120.3 with the initial and continuation hearing dates of the county or 120.4 the metropolitan special taxing districts. 120.5 (j) By August 20, the county auditor shall notify the 120.6 clerks of the cities within the county of the dates on which 120.7 school districts and regional library districts have elected to 120.8 hold their initial and continuation hearings. At the time a 120.9 city certifies its proposed levy under subdivision 1 it shall 120.10 certify the dates on which it elects to hold its initial hearing 120.11 and any continuation hearing. Until September 15, the first and 120.12 second Mondays of December are reserved for the use of the 120.13 cities. If a city does not certify its hearing dates by 120.14 September 15, the auditor shall assign the initial and 120.15 continuation hearing dates. The dates elected or assigned for 120.16 the initial hearing must not conflict with the initial hearing 120.17 dates of the county, metropolitan special taxing districts, 120.18 regional library districts, or school districts within which the 120.19 city is located. To the extent possible, the dates of the 120.20 city's continuation hearing should not conflict with the 120.21 continuation hearing dates of the county, metropolitan special 120.22 taxing districts, regional library districts, or school 120.23 districts within which the city is located. This paragraph does 120.24 not apply to cities of 500 population or less. 120.25 (k) The county initial hearing date and the city, 120.26 metropolitan special taxing district, regional library district, 120.27 and school district initial hearing dates must be designated on 120.28 the notices required under subdivision 3. The continuation 120.29 hearing dates need not be stated on the notices. 120.30 (l) At a subsequent hearing, each county, school district, 120.31 city over 500 population, and metropolitan special taxing 120.32 district may amend its proposed property tax levy and must adopt 120.33 a final property tax levy. Each county, city over 500 120.34 population, and metropolitan special taxing district may also 120.35 amend its proposed budget and must adopt a final budget at the 120.36 subsequent hearing. The final property tax levy must be adopted 121.1 prior to adopting the final budget. A school district is not 121.2 required to adopt its final budget at the subsequent hearing. 121.3 The subsequent hearing of a taxing authority must be held on a 121.4 date subsequent to the date of the taxing authority's initial 121.5 public hearing. If a continuation hearing is held, the 121.6 subsequent hearing must be held either immediately following the 121.7 continuation hearing or on a date subsequent to the continuation 121.8 hearing. The subsequent hearing may be held at a regularly 121.9 scheduled board or council meeting or at a special meeting 121.10 scheduled for the purposes of the subsequent hearing. The 121.11 subsequent hearing of a taxing authority does not have to be 121.12 coordinated by the county auditor to prevent a conflict with an 121.13 initial hearing, a continuation hearing, or a subsequent hearing 121.14 of any other taxing authority. All subsequent hearings must be 121.15 held prior to five working days after December 20 of the levy 121.16 year. The date, time, and place of the subsequent hearing must 121.17 be announced at the initial public hearing or at the 121.18 continuation hearing. 121.19 (m) The property tax levy certified under section 275.07 by 121.20 a city of any population, county, metropolitan special taxing 121.21 district, regional library district, or school district must not 121.22 exceed the proposed levy determined under subdivision 1, except 121.23 by an amount up to the sum of the following amounts: 121.24 (1) the amount of a school district levy whose voters 121.25 approved a referendum to increase taxes under section 123B.63, 121.26 subdivision 3, or 126C.17, subdivision 9, after the proposed 121.27 levy was certified; 121.28 (2) the amount of a city or county levy approved by the 121.29 voters after the proposed levy was certified; 121.30 (3) the amount of a levy to pay principal and interest on 121.31 bonds approved by the voters under section 475.58 after the 121.32 proposed levy was certified; 121.33 (4) the amount of a levy to pay costs due to a natural 121.34 disaster occurring after the proposed levy was certified, if 121.35 that amount is approved by the commissioner of revenue under 121.36 subdivision 6a; 122.1 (5) the amount of a levy to pay tort judgments against a 122.2 taxing authority that become final after the proposed levy was 122.3 certified, if the amount is approved by the commissioner of 122.4 revenue under subdivision 6a; 122.5 (6) the amount of an increase in levy limits certified to 122.6 the taxing authority by the commissioner of children, families, 122.7 and learning or the commissioner of revenue after the proposed 122.8 levy was certified; and 122.9 (7) the amount required under section 126C.55. 122.10 (n) This subdivision does not apply to townsand, special 122.11 taxing districts other than regional library districts and 122.12 metropolitan special taxing districts, cities with a population 122.13 of 500 or less, and counties or cities with a population over 122.14 500 whose proposed property tax levy is less than or equal to 122.15 its levy certified under section 275.07, subdivision 1, for the 122.16 previous year. 122.17 (o) Notwithstanding the requirements of this section, the 122.18 employer is required to meet and negotiate over employee 122.19 compensation as provided for in chapter 179A. 122.20 [EFFECTIVE DATE.] This section is effective for hearings 122.21 held in 2003 and thereafter. 122.22 Sec. 4. Minnesota Statutes 2000, section 275.065, 122.23 subdivision 8, is amended to read: 122.24 Subd. 8. [HEARING.] Notwithstanding any other provision of 122.25 law, Ramsey county, the city of St. Paul, and independent school 122.26 district No. 625 are authorized to and shall hold their initial 122.27 public hearing jointly. The hearing must be held on thesecond122.28 first Tuesday of December each year. The advertisement required 122.29 in subdivision 5a may be a joint advertisement. The hearing is 122.30 otherwise subject to the requirements of this section. 122.31 Ramsey county is authorized to hold an additional initial 122.32 hearing or hearings as provided under this section, provided 122.33 that any additional hearings must not conflict with the initial 122.34 or continuation hearing dates of the other taxing districts. 122.35 However, if Ramsey county elects not to hold such additional 122.36 initial hearing or hearings, the joint initial hearing required 123.1 by this subdivision must be held in a St. Paul location 123.2 convenient to residents of Ramsey county. 123.3 [EFFECTIVE DATE.] This section is effective for hearings 123.4 held in 2003 and thereafter. 123.5 Sec. 5. Minnesota Statutes 2000, section 275.065, is 123.6 amended by adding a subdivision to read: 123.7 Subd. 9. [REVERSE REFERENDUM.] The reverse referendum 123.8 procedure in this subdivision applies only in the case of a 123.9 county, or a city that has a population of more than 2,500, that 123.10 has adopted a property tax levy increase over the levy amount 123.11 certified under section 275.07, subdivision 1, for the previous 123.12 year. The levy subject to the provisions of this subdivision 123.13 does not include the levy under section 475.61 or another 123.14 similar provision providing a levy for general obligation bonds. 123.15 If, within 21 days after the public hearing and adoption of 123.16 a levy under subdivision 6, a petition signed by voters equal in 123.17 number to five percent of the votes cast in the county or city 123.18 in the last general election requesting a referendum on the levy 123.19 increase is filed with the county auditor or the city clerk, the 123.20 levy increase shall not be effective until it has been submitted 123.21 to the voters at a special election to be held on the fourth 123.22 Tuesday in January, and a majority of votes cast on the question 123.23 of approving the levy increase are in the affirmative. The 123.24 commissioner of revenue shall prepare the form of the question 123.25 to be presented at the referendum, which shall reference only 123.26 the amount of the property tax levy increase over the previous 123.27 year. 123.28 The county or city shall notify the county auditor of the 123.29 results of the referendum. If the majority of the votes cast on 123.30 the question are in the affirmative, the levy adopted under 123.31 subdivision 6 shall be certified to the county auditor under 123.32 section 275.07, subdivision 1. If the majority of the votes 123.33 cast on the question are in the negative, an amount equal to the 123.34 preceding year's levy shall be certified to the county auditor 123.35 for purposes of section 275.07, subdivision 1. 123.36 [EFFECTIVE DATE.] This section is effective for taxes 124.1 levied in 2003 and thereafter, for taxes payable in 2004 and 124.2 thereafter. 124.3 Sec. 6. Minnesota Statutes 2000, section 275.07, 124.4 subdivision 1, is amended to read: 124.5 Subdivision 1. [CERTIFICATION OF LEVY.] Except as 124.6 otherwise provided in this subdivision, the taxes voted by 124.7 cities, counties, school districts, and special districts shall 124.8 be certified by the proper authorities to the county auditor on 124.9 or before five working days after December 20 in each year. A 124.10 county or city to which the reverse referendum provisions under 124.11 section 275.065, subdivision 9, apply shall certify the taxes to 124.12 the county auditor by January 5, except that any county or city 124.13 for which a petition has been filed under section 275.065, 124.14 subdivision 9, must certify the day immediately following the 124.15 election under that section. A town must certify the levy 124.16 adopted by the town board to the county auditor by September 15 124.17 each year. If the town board modifies the levy at a special 124.18 town meeting after September 15, the town board must recertify 124.19 its levy to the county auditor on or before five working days 124.20 after December 20. The taxes certified shall not be reduced by 124.21 the county auditor by the aid received under section 273.1398, 124.22 subdivision 2, but shall be reduced by the county auditor by the 124.23 aid received under section 273.1398, subdivision 3. If a city, 124.24 town, county, school district, or special district fails to 124.25 certify its levy by that date, its levy shall be the amount 124.26 levied by it for the preceding year. 124.27 [EFFECTIVE DATE.] This section is effective for taxes 124.28 levied in 2003 and thereafter, for taxes payable in 2004 and 124.29 thereafter. 124.30 ARTICLE 6 124.31 HEALTH CARE TAXES 124.32 Section 1. [16A.78] [HEALTH CARE ACCESS FUND RESERVE.] 124.33 Subdivision 1. [ESTABLISH RESERVE.] A reserve is 124.34 established within the health care access fund for uses 124.35 necessary to preserve access to basic health care services. 124.36 Subd. 2. [RESERVE FINANCING.] The funds in the reserve are 125.1 equal to 15 percent of the expenditures for the MinnesotaCare 125.2 program in the immediately prior fiscal year. 125.3 Subd. 3. [RESERVE USE.] The reserve is established to 125.4 protect access to basic health care services that are publicly 125.5 funded. 125.6 [EFFECTIVE DATE.] This section is effective July 1, 2001. 125.7 Sec. 2. Minnesota Statutes 2000, section 62J.041, 125.8 subdivision 1, is amended to read: 125.9 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 125.10 section, the following definitions apply. 125.11 (b) "Health plan company" has the definition provided in 125.12 section 62Q.01. 125.13 (c) "Total expenditures" means incurred claims or 125.14 expenditures on health care services, administrative expenses, 125.15 charitable contributions, and all other payments made by health 125.16 plan companies out of premium revenues. 125.17 (d) "Net expenditures" means total expenditures minus 125.18 exempted taxes and assessments and payments or allocations made 125.19 to establish or maintain reserves. 125.20 (e) "Exempted taxes and assessments" means direct payments 125.21 for taxes to government agencies, contributions to the Minnesota 125.22 comprehensive health association, the medical assistance 125.23 provider's surcharge under section 256.9657, the MinnesotaCare 125.24 provider tax under Minnesota Statutes 2000, section 295.52, 125.25 assessments by the health coverage reinsurance association, 125.26 assessments by the Minnesota life and health insurance guaranty 125.27 association, assessments by the Minnesota risk adjustment 125.28 association, and any new assessments imposed by federal or state 125.29 law. 125.30 (f) "Consumer cost-sharing or subscriber liability" means 125.31 enrollee coinsurance, copayment, deductible payments, and 125.32 amounts in excess of benefit plan maximums. 125.33 [EFFECTIVE DATE.] This section is effective January 1, 2002. 125.34 Sec. 3. Minnesota Statutes 2000, section 62Q.095, 125.35 subdivision 6, is amended to read: 125.36 Subd. 6. [EXEMPTION.] A health plan company, to the extent 126.1 that it operates as a staff model health plan companyas defined126.2in section 295.50, subdivision 12b,by employing allied 126.3 independent health care providers to deliver health care 126.4 services to enrollees, is exempt from this section. For 126.5 purposes of this subdivision, "staff model health plan company" 126.6 means a health plan company as defined in section 62Q.01, 126.7 subdivision 4, that employs one or more types of health care 126.8 provider to deliver health care services to the health plan 126.9 company's enrollees. 126.10 [EFFECTIVE DATE.] This section is effective January 1, 2002. 126.11 Sec. 4. [62Q.671] [PASS-THROUGH OF SAVINGS TO CONSUMERS.] 126.12 Subdivision 1. [REDUCED PREMIUMS.] All health plan 126.13 companies must pass on to consumers, in the form of reduced 126.14 premium rates, all savings resulting from: 126.15 (1) the repeal of the MinnesotaCare provider taxes imposed 126.16 under Minnesota Statutes 2000, section 295.52, and the resulting 126.17 reduction in the transfer of additional expenses generated by 126.18 Minnesota Statutes 2000, section 295.52, obligations to 126.19 third-party contracts under Minnesota Statutes 2000, section 126.20 295.582; and 126.21 (2) the repeal of the one percent premium tax for health 126.22 maintenance organizations, nonprofit health service plan 126.23 corporations, and community integrated service networks imposed 126.24 under Minnesota Statutes 2000, section 297I.05, subdivision 5. 126.25 Subd. 2. [DOCUMENTING COMPLIANCE.] Each health plan 126.26 company must include with its annual renewal for certification 126.27 of authority or licensure documentation indicating compliance 126.28 with subdivision 1. 126.29 Subd. 3. [ENFORCEMENT.] If the appropriate commissioner 126.30 finds that a health plan company has not complied with 126.31 subdivision 1, the commissioner may take enforcement action 126.32 against that health plan company. The commissioner may, by 126.33 order, fine, or censure the health plan company or revoke or 126.34 suspend the certificate of authority or license of the health 126.35 plan company to do business in this state if the commissioner 126.36 finds that the health plan company has not complied with this 127.1 section. The health plan company may appeal the commissioner's 127.2 order through a contested case hearing in accordance with 127.3 chapter 14. 127.4 [EFFECTIVE DATE.] This section is effective January 1, 127.5 2002, and applies to premium rates for health plans issued or 127.6 renewed after that date. 127.7 Sec. 5. Minnesota Statutes 2000, section 214.16, 127.8 subdivision 2, is amended to read: 127.9 Subd. 2. [BOARD COOPERATION REQUIRED.] The board shall 127.10 assist the commissioner of health in data collection activities 127.11 required under Laws 1992, chapter 549, article 7, and shall127.12assist the commissioner of revenue in activities related to127.13collection of the health care provider tax required under Laws127.141992, chapter 549, article 9. Upon the request of the 127.15 commissioneror the commissioner of revenue, the board shall 127.16 make available names and addresses of current licensees and 127.17 provide other information or assistance as needed. 127.18 [EFFECTIVE DATE.] This section is effective January 1, 2002. 127.19 Sec. 6. Minnesota Statutes 2000, section 214.16, 127.20 subdivision 3, is amended to read: 127.21 Subd. 3. [GROUNDS FOR DISCIPLINARY ACTION.] The board 127.22 shall take disciplinary action, which may include license 127.23 revocation, against a regulated person for: 127.24 (1) intentional failure to provide the commissioner of 127.25 health with the data required under chapter 62J; and 127.26 (2)intentional failure to provide the commissioner of127.27revenue with data on gross revenue and other information127.28required for the commissioner to implement sections 295.50 to127.29295.58;127.30(3) intentional failure to pay the health care provider tax127.31required under section 295.52; and127.32(4)entering into a contract or arrangement that is 127.33 prohibited under sections 62J.70 to 62J.73. 127.34 [EFFECTIVE DATE.] This section is effective January 1, 2002. 127.35 Sec. 7. [256L.021] [USE OF TOBACCO SETTLEMENT PROCEEDS.] 127.36 (a) The commissioner of finance shall deposit the following 128.1 amounts of the annual payments due under the terms of the 128.2 tobacco settlement on December 31 of each year into the health 128.3 care access fund established under section 16A.724: 128.4 (1) the first $132,000,000 of the payment due December 31, 128.5 2001; 128.6 (2) the first $119,500,000 of the payment due December 31, 128.7 2003; and 128.8 (3) all payments due after January 1, 2004. 128.9 (b) The commissioner of finance shall credit to the health 128.10 care access fund the one-time tobacco settlement payment due on 128.11 January 2, 2002. 128.12 (c) For purposes of this section, "tobacco settlement" 128.13 means the consent judgment entered in the case of State v. 128.14 Philip Morris Inc., No. C1-94-8565 (Minnesota District Court, 128.15 Second Judicial District). 128.16 [EFFECTIVE DATE.] This section is effective the day 128.17 following final enactment. 128.18 Sec. 8. Minnesota Statutes 2000, section 270B.01, 128.19 subdivision 8, is amended to read: 128.20 Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this 128.21 chapter only, unless expressly stated otherwise, "Minnesota tax 128.22 laws" means the taxes, refunds, and fees administered by or paid 128.23 to the commissioner under chapters 115B (except taxes imposed 128.24 under sections 115B.21 to 115B.24), 289A (except taxes imposed 128.25 under sections 298.01, 298.015, and 298.24), 290, 290A, 291, 128.26 297A, and 297Hand sections 295.50 to 295.59, or any similar 128.27 Indian tribal tax administered by the commissioner pursuant to 128.28 any tax agreement between the state and the Indian tribal 128.29 government, and includes any laws for the assessment, 128.30 collection, and enforcement of those taxes, refunds, and fees. 128.31 [EFFECTIVE DATE.] This section is effective January 1, 2002. 128.32 Sec. 9. Minnesota Statutes 2000, section 270B.14, 128.33 subdivision 1, is amended to read: 128.34 Subdivision 1. [DISCLOSURE TO COMMISSIONER OF HUMAN 128.35 SERVICES.] (a) On the request of the commissioner of human 128.36 services, the commissioner shall disclose return information 129.1 regarding taxes imposed by chapter 290, and claims for refunds 129.2 under chapter 290A, to the extent provided in paragraph (b) and 129.3 for the purposes set forth in paragraph (c). 129.4 (b) Data that may be disclosed are limited to data relating 129.5 to the identity, whereabouts, employment, income, and property 129.6 of a person owing or alleged to be owing an obligation of child 129.7 support. 129.8 (c) The commissioner of human services may request data 129.9 only for the purposes of carrying out the child support 129.10 enforcement program and to assist in the location of parents who 129.11 have, or appear to have, deserted their children. Data received 129.12 may be used only as set forth in section 256.978. 129.13 (d) The commissioner shall provide the records and 129.14 information necessary to administer the supplemental housing 129.15 allowance to the commissioner of human services. 129.16 (e) At the request of the commissioner of human services, 129.17 the commissioner of revenue shall electronically match the 129.18 social security numbers and names of participants in the 129.19 telephone assistance plan operated under sections 237.69 to 129.20 237.711, with those of property tax refund filers, and determine 129.21 whether each participant's household income is within the 129.22 eligibility standards for the telephone assistance plan. 129.23 (f) The commissioner may provide records and information 129.24 collected under Minnesota Statutes 2000, sections 295.50 to 129.25 295.59 to the commissioner of human services for purposes of the 129.26 Medicaid Voluntary Contribution and Provider-Specific Tax 129.27 Amendments of 1991, Public Law Number 102-234. Upon the written 129.28 agreement by the United States Department of Health and Human 129.29 Services to maintain the confidentiality of the data, the 129.30 commissioner may provide records and information collected under 129.31 Minnesota Statutes 2000, sections 295.50 to 295.59 to the Health 129.32 Care Financing Administration section of the United States 129.33 Department of Health and Human Services for purposes of meeting 129.34 federal reporting requirements. 129.35 (g) The commissioner may provide records and information to 129.36 the commissioner of human services as necessary to administer 130.1 the early refund of refundable tax credits. 130.2 (h) The commissioner may disclose information to the 130.3 commissioner of human services necessary to verify income for 130.4 eligibility and premium payment under the MinnesotaCare program, 130.5 under section 256L.05, subdivision 2. 130.6 (i) The commissioner may disclose information to the 130.7 commissioner of human services necessary to verify whether 130.8 applicants or recipients for the Minnesota family investment 130.9 program, general assistance, food stamps, and Minnesota 130.10 supplemental aid program have claimed refundable tax credits 130.11 under chapter 290 and the property tax refund under chapter 130.12 290A, and the amounts of the credits. 130.13 [EFFECTIVE DATE.] This section is effective January 1, 2002. 130.14 Sec. 10. Minnesota Statutes 2000, section 297F.10, 130.15 subdivision 1, is amended to read: 130.16 Subdivision 1. [TAX AND USE TAX ON CIGARETTES.] Revenue 130.17 received from cigarette taxes, as well as related penalties, 130.18 interest, license fees, and miscellaneous sources of revenue 130.19 shall be deposited by the commissioner in the state treasury and 130.20 credited as follows: 130.21 (a) first to the general obligation special tax bond debt 130.22 service account in each fiscal year the amount required to 130.23 increase the balance on hand in the account on each December 1 130.24 to an amount equal to the full amount of principal and interest 130.25 to come due on all outstanding bonds whose debt service is 130.26 payable primarily from the proceeds of the tax to and including 130.27 the second following July 1; and 130.28 (b) after the requirements of paragraph (a) have been met: 130.29 (1) the revenue produced by one mill of the tax on 130.30 cigarettes weighing not more than three pounds a thousand and 130.31 two mills of the tax on cigarettes weighing more than three 130.32 pounds a thousand must be credited to the Minnesota future 130.33 resources fund;and130.34 (2) the amount of revenue specified under paragraph (c) 130.35 must be credited to the health care access fund; and 130.36 (3) the balance of the revenues derived from taxes, 131.1 penalties, and interest (under this chapter) and from license 131.2 fees and miscellaneous sources of revenue shall be credited to 131.3 the general fund. 131.4 (c) For fiscal year 2005, $112,000,000 of the revenue under 131.5 paragraph (b) must be credited to the health care access fund. 131.6 For each fiscal year after 2005, the amount credited to the 131.7 health care access fund equals: 131.8 (1) the amount certified to be paid in the previous year, 131.9 plus 131.10 (2) the percentage increase in the medical care of personal 131.11 consumption expenditures, published by the Bureau of Economic 131.12 Affairs of the United States Department of Commerce, for the 131.13 most recent 12-month period available May 31 of the previous 131.14 fiscal year multiplied by the sum of the amount under clause (1) 131.15 and the amount of the ongoing tobacco settlement payments 131.16 deposited in the health care access fund under section 256L.021, 131.17 paragraph (a), clause (3), for the previous fiscal year. 131.18 [EFFECTIVE DATE.] This section is effective beginning with 131.19 fiscal year 2004. 131.20 Sec. 11. Minnesota Statutes 2000, section 297I.15, is 131.21 amended by adding a subdivision to read: 131.22 Subd. 11. [HEALTH PLAN PREMIUMS.] Premiums received for 131.23 health plans as defined in section 62A.011, subdivision 3, and 131.24 premiums received for coverage described in section 62A.011, 131.25 subdivision 3, clauses (6), (7), (9), (10), and (12), are exempt 131.26 from the taxes imposed under this chapter. 131.27 [EFFECTIVE DATE.] This section is effective January 1, 131.28 2002, and applies to tax years beginning on or after that date. 131.29 Sec. 12. [REPEALER.] 131.30 Subdivision 1. [MINNESOTACARE PROVIDER TAX.] Minnesota 131.31 Statutes 2000, sections 295.50; 295.51; 295.52; 295.53; 295.54; 131.32 295.55; 295.56; 295.57; 295.58; 295.582; and 295.59, are 131.33 repealed. 131.34 Subd. 2. [FEDERAL RESERVE; FINANCIAL MANAGEMENT.] 131.35 Minnesota Statutes 2000, sections 16A.76; and 256L.02, 131.36 subdivision 3, are repealed. 132.1 Subd. 3. [NONPROFIT HEALTH PLAN COMPANY PREMIUM 132.2 TAX.] Minnesota Statutes 2000, section 297I.05, subdivision 5, 132.3 is repealed. 132.4 Subd. 4. [CONFORMING PROVISIONS.] Minnesota Statutes 2000, 132.5 sections 13.4967, subdivision 3; 62T.10; and 144.1484, 132.6 subdivision 2, are repealed. 132.7 [EFFECTIVE DATE.] This section is effective January 1, 132.8 2002, and applies to tax years beginning on or after that date. 132.9 ARTICLE 7 132.10 INCOME AND FRANCHISE TAXES 132.11 Section 1. [116J.885] [BIOMEDICAL INNOVATION AND 132.12 COMMERCIALIZATION INITIATIVE.] 132.13 Subdivision 1. [ESTABLISHED.] The commissioner shall 132.14 establish the biomedical innovation and commercialization 132.15 initiative (BICI) as a collaborative economic development 132.16 initiative between the University of Minnesota, Minnesota's 132.17 medical technology industry, and investors. BICI is not a state 132.18 agency. 132.19 The board established in subdivision 2 shall organize and 132.20 operate BICI as a for-profit entity and in a manner and form 132.21 that the board determines best allows BICI to carry out its 132.22 objectives. Total cash investment may not exceed $40,000,000. 132.23 Any distribution from BICI must be returned to all investors, 132.24 including the state, in the same proportion as funds were 132.25 invested. The amount of credits granted is the amount of the 132.26 state cash investment and is a reduction in the investor's cash 132.27 investment for participation in any distribution under this 132.28 subdivision. 132.29 Subd. 2. [BOARD.] BICI is governed by a board of 132.30 directors, appointed to six-year terms, comprised of: 132.31 (1) a representative chosen by the governor; 132.32 (2) a representative chosen by the University of Minnesota; 132.33 and 132.34 (3) five representatives from the state's medical 132.35 technology industry, chosen by private sector investors. 132.36 The board may use up to five percent of its total 133.1 capitalization to establish a management and administrative 133.2 budget, including the hiring of staff and for professional 133.3 management expenses. Members of the staff are not state 133.4 employees. 133.5 Subd. 3. [DUTIES OF BICI.] BICI shall: 133.6 (1) add business and financial expertise to technologies 133.7 that are being developed by University of Minnesota faculty and 133.8 staff to enhance commercial value; 133.9 (2) promote the depth, breadth, and value of technologies 133.10 being developed by the biomedical academic community; 133.11 (3) catalyze the development of functional, mutually 133.12 advantageous relationships between industry, faculty, staff, the 133.13 university, and extended research community; 133.14 (4) provide a financial return on commercialization efforts 133.15 to the stakeholders in BICI; 133.16 (5) directly commercialize technologies through the startup 133.17 of new Minnesota companies or enhance the marketing of 133.18 technologies to existing companies creating expanded economic 133.19 development opportunities in Minnesota; and 133.20 (6) adopt corporate bylaws and make them available to the 133.21 public. 133.22 Subd. 4. [STATEWIDE FOCUS.] BICI may contract and 133.23 collaborate with higher education and other research 133.24 institutions located throughout the state. 133.25 Subd. 5. [POWERS OF BOARD.] The board has the power to do 133.26 all things reasonable and necessary to carry out the duties of 133.27 BICI including, without limitation, the power to: 133.28 (1) enter into contracts; 133.29 (2) sue and be sued; 133.30 (3) acquire, hold, lease, and transfer any interest in real 133.31 and personal property; 133.32 (4) accept appropriations, gifts, grants, and bequests; 133.33 (5) hire employees for BICI; and 133.34 (6) delegate any of its powers. 133.35 Subd. 6. [BOARD COMPENSATION.] Compensation and expense 133.36 reimbursement of board members is as provided in section 134.1 15.0575, subdivision 1. 134.2 [EFFECTIVE DATE.] This section is effective the day 134.3 following final enactment. 134.4 Sec. 2. Minnesota Statutes 2000, section 270A.03, 134.5 subdivision 5, is amended to read: 134.6 Subd. 5. [DEBT.] (a) "Debt" means a legal obligation of a 134.7 natural person to pay a fixed and certain amount of money, which 134.8 equals or exceeds $25 and which is due and payable to a claimant 134.9 agency. The term includes criminal fines imposed under section 134.10 609.10 or 609.125 and restitution. A debt may arise under a 134.11 contractual or statutory obligation, a court order, or other 134.12 legal obligation, but need not have been reduced to judgment. 134.13 (b) A debt includes any legal obligation of a current 134.14 recipient of assistance which is based on overpayment of an 134.15 assistance grant where that payment is based on a client waiver 134.16 or an administrative or judicial finding of an intentional 134.17 program violation; or where the debt is owed to a program 134.18 wherein the debtor is not a client at the time notification is 134.19 provided to initiate recovery under this chapter and the debtor 134.20 is not a current recipient of food stamps, transitional child 134.21 care, or transitional medical assistance. 134.22 (c) A debt does not include any legal obligation to pay a 134.23 claimant agency for medical care, including hospitalization if 134.24 the income of the debtor at the time when the medical care was 134.25 rendered does not exceed the following amount: 134.26 (1) for an unmarried debtor, an income of$6,400$8,800 or 134.27 less; 134.28 (2) for a debtor with one dependent, an income 134.29 of$8,200$11,270 or less; 134.30 (3) for a debtor with two dependents, an income 134.31 of$9,700$13,330 or less; 134.32 (4) for a debtor with three dependents, an income of 134.33$11,000$15,120 or less; 134.34 (5) for a debtor with four dependents, an income 134.35 of$11,600$15,950 or less; and 134.36 (6) for a debtor with five or more dependents, an income of 135.1$12,100$16,630 or less. 135.2 The income amounts in this subdivision shall be adjusted 135.3 for inflation for debts incurred in calendar years19912001 and 135.4 thereafter. The dollar amount of each income level that applied 135.5 to debts incurred in the prior year shall be increased in the 135.6 same manner as provided in section290.06, subdivision 2d, for135.7the expansion of the tax rate brackets1f of the Internal 135.8 Revenue Code of 1986, as amended through December 31, 2000, 135.9 except that for the purposes of this subdivision the percentage 135.10 increase shall be determined from the year starting September 1, 135.11 1999, and ending August 31, 2000, as the base year for adjusting 135.12 for inflation for debts incurred after December 31, 2000. 135.13 (d) Debt also includes an agreement to pay a MinnesotaCare 135.14 premium, regardless of the dollar amount of the premium 135.15 authorized under section 256L.15, subdivision 1a. 135.16 [EFFECTIVE DATE.] This section is effective for debts 135.17 incurred after December 31, 2000. 135.18 Sec. 3. Minnesota Statutes 2000, section 289A.12, 135.19 subdivision 3, is amended to read: 135.20 Subd. 3. [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES, 135.21 AND S CORPORATIONS.] (a) Partnerships must file a return with 135.22 the commissioner for each taxable year. The return must conform 135.23 to the requirements of section290.31290.311, and must include 135.24 the names and addresses of the partners entitled to a 135.25 distributive share in their taxable net income, gain, loss, or 135.26 credit, and the amount of the distributive share to which each 135.27 is entitled. A partnership required to file a return for a 135.28 partnership taxable year must furnish a copy of the information 135.29 required to be shown on the return to a person who is a partner 135.30 at any time during the taxable year, on or before the day on 135.31 which the return for the taxable year was filed. 135.32 (b) The fiduciary of an estate or trust making the return 135.33 required to be filed under section 289A.08, subdivision 2, for a 135.34 taxable year must give a beneficiary who receives a distribution 135.35 from the estate or trust with respect to the taxable year or to 135.36 whom any item with respect to the taxable year is allocated, a 136.1 statement containing the information required to be shown on the 136.2 return, on or before the date on which the return was filed. 136.3 (c) An S corporation must file a return with the 136.4 commissioner for a taxable year during which an election under 136.5 section 290.9725 is in effect, stating specifically the names 136.6 and addresses of the persons owning stock in the corporation at 136.7 any time during the taxable year, the number of shares of stock 136.8 owned by a shareholder at all times during the taxable year, the 136.9 shareholder's pro rata share of each item of the corporation for 136.10 the taxable year, and other information the commissioner 136.11 requires. An S corporation required to file a return under this 136.12 paragraph for any taxable year must furnish a copy of the 136.13 information shown on the return to the person who is a 136.14 shareholder at any time during the taxable year, on or before 136.15 the day on which the return for the taxable year was filed. 136.16 (d) The partnership or S corporation return must be signed 136.17 by someone designated by the partnership or S corporation. 136.18 [EFFECTIVE DATE.] This section is effective for taxable 136.19 years beginning after December 31, 2000. 136.20 Sec. 4. Minnesota Statutes 2000, section 290.01, is 136.21 amended by adding a subdivision to read: 136.22 Subd. 5b. [INSURANCE COMPANY.] The terms "insurance 136.23 company," "life insurance company," and "insurance company other 136.24 than life," have the meanings given in the Internal Revenue Code. 136.25 [EFFECTIVE DATE.] This section is effective for tax years 136.26 beginning after December 31, 2000. 136.27 Sec. 5. Minnesota Statutes 2000, section 290.01, 136.28 subdivision 6b, is amended to read: 136.29 Subd. 6b. [FOREIGN OPERATING CORPORATION.] The term 136.30 "foreign operating corporation," when applied to a corporation, 136.31 means a domestic corporation with the following characteristics: 136.32 (1) it is part of a unitary business at least one member of 136.33 which is taxable in this state; 136.34 (2) it is not a foreign sales corporation under section 922 136.35 of the Internal Revenue Code, as amended through December 31, 136.36 1999, for the taxable year; and 137.1(2)(3) either (i) the average of the percentages of its 137.2 property and payrolls assigned to locations inside the United 137.3 States and the District of Columbia, excluding the commonwealth 137.4 of Puerto Rico and possessions of the United States, as 137.5 determined under section 290.191 or 290.20, is 20 percent or 137.6 less; or (ii) it has in effect a valid election under section 137.7 936 of the Internal Revenue Code. 137.8 [EFFECTIVE DATE.] This section is effective for taxable 137.9 years beginning after December 31, 2001. 137.10 Sec. 6. Minnesota Statutes 2000, section 290.01, 137.11 subdivision 7, is amended to read: 137.12 Subd. 7. [RESIDENT.] The term "resident" means (1) any 137.13 individual domiciled in Minnesota, except that an individual is 137.14 not a "resident" for the period of time that the individual is a 137.15 "qualified individual" as defined in section 911(d)(1) of the 137.16 Internal Revenue Code, if the qualified individual notifies the 137.17 county within three months of moving out of the country that 137.18 homestead status be revoked for the Minnesota residence of the 137.19 qualified individual, and the property is not classified as a 137.20 homestead while the individual remains a qualified individual; 137.21 and (2) any individual domiciled outside the state who maintains 137.22 a place of abode in the state and spends in the aggregate more 137.23 than one-half of the tax year in Minnesota, unless the 137.24 individual or the spouse of the individual is in the armed 137.25 forces of the United States, or the individual is covered under 137.26 the reciprocity provisions in section 290.081. 137.27 For purposes of this subdivision, presence within the state 137.28 for any part of a calendar day constitutes a day spent in the 137.29 state. Individuals shall keep adequate records to substantiate 137.30 the days spent outside the state. 137.31 The term "abode" means a dwelling maintained by an 137.32 individual, whether or not owned by the individual and whether 137.33 or not occupied by the individual, and includes a dwelling place 137.34 owned or leased by the individual's spouse. 137.35 In determining if the individual is domiciled in Minnesota, 137.36 neither the commissioner nor any courtshallmay consider: 138.1 (1) charitable contributions made byanthe individual 138.2 within or without the statein determining if the individual is138.3domiciled in Minnesota; or 138.4 (2) the location of a bank, other financial institution, 138.5 broker-dealer, as defined in section 80A.14, subdivision 4, or 138.6 investment adviser, as defined in section 80A.14, subdivision 9, 138.7 with which the individual has an account, loan, or other 138.8 contractual relationship. 138.9 [EFFECTIVE DATE.] This section is effective the day 138.10 following final enactment. 138.11 Sec. 7. Minnesota Statutes 2000, section 290.01, 138.12 subdivision 19b, is amended to read: 138.13 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 138.14 individuals, estates, and trusts, there shall be subtracted from 138.15 federal taxable income: 138.16 (1) interest income on obligations of any authority, 138.17 commission, or instrumentality of the United States to the 138.18 extent includable in taxable income for federal income tax 138.19 purposes but exempt from state income tax under the laws of the 138.20 United States; 138.21 (2) if included in federal taxable income, the amount of 138.22 any overpayment of income tax to Minnesota or to any other 138.23 state, for any previous taxable year, whether the amount is 138.24 received as a refund or as a credit to another taxable year's 138.25 income tax liability; 138.26 (3) the amount paid to others, less the credit allowed 138.27 under section 290.0674, not to exceed $1,625 for each qualifying 138.28 child in grades kindergarten to 6 and $2,500 for each qualifying 138.29 child in grades 7 to 12, for tuition, textbooks, and 138.30 transportation of each qualifying child in attending an 138.31 elementary or secondary school situated in Minnesota, North 138.32 Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 138.33 this state may legally fulfill the state's compulsory attendance 138.34 laws, which is not operated for profit, and which adheres to the 138.35 provisions of the Civil Rights Act of 1964 and chapter 363. For 138.36 the purposes of this clause, "tuition" includes fees or tuition 139.1 as defined in section 290.0674, subdivision 1,clause139.2 clauses (1), (6), and (7). As used in this clause, "textbooks" 139.3 includes books and other instructional materials and equipment 139.4 used in elementary and secondary schools in teaching only those 139.5 subjects legally and commonly taught in public elementary and 139.6 secondary schools in this state. Equipment expenses qualifying 139.7 for deduction includes expenses as defined and limited in 139.8 section 290.0674, subdivision 1,clauseclauses (3) and (5). 139.9 "Textbooks" does not include instructional books and materials 139.10 used in the teaching of religious tenets, doctrines, or worship, 139.11 the purpose of which is to instill such tenets, doctrines, or 139.12 worship, nor does it include books or materials for, or 139.13 transportation to, extracurricular activities including sporting 139.14 events, musical or dramatic events, speech activities, driver's 139.15 education, or similar programs. For purposes of the subtraction 139.16 provided by this clause, "qualifying child" has the meaning 139.17 given in section 32(c)(3) of the Internal Revenue Code; 139.18 (4) contributions made in taxable years beginning after 139.19 December 31, 1981, and before January 1, 1985, to a qualified 139.20 governmental pension plan, an individual retirement account, 139.21 simplified employee pension, or qualified plan covering a 139.22 self-employed person that were included in Minnesota gross 139.23 income in the taxable year for which the contributions were made 139.24 but were deducted or were not included in the computation of 139.25 federal adjusted gross income, less any amount allowed to be 139.26 subtracted as a distribution under this subdivision or a 139.27 predecessor provision in taxable years that began before January 139.28 1, 2000. This subtraction applies only for taxable years 139.29 beginning after December 31, 1999, and before January 1, 2001. 139.30 If an individual's subtraction under this clause exceeds the 139.31 individual's taxable income, the excess may be carried forward 139.32 to taxable years beginning after December 31, 2000, and before 139.33 January 1, 2002; 139.34 (5) income as provided under section 290.0802; 139.35(6) the amount of unrecovered accelerated cost recovery139.36system deductions allowed under subdivision 19g;140.1(7)(6) to the extent included in federal adjusted gross 140.2 income, income realized on disposition of property exempt from 140.3 tax under section 290.491; 140.4(8)(7) to the extent not deducted in determining federal 140.5 taxable income or used to claim the long-term care insurance 140.6 credit under section 290.0672, the amount paid for health 140.7 insurance of self-employed individuals as determined under 140.8 section 162(l) of the Internal Revenue Code, except that the 140.9 percent limit does not apply. If the individual deducted 140.10 insurance payments under section 213 of the Internal Revenue 140.11 Code of 1986, the subtraction under this clause must be reduced 140.12 by the lesser of: 140.13 (i) the total itemized deductions allowed under section 140.14 63(d) of the Internal Revenue Code, less state, local, and 140.15 foreign income taxes deductible under section 164 of the 140.16 Internal Revenue Code and the standard deduction under section 140.17 63(c) of the Internal Revenue Code; or 140.18 (ii) the lesser of (A) the amount of insurance qualifying 140.19 as "medical care" under section 213(d) of the Internal Revenue 140.20 Code to the extent not deducted under section 162(1) of the 140.21 Internal Revenue Code or excluded from income or (B) the total 140.22 amount deductible for medical care under section 213(a); 140.23(9)(8) the exemption amount allowed under Laws 1995, 140.24 chapter 255, article 3, section 2, subdivision 3; 140.25(10)(9) to the extent included in federal taxable income, 140.26 postservice benefits for youth community service under section 140.27 124D.42 for volunteer service under United States Code, title 140.28 42, sections 12601 to 12604; 140.29(11)(10) to the extent not deducted in determining federal 140.30 taxable income by an individual who does not itemize deductions 140.31 for federal income tax purposes for the taxable year, an amount 140.32 equal to50100 percent of the excess of charitable 140.33 contributions allowable as a deduction for the taxable year 140.34 under section 170(a) of the Internal Revenue Code over $500; 140.35(12)(11) to the extent included in federal taxable income, 140.36 holocaust victims' settlement payments for any injury incurred 141.1 as a result of the holocaust, if received by an individual who 141.2 was persecuted for racial or religious reasons by Nazi Germany 141.3 or any other Axis regime or an heir of such a person;and141.4(13)(12) for taxable years beginning before January 1, 141.5 2008, the amount of the federal small ethanol producer credit 141.6 allowed under section 40(a)(3) of the Internal Revenue Code 141.7 which is included in gross income under section 87 of the 141.8 Internal Revenue Code.; 141.9 (13) to the extent included in federal taxable income, the 141.10 compensation received for active duty in the armed forces of the 141.11 United States or the United Nations for personal services wholly 141.12 performed outside of the state of Minnesota; 141.13 (14) to the extent included in federal taxable income, the 141.14 first $3,000 of compensation received for (i) personal services 141.15 in the Minnesota national guard or armed forces reserves, or (ii) 141.16 active duty in the armed forces of the United States or the 141.17 United Nations for personal services wholly performed inside the 141.18 state of Minnesota; 141.19 (15) for individuals who are allowed a federal foreign tax 141.20 credit for taxes that do not qualify for a credit under section 141.21 290.06, subdivision 22, an amount equal to the carryover of 141.22 subnational foreign taxes for the taxable year, but not to 141.23 exceed the total subnational foreign taxes reported in claiming 141.24 the foreign tax credit. For purposes of this clause, "federal 141.25 foreign tax credit" means the credit allowed under section 27 of 141.26 the Internal Revenue Code, and "carryover of subnational foreign 141.27 taxes" equals the carryover allowed under section 904(c) of the 141.28 Internal Revenue Code minus national level foreign taxes to the 141.29 extent they exceed the federal foreign tax credit; and 141.30 (16) to the extent the gain was included in federal taxable 141.31 income, the capital gain exclusion under section 290.0803. 141.32 [EFFECTIVE DATE.] This section is effective for taxable 141.33 years beginning after December 31, 2000. 141.34 Sec. 8. Minnesota Statutes 2000, section 290.01, 141.35 subdivision 19c, is amended to read: 141.36 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 142.1 INCOME.] For corporations, there shall be added to federal 142.2 taxable income: 142.3 (1) the amount of any deduction taken for federal income 142.4 tax purposes for income, excise, or franchise taxes based on net 142.5 income or related minimum taxes, including but not limited to 142.6 the tax imposed under section 290.0922, paid by the corporation 142.7 to Minnesota, another state, a political subdivision of another 142.8 state, the District of Columbia, or any foreign country or 142.9 possession of the United States; 142.10 (2) interest not subject to federal tax upon obligations 142.11 of: the United States, its possessions, its agencies, or its 142.12 instrumentalities; the state of Minnesota or any other state, 142.13 any of its political or governmental subdivisions, any of its 142.14 municipalities, or any of its governmental agencies or 142.15 instrumentalities; the District of Columbia; or Indian tribal 142.16 governments; 142.17 (3) exempt-interest dividends received as defined in 142.18 section 852(b)(5) of the Internal Revenue Code; 142.19 (4) the amount of any net operating loss deduction taken 142.20 for federal income tax purposes under section 172 or 832(c)(10) 142.21 of the Internal Revenue Code or operations loss deduction under 142.22 section 810 of the Internal Revenue Code; 142.23 (5) the amount of any special deductions taken for federal 142.24 income tax purposes under sections 241 to 247 of the Internal 142.25 Revenue Code; 142.26 (6) losses from the business of mining, as defined in 142.27 section 290.05, subdivision 1, clause (a), that are not subject 142.28 to Minnesota income tax; 142.29 (7) the amount of any capital losses deducted for federal 142.30 income tax purposes under sections 1211 and 1212 of the Internal 142.31 Revenue Code; 142.32(8) the amount of any charitable contributions deducted for142.33federal income tax purposes under section 170 of the Internal142.34Revenue Code;142.35(9)(8) the exempt foreign trade income of a foreign sales 142.36 corporation under sections 921(a) and 291 of the Internal 143.1 Revenue Code; 143.2(10) the amount of percentage depletion deducted under143.3sections 611 through 614 and 291 of the Internal Revenue Code;143.4(11) for certified pollution control facilities placed in143.5service in a taxable year beginning before December 31, 1986,143.6and for which amortization deductions were elected under section143.7169 of the Internal Revenue Code of 1954, as amended through143.8December 31, 1985, the amount of the amortization deduction143.9allowed in computing federal taxable income for those143.10facilities;143.11(12)(9) the amount of any deemed dividend from a foreign 143.12 operating corporation determined pursuant to section 290.17, 143.13 subdivision 4, paragraph (g); 143.14(13) the amount of any environmental tax paid under section143.1559(a) of the Internal Revenue Code; and143.16(14)(10) the amount of a partner's pro rata share of net 143.17 income which does not flow through to the partner because the 143.18 partnership elected to pay the tax on the income under section 143.19 6242(a)(2) of the Internal Revenue Code; and 143.20 (11) the amount of net income excluded under section 114 of 143.21 the Internal Revenue Code. 143.22 [EFFECTIVE DATE.] This section is effective for taxable 143.23 years beginning after December 31, 2000. 143.24 Sec. 9. Minnesota Statutes 2000, section 290.01, 143.25 subdivision 19d, is amended to read: 143.26 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 143.27 TAXABLE INCOME.] For corporations, there shall be subtracted 143.28 from federal taxable income after the increases provided in 143.29 subdivision 19c: 143.30 (1) the amount of foreign dividend gross-up added to gross 143.31 income for federal income tax purposes under section 78 of the 143.32 Internal Revenue Code; 143.33 (2) the amount of salary expense not allowed for federal 143.34 income tax purposes due to claiming the federal jobs credit 143.35 under section 51 of the Internal Revenue Code; 143.36 (3) any dividend (not including any distribution in 144.1 liquidation) paid within the taxable year by a national or state 144.2 bank to the United States, or to any instrumentality of the 144.3 United States exempt from federal income taxes, on the preferred 144.4 stock of the bank owned by the United States or the 144.5 instrumentality; 144.6 (4) amounts disallowed for intangible drilling costs due to 144.7 differences between this chapter and the Internal Revenue Code 144.8 in taxable years beginning before January 1, 1987, as follows: 144.9 (i) to the extent the disallowed costs are represented by 144.10 physical property, an amount equal to the allowance for 144.11 depreciation under Minnesota Statutes 1986, section 290.09, 144.12 subdivision 7, subject to the modifications contained in 144.13 subdivision 19e; and 144.14 (ii) to the extent the disallowed costs are not represented 144.15 by physical property, an amount equal to the allowance for cost 144.16 depletion under Minnesota Statutes 1986, section 290.09, 144.17 subdivision 8; except that 144.18 (iii) this subtraction is permitted for the tax year ending 144.19 before December 31, 2002. Disallowed amounts remaining after 144.20 the tax year ending December 31, 2000, must be subtracted from 144.21 federal taxable income under this subdivision in two equal 144.22 portions in tax years 2001 and 2002; 144.23 (5) the deduction for capital losses pursuant to sections 144.24 1211 and 1212 of the Internal Revenue Code, except that: 144.25 (i) for capital losses incurred in taxable years beginning 144.26 after December 31, 1986, capital loss carrybacks shall not be 144.27 allowed; and 144.28 (ii) for capital losses incurred in taxable years beginning 144.29 after December 31, 1986, a capital loss carryover to each of the 144.30 15 taxable years succeeding the loss year shall be allowed; 144.31(iii) for capital losses incurred in taxable years144.32beginning before January 1, 1987, a capital loss carryback to144.33each of the three taxable years preceding the loss year, subject144.34to the provisions of Minnesota Statutes 1986, section 290.16,144.35shall be allowed; and144.36(iv) for capital losses incurred in taxable years beginning145.1before January 1, 1987, a capital loss carryover to each of the145.2five taxable years succeeding the loss year to the extent such145.3loss was not used in a prior taxable year and subject to the145.4provisions of Minnesota Statutes 1986, section 290.16, shall be145.5allowed;145.6 (6) an amount for interest and expenses relating to income 145.7 not taxable for federal income tax purposes, if (i) the income 145.8 is taxable under this chapter and (ii) the interest and expenses 145.9 were disallowed as deductions under the provisions of section 145.10 171(a)(2), 265 or 291 of the Internal Revenue Code in computing 145.11 federal taxable income; 145.12(7) in the case of mines, oil and gas wells, other natural145.13deposits, and timber for which percentage depletion was145.14disallowed pursuant to subdivision 19c, clause (11), a145.15reasonable allowance for depletion based on actual cost. In the145.16case of leases the deduction must be apportioned between the145.17lessor and lessee in accordance with rules prescribed by the145.18commissioner. In the case of property held in trust, the145.19allowable deduction must be apportioned between the income145.20beneficiaries and the trustee in accordance with the pertinent145.21provisions of the trust, or if there is no provision in the145.22instrument, on the basis of the trust's income allocable to145.23each;145.24(8) for(7) certified pollution control facilitiesplaced145.25in service in a taxable year beginning before December 31, 1986,145.26and for which amortization deductions were elected under section145.27169 of the Internal Revenue Code of 1954, as amended through145.28December 31, 1985, an amount equal to the allowance for145.29depreciation under Minnesota Statutes 1986, section 290.09,145.30subdivision 7amortization deduction amounts remaining after the 145.31 tax year ending December 31, 2000, must be subtracted from 145.32 federal taxable income under this subdivision in two equal 145.33 portions in tax years 2001 and 2002; 145.34(9) the amount included in federal taxable income145.35attributable to the credits provided in Minnesota Statutes 1986,145.36section 273.1314, subdivision 9, or Minnesota Statutes, section146.1469.171, subdivision 6;146.2(10)(8) amounts included in federal taxable income that 146.3 are due to refunds of income, excise, or franchise taxes based 146.4 on net income or related minimum taxes paid by the corporation 146.5 to Minnesota, another state, a political subdivision of another 146.6 state, the District of Columbia, or a foreign country or 146.7 possession of the United States to the extent that the taxes 146.8 were added to federal taxable income under section 290.01, 146.9 subdivision 19c, clause (1), in a prior taxable year; 146.10(11)(9) 80 percent of royalties, fees, or other like 146.11 income accrued or received from a foreign operating corporation 146.12 or a foreign corporation which is part of the same unitary 146.13 business as the receiving corporation; 146.14(12)(10) income or gains from the business of mining as 146.15 defined in section 290.05, subdivision 1, clause (a), that are 146.16 not subject to Minnesota franchise tax; 146.17(13)(11) the amount of handicap access expenditures in the 146.18 taxable year which are not allowed to be deducted or capitalized 146.19 under section 44(d)(7) of the Internal Revenue Code; 146.20(14)(12) the amount of qualified research expenses not 146.21 allowed for federal income tax purposes under section 280C(c) of 146.22 the Internal Revenue Code, but only to the extent that the 146.23 amount exceeds the amount of the credit allowed under section 146.24 290.068; 146.25(15)(13) the amount of salary expenses not allowed for 146.26 federal income tax purposes due to claiming the Indian 146.27 employment credit under section 45A(a) of the Internal Revenue 146.28 Code; 146.29(16)(14) the amount of any refund of environmental taxes 146.30 paid under section 59A of the Internal Revenue Code; and 146.31(17)(15) for taxable years beginning before January 1, 146.32 2008, the amount of the federal small ethanol producer credit 146.33 allowed under section 40(a)(3) of the Internal Revenue Code 146.34 which is included in gross income under section 87 of the 146.35 Internal Revenue Code; and 146.36 (16) for a corporation whose foreign sales corporation, as 147.1 defined in section 922 of the Internal Revenue Code, constituted 147.2 a foreign operating company during the taxable years ending 147.3 during calendar year 2000, an amount equal to 1.23 multiplied by 147.4 the amount of income excluded under section 114 of the Internal 147.5 Revenue Code, provided the income is not income of a foreign 147.6 operating company. 147.7 [EFFECTIVE DATE.] This section is effective for taxable 147.8 years beginning after December 31, 2000. 147.9 Sec. 10. Minnesota Statutes 2000, section 290.01, 147.10 subdivision 22, is amended to read: 147.11 Subd. 22. [TAXABLE NET INCOME.] For tax years beginning 147.12 after December 31, 1986, the term "taxable net income" means: 147.13 (1) for resident individuals the same as net income; 147.14 (2) for individuals who were not residents of Minnesota for 147.15 the entire year, the same as net income except that the tax is 147.16 imposed only on the Minnesota apportioned share of that income 147.17 as determined pursuant to section 290.06, subdivision 2c, 147.18 paragraph (e); 147.19 (3) for all other taxpayers, the part of net income that is 147.20 allocable to Minnesota by assignment or apportionment under one 147.21 or more of sections 290.17, 290.191, 290.20,290.35,and 290.36. 147.22 For tax years beginning before January 1, 1987, the term 147.23 "taxable net income" means the net income assignable to this 147.24 state pursuant to sections 290.17 to 290.20. For corporations, 147.25 taxable net income is then reduced by the deductions contained 147.26 in section 290.21. 147.27 [EFFECTIVE DATE.] This section is effective for taxable 147.28 years beginning after December 31, 2000. 147.29 Sec. 11. Minnesota Statutes 2000, section 290.01, 147.30 subdivision 29, is amended to read: 147.31 Subd. 29. [TAXABLE INCOME.]For tax years beginning after147.32December 31, 1986,The term "taxable income" means: 147.33 (1) for individuals, estates, and trusts, the same as 147.34 taxable net income; 147.35 (2) for corporations,including insurance companies,the 147.36 taxable net income less 148.1 (i) the net operating loss deduction under section 290.095; 148.2 and 148.3 (ii) the dividends received deduction under section 290.21, 148.4 subdivision 4; and148.5(iii) the charitable contribution deduction under section148.6290.21, subdivision 3. 148.7 [EFFECTIVE DATE.] This section is effective for taxable 148.8 years beginning after December 31, 2000. 148.9 Sec. 12. Minnesota Statutes 2000, section 290.014, 148.10 subdivision 5, is amended to read: 148.11 Subd. 5. [CORPORATIONS.] Except as provided in section 148.12 290.015, corporations are subject to the return filing 148.13 requirements and to tax as provided in this chapter if the 148.14 corporation so exercises its franchise as to engage in such 148.15 contacts with this state as to cause part of the income of the 148.16 corporation to be: 148.17 (1) allocable to this state under section 290.17, 290.191, 148.18 290.20,290.35,or 290.36; 148.19 (2) taxed to the corporation under the Internal Revenue 148.20 Code (or not taxed under the Internal Revenue Code by reason of 148.21 its character but of a character which is taxable under this 148.22 chapter) in its capacity as a beneficiary of an estate with 148.23 income allocable to this state under section 290.17, 290.191, or 148.24 290.20 and the income, taking into account the income character 148.25 provisions of section 662(b) of the Internal Revenue Code, would 148.26 be allocable to this state under section 290.17, 290.191, or 148.27 290.20 if realized by the corporation directly from the source 148.28 from which realized by the estate; 148.29 (3) taxed to the corporation under the Internal Revenue 148.30 Code (or not taxed under the Internal Revenue Code by reason of 148.31 its character but of a character which is taxable under this 148.32 chapter) in its capacity as a beneficiary or grantor or other 148.33 person treated as a substantial owner of a trust with income 148.34 allocable to this state under section 290.17, 290.191, or 290.20 148.35 and the income, taking into account the income character 148.36 provisions of section 652(b), 662(b), or 664(b) of the Internal 149.1 Revenue Code, would be allocable to this state under section 149.2 290.17, 290.191, or 290.20 if realized by the corporation 149.3 directly from the source from which realized by the trust; or 149.4 (4) taxed to the corporation under the Internal Revenue 149.5 Code (or not taxed under the Internal Revenue Code by reason of 149.6 its character but of a character which is taxable under this 149.7 chapter) in its capacity as a limited or general partner in a 149.8 partnership with income allocable to this state under section 149.9 290.17, 290.191, or 290.20 and the income, taking into account 149.10 the income character provisions of section 702(b) of the 149.11 Internal Revenue Code, would be allocable to this state under 149.12 section 290.17, 290.191, or 290.20 if realized by the 149.13 corporation directly from the source from which realized by the 149.14 partnership. 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 290.05, 149.18 subdivision 1, is amended to read: 149.19 Subdivision 1. [EXEMPT ENTITIES.] The following 149.20 corporations, individuals, estates, trusts, and organizations 149.21 shall be exempted from taxation under this chapter, provided 149.22 that every such person or corporation claiming exemption under 149.23 this chapter, in whole or in part, must establish to the 149.24 satisfaction of the commissioner the taxable status of any 149.25 income or activity: 149.26 (a) corporations, individuals, estates, and trusts engaged 149.27 in the business of mining or producing iron ore and other ores 149.28 the mining or production of which is subject to the occupation 149.29 tax imposed by section 298.01; but if any such corporation, 149.30 individual, estate, or trust engages in any other business or 149.31 activity or has income from any property not used in such 149.32 business it shall be subject to this tax computed on the net 149.33 income from such property or such other business or activity. 149.34 Royalty shall not be considered as income from the business of 149.35 mining or producing iron ore within the meaning of this section; 149.36 (b) the United States of America, the state of Minnesota or 150.1 any political subdivision of either agencies or 150.2 instrumentalities, whether engaged in the discharge of 150.3 governmental or proprietary functions; and 150.4 (c) any insurance companythat is domiciled in a state or150.5country other than Minnesota that imposes retaliatory taxes,150.6fines, deposits, penalties, licenses, or fees and that does not150.7grant, on a reciprocal basis, exemption from such retaliatory150.8taxes to insurance companies or their agents domiciled in150.9Minnesota. "Retaliatory taxes" means taxes imposed on insurance150.10companies organized in another state or country that result from150.11the fact that an insurance company organized in the taxing150.12jurisdiction and doing business in the other jurisdiction is150.13subject to taxes, fines, deposits, penalties, licenses, or fees150.14in an amount exceeding that imposed by the taxing jurisdiction150.15upon an insurance company organized in the other state or150.16country and doing business to the same extent in the taxing150.17jurisdiction; and150.18(d) town and farmers' mutual insurance companies and mutual150.19property and casualty insurance companies, other than those (1)150.20writing life insurance or (2) whose total assets on December 31,150.211989, exceeded $1,600,000,000. 150.22 [EFFECTIVE DATE.] This section is effective for taxable 150.23 years beginning after December 31, 2000. 150.24 Sec. 14. Minnesota Statutes 2000, section 290.06, 150.25 subdivision 2c, is amended to read: 150.26 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 150.27 AND TRUSTS.] (a) The income taxes imposed by this chapter upon 150.28 married individuals filing joint returns and surviving spouses 150.29 as defined in section 2(a) of the Internal Revenue Code must be 150.30 computed by applying to their taxable net income the following 150.31 schedule of rates: 150.32 (1) On the first $25,680, 5.35 percent; 150.33 (2) On all over $25,680, but not over $102,030, 7.05 150.34 percent; 150.35 (3) On all over $102,030, 7.85 percent. 150.36 Married individuals filing separate returns, estates, and 151.1 trusts must compute their income tax by applying the above rates 151.2 to their taxable income, except that the income brackets will be 151.3 one-half of the above amounts. 151.4 (b) The income taxes imposed by this chapter upon unmarried 151.5 individuals must be computed by applying to taxable net income 151.6 the following schedule of rates: 151.7 (1) On the first $17,570, 5.35 percent; 151.8 (2) On all over $17,570, but not over $57,710, 7.05 151.9 percent; 151.10 (3) On all over $57,710, 7.85 percent. 151.11 (c) The income taxes imposed by this chapter upon unmarried 151.12 individuals qualifying as a head of household as defined in 151.13 section 2(b) of the Internal Revenue Code must be computed by 151.14 applying to taxable net income the following schedule of rates: 151.15 (1) On the first $21,630, 5.35 percent; 151.16 (2) On all over $21,630, but not over $86,910, 7.05 151.17 percent; 151.18 (3) On all over $86,910, 7.85 percent. 151.19 (d) In lieu of a tax computed according to the rates set 151.20 forth in this subdivision, the tax of any individual taxpayer 151.21 whose taxable net income for the taxable year is less than an 151.22 amount determined by the commissioner must be computed in 151.23 accordance with tables prepared and issued by the commissioner 151.24 of revenue based on income brackets of not more than $100. The 151.25 amount of tax for each bracket shall be computed at the rates 151.26 set forth in this subdivision, provided that the commissioner 151.27 may disregard a fractional part of a dollar unless it amounts to 151.28 50 cents or more, in which case it may be increased to $1. 151.29 (e) An individual who is not a Minnesota resident for the 151.30 entire year must compute the individual's Minnesota income tax 151.31 as provided in this subdivision. After the application of the 151.32 nonrefundable credits provided in this chapter, the tax 151.33 liability must then be multiplied by a fraction in which: 151.34 (1) the numerator is the individual's Minnesota source 151.35 federal adjusted gross income as defined in section 62 of the 151.36 Internal Revenue Code and increased by the additions required 152.1 under section 290.01, subdivision 19a, clauses (1) and (6), and 152.2 reduced by the Minnesota assignable portion of the subtraction 152.3 for United States government interest under section 290.01, 152.4 subdivision 19b, clause (1), after applying the allocation and 152.5 assignability provisions of section 290.081, clause (a), or 152.6 290.17; and 152.7 (2) the denominator is the individual's federal adjusted 152.8 gross income as defined in section 62 of the Internal Revenue 152.9 Code of 1986, increased by the amounts specified in section 152.10 290.01, subdivision 19a, clauses (1) and (6), and reduced by the 152.11 amounts specified in section 290.01, subdivision 19b, clause (1). 152.12 [EFFECTIVE DATE.] This section is effective for taxable 152.13 years beginning after December 31, 2000. 152.14 Sec. 15. Minnesota Statutes 2000, section 290.06, 152.15 subdivision 22, is amended to read: 152.16 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 152.17 taxpayer who is liable for taxes on or measured by net income to 152.18 another stateor province or territory of Canada, as provided in 152.19 paragraphs (b) through (f), upon income allocated or apportioned 152.20 to Minnesota, is entitled to a credit for the tax paid to 152.21 another stateor province or territory of Canadaif the tax is 152.22 actually paid in the taxable year or a subsequent taxable year. 152.23 A taxpayer who is a resident of this state pursuant to section 152.24 290.01, subdivision 7, clause (2), and who is subject to income 152.25 tax as a resident in the state of the individual's domicile is 152.26 not allowed this credit unless the state of domicile does not 152.27 allow a similar credit. 152.28 (b) For an individual, estate, or trust, the credit is 152.29 determined by multiplying the tax payable under this chapter by 152.30 the ratio derived by dividing the income subject to tax in the 152.31 other stateor province or territory of Canadathat is also 152.32 subject to tax in Minnesota while a resident of Minnesota by the 152.33 taxpayer's federal adjusted gross income, as defined in section 152.34 62 of the Internal Revenue Code, modified by the addition 152.35 required by section 290.01, subdivision 19a, clause (1), and the 152.36 subtraction allowed by section 290.01, subdivision 19b, clause 153.1 (1), to the extent the income is allocated or assigned to 153.2 Minnesota under sections 290.081 and 290.17. 153.3 (c) If the taxpayer is an athletic team that apportions all 153.4 of its income under section 290.17, subdivision 5, the credit is 153.5 determined by multiplying the tax payable under this chapter by 153.6 the ratio derived from dividing the total net income subject to 153.7 tax in the other stateor province or territory of Canadaby the 153.8 taxpayer's Minnesota taxable income. 153.9 (d) The credit determined under paragraph (b) or (c) shall 153.10 not exceed the amount of tax so paid to the other stateor153.11province or territory of Canadaon the gross income earned 153.12 within the other stateor province or territory of Canada153.13 subject to tax under this chapter, nor shall the allowance of 153.14 the credit reduce the taxes paid under this chapter to an amount 153.15 less than what would be assessed if such income amount was 153.16 excluded from taxable net income. 153.17 (e) In the case of the tax assessed on a lump sum 153.18 distribution under section 290.032, the credit allowed under 153.19 paragraph (a) is the tax assessed by the other stateor province153.20or territory of Canadaon the lump sum distribution that is also 153.21 subject to tax under section 290.032, and shall not exceed the 153.22 tax assessed under section 290.032. To the extent the total 153.23 lump sum distribution defined in section 290.032, subdivision 1, 153.24 includes lump sum distributions received in prior years or is 153.25 all or in part an annuity contract, the reduction to the tax on 153.26 the lump sum distribution allowed under section 290.032, 153.27 subdivision 2, includes tax paid to another state that is 153.28 properly apportioned to that distribution. 153.29 (f) If a Minnesota resident reported an item of income to 153.30 Minnesota and is assessed tax in such other stateor province or153.31territory of Canadaon that same income after the Minnesota 153.32 statute of limitations has expired, the taxpayer shall receive a 153.33 credit for that year under paragraph (a), notwithstanding any 153.34 statute of limitations to the contrary. The claim for the 153.35 credit must be submitted within one year from the date the taxes 153.36 were paid to the other stateor province or territory of154.1Canada. The taxpayer must submit sufficient proof to show 154.2 entitlement to a credit. 154.3 (g) For the purposes of this subdivision, a resident 154.4 shareholder of a corporation treated as an "S" corporation under 154.5 section 290.9725, must be considered to have paid a tax imposed 154.6 on the shareholder in an amount equal to the shareholder's pro 154.7 rata share of any net income tax paid by the S corporation to 154.8 another state. For the purposes of the preceding sentence, the 154.9 term "net income tax" means any tax imposed on or measured by a 154.10 corporation's net income. 154.11 (h) For the purposes of this subdivision, a resident 154.12 partner of an entity taxed as a partnership under the Internal 154.13 Revenue Code must be considered to have paid a tax imposed on 154.14 the partner in an amount equal to the partner's pro rata share 154.15 of any net income tax paid by the partnership to another state. 154.16 For purposes of the preceding sentence, the term "net income" 154.17 tax means any tax imposed on or measured by a partnership's net 154.18 income. 154.19 (i) For the purposes of this subdivision, "another state": 154.20 (1) includes: 154.21 (i) the District of Columbia, but does not include; and 154.22 (ii) a province or territory of Canada; but 154.23 (2) excludes Puerto Ricoorand the several territories 154.24 organized by Congress. 154.25 (j) The limitations on the credit in paragraphs (b), (c), 154.26 and (d), are imposed on a state by state basis. 154.27 (k) For a tax imposed by a province or territory of Canada, 154.28 the tax for purposes of this subdivision is the excess of the 154.29 tax over the amount of the foreign tax credit allowed under 154.30 section 27 of the Internal Revenue Code. In determining the 154.31 amount of the foreign tax credit allowed, the net income taxes 154.32 imposed by Canada on the income are deducted first. Any 154.33 remaining amount of the allowable foreign tax credit reduces the 154.34 provincial or territorial tax that qualifies for the credit 154.35 under this subdivision. 154.36 [EFFECTIVE DATE.] This section is effective for taxable 155.1 years beginning after December 31, 2000. 155.2 Sec. 16. Minnesota Statutes 2000, section 290.067, 155.3 subdivision 1, is amended to read: 155.4 Subdivision 1. [AMOUNT OF CREDIT.] (a) A taxpayer may take 155.5 as a credit against the tax due from the taxpayer and a spouse, 155.6 if any, under this chapter an amount equal to the dependent care 155.7 credit for which the taxpayer is eligible pursuant to the 155.8 provisions of section 21 of the Internal Revenue Code subject to 155.9 the limitations provided in subdivision 2 except that in 155.10 determining whether the child qualified as a dependent, income 155.11 received as a Minnesota family investment program grant or 155.12 allowance to or on behalf of the child must not be taken into 155.13 account in determining whether the child received more than half 155.14 of the child's support from the taxpayer, and the provisions of 155.15 section 32(b)(1)(D) of the Internal Revenue Code do not apply. 155.16 (b) If a child who has not attained the age of six years at 155.17 the close of the taxable year is cared for at a licensed family 155.18 day care home operated by the child's parent, the taxpayer is 155.19 deemed to have paid employment-related expenses. If the child 155.20 is 16 months old or younger at the close of the taxable year, 155.21 the amount of expenses deemed to have been paid equals the 155.22 maximum limit for one qualified individual under section 21(c) 155.23 and (d) of the Internal Revenue Code. If the child is older 155.24 than 16 months of age but has not attained the age of six years 155.25 at the close of the taxable year, the amount of expenses deemed 155.26 to have been paid equals the amount the licensee would charge 155.27 for the care of a child of the same age for the same number of 155.28 hours of care. 155.29 (c) If a married couple: 155.30 (1) has a child who has not attained the age of one year at 155.31 the close of the taxable year; 155.32 (2) files a joint tax return for the taxable year; and 155.33 (3) does not participate in a dependent care assistance 155.34 program as defined in section 129 of the Internal Revenue Code, 155.35 in lieu of the actual employment related expenses paid for that 155.36 child under paragraph (a) or the deemed amount under paragraph 156.1 (b), the lesser of (i) the combined earned income of the couple 156.2 or (ii) $2,400 will be deemed to be the employment related 156.3 expense paid for that child. The earned income limitation of 156.4 section 21(d) of the Internal Revenue Code shall not apply to 156.5 this deemed amount. These deemed amounts apply regardless of 156.6 whether any employment-related expenses have been paid. 156.7 (d) An individual who: 156.8 (1) incurs employment-related expenses for the care of one 156.9 or more dependents who have attained the age of 13 years but not 156.10 attained the age of 15 years at the close of the taxable year; 156.11 and 156.12 (2) is not eligible for a credit under section 21 of the 156.13 Internal Revenue Code for the employment-related expenses 156.14 incurred after the dependent or dependents attained the age of 156.15 13 years; 156.16 is eligible for a credit under this paragraph only. 156.17 The credit under this paragraph equals the credit that would 156.18 have been allowed under this section if the dependent or 156.19 dependents had not attained the age of 13 years at the close of 156.20 the taxable year. The credit under this paragraph in 156.21 combination with any other credits allowed under this section is 156.22 subject to the limitations in subdivision 2. 156.23(d)(e) If the taxpayer is not required and does not file a 156.24 federal individual income tax return for the tax year, no credit 156.25 is allowed for any amount paid to any person unless: 156.26 (1) the name, address, and taxpayer identification number 156.27 of the person are included on the return claiming the credit; or 156.28 (2) if the person is an organization described in section 156.29 501(c)(3) of the Internal Revenue Code and exempt from tax under 156.30 section 501(a) of the Internal Revenue Code, the name and 156.31 address of the person are included on the return claiming the 156.32 credit. 156.33 In the case of a failure to provide the information required 156.34 under the preceding sentence, the preceding sentence does not 156.35 apply if it is shown that the taxpayer exercised due diligence 156.36 in attempting to provide the information required. 157.1 In the case of a nonresident, part-year resident, or a 157.2 person who has earned income not subject to tax under this 157.3 chapter, the credit determined under section 21 of the Internal 157.4 Revenue Code must be allocated based on the ratio by which the 157.5 earned income of the claimant and the claimant's spouse from 157.6 Minnesota sources bears to the total earned income of the 157.7 claimant and the claimant's spouse. 157.8 [EFFECTIVE DATE.] This section is effective for taxable 157.9 years beginning after December 31, 2000. 157.10 Sec. 17. Minnesota Statutes 2000, section 290.067, 157.11 subdivision 2, is amended to read: 157.12 Subd. 2. [LIMITATIONS.] The credit for expenses incurred 157.13 for the care of each dependent shall not exceed $720 in any 157.14 taxable year, and the total credit for all dependents of a 157.15 claimant shall not exceed $1,440 in a taxable year. The maximum 157.16 total credit shall be reduced according to the amount of the 157.17 income of the claimant and a spouse, if any, minus the earned 157.18 income of the lesser-earning spouse, as follows: 157.19 income up to$13,350$18,040, $720 maximum for one 157.20 dependent, $1,440 for all dependents; 157.21 income over$13,350$18,040, the maximum credit for one 157.22 dependent shall be reduced by $18 for every $350 of additional 157.23 income, $36 for all dependents. 157.24 The commissioner shall construct and make available to 157.25 taxpayers tables showing the amount of the credit at various 157.26 levels of income and expenses. The tables shall follow the 157.27 schedule contained in this subdivision, except that the 157.28 commissioner may graduate the transitions between expenses and 157.29 income brackets. 157.30 For purposes of this section, "earned income of the 157.31 lesser-earning spouse" has the meaning given in section 157.32 290.0675, subdivision 1, paragraph (d). 157.33 [EFFECTIVE DATE.] The change from $13,350 to $18,040 in 157.34 this section is effective for taxable years beginning after 157.35 December 31, 1999, and the rest of this section is effective for 157.36 taxable years beginning after December 31, 2000. 158.1 Sec. 18. Minnesota Statutes 2000, section 290.067, 158.2 subdivision 2b, is amended to read: 158.3 Subd. 2b. [INFLATION ADJUSTMENT.] The dollar amount of the 158.4 income threshold at which the maximum credit begins to be 158.5 reduced under subdivision 2 must be adjusted for inflation. The 158.6 commissioner shalladjust the threshold amount by the percentage158.7determined under section 290.06, subdivision 2d, for the taxable158.8year.make the inflation adjustments in accordance with section 158.9 1f of the Internal Revenue Code except that for the purposes of 158.10 this subdivision the percentage increase must be determined from 158.11 the year starting September 1, 1999, and ending August 31, 2000, 158.12 as the base year for adjusting for inflation for the tax year 158.13 beginning after December 31, 2000. The determination of the 158.14 commissioner under this subdivision is not a rule under the 158.15 Administrative Procedure Act. 158.16 [EFFECTIVE DATE.] This section is effective for taxable 158.17 years beginning after December 31, 2000. 158.18 Sec. 19. Minnesota Statutes 2000, section 290.0671, 158.19 subdivision 1, is amended to read: 158.20 Subdivision 1. [CREDIT ALLOWED.] (a) An individual is 158.21 allowed a credit against the tax imposed by this chapter equal 158.22 to a percentage of earned income. To receive a credit, a 158.23 taxpayer must be eligible for a credit under section 32 of the 158.24 Internal Revenue Code. An individual who would have been 158.25 eligible for a credit under section 32 of the Internal Revenue 158.26 Code if the phaseout in section 32(b) were calculated based on 158.27 the individual's earned income or modified adjusted gross 158.28 income, whichever is greater, minus the earned income of the 158.29 lesser-earning spouse, is also eligible for a credit under this 158.30 section. 158.31 (b) For individuals with no qualifying children, the credit 158.32 equals 1.9125 percent of the first$4,460$4,620 of earned 158.33 income. The credit is reduced by 1.9125 percent of earned 158.34 income or modified adjusted gross income, whichever is 158.35 greater, minus the earned income of the lesser-earning spouse, 158.36 in excess of$5,570$5,770, but in no case is the credit less 159.1 than zero. 159.2 (c) For individuals with one qualifying child, the credit 159.3 equals 8.5 percent of the first$6,680$6,920 of earned income 159.4 and 8.5 percent of earned income over$11,650$12,080 but less 159.5 than$12,990$13,450. The credit is reduced by 5.73 percent of 159.6 earned income or modified adjusted gross income, whichever is 159.7 greater, minus the earned income of the lesser-earning spouse, 159.8 in excess of$14,560$15,080, but in no case is the credit less 159.9 than zero. 159.10 (d) For individuals with two or more qualifying children, 159.11 the credit equals ten percent of the first$9,390$9,720 of 159.12 earned income and 20 percent of earned income 159.13 over$14,350$14,860 but less than$16,230$16,800. The credit 159.14 is reduced by 10.3 percent of earned income or modified adjusted 159.15 gross income, whichever is greater, minus the earned income of 159.16 the lesser-earning spouse, in excess of$17,280$17,890, but in 159.17 no case is the credit less than zero. 159.18 (e) For a nonresident or part-year resident, the credit 159.19 must be allocated based on the percentage calculated under 159.20 section 290.06, subdivision 2c, paragraph (e). 159.21 (f) For a person who was a resident for the entire tax year 159.22 and has earned income not subject to tax under this chapter, the 159.23 credit must be allocated based on the ratio of federal adjusted 159.24 gross income reduced by the earned income not subject to tax 159.25 under this chapter over federal adjusted gross income. 159.26 (g) The commissioner shall construct tables showing the 159.27 amount of the credit at various income levels and make them 159.28 available to taxpayers. The tables shall follow the schedule 159.29 contained in this subdivision, except that the commissioner may 159.30 graduate the transition between income brackets. 159.31 [EFFECTIVE DATE.] This section is effective for taxable 159.32 years beginning after December 31, 2000. 159.33 Sec. 20. Minnesota Statutes 2000, section 290.0671, 159.34 subdivision 1a, is amended to read: 159.35 Subd. 1a. [DEFINITIONS.] For purposes of this section, the 159.36 terms "qualifying child," "earned income," and "modified 160.1 adjusted gross income" have the meanings given in section 32(c) 160.2 of the Internal Revenue Code. "Earned income of the 160.3 lesser-earning spouse" has the meaning given in section 160.4 290.0675, subdivision 1, paragraph (d). 160.5 [EFFECTIVE DATE.] This section is effective for taxable 160.6 years beginning after December 31, 2000. 160.7 Sec. 21. Minnesota Statutes 2000, section 290.0671, 160.8 subdivision 7, is amended to read: 160.9 Subd. 7. [INFLATION ADJUSTMENT.] The earned income amounts 160.10 used to calculate the credit and the income thresholds at which 160.11 the maximum credit begins to be reduced in subdivision 1 must be 160.12 adjusted for inflation. The commissioner shalladjust the160.13earned income and threshold amounts by the percentage determined160.14under section 290.06, subdivision 2d, for the taxable year.make 160.15 the inflation adjustments in accordance with section 1f of the 160.16 Internal Revenue Code except that for the purposes of this 160.17 subdivision the percentage increase shall be determined from the 160.18 year starting September 1, 1999, and ending August 31, 2000, as 160.19 the base year for adjusting for inflation for the tax year 160.20 beginning after December 31, 2000. The determination of the 160.21 commissioner under this subdivision is not a rule under the 160.22 Administrative Procedure Act. 160.23 [EFFECTIVE DATE.] This section is effective for taxable 160.24 years beginning after December 31, 2000. 160.25 Sec. 22. Minnesota Statutes 2000, section 290.0674, 160.26 subdivision 1, is amended to read: 160.27 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed 160.28 a credit against the tax imposed by this chapter in an amount 160.29 equal to the amount paid for education-related expenses for a 160.30 qualifying child in kindergarten through grade 12. For purposes 160.31 of this section, "education-related expenses" means: 160.32 (1) fees or tuition for instruction by an instructorunder160.33 who meets one of the requirements of section 120A.22, 160.34 subdivision 10, clause (1), (2), (3), (4), or (5), orbywho is 160.35 a member of the Minnesota music teachers association, and is not 160.36 a lineal ancestor or sibling of the dependent for instruction 161.1 outside the regular school day or school year, including 161.2 tutoring, driver's education offered as part of school 161.3 curriculum, regardless of whether it is taken from a public or 161.4 private entity or summer camps, in grade or age appropriate 161.5 curricula that supplement curricula and instruction available 161.6 during the regular school year, that assists a dependent to 161.7 improve knowledge of core curriculum areas or to expand 161.8 knowledge and skills under the graduation rule under section 161.9 120B.02, paragraph (e), clauses (1) to (7), (9), and (10), and 161.10 that do not include the teaching of religious tenets, doctrines, 161.11 or worship, the purpose of which is to instill such tenets, 161.12 doctrines, or worship; 161.13 (2) expenses for textbooks, including books and other 161.14 instructional materials and equipment used in elementary and 161.15 secondary schools in teaching only those subjects legally and 161.16 commonly taught in public elementary and secondary schools in 161.17 this state. "Textbooks" does not include instructional books 161.18 and materials used in the teaching of religious tenets, 161.19 doctrines, or worship, the purpose of which is to instill such 161.20 tenets, doctrines, or worship, nor does it include books or 161.21 materials for extracurricular activities including sporting 161.22 events, musical or dramatic events, speech activities, driver's 161.23 education, or similar programs; 161.24 (3) a maximum expense of $200 per family for personal 161.25 computer hardware, excluding single purpose processors, and 161.26 educational software that assists a dependent to improve 161.27 knowledge of core curriculum areas or to expand knowledge and 161.28 skills under the graduation rule under section 120B.02, 161.29 paragraph (e), clauses (1) to (7), (9), and (10), purchased for 161.30 use in the taxpayer's home and not used in a trade or business 161.31 regardless of whether the computer is required by the 161.32 dependent's school;and161.33 (4) the amount paid to others for transportation of a 161.34 qualifying child attending an elementary or secondary school 161.35 situated in Minnesota, North Dakota, South Dakota, Iowa, or 161.36 Wisconsin, wherein a resident of this state may legally fulfill 162.1 the state's compulsory attendance laws, which is not operated 162.2 for profit, and which adheres to the provisions of the Civil 162.3 Rights Act of 1964 and chapter 363.; 162.4 (5) expenses for the purchase or lease of musical 162.5 instruments used in classes offered as part of the school 162.6 curriculum; 162.7 (6) the amount paid to a public school for participation in 162.8 extracurricular activities for which fees are authorized under 162.9 section 123B.36, subdivision 1, paragraph (b), clauses (2), (7), 162.10 and (10); and 162.11 (7) the amount paid to a nonpublic school for participation 162.12 in activities listed in section 123B.36, subdivision 1, 162.13 paragraph (b), clauses (2), (7), and (10). 162.14 For purposes of this section, "qualifying child" has the 162.15 meaning given in section 32(c)(3) of the Internal Revenue Code. 162.16 [EFFECTIVE DATE.] This section is effective for taxable 162.17 years beginning after December 31, 2000. 162.18 Sec. 23. Minnesota Statutes 2000, section 290.0674, 162.19 subdivision 2, is amended to read: 162.20 Subd. 2. [LIMITATIONS.] (a) For claimants with income not 162.21 greater than $33,500, the maximum credit allowed is $1,000 per 162.22 qualifying childand $2,000 per family.No credit is allowed162.23for education-related expenses for claimants with income greater162.24than $37,500.The maximum credit for each claimant is $1,000 162.25 multiplied by the number of qualifying children for whom the 162.26 individual claims the credit. The maximum creditper childfor 162.27 a claimant is reduced by $1 for each $4 of household income over 162.28 $33,500, and the maximum credit per family is reduced by $2 for162.29each $4 of household income over $33,500for claimants with one 162.30 qualifying child, and by $1 for each $3 of household income over 162.31 $33,500 for all other claimants, but in no case is the credit 162.32 less than zero. 162.33 For purposes of this section "income" has the meaning given 162.34 in section 290.067, subdivision 2a. In the case of a married 162.35 claimant, a credit is not allowed unless a joint income tax 162.36 return is filed. 163.1 (b) For a nonresident or part-year resident, the credit 163.2 determined under subdivision 1 and the maximum credit amount in 163.3 paragraph (a) must be allocated using the percentage calculated 163.4 in section 290.06, subdivision 2c, paragraph (e). 163.5 [EFFECTIVE DATE.] This section is effective for taxable 163.6 years beginning after December 31, 2000. 163.7 Sec. 24. Minnesota Statutes 2000, section 290.0675, 163.8 subdivision 1, is amended to read: 163.9 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 163.10 section the following terms have the meanings given. 163.11 (b) "Earned income" means the sum of the following, to the 163.12 extent included in Minnesota taxable income: 163.13 (1) earned income as defined in section 32(c)(2) of the 163.14 Internal Revenue Code; 163.15 (2)to the extent included in Minnesota taxable income,163.16 income received from a retirement pension, profit-sharing, stock 163.17 bonus, or annuity plan; and 163.18 (3)to the extent included in Minnesota taxable income,163.19 social security benefits as defined in section 86(d)(1) of the 163.20 Internal Revenue Code. 163.21 (c) "Taxable income" means net income as defined in section 163.22 290.01, subdivision 19. 163.23 (d) "Earned income of lesser-earning spouse" means the 163.24 earned income of the spouse with the lesser amount of earned 163.25 income as defined in paragraph (b) for the taxable year. 163.26 [EFFECTIVE DATE.] This section is effective for taxable 163.27 years beginning after December 31, 2000. 163.28 Sec. 25. Minnesota Statutes 2000, section 290.0675, 163.29 subdivision 3, is amended to read: 163.30 Subd. 3. [CREDIT AMOUNT.] The credit amount isas shown in163.31the table in this subdivision, based on the couple's taxable163.32income for the tax year and on the earned income of the163.33lesser-earning spousethe difference between the tax on the 163.34 couple's joint Minnesota taxable income under the rates in 163.35 section 290.06, subdivision 2c, paragraph (a), and the sum of 163.36 the tax under the rates of section 290.06, subdivision 2c, 164.1 paragraph (b), on the earned income of the lesser-earning 164.2 spouse, and the tax under the rates of section 290.06, 164.3 subdivision 2c, paragraph (b), on the couple's joint Minnesota 164.4 taxable income, minus the earned income of the lesser-earning 164.5 spouse. 164.6Credit ForCredit For164.7Earned Income ofTaxable IncomeTaxable Income164.8Lesser Earning Spouse$25,680-$102,029$102,030-over164.9$14,250 - $15,249$7$0164.10$15,250 - $16,249$24$0164.11$16,250 - $17,249$41$0164.12$17,250 - $18,249$58$0164.13$18,250 - $19,249$75$0164.14$19,250 - $20,249$92$0164.15$20,250 - $21,249$109$0164.16$21,250 - $22,249$126$0164.17$22,250 - $23,249$143$0164.18$23,250 - $24,249$160$0164.19$24,250 - $25,249$161$0164.20$25,250 - $26,249$161$0164.21$26,250 - $27,249$161$0164.22$27,250 - $28,249$161$0164.23$28,250 - $29,249$161$0164.24$29,250 - $30,249$161$0164.25$30,250 - $31,249$161$0164.26$31,250 - $32,249$161$6164.27$32,250 - $33,249$161$14164.28$33,250 - $34,249$161$22164.29$34,250 - $35,249$161$30164.30$35,250 - $36,249$161$38164.31$36,250 - $37,249$161$46164.32$37,250 - $38,249$161$54164.33$38,250 - $39,249$161$62164.34$39,250 - $40,249$161$70164.35$40,250 - $41,249$161$78164.36$41,250 - $42,249$161$86165.1$42,250 - $43,249$161$94165.2$43,250 - $44,249$161$102165.3$44,250 - $45,249$161$110165.4$45,250 - $46,249$161$118165.5$46,250 - $47,249$161$126165.6$47,250 - $48,249$161$134165.7$48,250 - $49,249$161$142165.8$49,250 - $50,249$161$150165.9$50,250 - $51,249$161$158165.10$51,250 - $52,249$161$166165.11$52,250 - $53,249$161$174165.12$53,250 - $54,249$161$182165.13$54,250 - $55,249$161$190165.14$55,250 - $56,249$161$198165.15$56,250 - $57,249$161$206165.16$57,250 - $58,249$161$214165.17$58,250 - $59,249$161$222165.18$59,250 - $60,249$161$230165.19$60,250 - $61,249$161$238165.20$61,250 - $62,249$161$246165.21$62,250 - $63,249$161$254165.22$63,250 - $64,249$161$262165.23$64,250 and over$161$268165.24 For taxable years beginning after December 31, 2001, the 165.25 commissioner of revenue shall prepare and make available to 165.26 taxpayers a comprehensive table showing the credit under this 165.27 section at brackets of earnings of the lesser-earning spouse and 165.28 joint taxable income. The brackets of earnings shall not be 165.29 more than $2,000. 165.30 For taxable years beginning after December 31,20002002, 165.31 the commissioner shall update the table as necessary to provide 165.32 a credit that reflects the relationship between the marginal tax 165.33 rates imposed under section 290.06, subdivision 2c. 165.34 [EFFECTIVE DATE.] This section is effective for taxable 165.35 years beginning after December 31, 2000. 165.36 Sec. 26. [290.0676] [CREDIT FOR LAND DONATED FOR 166.1 CONSERVATION PURPOSES.] 166.2 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 166.3 section, the following terms have the meanings given. 166.4 (b) "Interest in real property" means fee title or 166.5 qualified real property interest as defined in section 170(h) of 166.6 the Internal Revenue Code and the United States Treasury 166.7 Regulations promulgated thereunder. 166.8 (c) "Fair market value" of an interest in real property 166.9 means the value as determined by a "qualified appraisal" 166.10 prepared by a "qualified appraiser" as those terms are defined 166.11 in United States Treasury Regulations, section 1.170A-13, as 166.12 amended through December 31, 2000. If the taxpayer does not 166.13 obtain an appraisal, "fair market value" means the estimated 166.14 market value of the property as determined by the assessor for 166.15 property tax purposes. 166.16 (d) "Discount of the sale price" means the difference 166.17 between the fair market value of an interest in real property at 166.18 the time of sale and the sale price, if the price the property 166.19 is sold for is lower. 166.20 (e) "Conservation purposes" means the conservation purposes 166.21 as defined in section 170(h)(4)(A)(i), (ii), and (iii) of the 166.22 Internal Revenue Code. 166.23 Subd. 2. [CREDIT ALLOWED.] A taxpayer who donates an 166.24 interest in real property in this state for conservation 166.25 purposes to a qualified organization described in subdivision 3, 166.26 paragraph (a), may take a credit against the tax imposed by this 166.27 chapter in an amount equal to 50 percent of the fair market 166.28 value of the interest in real property. A taxpayer who sells an 166.29 interest in real property at a discount for conservation 166.30 purposes may take a credit against the tax imposed by this 166.31 chapter in an amount equal to 50 percent of the value of the 166.32 discount of the sale price in the interest in real property. 166.33 Subd. 3. [QUALIFICATION.] (a) To qualify for a credit 166.34 under this section, the taxpayer must convey the interest in 166.35 real property to: 166.36 (1) the state of Minnesota, a local government conservation 167.1 agency, or a special purpose unit of government; or 167.2 (2) a private organization as provided in section 501(c) of 167.3 the Internal Revenue Code that: 167.4 (i) meets the requirements of section 170(h)(3) of the 167.5 Internal Revenue Code; and 167.6 (ii) is organized and operated for one of the conservation 167.7 purposes specified in section 170(h)(4)(A)(i), (ii), and (iii) 167.8 of the Internal Revenue Code. 167.9 (b) A taxpayer claiming the credit under this section shall 167.10 attach the following to the tax returns on which the credit is 167.11 claimed: 167.12 (1) a certificate of acceptance from an organization 167.13 described in paragraph (a) verifying that the organization has 167.14 accepted the contribution; and 167.15 (2) a copy of a qualified appraisal by a qualified 167.16 appraiser as those terms are defined in United States Treasury 167.17 Regulations, section 1.170A-13, as amended through December 31, 167.18 2000, or a copy of the most recent notice of estimated market 167.19 value provided by the assessor. 167.20 (c) Conveyances of real property for open space for the 167.21 purpose of fulfilling density requirements or other requirements 167.22 to obtain subdivision or building permits are not eligible for a 167.23 credit under this section. 167.24 Subd. 4. [LIMITATION; CARRYOVER.] (a) The credit for the 167.25 taxable year may not exceed the taxpayer's liability for tax 167.26 before the credit under this section or $100,000, whichever is 167.27 less. 167.28 (b) If the amount of the credit determined under this 167.29 section for any taxable year exceeds the limitation in paragraph 167.30 (a), the excess is a carryover to each of the five succeeding 167.31 taxable years. All of the excess unused credit for the taxable 167.32 year must be carried first to the earliest of the taxable years 167.33 to which the credit may be carried and then to each successive 167.34 year to which the credit may be carried. The unused credit that 167.35 may be added under this paragraph in any year may not exceed the 167.36 lesser of the taxpayer's liability for tax less the land 168.1 donation credit for the taxable year or $100,000. 168.2 Subd. 5. [EXPIRATION.] The credit under this section 168.3 expires for contributions made after December 31, 2004. 168.4 [EFFECTIVE DATE.] This section is effective for 168.5 contributions made after the day following final enactment in 168.6 taxable years beginning after December 31, 2000. 168.7 Sec. 27. [290.0679] [ASSIGNMENT OF REFUND.] 168.8 Subdivision 1. [DEFINITIONS.] (a) "Qualifying taxpayer" 168.9 means a taxpayer who has a child in kindergarten through grade 168.10 12 in the current tax year and who met all other eligibility 168.11 requirements for receiving the education credit in the tax year 168.12 preceding the assignment of the taxpayer's refund. 168.13 (b) "Education credit" means the credit allowed under 168.14 section 290.0674. 168.15 (c) "Refund" means an individual income tax refund or 168.16 political contribution refund under this chapter, or a property 168.17 tax refund under chapter 290A. 168.18 (d) "Financial institution" means a state or federally 168.19 chartered bank, savings bank, savings association, or credit 168.20 union. 168.21 (e) "Qualifying organization" means a tax-exempt 168.22 organization under section 501(c)(3) of the Internal Revenue 168.23 Code. 168.24 (f) "Assignee" means a financial institution or qualifying 168.25 organization that is entitled to receive payment of a refund 168.26 assigned under this section. 168.27 Subd. 2. [CONDITIONS FOR ASSIGNMENT.] A qualifying 168.28 taxpayer may assign all or part of a refund for the current and 168.29 future taxable years to a financial institution or a qualifying 168.30 organization. The amount assigned may not exceed the maximum 168.31 allowable education credit. Both the taxpayer and spouse must 168.32 consent to the assignment of a refund from a joint return. 168.33 Subd. 3. [CONSENT FOR DISCLOSURE.] When the taxpayer 168.34 applies to the financial institution or the qualifying 168.35 organization for a loan to be secured by the assignment under 168.36 subdivision 2, the taxpayer must sign a written consent on a 169.1 form prescribed by the commissioner. The consent must authorize 169.2 the commissioner to disclose to the financial institution or 169.3 qualifying organization the total amount of state taxes owed or 169.4 revenue recapture claims filed under chapter 270A against the 169.5 taxpayer, and the total amount of outstanding assignments made 169.6 by the taxpayer under this section. For a refund from a joint 169.7 return, the consent must also authorize the disclosure of taxes, 169.8 revenue recapture claims, and assignments relating to the 169.9 taxpayer's spouse, and must be signed by the spouse. The 169.10 financial institution or qualifying organization may request 169.11 that the taxpayer provide a copy of the taxpayer's previous 169.12 year's income tax return, if any, and may assist the taxpayer in 169.13 requesting a copy of the previous year's return from the 169.14 commissioner. 169.15 Subd. 4. [CONSUMER DISCLOSURE.] (a) If the loan secured by 169.16 the assignment involves payment by the assignee to a third-party 169.17 vendor or provider of a product or service, the purchase of 169.18 which qualifies for the education credit, the third-party vendor 169.19 must comply with the disclosure requirements of this subdivision. 169.20 (b) The third-party vendor must disclose to the taxpayer, 169.21 in plain language: 169.22 (1) the cost of each product or service for which the 169.23 third-party vendor separately charges the taxpayer; 169.24 (2) any fees charged to the taxpayer for tax preparation 169.25 services; and 169.26 (3) for qualifying low-income taxpayers, information on the 169.27 availability of free tax preparation services. 169.28 (c) The third-party vendor must provide to the taxpayer 169.29 executed copies of any documents signed by the taxpayer. 169.30 Subd. 5. [FILING OF ASSIGNMENT.] The commissioner shall 169.31 prescribe the form of and manner for filing an assignment of a 169.32 refund under this section. 169.33 Subd. 6. [EFFECT OF ASSIGNMENT.] The taxpayer may not 169.34 revoke an assignment after it has been filed. The assignee must 169.35 notify the commissioner if the loan secured by the assignment 169.36 has been paid in full, in which case the assignment is 170.1 canceled. An assignment is in effect until the amount assigned 170.2 is refunded in full to the assignee, or until the assignee 170.3 cancels the assignment. 170.4 Subd. 7. [PAYMENT OF REFUND.] When a refund assigned under 170.5 this section is issued by the commissioner, the proceeds of the 170.6 refund must be distributed in the following order: 170.7 (1) to satisfy any delinquent tax obligations of the 170.8 taxpayer which are owed to the commissioner; 170.9 (2) to claimant agencies to satisfy any revenue recapture 170.10 claims filed against the taxpayer, in the order of priority of 170.11 the claims set forth in section 270A.10; 170.12 (3) to assignees to satisfy assignments under this section, 170.13 based on the order in time in which the commissioner received 170.14 the assignments; and 170.15 (4) to the taxpayer. 170.16 Subd. 8. [LEGAL ACTION.] If there is a dispute between the 170.17 taxpayer and the assignee after the commissioner has remitted 170.18 the taxpayer's refund to the assignee, the taxpayer's only 170.19 remedy is to bring an action against the assignee in court to 170.20 recover the refund. The action must be brought within two years 170.21 after the commissioner remits the refund to the assignee. The 170.22 commissioner may not be a party to the proceeding. 170.23 Subd. 9. [ASSIGNMENTS PRIVATE DATA.] Information regarding 170.24 assignments under this section is classified as private data on 170.25 individuals. 170.26 [EFFECTIVE DATE.] This section is effective for assignment 170.27 of refunds for taxable years beginning after December 31, 2000. 170.28 The commissioner may begin accepting assignments after August 1, 170.29 2001. 170.30 Sec. 28. Minnesota Statutes 2000, section 290.068, 170.31 subdivision 1, is amended to read: 170.32 Subdivision 1. [CREDIT ALLOWED.] Acorporation, other than170.33a corporation treated as an "S" corporation under section170.34290.9725,taxpayer is allowed a credit against theportion of170.35the franchisetax computed under section 290.06, subdivision 1,170.36 for the taxable year equal to: 171.1 (a) 5 percent of the first $2,000,000 of the excess (if 171.2 any) of: 171.3 (1) the qualified research expenses for the taxable year, 171.4 over 171.5 (2) the base amount; and 171.6 (b)2.54 percent on all of such excess expenses over 171.7 $2,000,000. 171.8 [EFFECTIVE DATE.] This section is effective for taxable 171.9 years beginning after December 31, 2000. 171.10 Sec. 29. Minnesota Statutes 2000, section 290.068, 171.11 subdivision 3, is amended to read: 171.12 Subd. 3. [LIMITATION; CARRYOVER.] (a)(1) The credit for 171.13 the taxable yearshallmay not exceed the liability for tax. 171.14 "Liability for tax" for purposes of this section means the tax 171.15 imposed underthis chaptersection 290.06 for the taxable year 171.16 reduced by the sum of the nonrefundable credits allowed under 171.17 this chapter. 171.18 (2)In the case of a corporation which isFor a partner in 171.19 a partnership, the credit allowed for the taxable yearshallmay 171.20 not exceed the lesser of the amount determined under clause (1) 171.21 for the taxable year or an amount (separately computed with 171.22 respect to thecorporation'staxpayer's interest in the trade or 171.23 business or entity) equal to the amount of tax attributable to 171.24 that portion of taxable income which is allocable or 171.25 apportionable to thecorporation'staxpayer's interest in the 171.26 trade or business or entity. 171.27 (b) If the amount of the credit determined under this 171.28 section for any taxable year exceeds the limitation under clause 171.29 (a), the excessshall beis a research credit carryover to each 171.30 of the 15 succeeding taxable years. The entire amount of the 171.31 excess unused credit for the taxable yearshallmust be carried 171.32 first to the earliest of the taxable years to which the credit 171.33 may be carried and then to each successive year to which the 171.34 credit may be carried. The amount of the unused credit which 171.35 may be added under this clauseshallmay not exceed the 171.36 taxpayer's liability for tax less the research credit for the 172.1 taxable year. 172.2 [EFFECTIVE DATE.] This section is effective for taxable 172.3 years beginning after December 31, 2000. 172.4 Sec. 30. Minnesota Statutes 2000, section 290.068, 172.5 subdivision 4, is amended to read: 172.6 Subd. 4. [PARTNERSHIPS.] In the case ofpartnerships172.7 taxpayers other than corporations, the creditshall be allocated172.8in the same manner provided by sectionis subject to sections 172.9 41(f)(2) and 41(g) of the Internal Revenue Code. 172.10 [EFFECTIVE DATE.] This section is effective for taxable 172.11 years beginning after December 31, 2000. 172.12 Sec. 31. [290.0692] [BIOMEDICAL INNOVATION AND 172.13 COMMERCIALIZATION INITIATIVE CREDIT.] 172.14 (a) A tax credit is allowed for cash investments in the 172.15 biomedical innovation and commercialization initiative pursuant 172.16 to section 116J.885. A credit is allowed against the tax 172.17 imposed by sections 290.03 and 290.06 equal to 25 percent of the 172.18 amount of the investment by the taxpayer for the year of the 172.19 investment. 172.20 (b) The amount of tax credits for a taxable year shall not 172.21 exceed the liability for tax. For purposes of this section, 172.22 "liability for tax," means the tax imposed by sections 290.03 172.23 and 290.06 for the taxable year reduced by the amount of 172.24 nonrefundable credits allowed under this chapter. The unused 172.25 portion of the credits shall be a biomedical innovation and 172.26 commercialization credit carryover for the tax year and each of 172.27 the subsequent nine succeeding taxable years. The commissioner 172.28 shall prescribe the manner in which the credit may be claimed. 172.29 This may include allowing the credit only as a separately 172.30 processed claim for refund. 172.31 (c) The biomedical innovation and commercialization 172.32 initiative or any for-profit entity that is formed under section 172.33 116J.885, subdivision 3, clause (5), must file, in writing, an 172.34 information return with the commissioner no later than February 172.35 15 of each year. The information return must contain the total 172.36 amount of investments in the biomedical innovation and 173.1 commercialization initiative or the for-profit entity, the 173.2 amount of investment made by each taxpayer, and the taxpayer's 173.3 name and Minnesota tax identification number. 173.4 [EFFECTIVE DATE.] This section is effective for tax years 173.5 beginning after December 31, 2000. 173.6 Sec. 32. [290.0803] [GAIN ON QUALIFIED STOCK.] 173.7 (a) An individual is allowed a subtraction for 50 percent 173.8 of any gain from the sale or exchange of qualified stock held 173.9 for more than five years. To qualify for the subtraction under 173.10 this section, the stock must be: 173.11 (1) acquired after the day following final enactment of 173.12 this section; 173.13 (2) in a business that was a qualified business for the 173.14 taxable year in which the individual acquired the stock and for 173.15 the taxable year prior to the year in which the individual sold 173.16 or exchanged the stock. 173.17 (b) Stock means common or preferred stock or an ownership 173.18 interest in an entity taxed as a partnership. 173.19 (c) A business is a qualified business only if it: 173.20 (1) meets the active business requirements of section 173.21 1202(e) of the Internal Revenue Code, except the business need 173.22 not be a C corporation; 173.23 (2) meets the jurisdiction requirements of section 297A.66 173.24 or agrees voluntarily to collect tax under chapter 297A; and 173.25 (3) has filed a certification with the commissioner of 173.26 trade and economic development for the taxable year under 173.27 paragraph (d). 173.28 (d) To be a qualified business for a taxable year, the 173.29 business must file a certification with the commissioner of 173.30 trade and economic development that it meets the requirements of 173.31 paragraph (c), clauses (1) and (2), by 15 days before the start 173.32 of a taxable year. The certification must be made in the form 173.33 prescribed by the commissioner of trade and economic development 173.34 and must be annually renewed, in the manner prescribed by the 173.35 commissioner of trade and economic development, to be in effect 173.36 for a taxable year. The commissioner of trade and economic 174.1 development shall make available to the public, through the 174.2 Internet or in any other way the commissioner determines 174.3 appropriate, a list of the qualifying businesses for each 174.4 taxable year. 174.5 Sec. 33. Minnesota Statutes 2000, section 290.091, 174.6 subdivision 2, is amended to read: 174.7 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by 174.8 this section, the following terms have the meanings given: 174.9 (a) "Alternative minimum taxable income" means the sum of 174.10 the following for the taxable year: 174.11 (1) the taxpayer's federal alternative minimum taxable 174.12 income as defined in section 55(b)(2) of the Internal Revenue 174.13 Code; 174.14 (2) the taxpayer's itemized deductions allowed in computing 174.15 federal alternative minimum taxable income, but excluding: 174.16 (i) theMinnesotacharitable contribution deduction; 174.17 (ii) the medical expense deduction; 174.18 (iii) the casualty, theft, and disaster loss deduction; 174.19 (iv) the impairment-related work expenses of a disabled 174.20 person; and 174.21 (v) holocaust victims' settlement payments to the extent 174.22 allowed under section 290.01, subdivision 19b; 174.23 (3) for depletion allowances computed under section 613A(c) 174.24 of the Internal Revenue Code, with respect to each property (as 174.25 defined in section 614 of the Internal Revenue Code), to the 174.26 extent not included in federal alternative minimum taxable 174.27 income, the excess of the deduction for depletion allowable 174.28 under section 611 of the Internal Revenue Code for the taxable 174.29 year over the adjusted basis of the property at the end of the 174.30 taxable year (determined without regard to the depletion 174.31 deduction for the taxable year); 174.32 (4) to the extent not included in federal alternative 174.33 minimum taxable income, the amount of the tax preference for 174.34 intangible drilling cost under section 57(a)(2) of the Internal 174.35 Revenue Code determined without regard to subparagraph (E); and 174.36 (5) to the extent not included in federal alternative 175.1 minimum taxable income, the amount of interest income as 175.2 provided by section 290.01, subdivision 19a, clause (1); 175.3 less the sum of the amounts determined under the following: 175.4 (1) interest income as defined in section 290.01, 175.5 subdivision 19b, clause (1); 175.6 (2) an overpayment of state income tax as provided by 175.7 section 290.01, subdivision 19b, clause (2), to the extent 175.8 included in federal alternative minimum taxable income; 175.9 (3) the amount of investment interest paid or accrued 175.10 within the taxable year on indebtedness to the extent that the 175.11 amount does not exceed net investment income, as defined in 175.12 section 163(d)(4) of the Internal Revenue Code. Interest does 175.13 not include amounts deducted in computing federal adjusted gross 175.14 income;and175.15 (4) amounts subtracted from federal taxable income as 175.16 provided by section 290.01, subdivision 19b,clausesclause (4); 175.17 and(6)175.18 (5) to the extent the gain was included in federal taxable 175.19 income, the capital gains exclusion under section 290.0803. 175.20 In the case of an estate or trust, alternative minimum 175.21 taxable income must be computed as provided in section 59(c) of 175.22 the Internal Revenue Code. 175.23 (b) "Investment interest" means investment interest as 175.24 defined in section 163(d)(3) of the Internal Revenue Code. 175.25 (c) "Tentative minimum tax" equals 6.4 percent of 175.26 alternative minimum taxable income after subtracting the 175.27 exemption amount determined under subdivision 3. 175.28 (d) "Regular tax" means the tax that would be imposed under 175.29 this chapter (without regard to this section and section 175.30 290.032), reduced by the sum of the nonrefundable credits 175.31 allowed under this chapter. 175.32 (e) "Net minimum tax" means the minimum tax imposed by this 175.33 section. 175.34(f) "Minnesota charitable contribution deduction" means a175.35charitable contribution deduction under section 170 of the175.36Internal Revenue Code to or for the use of an entity described176.1in section 290.21, subdivision 3, clauses (a) to (e). When the176.2federal deduction for charitable contributions is limited under176.3section 170(b) of the Internal Revenue Code, the allowable176.4contributions in the year of contribution are deemed to be first176.5contributions to entities described in section 290.21,176.6subdivision 3, clauses (a) to (e).176.7 Sec. 34. Minnesota Statutes 2000, section 290.091, 176.8 subdivision 3, is amended to read: 176.9 Subd. 3. [EXEMPTION AMOUNT.] For purposes of computing the 176.10 alternative minimum tax, the exemption amount is the exemption 176.11 determined under section 55(d) of the Internal Revenue Code, as 176.12 amended through December 31, 1992, except that (i) for married 176.13 couples filing joint returns, the exemption amount equals two 176.14 times the amount allowed in section 55(d)(1)(B) of the Internal 176.15 Revenue Code as amended through December 31, 1992, and the 176.16 phaseout threshold equals two times the amount provided in 176.17 section 55(d)(3)(B) of the Internal Revenue Code as amended 176.18 through December 31, 1992; (ii) for married couples filing 176.19 separate returns, the exemption amount and phaseout threshold 176.20 equal one-half the amounts provided for married couples filing 176.21 joint returns; and (iii) for all filers, alternative minimum 176.22 taxable income as determined under this section must be 176.23 substituted in the computation of the phase out under section 176.24 55(d)(3). 176.25 [EFFECTIVE DATE.] This section is effective for taxable 176.26 years beginning after December 31, 2000. 176.27 Sec. 35. Minnesota Statutes 2000, section 290.0921, 176.28 subdivision 1, is amended to read: 176.29 Subdivision 1. [TAX IMPOSED.] In addition to the taxes 176.30 computed under this chapter without regard to this section, the 176.31 franchise tax imposed on corporations includes a tax equal to 176.32 the excess, if any, for the taxable year of: 176.33 (1) 5.8 percent of Minnesota alternative minimum taxable 176.34 incomeless the credit allowed under section 290.35, subdivision176.353; over 176.36 (2) the tax imposed under section 290.06, subdivision 1, 177.1 without regard to this section. 177.2 [EFFECTIVE DATE.] This section is effective for taxable 177.3 years beginning after December 31, 2000. 177.4 Sec. 36. Minnesota Statutes 2000, section 290.0921, 177.5 subdivision 2, is amended to read: 177.6 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 177.7 the following terms have the meanings given them. 177.8 (b) "Alternative minimum taxable net income" is alternative 177.9 minimum taxable income, 177.10 (1) less the exemption amount, and 177.11 (2) apportioned or allocated to Minnesota under section 177.12 290.17, 290.191, or 290.20. 177.13 (c) The "exemption amount" is $40,000, reduced, but not 177.14 below zero, by 25 percent of the excess of alternative minimum 177.15 taxable income over $150,000. 177.16 (d) "Minnesota alternative minimum taxable income" is 177.17 alternative minimum taxable net income, less the deductions for 177.18 alternative tax net operating loss under subdivision 4; 177.19 charitable contributions under subdivision 5; and dividends 177.20 received under subdivision 6. The sum of the deductions under 177.21 this paragraph may not exceed 90 percent of alternative minimum 177.22 taxable net income. This limitation does not apply to a 177.23 deduction for dividends paid to or received from a corporation 177.24 which is subject to tax under section290.35 or290.36 and which 177.25 is a member of an affiliated group of corporations as defined by 177.26 the Internal Revenue Code. 177.27 [EFFECTIVE DATE.] This section is effective for taxable 177.28 years beginning after December 31, 2000. 177.29 Sec. 37. Minnesota Statutes 2000, section 290.0921, 177.30 subdivision 3, is amended to read: 177.31 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.] 177.32 "Alternative minimum taxable income" is Minnesota net income as 177.33 defined in section 290.01, subdivision 19, and includes the 177.34 adjustments and tax preference items in sections 56, 57, 58, and 177.35 59(d), (e), (f), and (h) of the Internal Revenue Code. If a 177.36 corporation files a separate company Minnesota tax return, the 178.1 minimum tax must be computed on a separate company basis. If a 178.2 corporation is part of a tax group filing a unitary return, the 178.3 minimum tax must be computed on a unitary basis. The following 178.4 adjustments must be made. 178.5 (1) For purposes of the depreciation adjustments under 178.6 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code, 178.7 the basis for depreciable property placed in service in a 178.8 taxable year beginning before January 1, 1990, is the adjusted 178.9 basis for federal income tax purposes, including any 178.10 modification made in a taxable year under section 290.01, 178.11 subdivision 19e, or Minnesota Statutes 1986, section 290.09, 178.12 subdivision 7, paragraph (c). 178.13 (2) For taxable years beginning after December 31, 2000, 178.14 the amount of any remaining modification made under section 178.15 290.01, subdivision 19e, or Minnesota Statutes 1986, section 178.16 290.09, subdivision 7, paragraph (c), not previously deducted is 178.17 a depreciation allowance in the first taxable year after 178.18 December 31, 2000. 178.19 (3) The alternative tax net operating loss deduction under 178.20 sections 56(a)(4) and 56(d) of the Internal Revenue Code does 178.21 not apply. 178.22(3)(4) The special rule for certain dividends under 178.23 section 56(g)(4)(C)(ii) of the Internal Revenue Code does not 178.24 apply. 178.25(4)(5) The special rule for dividends from section 936 178.26 companies under section 56(g)(4)(C)(iii) does not apply. 178.27(5)(6) The tax preference for depletion under section 178.28 57(a)(1) of the Internal Revenue Code does not apply. 178.29(6)(7) The tax preference for intangible drilling costs 178.30 under section 57(a)(2) of the Internal Revenue Code must be 178.31 calculated without regard to subparagraph (E) and the 178.32 subtraction under section 290.01, subdivision 19d, clause (4). 178.33(7)(8) The tax preference for tax exempt interest under 178.34 section 57(a)(5) of the Internal Revenue Code does not apply. 178.35(8)(9) The tax preference for charitable contributions of 178.36 appreciated property under section 57(a)(6) of the Internal 179.1 Revenue Code does not apply. 179.2(9)(10) For purposes of calculating the tax preference for 179.3 accelerated depreciation or amortization on certain property 179.4 placed in service before January 1, 1987, under section 57(a)(7) 179.5 of the Internal Revenue Code, the deduction allowable for the 179.6 taxable year is the deduction allowed under section 290.01, 179.7 subdivision 19e. 179.8 (11) For taxable years beginning after December 31, 2000, 179.9 the amount of any remaining modification made under section 179.10 290.01, subdivision 19e, not previously deducted is a 179.11 depreciation or amortization allowance in the first taxable year 179.12 after December 31, 2000. 179.13(10)(12) For purposes of calculating the adjustment for 179.14 adjusted current earnings in section 56(g) of the Internal 179.15 Revenue Code, the term "alternative minimum taxable income" as 179.16 it is used in section 56(g) of the Internal Revenue Code, means 179.17 alternative minimum taxable income as defined in this 179.18 subdivision, determined without regard to the adjustment for 179.19 adjusted current earnings in section 56(g) of the Internal 179.20 Revenue Code. 179.21(11)(13) For purposes of determining the amount of 179.22 adjusted current earnings under section 56(g)(3) of the Internal 179.23 Revenue Code, no adjustment shall be made under section 56(g)(4) 179.24 of the Internal Revenue Code with respect to (i) the amount of 179.25 foreign dividend gross-up subtracted as provided in section 179.26 290.01, subdivision 19d, clause (1), (ii) the amount of refunds 179.27 of income, excise, or franchise taxes subtracted as provided in 179.28 section 290.01, subdivision 19d, clause (10), or (iii) the 179.29 amount of royalties, fees or other like income subtracted as 179.30 provided in section 290.01, subdivision 19d, clause (11). 179.31 Items of tax preference must not be reduced below zero as a 179.32 result of the modifications in this subdivision. 179.33 [EFFECTIVE DATE.] This section is effective the day 179.34 following final enactment. 179.35 Sec. 38. Minnesota Statutes 2000, section 290.0921, 179.36 subdivision 6, is amended to read: 180.1 Subd. 6. [DIVIDENDS RECEIVED.] (a) A deduction is allowed 180.2 from alternative minimum taxable net income equal to the 180.3 deduction for dividends received under section 290.21, 180.4 subdivision 4, for purposes of calculating taxable income under 180.5 section 290.01, subdivision 29. 180.6 (b) The amount of the deduction must not exceed 90 percent 180.7 of alternative minimum taxable net income. This limitation does 180.8 not apply to dividends paid to or received from a corporation 180.9 which is subject to tax under section290.35 or290.36 and which 180.10 is a member of an affiliated group of corporations as defined by 180.11 the Internal Revenue Code. 180.12 [EFFECTIVE DATE.] This section is effective for taxable 180.13 years beginning after December 31, 2000. 180.14 Sec. 39. Minnesota Statutes 2000, section 290.0922, 180.15 subdivision 2, is amended to read: 180.16 Subd. 2. [EXEMPTIONS.] The following entities are exempt 180.17 from the tax imposed by this section: 180.18 (1) corporations exempt from tax under section 290.05other180.19than insurance companies exempt under subdivision 1, paragraph180.20(d); 180.21 (2) real estate investment trusts; 180.22 (3) regulated investment companies or a fund thereof; and 180.23 (4) entities having a valid election in effect under 180.24 section 860D(b) of the Internal Revenue Code; 180.25 (5) town and farmers' mutual insurance companies; and 180.26 (6) cooperatives organized under chapter 308A that provide 180.27 housing exclusively to persons age 55 and over and are 180.28 classified as homesteads under section 273.124, subdivision 3. 180.29 Entities not specifically exempted by this subdivision are 180.30 subject to tax under this section, notwithstanding section 180.31 290.05. 180.32 [EFFECTIVE DATE.] This section is effective for taxable 180.33 years beginning after December 31, 2000. 180.34 Sec. 40. Minnesota Statutes 2000, section 290.093, is 180.35 amended to read: 180.36 290.093 [TAX COMPUTATION FOR MUTUAL SAVINGS BANKS 181.1 CONDUCTING LIFE INSURANCE BUSINESS.] 181.2 Mutual savings banks as defined in section 594 of the 181.3 Internal Revenue Code are subject to a taxconsisting of the sum181.4of the taxes determined under clauses (1) and (2):181.5(1) a taxcomputed on the taxable income determined without 181.6 regard to any items of gross income or deductions properly 181.7 allocable to the business of the life insurance department, at 181.8 the rates and in the manneras if this section did not apply;181.9and181.10(2) a tax computed on the income of the life insurance181.11department determined without regard to any items of gross181.12income or deductions not properly allocable to the department181.13computed in the manner provided in section 290.35 and at the181.14rate provided in section 290.06for a corporation not engaged in 181.15 the business of issuing life insurance contracts. 181.16 This section applies only if the life insurance department 181.17 would, if it were treated as a separate corporation, qualify as 181.18 a life insurance company under section 816 of the Internal 181.19 Revenue Code. 181.20 [EFFECTIVE DATE.] This section is effective for taxable 181.21 years beginning after December 31, 2000. 181.22 Sec. 41. Minnesota Statutes 2000, section 290.095, 181.23 subdivision 2, is amended to read: 181.24 Subd. 2. [DEFINED AND LIMITED.] (a) The term "net 181.25 operating loss" as used in this section shall mean a net 181.26 operating loss as defined in section 172(c)or 810(a), in the181.27case of life insurance companies,of the Internal Revenue Code, 181.28 with the modifications specified in subdivision 4. The 181.29 deductions provided in section 290.21 and the modification 181.30 provided in section 290.01, subdivision 19d, clause(11)(9), 181.31 cannot be used in the determination of a net operating loss. 181.32 (b) The term "net operating loss deduction" as used in this 181.33 section means the aggregate of the net operating loss carryovers 181.34 to the taxable year, computed in accordance with subdivision 3. 181.35 The provisions of section 172(b)or 810(b), in the case of life181.36insurance companies,of the Internal Revenue Code relating to 182.1 the carryback of net operating losses, do not apply. 182.2 [EFFECTIVE DATE.] This section is effective for taxable 182.3 years beginning after December 31, 2000. 182.4 Sec. 42. Minnesota Statutes 2000, section 290.17, 182.5 subdivision 1, is amended to read: 182.6 Subdivision 1. [SCOPE OF ALLOCATION RULES.] (a) The income 182.7 of resident individuals is not subject to allocation outside 182.8 this state. The allocation rules apply to nonresident 182.9 individuals, estates, trusts, nonresident partners of 182.10 partnerships, nonresident shareholders of corporations treated 182.11 as "S" corporations under section 290.9725, and all corporations 182.12 not having such an election in effect. If a partnership or 182.13 corporation would not otherwise be subject to the allocation 182.14 rules, but conducts a trade or business that is part of a 182.15 unitary business involving another legal entity that is subject 182.16 to the allocation rules, the partnership or corporation is 182.17 subject to the allocation rules. 182.18 (b) Expenses, losses, and other deductions (referred to 182.19 collectively in this paragraph as "deductions") must be 182.20 allocated along with the item or class of gross income to which 182.21 they are definitely related for purposes of assignment under 182.22 this section or apportionment under section 290.191, 290.20, 182.23290.35,or 290.36. Deductions not definitely related to any 182.24 item or class of gross income are assigned to the taxpayer's 182.25 domicile. 182.26 (c) In the case of an individual who is a resident for only 182.27 part of a taxable year, the individual's income, gains, losses, 182.28 and deductions from the distributive share of a partnership, S 182.29 corporation, trust, or estate are not subject to allocation 182.30 outside this state to the extent of the distributive share 182.31 multiplied by a ratio, the numerator of which is the number of 182.32 days the individual was a resident of this state during the tax 182.33 year of the partnership, S corporation, trust, or estate, and 182.34 the denominator of which is the number of days in the taxable 182.35 year of the partnership, S corporation, trust, or estate. 182.36 [EFFECTIVE DATE.] This section is effective for taxable 183.1 years beginning after December 31, 2000. 183.2 Sec. 43. Minnesota Statutes 2000, section 290.17, 183.3 subdivision 4, is amended to read: 183.4 Subd. 4. [UNITARY BUSINESS PRINCIPLE.] (a) If a trade or 183.5 business conducted wholly within this state or partly within and 183.6 partly without this state is part of a unitary business, the 183.7 entire income of the unitary business is subject to 183.8 apportionment pursuant to section 290.191. Notwithstanding 183.9 subdivision 2, paragraph (c), none of the income of a unitary 183.10 business is considered to be derived from any particular source 183.11 and none may be allocated to a particular place except as 183.12 provided by the applicable apportionment formula. The 183.13 provisions of this subdivision do not apply to business income 183.14 subject to subdivision 5, income of an insurance company 183.15determined under section 290.35, or income of an investment 183.16 company determined under section 290.36. 183.17 (b) The term "unitary business" means business activities 183.18 or operations which result in a flow of value between them. The 183.19 term may be applied within a single legal entity or between 183.20 multiple entities and without regard to whether each entity is a 183.21 sole proprietorship, a corporation, a partnership or a trust. 183.22 (c) Unity is presumed whenever there is unity of ownership, 183.23 operation, and use, evidenced by centralized management or 183.24 executive force, centralized purchasing, advertising, 183.25 accounting, or other controlled interaction, but the absence of 183.26 these centralized activities will not necessarily evidence a 183.27 nonunitary business. Unity is also presumed when business 183.28 activities or operations are of mutual benefit, dependent upon 183.29 or contributory to one another, either individually or as a 183.30 group. 183.31 (d) Where a business operation conducted in Minnesota is 183.32 owned by a business entity that carries on business activity 183.33 outside the state different in kind from that conducted within 183.34 this state, and the other business is conducted entirely outside 183.35 the state, it is presumed that the two business operations are 183.36 unitary in nature, interrelated, connected, and interdependent 184.1 unless it can be shown to the contrary. 184.2 (e) Unity of ownership is not deemed to exist when a 184.3 corporation is involved unless that corporation is a member of a 184.4 group of two or more business entities and more than 50 percent 184.5 of the voting stock of each member of the group is directly or 184.6 indirectly owned by a common owner or by common owners, either 184.7 corporate or noncorporate, or by one or more of the member 184.8 corporations of the group. For this purpose, the term "voting 184.9 stock" shall include membership interests of mutual insurance 184.10 holding companies formed under section 60A.077. 184.11 (f) The net income and apportionment factors under section 184.12 290.191 or 290.20 of foreign corporations and other foreign 184.13 entities which are part of a unitary business shall not be 184.14 included in the net income or the apportionment factors of the 184.15 unitary business. A foreign corporation or other foreign entity 184.16 which is required to file a return under this chapter shall file 184.17 on a separate return basis. The net income and apportionment 184.18 factors under section 290.191 or 290.20 of foreign operating 184.19 corporations shall not be included in the net income or the 184.20 apportionment factors of the unitary business except as provided 184.21 in paragraph (g). 184.22 (g) The adjusted net income of a foreign operating 184.23 corporation shall be deemed to be paid as a dividend on the last 184.24 day of its taxable year to each shareholder thereof, in 184.25 proportion to each shareholder's ownership, with which such 184.26 corporation is engaged in a unitary business. Such deemed 184.27 dividend shall be treated as a dividend under section 290.21, 184.28 subdivision 4. 184.29 Dividends actually paid by a foreign operating corporation 184.30 to a corporate shareholder which is a member of the same unitary 184.31 business as the foreign operating corporation shall be 184.32 eliminated from the net income of the unitary business in 184.33 preparing a combined report for the unitary business. The 184.34 adjusted net income of a foreign operating corporation shall be 184.35 its net income adjusted as follows: 184.36 (1) any taxes paid or accrued to a foreign country, the 185.1 commonwealth of Puerto Rico, or a United States possession or 185.2 political subdivision of any of the foregoing shall be a 185.3 deduction; and 185.4 (2) the subtraction from federal taxable income for 185.5 payments received from foreign corporations or foreign operating 185.6 corporations under section 290.01, subdivision 19d, 185.7 clause(11)(9), shall not be allowed. 185.8 If a foreign operating corporation incurs a net loss, 185.9 neither income nor deduction from that corporation shall be 185.10 included in determining the net income of the unitary business. 185.11 (h) For purposes of determining the net income of a unitary 185.12 business and the factors to be used in the apportionment of net 185.13 income pursuant to section 290.191 or 290.20, there must be 185.14 included only the income and apportionment factors of domestic 185.15 corporations or other domestic entities other than foreign 185.16 operating corporations that are determined to be part of the 185.17 unitary business pursuant to this subdivision, notwithstanding 185.18 that foreign corporations or other foreign entities might be 185.19 included in the unitary business. 185.20 (i) Deductions for expenses, interest, or taxes otherwise 185.21 allowable under this chapter that are connected with or 185.22 allocable against dividends, deemed dividends described in 185.23 paragraph (g), or royalties, fees, or other like income 185.24 described in section 290.01, subdivision 19d, clause(11)(9), 185.25 shall not be disallowed. 185.26 (j) Each corporation or other entity, except a sole 185.27 proprietorship, that is part of a unitary business must file 185.28 combined reports as the commissioner determines. On the 185.29 reports, all intercompany transactions between entities included 185.30 pursuant to paragraph (h) must be eliminated and the entire net 185.31 income of the unitary business determined in accordance with 185.32 this subdivision is apportioned among the entities by using each 185.33 entity's Minnesota factors for apportionment purposes in the 185.34 numerators of the apportionment formula and the total factors 185.35 for apportionment purposes of all entities included pursuant to 185.36 paragraph (h) in the denominators of the apportionment formula. 186.1 (k) If a corporation has been divested from a unitary 186.2 business and is included in a combined report for a fractional 186.3 part of the common accounting period of the combined report: 186.4 (1) its income includable in the combined report is its 186.5 income incurred for that part of the year determined by 186.6 proration or separate accounting; and 186.7 (2) its sales, property, and payroll included in the 186.8 apportionment formula must be prorated or accounted for 186.9 separately. 186.10 [EFFECTIVE DATE.] This section is effective for taxable 186.11 years beginning after December 31, 2000. 186.12 Sec. 44. Minnesota Statutes 2000, section 290.191, 186.13 subdivision 2, is amended to read: 186.14 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 186.15 Except for those trades or businesses required to use a 186.16 different formula under subdivision 3 or section290.35 or186.17 290.36, and for those trades or businesses that receive 186.18 permission to use some other method under section 290.20 or 186.19 under subdivision 4, a trade or business required to apportion 186.20 its net income must apportion its income to this state on the 186.21 basis of: 186.22 (1) for taxable years beginning after December 31, 2000, 186.23 and before January 1, 2004, the percentage obtained by taking 186.24 the sum of: 186.25(1) 75(i) 90 percent of the percentage which the sales 186.26 made within this state in connection with the trade or business 186.27 during the tax period are of the total sales wherever made in 186.28 connection with the trade or business during the tax period; 186.29(2) 12.5(ii) five percent of the percentage which the 186.30 total tangible property used by the taxpayer in this state in 186.31 connection with the trade or business during the tax period is 186.32 of the total tangible property, wherever located, used by the 186.33 taxpayer in connection with the trade or business during the tax 186.34 period; and 186.35(3) 12.5(iii) five percent of the percentage which the 186.36 taxpayer's total payrolls paid or incurred in this state or paid 187.1 in respect to labor performed in this state in connection with 187.2 the trade or business during the tax period are of the 187.3 taxpayer's total payrolls paid or incurred in connection with 187.4 the trade or business during the tax period; and 187.5 (2) for taxable years beginning after December 31, 2003, 187.6 the percentage that the sales made within this state in 187.7 connection with the trade or business during the tax period are 187.8 of the total sales wherever made in connection with the trade or 187.9 business during the tax period. 187.10 [EFFECTIVE DATE.] This section is effective for taxable 187.11 years beginning after December 31, 2000. 187.12 Sec. 45. Minnesota Statutes 2000, section 290.191, 187.13 subdivision 3, is amended to read: 187.14 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL 187.15 INSTITUTIONS.] Except for an investment company required to 187.16 apportion its income under section 290.36, a financial 187.17 institution that is required to apportion its net income must 187.18 apportion its net income to this state on the basis of: 187.19 (1) for taxable years beginning after December 31, 2000, 187.20 and before January 1, 2004, the percentage obtained by taking 187.21 the sum of: 187.22(1) 75(i) 90 percent of the percentage which the receipts 187.23 from within this state in connection with the trade or business 187.24 during the tax period are of the total receipts in connection 187.25 with the trade or business during the tax period, from wherever 187.26 derived; 187.27(2) 12.5(ii) five percent of the percentage which the sum 187.28 of the total tangible property used by the taxpayer in this 187.29 state and the intangible property owned by the taxpayer and 187.30 attributed to this state in connection with the trade or 187.31 business during the tax period is of the sum of the total 187.32 tangible property, wherever located, used by the taxpayer and 187.33 the intangible property owned by the taxpayer and attributed to 187.34 all states in connection with the trade or business during the 187.35 tax period; and 187.36(3) 12.5(iii) five percent of the percentage which the 188.1 taxpayer's total payrolls paid or incurred in this state or paid 188.2 in respect to labor performed in this state in connection with 188.3 the trade or business during the tax period are of the 188.4 taxpayer's total payrolls paid or incurred in connection with 188.5 the trade or business during the tax period; and 188.6 (2) for taxable years beginning after December 31, 2003, 188.7 the percentage that the receipts from within this state in 188.8 connection with the trade or business during the tax period are 188.9 of the total receipts in connection with the trade or business 188.10 during the tax period, from wherever derived. 188.11 [EFFECTIVE DATE.] This section is effective for taxable 188.12 years beginning after December 31, 2000. 188.13 Sec. 46. Minnesota Statutes 2000, section 290.21, 188.14 subdivision 4, is amended to read: 188.15 Subd. 4. (a)(1) Eighty percent of dividends received by a 188.16 corporation during the taxable year from another corporation, in 188.17 which the recipient owns 20 percent or more of the stock, by 188.18 vote and value, not including stock described in section 188.19 1504(a)(4) of the Internal Revenue Code when the corporate stock 188.20 with respect to which dividends are paid does not constitute the 188.21 stock in trade of the taxpayer or would not be included in the 188.22 inventory of the taxpayer, or does not constitute property held 188.23 by the taxpayer primarily for sale to customers in the ordinary 188.24 course of the taxpayer's trade or business, or when the trade or 188.25 business of the taxpayer does not consist principally of the 188.26 holding of the stocks and the collection of the income and gains 188.27 therefrom; and 188.28 (2)(i) The remaining 20 percent of dividends if the 188.29 dividends received are the stock in an affiliated company 188.30 transferred in an overall plan of reorganization and the 188.31 dividend is eliminated in consolidation under Treasury 188.32 Department Regulation 1.1502-14(a), as amended through December 188.33 31, 1989; or 188.34 (ii) The remaining 20 percent of dividends if the dividends 188.35 are received from a corporation which is subject to tax under 188.36 section290.35 or290.36 and which is a member of an affiliated 189.1 group of corporations as defined by the Internal Revenue Code 189.2 and the dividend is eliminated in consolidation under Treasury 189.3 Department Regulation 1.1502-14(a), as amended through December 189.4 31, 1989, or is deducted under an election under section 243(b) 189.5 of the Internal Revenue Code. 189.6 (b) Seventy percent of dividends received by a corporation 189.7 during the taxable year from another corporation in which the 189.8 recipient owns less than 20 percent of the stock, by vote or 189.9 value, not including stock described in section 1504(a)(4) of 189.10 the Internal Revenue Code when the corporate stock with respect 189.11 to which dividends are paid does not constitute the stock in 189.12 trade of the taxpayer, or does not constitute property held by 189.13 the taxpayer primarily for sale to customers in the ordinary 189.14 course of the taxpayer's trade or business, or when the trade or 189.15 business of the taxpayer does not consist principally of the 189.16 holding of the stocks and the collection of income and gain 189.17 therefrom. 189.18 (c) The dividend deduction provided in this subdivision 189.19 shall be allowed only with respect to dividends that are 189.20 included in a corporation's Minnesota taxable net income for the 189.21 taxable year. 189.22 The dividend deduction provided in this subdivision does 189.23 not apply to a dividend from a corporation which, for the 189.24 taxable year of the corporation in which the distribution is 189.25 made or for the next preceding taxable year of the corporation, 189.26 is a corporation exempt from tax under section 501 of the 189.27 Internal Revenue Code. 189.28 The dividend deduction provided in this subdivision applies 189.29 to the amount of regulated investment company dividends only to 189.30 the extent determined under section 854(b) of the Internal 189.31 Revenue Code. 189.32 The dividend deduction provided in this subdivision shall 189.33 not be allowed with respect to any dividend for which a 189.34 deduction is not allowed under the provisions of section 246(c) 189.35 of the Internal Revenue Code. 189.36 (d) If dividends received by a corporation that does not 190.1 have nexus with Minnesota under the provisions of Public Law 190.2 Number 86-272 are included as income on the return of an 190.3 affiliated corporation permitted or required to file a combined 190.4 report under section 290.34, subdivision 2, then for purposes of 190.5 this subdivision the determination as to whether the trade or 190.6 business of the corporation consists principally of the holding 190.7 of stocks and the collection of income and gains therefrom shall 190.8 be made with reference to the trade or business of the 190.9 affiliated corporation having a nexus with Minnesota. 190.10 (e) The deduction provided by this subdivision does not 190.11 apply if the dividends are paid by a FSC as defined in section 190.12 922 of the Internal Revenue Code. 190.13 (f) If one or more of the members of the unitary group 190.14 whose income is included on the combined report received a 190.15 dividend, the deduction under this subdivision for each member 190.16 of the unitary business required to file a return under this 190.17 chapter is the product of: (1) 100 percent of the dividends 190.18 received by members of the group; (2) the percentage allowed 190.19 pursuant to paragraph (a) or (b); and (3) the percentage of the 190.20 taxpayer's business income apportionable to this state for the 190.21 taxable year under section 290.191 or 290.20. 190.22 [EFFECTIVE DATE.] This section is effective for taxable 190.23 years beginning after December 31, 2000. 190.24 Sec. 47. Minnesota Statutes 2000, section 290.9725, is 190.25 amended to read: 190.26 290.9725 [S CORPORATION.] 190.27 For purposes of this chapter, the term "S corporation" 190.28 means any corporation having a valid election in effect for the 190.29 taxable year under section 1362 of the Internal Revenue Code. 190.30 An S corporation shall not be subject to the taxes imposed by 190.31 this chapter, except:190.32(1)the taxes imposed under sections 290.0922, 290.92, 190.33 290.9727, 290.9728, and 290.9729; and190.34(2) the tax under sections 290.06, subdivision 1, and190.35290.0921 apply to a financial institution to which either190.36section 585 or 593 of the Internal Revenue Code applies or that191.1has a wholly owned subsidiary as described in section191.21361(b)(3)(B) of the Internal Revenue Code which is a financial191.3institution under section 585 or 593 of the Internal Revenue191.4Code. 191.5 [EFFECTIVE DATE.] This section is effective for taxable 191.6 years beginning after December 31, 2000. 191.7 Sec. 48. Minnesota Statutes 2000, section 297I.20, is 191.8 amended to read: 191.9 297I.20 [GUARANTY ASSOCIATION ASSESSMENT OFFSET.] 191.10 (a) An insurance company may offset against its premium tax 191.11 liability to this state any amount paid for assessments made for 191.12 insolvencies which occur after July 31, 1994, under sections 191.13 60C.01 to 60C.22; and any amount paid for assessments made after 191.14 July 31, 1994, under Minnesota Statutes 1992, sections 61B.01 to 191.15 61B.16, or under sections 61B.18 to 61B.32 as follows: 191.16 (1) Each such assessment shall give rise to an amount of 191.17 offset equal to 20 percent of the amount of the assessment for 191.18 each of the five calendar years following the year in which the 191.19 assessment was paid. 191.20 (2) The amount of offset initially determined for each 191.21 taxable year is the sum of the amounts determined under clause 191.22 (1) for that taxable year. 191.23 (b)(1) Each year the commissioner shall compare total 191.24 guaranty association assessments levied over the preceding five 191.25 calendar years to the sum of all premium tax and corporate 191.26 franchise tax revenues collected from insurance companies, 191.27 without reduction for any guaranty association assessment offset 191.28 in the preceding calendar year, referred to in this subdivision 191.29 as "preceding year insurance tax revenues." 191.30 (2) If total guaranty association assessments levied over 191.31 the preceding five years exceed the preceding year insurance tax 191.32 revenues, insurance companies must be allowed only a 191.33 proportionate part of the premium tax offset calculated under 191.34 paragraph (a) for the current calendar year. 191.35 (3) The proportionate part of the premium tax offset 191.36 allowed in the current calendar year is determined by 192.1 multiplying the amount calculated under paragraph (a) by a 192.2 fraction. The numerator of the fraction equals the preceding 192.3 year insurance tax revenues, and its denominator equals total 192.4 guaranty association assessments levied over the preceding 192.5 five-year period. 192.6 (4) The proportionate part of the premium tax offset that 192.7 is not allowed must be carried forward to subsequent tax years 192.8 and added to the amount of premium tax offset calculated under 192.9 paragraph (a) prior to application of the limitation imposed by 192.10 this paragraph. 192.11 (5) Any amount carried forward from prior years must be 192.12 allowed before allowance of the offset for the current year 192.13 calculated under paragraph (a). 192.14 (6) The premium tax offset limitation must be calculated 192.15 separately for (i) insurance companies subject to assessment 192.16 under sections 60C.01 to 60C.22, and (ii) insurance companies 192.17 subject to assessment under Minnesota Statutes 1992, sections 192.18 61B.01 to 61B.16, or 61B.18 to 61B.32. 192.19 (7) When the premium tax offset is limited by this 192.20 provision, the commissioner shall notify affected insurance 192.21 companies on a timely basis for purposes of completing premium 192.22 and corporate franchise tax returns. 192.23 (8) The guaranty associations created under sections 60C.01 192.24 to 60C.22, Minnesota Statutes 1992, sections 61B.01 to 61B.16, 192.25 and 61B.18 to 61B.32, shall provide the commissioner with the 192.26 necessary information on guaranty association assessments. 192.27 (c)(1) If the offset determined by the application of 192.28 paragraphs (a) and (b) exceeds thegreater of theinsurance 192.29 company's premium tax liability under this sectionor its192.30corporate franchise tax liability under chapter 290prior to 192.31 allowance of the credit for premium taxes, then the insurance 192.32 company may carry forward the excess, referred to in this 192.33 subdivision as the "carryforward credit" to subsequent taxable 192.34 years. 192.35 (2) The carryforward credit is allowed as an offset against 192.36 premium tax liability for the first succeeding year to the 193.1 extent that the premium tax liability for that year exceeds the 193.2 amount of the allowable offset for the year determined under 193.3 paragraphs (a) and (b). 193.4 (3) The carryforward credit must be reduced, but not below 193.5 zero, by thegreater of theamount of the carryforward credit 193.6 allowed as an offset against the premium tax under this 193.7 paragraphor the amount of the carryforward credit allowed as an193.8offset against the insurance company's corporate franchise tax193.9liability under section 290.35, subdivision 6, paragraph (d). 193.10 The remainder, if any, of the carryforward credit must be 193.11 carried forward to succeeding taxable years until the entire 193.12 carryforward credit has been credited against the insurance 193.13 company's liability for premium tax under this chapterand193.14corporate franchise tax under chapter 290if applicable for that 193.15 taxable year. 193.16 (d) When an insurer has offset against taxes its payment of 193.17 an assessment of the Minnesota life and health guaranty 193.18 association, and the association pays the insurer a refund with 193.19 respect to the assessment under Minnesota Statutes 1992, section 193.20 61B.07, subdivision 6, or 61B.24, subdivision 6, then the refund 193.21 reduces the insurer's carryforward credit under paragraph (c). 193.22 If the refund exceeds the amount of the carryforward credit, the 193.23 excess amount must be repaid to the state by the insurers to the 193.24 extent of the offset in the manner the commissioner requires. 193.25 [EFFECTIVE DATE.] This section is effective for taxable 193.26 years beginning after December 31, 2000. 193.27 Sec. 49. Minnesota Statutes 2000, section 298.01, 193.28 subdivision 3b, is amended to read: 193.29 Subd. 3b. [DEDUCTIONS.] (a) For purposes of determining 193.30 taxable income under subdivision 3, the deductions from gross 193.31 income include only those expenses necessary to convert raw ores 193.32 to marketable quality. Such expenses include costs associated 193.33 with refinement but do not include expenses such as 193.34 transportation, stockpiling, marketing, or marine insurance that 193.35 are incurred after marketable ores are produced, unless the 193.36 expenses are included in gross income. 194.1 (b) The provisions of section 290.01, subdivisions 19c, 194.2clauses (7) and (11)clause (6), and 19d,clauses (7) and194.3(12)clause (10), are not used to determine taxable income. 194.4 [EFFECTIVE DATE.] This section is effective for taxes 194.5 payable May 1, 2002, and thereafter. 194.6 Sec. 50. Minnesota Statutes 2000, section 298.01, 194.7 subdivision 4c, is amended to read: 194.8 Subd. 4c. [SPECIAL DEDUCTIONSDEDUCTION FOR DEPRECIATION; 194.9 NET OPERATING LOSS.] (a) For purposes of determining taxable 194.10 income under subdivision 4,the following modifications are194.11allowed:194.12(1)the provisions of section 290.01, subdivisions 19c, 194.13clauses (7) and (11)clause (6), and 19d,clauses (7) and194.14(12)clause (10), are not used to determine taxable income; and. 194.15(2) for assets placed in service before January 1, 1990,194.16the deduction for depreciation will be the same amount allowed194.17under chapter 290, except that after an asset has been fully194.18depreciated for federal income tax purposes any remaining194.19depreciable basis is allowed as a deduction using the194.20straight-line method over the following number of years:194.21(i) three-year property, one year;194.22(ii) five- and seven-year property, two years;194.23(iii) ten-year property, five years; and194.24(iv) all other property, seven years.194.25No deduction is allowed if an asset is fully depreciated194.26for occupation tax purposes before January 1990.194.27(b) For purposes of determining the deduction allowed under194.28paragraph (a), clause (2), the remaining depreciable basis of194.29property placed in service before January 1, 1990, is calculated194.30as follows:194.31(1) the adjusted basis of the property on December 31,194.321989, which was used to calculate the hypothetical corporate194.33franchise tax under Minnesota Statutes 1988, section 298.40,194.34including salvage value; less194.35(2) deductions for depreciation allowed under section194.36290.01, subdivision 19e.195.1(c) The basis for determining gain or loss on sale or195.2disposition of assets placed in service before January 1, 1990,195.3is the basis determined under paragraph (b), less the deductions195.4allowed under paragraph (a), clause (2).195.5(d)(b) The amount of net operating loss incurred in a 195.6 taxable year beginning before January 1, 1990, that may be 195.7 carried over to a taxable year beginning after December 31, 195.8 1989, is the amount of net operating loss carryover determined 195.9 in the calculation of the hypothetical corporate franchise tax 195.10 under Minnesota Statutes 1988, sections 298.40 and 298.402. 195.11 [EFFECTIVE DATE.] This section is effective for taxes 195.12 payable May 1, 2002, and thereafter. 195.13 Sec. 51. Minnesota Statutes 2000, section 469.1732, 195.14 subdivision 1, is amended to read: 195.15 Subdivision 1. [AUTHORITY.] A business that conducts 195.16 business activity within a border city development zone 195.17 designated under section 469.1731 may qualify for the property 195.18 tax exemption under section 272.0212, the corporate franchise195.19tax credit under subdivision 2,and the sales tax exemption 195.20 under section 469.1734, subdivision 6. 195.21 [EFFECTIVE DATE.] This section is effective the day 195.22 following final enactment. 195.23 Sec. 52. [REPORT ON INCOME TAX RECIPROCITY WITH 195.24 WISCONSIN.] 195.25 By March 1, 2002, the commissioner of revenue must report 195.26 to house and senate committees dealing with taxes on the 195.27 advisability of terminating individual income tax reciprocity 195.28 with the state of Wisconsin under Minnesota Statutes, section 195.29 290.081. 195.30 [EFFECTIVE DATE.] This section is effective the day 195.31 following final enactment. 195.32 Sec. 53. [APPROPRIATION; TAXPAYER ASSISTANCE.] 195.33 (a) $150,000 is appropriated for fiscal year 2002 from the 195.34 general fund to the commissioner of revenue to make grants to 195.35 one or more nonprofit organizations, qualifying under section 195.36 501(c)(3) of the Internal Revenue Code of 1986, to coordinate, 196.1 facilitate, encourage, and aid in the provision of taxpayer 196.2 assistance services. This appropriation is available for fiscal 196.3 years 2002 and 2003 and does not become a part of the base. 196.4 (b) For purposes of this section, "taxpayer assistance 196.5 services" means accounting and tax preparation services provided 196.6 by volunteers to low-income and disadvantaged Minnesota 196.7 residents to help them file federal and state income tax returns 196.8 and Minnesota property tax refund claims and to provide personal 196.9 representation before the department of revenue and Internal 196.10 Revenue Service. 196.11 Sec. 54. [REPEALER.] 196.12 (a) Minnesota Statutes 2000, sections 290.06, subdivision 196.13 25; and 290.0673, are repealed. 196.14 (b) Minnesota Statutes 2000, sections 290.06, subdivision 196.15 26; 290.095, subdivision 1a; 290.21, subdivision 3; 290.35; and 196.16 290.9726, subdivision 7, are repealed. 196.17 (c) Minnesota Statutes 2000, sections 469.1732, subdivision 196.18 2; and 469.1734, subdivision 4, are repealed. 196.19 (d) Minnesota Statutes 2000, sections 290.095, subdivision 196.20 7; 290.23; 290.25; and 290.31, subdivisions 2, 2a, 3, 4, 5, and 196.21 19, are repealed. 196.22 (e) Minnesota Statutes 2000, section 290.191, subdivision 196.23 4, is repealed. 196.24 [EFFECTIVE DATE.] Paragraph (a) of this section is 196.25 effective for taxable years beginning after December 31, 2001. 196.26 Paragraphs (b) and (d) of this section are effective for taxable 196.27 years beginning after December 31, 2000. Paragraph (c) of this 196.28 section is effective the day following final enactment. 196.29 Paragraph (e) of this section is effective for tax years 196.30 beginning after December 31, 2003. 196.31 ARTICLE 8 196.32 SALES AND USE TAXES 196.33 Section 1. Minnesota Statutes 2000, section 84.922, is 196.34 amended by adding a subdivision to read: 196.35 Subd. 11. [PROOF OF SALES TAX PAYMENT.] A person applying 196.36 for initial registration in Minnesota of an all-terrain vehicle 197.1 shall provide a purchaser's certificate showing a complete 197.2 description of the all-terrain vehicle, the seller's name and 197.3 address, the full purchase price of the all-terrain vehicle, and 197.4 the trade-in allowance, if any. The certificate also must 197.5 include information showing either that (1) the sales and use 197.6 tax under chapter 297A was paid, or (2) the purchase was exempt 197.7 from tax under chapter 297A. The certificate is not required if 197.8 the applicant provides a receipt, invoice, or other document 197.9 that shows the all-terrain vehicle was purchased from a retailer 197.10 maintaining a place of business in this state as defined in 197.11 section 297A.66, subdivision 1. 197.12 [EFFECTIVE DATE.] This section is effective for 197.13 registrations occurring on or after July 1, 2001. 197.14 Sec. 2. Minnesota Statutes 2000, section 289A.11, 197.15 subdivision 1, is amended to read: 197.16 Subdivision 1. [RETURN REQUIRED.]Except as provided in197.17section 289A.18, subdivision 4,For themonthperiod in which 197.18 taxes imposed by chapter 297A are payable, or for which a return 197.19 is due, a return for the preceding reporting period must be 197.20 filed with the commissioner in the form and manner the 197.21 commissioner prescribes. A person making sales at retail at two 197.22 or more places of business may file a consolidated return 197.23 subject to rules prescribed by the commissioner. In computing 197.24 the dollar amount of items on the return, the amounts are 197.25 rounded off to the nearest whole dollar, disregarding amounts 197.26 less than 50 cents and increasing amounts of 50 cents to 99 197.27 cents to the next highest dollar. 197.28 Notwithstanding this subdivision, a person who is not 197.29 required to hold a sales tax permit under chapter 297A and who 197.30 makes annual purchases of less than $18,500 that are subject to 197.31 the use tax imposed by section 297A.14, may file an annual use 197.32 tax return on a form prescribed by the commissioner. If a 197.33 person who qualifies for an annual use tax reporting period is 197.34 required to obtain a sales tax permit or makes use tax purchases 197.35 in excess of $18,500 during the calendar year, the reporting 197.36 period must be considered ended at the end of the month in which 198.1 the permit is applied for or the purchase in excess of $18,500 198.2 is made and a return must be filed for the preceding reporting 198.3 period. 198.4 [EFFECTIVE DATE.] This section is effective beginning with 198.5 returns filed after January 1, 2002. 198.6 Sec. 3. Minnesota Statutes 2000, section 289A.18, 198.7 subdivision 4, is amended to read: 198.8 Subd. 4. [SALES AND USE TAX RETURNS.] (a) Sales and use 198.9 tax returns must be filed on or before the 20th day of the month 198.10 following the close of the preceding reporting period, except 198.11 that annual use tax returns provided for under section 289A.11, 198.12 subdivision 1, must be filed by April 15 following the close of 198.13 the calendar year, in the case of individuals. Annual use tax 198.14 returns of businesses, including sole proprietorships, and 198.15 annual sales tax returns must be filed by February 5 following 198.16 the close of the calendar year. 198.17 (b)Except for the return for the June reporting period,198.18which is due on the following August 25, returns filed by198.19retailers required to remit liabilities by means of funds198.20transfer under section 289A.20, subdivision 4, paragraph (d),198.21are due on or before the 25th day of the month following the198.22close of the preceding reporting period.198.23(c)If a retailer has an average sales and use tax 198.24 liability, including local sales and use taxes administered by 198.25 the commissioner, equal to or less than $500 per month in any 198.26 quarter of a calendar year, and has substantially complied with 198.27 the tax laws during the preceding four calendar quarters, the 198.28 retailer may request authorization to file and pay the taxes 198.29 quarterly in subsequent calendar quarters. The authorization 198.30 remains in effect during the period in which the retailer's 198.31 quarterly returns reflect sales and use tax liabilities of less 198.32 than $1,500 and there is continued compliance with state tax 198.33 laws. 198.34(d)(c) If a retailer has an average sales and use tax 198.35 liability, including local sales and use taxes administered by 198.36 the commissioner, equal to or less than $100 per month during a 199.1 calendar year, and has substantially complied with the tax laws 199.2 during that period, the retailer may request authorization to 199.3 file and pay the taxes annually in subsequent years. The 199.4 authorization remains in effect during the period in which the 199.5 retailer's annual returns reflect sales and use tax liabilities 199.6 of less than $1,200 and there is continued compliance with state 199.7 tax laws. 199.8(e)(d) The commissioner may also grant quarterly or annual 199.9 filing and payment authorizations to retailers if the 199.10 commissioner concludes that the retailers' future tax 199.11 liabilities will be less than the monthly totals identified in 199.12 paragraphs (b) and (c)and (d). An authorization granted under 199.13 this paragraph is subject to the same conditions as an 199.14 authorization granted under paragraphs (b) and (c)and (d). 199.15(f)(e) A taxpayer who is a materials supplier may report 199.16 gross receipts either on: 199.17 (1) the cash basis as the consideration is received; or 199.18 (2) the accrual basis as sales are made. 199.19 As used in this paragraph, "materials supplier" means a person 199.20 who provides materials for the improvement of real property; who 199.21 is primarily engaged in the sale of lumber and building 199.22 materials-related products to owners, contractors, 199.23 subcontractors, repairers, or consumers; who is authorized to 199.24 file a mechanics lien upon real property and improvements under 199.25 chapter 514; and who files with the commissioner an election to 199.26 file sales and use tax returns on the basis of this paragraph. 199.27 [EFFECTIVE DATE.] This section is effective beginning with 199.28 returns filed after January 1, 2002. 199.29 Sec. 4. Minnesota Statutes 2000, section 289A.20, 199.30 subdivision 4, is amended to read: 199.31 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 199.32 chapter 297A are due and payable to the commissioner monthly on 199.33 or before the 20th day of the month following the month in which 199.34 the taxable event occurred, or following another reporting 199.35 period as the commissioner prescribes or as allowed under 199.36 section 289A.18, subdivision 4, paragraph (f), except that use 200.1 taxes due on an annual use tax return as provided under section 200.2 289A.11, subdivision 1, are payable by April 15 following the 200.3 close of the calendar year. 200.4 (b)A vendor having a liability of $120,000 or more during200.5a fiscal year ending June 30 must remit the June liability for200.6the next year in the following manner:200.7(1) Two business days before June 30 of the year, the200.8vendor must remit 62 percent of the estimated June liability to200.9the commissioner.200.10(2) On or before August 14 of the year, the vendor must pay200.11any additional amount of tax not remitted in June.200.12(c)A vendor having a liability of $120,000 or more during 200.13 a fiscal year ending June 30 must remit all liabilities on 200.14 returns due for periods beginning in the subsequent calendar 200.15 year by means of a funds transfer as defined in section 200.16 336.4A-104, paragraph (a). The funds transfer payment date, as 200.17 defined in section 336.4A-401, must be on or before the 14th day 200.18 of the month following the month in which the taxable event 200.19 occurred, or on or before the 14th day of the month following 200.20 the month in which the sale is reported under section 289A.18, 200.21 subdivision 4, except for 62 percent of the estimated June200.22liability, which is due two business days before June 30. The200.23remaining amount of the June liability is due on August 14. If 200.24 the date the tax is due is not a funds transfer business day, as 200.25 defined in section 336.4A-105, paragraph (a), clause (4), the 200.26 payment date must be on or before the funds transfer business 200.27 day next following the date the tax is due. 200.28(d)(c) If the vendor required to remit by electronic funds 200.29 transfer as provided in paragraph(c)(b) is unable due to 200.30 reasonable cause to determine the actual sales and use tax due 200.31 on or before the due date for payment, the vendor may remit an 200.32 estimate of the tax owed using one of the following options: 200.33 (1) 100 percent of the tax reported on the previous month's 200.34 sales and use tax return; 200.35 (2) 100 percent of the tax reported on the sales and use 200.36 tax return for the same month in the previous calendar year; or 201.1 (3) 95 percent of the actual tax due. 201.2 Any additional amount of tax that is not remitted on or 201.3 before the due date for payment, must be remitted with the 201.4 return. If a vendor fails to remit the actual liability or does 201.5 not remit using one of the estimate options by the due date for 201.6 payment, the vendor must remit actual liability as provided in 201.7 paragraph(c)(b) in all subsequent periods.This paragraph201.8does not apply to the June sales and use tax liability.201.9 [EFFECTIVE DATE.] This section is effective beginning with 201.10 returns filed after January 1, 2002. 201.11 Sec. 5. Minnesota Statutes 2000, section 289A.50, 201.12 subdivision 2a, is amended to read: 201.13 Subd. 2a. [REFUND OF SALES TAX TO PURCHASERS.] If a vendor 201.14 has collected from a purchaser a tax on a transaction that is 201.15 not subject to the tax imposed by chapter 297A, the purchaser 201.16 may apply directly to the commissioner for a refund under this 201.17 section if: 201.18 (a) the purchaser is currently registered to collect and 201.19 remit the salesandtax or to remit the use tax; and 201.20 (b) the amount of the refund applied for exceeds $500. 201.21 The purchaser may not file more than two applications for 201.22 refund under this subdivision in a calendar year. 201.23 [EFFECTIVE DATE.] This section is effective the day 201.24 following final enactment. 201.25 Sec. 6. Minnesota Statutes 2000, section 297A.01, 201.26 subdivision 3, is amended to read: 201.27 Subd. 3. A "sale" and a "purchase" includes, but is not 201.28 limited to, each of the following transactions: 201.29 (a) Any transfer of title or possession, or both, of 201.30 tangible personal property, whether absolutely or conditionally, 201.31 and the leasing of or the granting of a license to use or 201.32 consume tangible personal property other than manufactured homes 201.33 used for residential purposes for a continuous period of 30 days 201.34 or more, for a consideration in money or by exchange or barter; 201.35 (b) The production, fabrication, printing, or processing of 201.36 tangible personal property for a consideration for consumers who 202.1 furnish either directly or indirectly the materials used in the 202.2 production, fabrication, printing, or processing; 202.3 (c) The furnishing, preparing, or serving for a 202.4 consideration of food, meals, or drinks. "Sale" or "purchase" 202.5 does not include: 202.6 (1) meals or drinks served to patients, inmates, or persons 202.7 residing at hospitals, sanitariums, nursing homes, senior 202.8 citizens homes, and correctional, detention, and detoxification 202.9 facilities; 202.10 (2) meals or drinks purchased for and served exclusively to 202.11 individuals who are 60 years of age or over and their spouses or 202.12 to the handicapped and their spouses by governmental agencies, 202.13 nonprofit organizations, agencies, or churches or pursuant to 202.14 any program funded in whole or part through 42 USCA sections 202.15 3001 through 3045, wherever delivered, prepared or served; or 202.16 (3) meals and lunches served at public and private schools, 202.17 universities, or colleges. 202.18 Notwithstanding section 297A.25, subdivision 2, taxable food or 202.19 meals include, but are not limited to, the following: 202.20 (i) food or drinks sold by the retailer for immediate 202.21 consumption on the retailer's premises. Food and drinks sold 202.22 within a building or grounds which require an admission charge 202.23 for entrance are presumed to be sold for consumption on the 202.24 premises; 202.25 (ii) food or drinks prepared by the retailer for immediate 202.26 consumption either on or off the retailer's premises. For 202.27 purposes of this subdivision, "food or drinks prepared for 202.28 immediate consumption" includes any food product upon which an 202.29 act of preparation including, but not limited to, cooking, 202.30 mixing, sandwich making, blending, heating, or pouring has been 202.31 performed by the retailer so the food product may be immediately 202.32 consumed by the purchaser; 202.33 (iii) ice cream, ice milk, frozen yogurt products, or 202.34 frozen novelties sold in single or individual servings including 202.35 cones, sundaes, and snow cones. For purposes of this 202.36 subdivision, "single or individual servings" does not include 203.1 products when sold in bulk containers or bulk packaging; 203.2 (iv) soft drinks and other beverages including all 203.3 carbonated and noncarbonated beverages or drinks sold in liquid 203.4 form except nonalcoholic beverages or drinks which contain milk 203.5 or milk products, nonalcoholic beverages or drinks containing 15 203.6 or more percent fruit juice, and noncarbonated and 203.7 noneffervescent bottled water sold in individual containers of 203.8 one-half gallon or more in size; 203.9 (v) gum, candy, and candy products, except when sold for 203.10 fundraising purposes by a nonprofit organization that provides 203.11 educational and social activities primarily for young people 18 203.12 years of age and under; 203.13 (vi) ice; 203.14 (vii) all food sold from vending machines; 203.15 (viii) all food for immediate consumption sold from 203.16 concession stands and vehicles; 203.17 (ix) party trays; 203.18 (x) all meals and single servings of packaged snack food 203.19 sold in restaurants and bars; and 203.20 (xi) bakery products: 203.21 (A) prepared by the retailer for consumption on the 203.22 retailer's premises; 203.23 (B) sold at a place that charges admission; 203.24 (C) sold from vending machines; or 203.25 (D) sold in single or individual servings from concession 203.26 stands, vehicles, bars, and restaurants. For purposes of this 203.27 subdivision, "single or individual servings" does not include 203.28 products when sold in bulk containers or bulk packaging. 203.29 For purposes of this subdivision, "premises" means the 203.30 total space and facilities, including buildings, grounds, and 203.31 parking lots that are made available or that are available for 203.32 use by the retailer or customer for the purpose of sale or 203.33 consumption of prepared food and drinks. The premises of a 203.34 caterer is the place where the catered food or drinks are 203.35 served; 203.36 (d) The granting of the privilege of admission to places of 204.1 amusement, recreational areas, or athletic events, except a 204.2 world championship football game sponsored by the national 204.3 football league, and the privilege of having access to and the 204.4 use of amusement devices, tanning facilities, reducing salons, 204.5 steam baths, turkish baths, health clubs, and spas or athletic 204.6 facilities; 204.7 (e) The furnishing for a consideration of lodging and 204.8 related services by a hotel, rooming house, tourist court, motel 204.9 or trailer camp and of the granting of any similar license to 204.10 use real property other than the renting or leasing thereof for 204.11 a continuous period of 30 days or more; 204.12 (f) The furnishing for a consideration of electricity, gas, 204.13 water, or steam for use or consumption within this state, or 204.14 local exchange telephone service, intrastate toll service, and 204.15 interstate toll service, if that service originates from and is 204.16 charged to a telephone located in this state. Telephone service 204.17 does not include services purchased with prepaid telephone 204.18 calling cards. Telephone service includes paging services and 204.19 private communication service, as defined in United States Code, 204.20 title 26, section 4252(d), as amended through December 31, 1991, 204.21 except for private communication service purchased by an agent 204.22 acting on behalf of the state lottery. The furnishing for a 204.23 consideration of access to telephone services by a hotel to its 204.24 guests is a sale under this clause. Sales by municipal 204.25 corporations in a proprietary capacity are included in the 204.26 provisions of this clause. The furnishing of water and sewer 204.27 services for residential use shall not be considered a sale. 204.28 The sale of natural gas to be used as a fuel in vehicles 204.29 propelled by natural gas shall not be considered a sale for the 204.30 purposes of this section; 204.31 (g) The furnishing for a consideration of cable television 204.32 services, including charges for basic service, charges for 204.33 premium service, and any other charges for any other 204.34 pay-per-view, monthly, or similar television services; 204.35 (h) The furnishing for a consideration of parking services, 204.36 whether on a contractual, hourly, or other periodic basis, 205.1 except for parking at a meter; 205.2 (i) The furnishing for a consideration of services listed 205.3 in this paragraph: 205.4 (i) laundry and dry cleaning services including cleaning, 205.5 pressing, repairing, altering, and storing clothes, linen 205.6 services and supply, cleaning and blocking hats, and carpet, 205.7 drapery, upholstery, and industrial cleaning. Laundry and dry 205.8 cleaning services do not include services provided by coin 205.9 operated facilities operated by the customer; 205.10 (ii) motor vehicle washing, waxing, and cleaning services, 205.11 including services provided by coin-operated facilities operated 205.12 by the customer, and rustproofing, undercoating, and towing of 205.13 motor vehicles; 205.14 (iii) building and residential cleaning, maintenance, and 205.15 disinfecting and exterminating services; 205.16 (iv) detective services, security services, burglar, fire 205.17 alarm, and armored car services; but not including services 205.18 performed within the jurisdiction they serve by off-duty 205.19 licensed peace officers as defined in section 626.84, 205.20 subdivision 1, or services provided by a nonprofit organization 205.21 for monitoring and electronic surveillance of persons placed on 205.22 in-home detention pursuant to court order or under the direction 205.23 of the Minnesota department of corrections; 205.24 (v) pet grooming services; 205.25 (vi) lawn care, fertilizing, mowing, spraying and sprigging 205.26 services; garden planting and maintenance; tree, bush, and shrub 205.27 pruning, bracing, spraying, and surgery; indoor plant care; 205.28 tree, bush, shrub and stump removal; and tree trimming for 205.29 public utility lines. Services performed under a construction 205.30 contract for the installation of shrubbery, plants, sod, trees, 205.31 bushes, and similar items are not taxable; 205.32 (vii) massages, except when provided by a licensed health 205.33 care facility or professional or upon written referral from a 205.34 licensed health care facility or professional for treatment of 205.35 illness, injury, or disease; and 205.36 (viii) the furnishing for consideration of lodging, board 206.1 and care services for animals in kennels and other similar 206.2 arrangements, but excluding veterinary and horse boarding 206.3 services. 206.4 The services listed in this paragraph are taxable under section 206.5 297A.02 if the service is performed wholly within Minnesota or 206.6 if the service is performed partly within and partly without 206.7 Minnesota and the greater proportion of the service is performed 206.8 in Minnesota, based on the cost of performance. In applying the 206.9 provisions of this chapter, the terms "tangible personal 206.10 property" and "sales at retail" include taxable services and the 206.11 provision of taxable services, unless specifically provided 206.12 otherwise. Services performed by an employee for an employer 206.13 are not taxable under this paragraph. Services performed by a 206.14 partnership or association for another partnership or 206.15 association are not taxable under this paragraph if one of the 206.16 entities owns or controls more than 80 percent of the voting 206.17 power of the equity interest in the other entity. Services 206.18 performed between members of an affiliated group of corporations 206.19 are not taxable. For purposes of this section, "affiliated 206.20 group of corporations" includes those entities that would be 206.21 classified as a member of an affiliated group under United 206.22 States Code, title 26, section 1504, as amended through December 206.23 31, 1987, and who are eligible to file a consolidated tax return 206.24 for federal income tax purposes; 206.25 (j) A "sale" and a "purchase" includes the transfer of 206.26 computer software, meaning information and directions that 206.27 dictate the function performed by data processing equipment. A 206.28 "sale" and a "purchase" does not include the design, 206.29 development, writing, translation, fabrication, lease, or 206.30 transfer for a consideration of title or possession of a custom 206.31 computer program; and 206.32 (k) The granting of membership in a club, association, or 206.33 other organization if: 206.34 (1) the club, association, or other organization makes 206.35 available for the use of its members sports and athletic 206.36 facilities (without regard to whether a separate charge is 207.1 assessed for use of the facilities); and 207.2 (2) use of the sports and athletic facilities is not made 207.3 available to the general public on the same basis as it is made 207.4 available to members. 207.5 Granting of membership includes both one-time initiation fees 207.6 and periodic membership dues. Sports and athletic facilities 207.7 include golf courses, tennis, racquetball, handball and squash 207.8 courts, basketball and volleyball facilities, running tracks, 207.9 exercise equipment, swimming pools, and other similar athletic 207.10 or sports facilities. The provisions of this paragraph do not 207.11 apply to camps or other recreation facilities owned and operated 207.12 by an exempt organization under section 501(c)(3) of the 207.13 Internal Revenue Code of 1986, as amended through December 31, 207.14 1992, for educational and social activities for young people 207.15 primarily age 18 and under. 207.16 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 207.17 effective the day following final enactment. In the next 207.18 edition of Minnesota Statutes, the revisor of statutes shall 207.19 codify the amendment in this section in Minnesota Statutes, 207.20 section 297A.61, subdivision 3. 207.21 Sec. 7. Minnesota Statutes 2000, section 297A.07, 207.22 subdivision 3, is amended to read: 207.23 Subd. 3. [NEW PERMITS AFTER REVOCATION.] The commissioner 207.24 shall not issue a new permit or reinstate a revoked permit after 207.25 revocation unless the taxpayer applies for a permit and provides 207.26 reasonable evidence of intention to comply with the sales and 207.27 use tax laws and rules. The commissioner may require the 207.28 applicant to supply security, in addition to that authorized by 207.29 section 297A.28, as is reasonably necessary to insure compliance 207.30 with the sales and use tax laws and rules. If the commissioner 207.31 issues or reinstates a permit not in conformance with the 207.32 requirements of this subdivision or applicable rules, the 207.33 commissioner may cancel the permit upon notice to the permit 207.34 holder. The notice must be served by first class and certified 207.35 mail at the permit holder's last known address. The 207.36 cancellation shall be effective immediately, subject to the 208.1 right of the permit holder to show that the permit was issued in 208.2 conformance with the requirements of this subdivision and 208.3 applicable rules. Upon such showing, the permit must be 208.4 reissued. 208.5 If a taxpayer has had a permit or permits revoked three 208.6 times in a five-year period, the commissioner shall not issue a 208.7 new permit or reinstate the revoked permit until 24 months have 208.8 elapsed after revocation and the taxpayer has satisfied the 208.9 conditions for reinstatement of a revoked permit or issuance of 208.10 a new permit imposed by this section and rules adopted hereunder. 208.11 For purposes of this subdivision, the term "taxpayer" means 208.12 an individual, if a revoked permit was issued to or in the name 208.13 of an individual, or a corporation or partnership, if a revoked 208.14 permit was issued to or in the name of a corporation or 208.15 partnership. Taxpayer also means an officer of a corporation, a 208.16 member of a partnership, or an individual who is liable for 208.17 delinquent sales taxes, either for the entity for which the new 208.18 or reinstated permit is at issue, or for another entity for 208.19 which a permit was previously revoked, or personally as a permit 208.20 holder. 208.21 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] (a) This section 208.22 is effective the day following final enactment. 208.23 (b) In the next edition of Minnesota Statutes, the revisor 208.24 shall codify the amendments to this section in Minnesota 208.25 Statutes, section 297A.86, subdivision 2. 208.26 Sec. 8. Minnesota Statutes 2000, section 297A.25, 208.27 subdivision 3, is amended to read: 208.28 Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts 208.29 from the sale of and storage, use, or consumption of prescribed 208.30 drugs, prescribed medicine and insulin, intended for use, 208.31 internal or external, in the cure, mitigation, treatment or 208.32 prevention of illness or disease in human beings are exempt, 208.33 together with prescription glasses, fever thermometers, 208.34 therapeutic, and prosthetic devices. "Prescribed drugs" or 208.35 "prescribed medicine" includes over-the-counter drugs or 208.36 medicine prescribed by a licensedphysicianhealth care 209.1 professional. "Therapeutic devices" includes reusable finger 209.2 pricking devices for the extraction of blood, blood glucose 209.3 monitoring machines, and other diagnostic agents used in 209.4 diagnosing, monitoring, or treating diabetes. Nonprescription 209.5 analgesics consisting principally (determined by the weight of 209.6 all ingredients) of acetaminophen, acetylsalicylic acid, 209.7 ibuprofen, ketoprofen, naproxen, and other nonprescription 209.8 analgesics that are approved by the United States Food and Drug 209.9 Administration for internal use by human beings, or a 209.10 combination thereof, are exempt. 209.11 Medical supplies purchased by a licensed health care 209.12 facility or licensed health care professional to provide medical 209.13 treatment to residents or patients are exempt. The exemption 209.14 does not apply to medical equipment or components of medical 209.15 equipment, laboratory supplies, radiological supplies, and other 209.16 items used in providing medical services. For purposes of this 209.17 subdivision, "medical supplies" means adhesive and nonadhesive 209.18 bandages, gauze pads and strips, cotton applicators, 209.19 antiseptics, nonprescription drugs, eye solution, and other 209.20 similar supplies used directly on the resident or patient in 209.21 providing medical services. 209.22 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 209.23 effective the day following final enactment. In the next 209.24 edition of Minnesota Statutes, the revisor of statutes shall 209.25 codify the amendment in this section in Minnesota Statutes, 209.26 section 297A.67, subdivision 6. 209.27 Sec. 9. Minnesota Statutes 2000, section 297A.25, 209.28 subdivision 11, is amended to read: 209.29 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 209.30 all sales, including sales in which title is retained by a 209.31 seller or a vendor or is assigned to a third party under an 209.32 installment sale or lease purchase agreement under section 209.33 465.71, of tangible personal property to, and all storage, use 209.34 or consumption of such property by, the United States and its 209.35 agencies and instrumentalities, the University of Minnesota, 209.36 state universities, community colleges, technical colleges, 210.1 state academies, the Perpich center for arts education, an 210.2 instrumentality of a political subdivision that is accredited as 210.3 an optional/special function school by the North Central 210.4 Association of Colleges and Schools, school districts, public 210.5 libraries, public library systems, multicounty, multitype 210.6 library systems as defined in section 134.001, county law 210.7 libraries under chapter 134A, state agency libraries, the state 210.8 library under section 480.09, and the legislative reference 210.9 library are exempt. 210.10 As used in this subdivision, "school districts" means 210.11 public school entities and districts of every kind and nature 210.12 organized under the laws of the state of Minnesota, including, 210.13 without limitation, school districts, intermediate school 210.14 districts, education districts, service cooperatives, secondary 210.15 vocational cooperative centers, special education cooperatives, 210.16 joint purchasing cooperatives, telecommunication cooperatives, 210.17 regional management information centers, and any instrumentality 210.18 of a school district, as defined in section 471.59. 210.19 Sales exempted by this subdivision include sales under 210.20 section 297A.01, subdivision 3, paragraph (f). 210.21 Sales to hospitals and nursing homes owned and operated by 210.22 political subdivisions of the state of tangible personal 210.23 property and taxable services used at or by the hospitals and 210.24 nursing homes are exempt under this subdivision. 210.25 Sales of supplies and equipment used in the operation of an 210.26 ambulance service owned and operated by a political subdivision 210.27 of the state are exempt under this subdivision provided that the 210.28 supplies and equipment are used in the course of providing 210.29 medical care. Sales to a political subdivision of repair and 210.30 replacement parts for emergency rescue vehicles and fire trucks 210.31 and apparatus are exempt under this subdivision. 210.32 Sales to a political subdivision of machinery and 210.33 equipment, except for motor vehicles, used directly for mixed 210.34 municipal solid waste management services at a solid waste 210.35 disposal facility as defined in section 115A.03, subdivision 10, 210.36 are exempt under this subdivision. 211.1 Sales to political subdivisions of chore and homemaking 211.2 services to be provided to elderly or disabled individuals are 211.3 exempt. 211.4 Sales to a town of gravel and of machinery, equipment, and 211.5 accessories, except motor vehicles, used exclusively for road 211.6 and bridge maintenance, and leases of motor vehicles exempt from 211.7 tax under section 297B.03, clause (10), are exempt. 211.8 Sales of telephone services to the department of 211.9 administration that are used to provide telecommunications 211.10 services through the intertechnologies revolving fund are exempt 211.11 under this subdivision. 211.12 This exemption shall not apply to building, construction or 211.13 reconstruction materials purchased by a contractor or a 211.14 subcontractor as a part of a lump-sum contract or similar type 211.15 of contract with a guaranteed maximum price covering both labor 211.16 and materials for use in the construction, alteration, or repair 211.17 of a building or facility. This exemption does not apply to 211.18 construction materials purchased by tax exempt entities or their 211.19 contractors to be used in constructing buildings or facilities 211.20 which will not be used principally by the tax exempt entities. 211.21 This exemption does not apply to the leasing of a motor 211.22 vehicle as defined in section 297B.01, subdivision 5, except for 211.23 leases entered into by the United States or its agencies or 211.24 instrumentalities. 211.25 The tax imposed on sales to political subdivisions of the 211.26 state under this section applies to all political subdivisions 211.27 other than those explicitly exempted under this subdivision, 211.28 notwithstanding section 115A.69, subdivision 6, 116A.25, 211.29 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 211.30 469.127, 473.448, 473.545, or 473.608 or any other law to the 211.31 contrary enacted before 1992. 211.32 Sales exempted by this subdivision include sales made to 211.33 other states or political subdivisions of other states, if the 211.34 sale would be exempt from taxation if it occurred in that state, 211.35 but do not include sales under section 297A.01, subdivision 3, 211.36 paragraphs (c) and (e). 212.1 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 212.2 effective the day following final enactment. In the next 212.3 edition of Minnesota Statutes, the revisor of statutes shall 212.4 codify the amendment in this section in Minnesota Statutes, 212.5 section 297A.70, subdivision 2. 212.6 Sec. 10. Minnesota Statutes 2000, section 297A.25, 212.7 subdivision 28, is amended to read: 212.8 Subd. 28. [WASTE PROCESSING EQUIPMENT.] The gross receipts 212.9 from the sale of and storage, use, or consumption of equipment 212.10 used for processing solid or hazardous waste at a resource 212.11 recovery facility, as defined in section 115A.03, subdivision 212.12 28, are exempt, including pollution control equipment at a 212.13 resource recovery facility that burns refuse-derived fuel or 212.14 mixed municipal solid waste as its primary fuel. An electric 212.15 generation facility that processes and utilizes waste tires as 212.16 its primary fuel is a resource recovery facility for the 212.17 purposes of this section. 212.18 [EFFECTIVE DATE; INSTRUCTION TO REVISOR.] This section is 212.19 effective for purchases and sales made on or after June 1, 2001. 212.20 In the next edition of Minnesota Statutes, the revisor of 212.21 statutes shall codify the amendment to this section in section 212.22 297A.68, subdivision 24. 212.23 Sec. 11. Minnesota Statutes 2000, section 297A.61, 212.24 subdivision 3, is amended to read: 212.25 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 212.26 include, but are not limited to, each of the transactions listed 212.27 in this subdivision. 212.28 (b) Sale and purchase include any transfer of title or 212.29 possession, or both, of tangible personal property, whether 212.30 absolutely or conditionally, and the leasing of or the granting 212.31 of a license to use or consume, for a consideration, tangible 212.32 personal property, other than a manufactured home used for 212.33 residential purposes for a continuous period of 30 days or more. 212.34 (c) Sale and purchase include the production, fabrication, 212.35 printing, or processing of tangible personal property for a 212.36 consideration for consumers who furnish either directly or 213.1 indirectly the materials used in the production, fabrication, 213.2 printing, or processing. 213.3 (d) Sale and purchase include the furnishing, preparing, or 213.4 serving for a consideration of food or drinks. Notwithstanding 213.5 section 297A.67, subdivision 2, taxable food or drinks include, 213.6 but are not limited to, the following: 213.7 (1) food or drinks sold by the retailer for immediate 213.8 consumption on the retailer's premises. Food and drinks sold 213.9 within a building or grounds that require an admission charge 213.10 for entrance are presumed to be sold for consumption on the 213.11 premises; 213.12 (2) food or drinks prepared by the retailer for immediate 213.13 consumption either on or off the retailer's premises. For 213.14 purposes of this subdivision, "food or drinks prepared for 213.15 immediate consumption" means any food product upon which an act 213.16 of preparation including, but not limited to, cooking, mixing, 213.17 sandwich making, blending, heating, or pouring has been 213.18 performed by the retailer so the food product may be immediately 213.19 consumed by the purchaser; 213.20 (3) ice cream, ice milk, frozen yogurt products, or frozen 213.21 novelties sold in single or individual servings including, but 213.22 not limited to, cones, sundaes, and snow cones; 213.23 (4) soft drinks and other beverages, including all 213.24 carbonated and noncarbonated beverages or drinks sold in liquid 213.25 form, but not including beverages or drinks which contain milk 213.26 or milk products, beverages or drinks containing 15 or more 213.27 percent fruit juice, and noncarbonated and noneffervescent 213.28 bottled water sold in individual containers of one-half gallon 213.29 or more in size; 213.30 (5) gum, candy, and candy products; 213.31 (6) ice; 213.32 (7) all food sold from vending machines; 213.33 (8) all food for immediate consumption sold from concession 213.34 stands and vehicles; 213.35 (9) party trays; 213.36 (10) all meals and single servings of packaged snack food 214.1 sold in restaurants and bars; and 214.2 (11) bakery products that are: 214.3 (i) prepared by the retailer for consumption on the 214.4 retailer's premises; 214.5 (ii) sold at a place that charges admission; 214.6 (iii) sold from vending machines; or 214.7 (iv) sold in single or individual servings from concession 214.8 stands, vehicles, bars, and restaurants. 214.9 For purposes of this paragraph, "single or individual 214.10 servings" does not include products when sold in bulk containers 214.11 or bulk packaging. 214.12 For purposes of this paragraph, "premises" means the total 214.13 space and facilities, including buildings, grounds, and parking 214.14 lots that are made available or that are available for use by 214.15 the retailer or customer for the purpose of sale or consumption 214.16 of prepared food and drinks. The premises of a caterer is the 214.17 place where the catered food or drinks are served. 214.18 (e) A sale and a purchase includes the furnishing for a 214.19 consideration of electricity, gas, water, or steam for use or 214.20 consumption within this stateor local exchange telephone214.21service, intrastate toll service, and interstate toll service,214.22if that service originates from and is charged to a telephone214.23located in this state. Telephone service includes (1) paging214.24services, and (2) private communication service, as defined in214.25United States Code, title 26, section 4252(d), except for214.26private communication service purchased by an agent acting on214.27behalf of the state lottery. Telephone service does not include214.28services purchased with a prepaid telephone calling card. The214.29furnishing for a consideration of access to telephone services214.30by a hotel to its guests is a sale. The furnishing for a214.31consideration of items listed in this paragraph by a municipal214.32corporation is a sale. 214.33 (f) A sale and a purchase includes the transfer for a 214.34 consideration of computer software. 214.35 (g) A sale and a purchase includes the furnishing for a 214.36 consideration of taxable services as defined in subdivision 16. 215.1 (h) A sale and a purchase includes the furnishing for a 215.2 consideration of tangible personal property or taxable services 215.3 by the United States or any of its agencies or 215.4 instrumentalities, or the state of Minnesota, its agencies, 215.5 instrumentalities, or political subdivisions. 215.6 (i) A sale and a purchase includes the furnishing for a 215.7 consideration of telecommunications services, including cable 215.8 television services and direct satellite services. 215.9 Telecommunications services are taxed to the extent allowed 215.10 under federal law if those services: 215.11 (1) either (i) originate and terminate in this state; or 215.12 (ii) originate in this state and terminate outside the state and 215.13 the service is charged to a telephone number customer located in 215.14 this state or to the account of any transmission instrument in 215.15 this state; or (iii) originate outside this state and terminate 215.16 in this state and the service is charged to a telephone number 215.17 customer located in this state or to the account of any 215.18 transmission instrument in this state; or 215.19 (2) are rendered by providing a private communications 215.20 service for which the customer has one or more locations within 215.21 Minnesota connected to the service and the service is charged to 215.22 a telephone number customer located in this state or to the 215.23 account of any transmission instrument in this state. 215.24 All charges for mobile telecommunications services, as 215.25 defined in United States Code, title 4, section 124, are deemed 215.26 to be provided by the customer's home service provider and 215.27 sourced to the customer's place of primary use and are subject 215.28 to tax based upon the customer's place of primary use in 215.29 accordance with the Mobile Telecommunications Sourcing Act, 215.30 United States Code, title 4, sections 116 to 126. 215.31 [EFFECTIVE DATE.] This section is effective for sales and 215.32 purchases made after June 30, 2001. 215.33 Sec. 12. Minnesota Statutes 2000, section 297A.61, 215.34 subdivision 12, is amended to read: 215.35 Subd. 12. [FARM MACHINERY.] (a) "Farm machinery" means new 215.36 or used machinery, equipment, implements, accessories, and 216.1 contrivances used directly and principally in the production for 216.2 sale, but not including the processing, of livestock, dairy 216.3 animals, dairy products, poultry and poultry products, fruits, 216.4 vegetables, trees and shrubs, plants, forage, grains, and bees 216.5 and apiary products. 216.6 (b) Farm machinery includes: 216.7 (1) machinery for the preparation, seeding, or cultivation 216.8 of soil for growing agricultural crops and sod, for the 216.9 harvesting and threshing of agricultural products, or for the 216.10 harvesting or mowing of sod; 216.11 (2) barn cleaners, milking systems, grain dryers,automatic216.12 feeding systems including stationary feed bunks, and similar 216.13 installations, whether or not the equipment is installed by the 216.14 seller and becomes part of the real property; 216.15 (3) irrigation equipment sold for exclusively agricultural 216.16 use, including pumps, pipe fittings, valves, sprinklers, and 216.17 other equipment necessary to the operation of an irrigation 216.18 system when sold as part of an irrigation system, whether or not 216.19 the equipment is installed by the seller and becomes part of the 216.20 real property; 216.21 (4) logging equipment, including chain saws used for 216.22 commercial logging; 216.23 (5) fencing used for the containment of farmed cervidae, as 216.24 defined in section 17.451, subdivision 2; 216.25 (6) primary and backup generator units used to generate 216.26 electricity for the purpose of operating farm machinery, as 216.27 defined in this subdivision, or providing light or space heating 216.28 necessary for the production of livestock, dairy animals, dairy 216.29 products, or poultry and poultry products; 216.30 (7) aquaculture production equipment as defined in 216.31 subdivision 13; and 216.32 (8) equipment used for maple syrup harvesting. 216.33 (c) Farm machinery does not include: 216.34 (1) repair or replacement parts; 216.35 (2) tools, shop equipment, grain bins,feed bunks,fencing 216.36 material except fencing material covered by paragraph (b), 217.1 clause (5), communication equipment, and other farm supplies; 217.2 (3) motor vehicles taxed under chapter 297B; 217.3 (4) snowmobiles or snow blowers; or 217.4 (5) lawn mowers except those used in the production of sod 217.5 for sale, or garden-type tractors or garden tillers. 217.6 [EFFECTIVE DATE.] This section is effective for sales and 217.7 purchases made after June 30, 2001. 217.8 Sec. 13. Minnesota Statutes 2000, section 297A.61, 217.9 subdivision 16, is amended to read: 217.10 Subd. 16. [TAXABLE SERVICES.] (a) "Taxable services" means 217.11 the services listed in this subdivision and other services 217.12 listed in subdivision 3. 217.13 (b) Taxable services includes the granting of the privilege 217.14 of admission to places of amusement, recreational areas, or 217.15 athletic events, and the making available of amusement devices, 217.16 tanning facilities, reducing salons, steam baths, turkish baths, 217.17 health clubs, and spas or athletic facilities. 217.18 (c) Taxable services includes the furnishing of lodging and 217.19 related services by a hotel, rooming house, resort, campground, 217.20 motel, or trailer camp and the granting of any similar license 217.21 to use real property other than the renting or leasing thereof 217.22 for a continuous period of 30 days or more. 217.23 (d)Taxable services includes the furnishing of cable217.24television services or similar television services, including,217.25but not limited to, charges for basic, premium, pay-per-view,217.26and any other similar service.217.27(e)Taxable services includes the furnishing of parking 217.28 services, whether on a contractual, hourly, or other periodic 217.29 basis, except for parking at a meter. 217.30(f)(e) Taxable services includes the granting of 217.31 membership in a club, association, or other organization if: 217.32 (1) the club, association, or other organization makes 217.33 available for the use of its members sports and athletic 217.34 facilities, without regard to whether a separate charge is 217.35 assessed for use of the facilities; and 217.36 (2) use of the sports and athletic facility is not made 218.1 available to the general public on the same basis as it is made 218.2 available to members. 218.3 Granting of membership means both one-time initiation fees and 218.4 periodic membership dues. Sports and athletic facilities 218.5 include golf courses; tennis, racquetball, handball, and squash 218.6 courts; basketball and volleyball facilities; running tracks; 218.7 exercise equipment; swimming pools; and other similar athletic 218.8 or sports facilities. 218.9(g)(f) Taxable services includes the furnishing of the 218.10 following services as provided in this paragraph: 218.11 (1) laundry and dry cleaning services including cleaning, 218.12 pressing, repairing, altering, and storing clothes, linen 218.13 services and supply, cleaning and blocking hats, and carpet, 218.14 drapery, upholstery, and industrial cleaning. Laundry and dry 218.15 cleaning services do not include services provided by coin 218.16 operated facilities operated by the customer; 218.17 (2) motor vehicle washing, waxing, and cleaning services, 218.18 including services provided by coin operated facilities operated 218.19 by the customer, and rustproofing, undercoating, and towing of 218.20 motor vehicles; 218.21 (3) building and residential cleaning, maintenance, and 218.22 disinfecting and exterminating services; 218.23 (4) detective, security, burglar, fire alarm, and armored 218.24 car services; but not including services performed within the 218.25 jurisdiction they serve by off-duty licensed peace officers as 218.26 defined in section 626.84, subdivision 1, or services provided 218.27 by a nonprofit organization for monitoring and electronic 218.28 surveillance of persons placed on in-home detention pursuant to 218.29 court order or under the direction of the Minnesota department 218.30 of corrections; 218.31 (5) pet grooming services; 218.32 (6) lawn care, fertilizing, mowing, spraying and sprigging 218.33 services; garden planting and maintenance; tree, bush, and shrub 218.34 pruning, bracing, spraying, and surgery; indoor plant care; 218.35 tree, bush, shrub, and stump removal; and tree trimming for 218.36 public utility lines. Services performed under a construction 219.1 contract for the installation of shrubbery, plants, sod, trees, 219.2 bushes, and similar items are not taxable; 219.3 (7) massages, except when provided by a licensed health 219.4 care facility or professional or upon written referral from a 219.5 licensed health care facility or professional for treatment of 219.6 illness, injury, or disease; and 219.7 (8) the furnishing of lodging, board, and care services for 219.8 animals in kennels and other similar arrangements, but excluding 219.9 veterinary and horse boarding services. 219.10 The services listed in this paragraph are taxable under 219.11 section 297A.62 if the service is performed wholly within 219.12 Minnesota or if the service is performed partly within and 219.13 partly outside Minnesota and the greater proportion of the 219.14 service is performed in Minnesota, based on the cost of 219.15 performance. In applying the provisions of this chapter, the 219.16 terms "tangible personal property" and "sales at retail" include 219.17 taxable services and the provision of taxable services, unless 219.18 specifically provided otherwise. Services performed by an 219.19 employee for an employer are not taxable. Services performed by 219.20 a partnership or association for another partnership or 219.21 association are not taxable if one of the entities owns or 219.22 controls more than 80 percent of the voting power of the equity 219.23 interest in the other entity. Services performed between 219.24 members of an affiliated group of corporations are not taxable. 219.25 For purposes of this section, "affiliated group of corporations" 219.26 includes those entities that would be classified as members of 219.27 an affiliated group under United States Code, title 26, section 219.28 1504, and that are eligible to file a consolidated tax return 219.29 for federal income tax purposes. 219.30 [EFFECTIVE DATE.] This section is effective for sales and 219.31 purchases made after June 30, 2001. 219.32 Sec. 14. Minnesota Statutes 2000, section 297A.61, is 219.33 amended by adding a subdivision to read: 219.34 Subd. 24. [TELECOMMUNICATIONS SERVICES.] (a) 219.35 "Telecommunications services" means the transmission, 219.36 conveyance, or routing of voice, data, audio, video, or any 220.1 other information or signals to a point, or between or among 220.2 points, by or through any electronic, satellite, optical, 220.3 microwave, or other medium or method now in existence or 220.4 hereafter devised, regardless of the protocol used for such 220.5 transmission, conveyance, or routing. 220.6 (b) Telecommunications services includes the furnishing for 220.7 consideration of access to telephone services by a hotel to its 220.8 guests. 220.9 (c) Telecommunications services do not include: 220.10 (1) services purchased with a prepaid telephone calling 220.11 card; 220.12 (2) private communication service purchased by an agent 220.13 acting on behalf of the state lottery; 220.14 (3) information services; and 220.15 (4) purchases of telecommunications when the purchaser uses 220.16 the purchased services as a component part of or integrates such 220.17 service into another telecommunications service that is sold by 220.18 the purchaser in the normal course of business. 220.19 (d) For purposes of this subdivision, "information 220.20 services" means the offering of the capability for generating, 220.21 acquiring, storing, transforming, processing, retrieving, 220.22 utilizing, or making available information. 220.23 [EFFECTIVE DATE.] This section is effective for sales and 220.24 purchases occurring after June 30, 2001. 220.25 Sec. 15. Minnesota Statutes 2000, section 297A.61, is 220.26 amended by adding a subdivision to read: 220.27 Subd. 25. [CABLE TELEVISION SERVICE.] "Cable television 220.28 service" means the transmission of video, audio, or other 220.29 programming service to purchasers, and the subscriber 220.30 interaction, if any, required for the selection or use of the 220.31 programming service, regardless of whether the programming is 220.32 transmitted over facilities owned or operated by the cable 220.33 service provider or over facilities owned or operated by one or 220.34 more dealers of communications services. The term includes 220.35 point-to-multipoint distribution services by which programming 220.36 is transmitted or broadcast by microwave or other equipment 221.1 directly to the subscriber's premises. The term includes basic, 221.2 extended, premium, pay-per-view, digital, and music services. 221.3 [EFFECTIVE DATE.] This section is effective for sales and 221.4 purchases occurring after June 30, 2001. 221.5 Sec. 16. Minnesota Statutes 2000, section 297A.61, is 221.6 amended by adding a subdivision to read: 221.7 Subd. 26. [PRIVATE COMMUNICATION SERVICE.] "Private 221.8 communication service" means a communication service furnished 221.9 to a subscriber which entitles the subscriber to: 221.10 (1) exclusive or priority use of any communication channel 221.11 or group of channels; 221.12 (2) the use of an intercommunication system for the 221.13 subscriber's stations, or regardless of whether the channel, 221.14 group of channels, or intercommunication system may be connected 221.15 through switching; 221.16 (3) the switching capacity, extension lines and stations, 221.17 or other associated services that are provided in connection 221.18 with, and are necessary or unique to the use of, channels or 221.19 systems described in clause (1); or 221.20 (4) any combination of tunneling, encryption, 221.21 authentication, and access control technologies and services 221.22 used to carry traffic over the Internet, a managed Internet 221.23 provider network or provider's backbone. 221.24 [EFFECTIVE DATE.] This section is effective for sales and 221.25 purchases occurring after June 30, 2001. 221.26 Sec. 17. Minnesota Statutes 2000, section 297A.61, is 221.27 amended by adding a subdivision to read: 221.28 Subd. 27. [DIRECT SATELLITE SERVICE.] "Direct satellite 221.29 service" means programming transmitted or broadcast by satellite 221.30 directly to the subscriber's premises without the use of ground 221.31 receiving or distribution equipment, except at the subscriber's 221.32 premises or in the uplink process to the satellite. 221.33 [EFFECTIVE DATE.] This section is effective for sales and 221.34 purchases occurring after June 30, 2001. 221.35 Sec. 18. Minnesota Statutes 2000, section 297A.62, 221.36 subdivision 3, is amended to read: 222.1 Subd. 3. [MANUFACTURED HOUSINGAND; PARK TRAILERS; 222.2 PREFABRICATED HOMES.] (a) For retail sales of manufactured homes 222.3 as defined in section 327.31, subdivision 6, for residential 222.4 uses, the sales tax under subdivision 1 is imposed on 65 percent 222.5 of the dealer's cost of the manufactured home. 222.6 (b) For retail sales of new or used park trailers, as 222.7 defined in section 168.011, subdivision 8, paragraph (b), the 222.8 sales tax under subdivision 1 is imposed on 65 percent of the 222.9 sales price of the park trailer. 222.10 (c) For retail sales of prefabricated homes, the sales tax 222.11 under subdivision 1 is imposed on 65 percent of the 222.12 manufacturer's wholesale list price of the prefabricated home 222.13 for sales to dealers. As used in this paragraph, a 222.14 "prefabricated home" is a prefabricated building subject to 222.15 Minnesota Rules, chapter 1360 or 1361, that is intended for use 222.16 as a single-family or multifamily dwelling. 222.17 [EFFECTIVE DATE.] This section is effective for sales made 222.18 after June 30, 2001. 222.19 Sec. 19. Minnesota Statutes 2000, section 297A.67, 222.20 subdivision 25, is amended to read: 222.21 Subd. 25. [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 222.22 related services used in the maintenance of cemetery grounds are 222.23 exempt. For purposes of this subdivision, "lawn care and 222.24 related services" means the services listed in section 297A.61, 222.25 subdivision 16, paragraph(g)(f), clause (6), and "cemetery" 222.26 means a cemetery for human burial. 222.27 [EFFECTIVE DATE.] This section is effective for sales and 222.28 purchases made after June 30, 2001. 222.29 Sec. 20. Minnesota Statutes 2000, section 297A.67, is 222.30 amended by adding a subdivision to read: 222.31 Subd. 26. [AMBULANCE SUPPLIES, PARTS, AND EQUIPMENT.] The 222.32 following sales to or use by an ambulance service licensed under 222.33 section 144E.10 are exempt: 222.34 (1) supplies and equipment used to provide medical care; 222.35 and 222.36 (2) repair and replacement parts for ambulances. 223.1 [EFFECTIVE DATE.] This section is effective for sales and 223.2 purchases made after June 30, 2001. 223.3 Sec. 21. Minnesota Statutes 2000, section 297A.67, is 223.4 amended by adding a subdivision to read: 223.5 Subd. 27. [ENERGY EFFICIENT PRODUCTS.] (a) A residential 223.6 lighting fixture or a compact fluorescent bulb is exempt if it 223.7 has an energy star label. 223.8 (b) The following products are exempt if they have an 223.9 energyguide label that indicates that the product meets or 223.10 exceeds the standards listed below: 223.11 (1) an electric heat pump hot water heater with an energy 223.12 factor of at least 1.9; 223.13 (2) a natural gas water heater with an energy factor of at 223.14 least 0.62; 223.15 (3) a window air conditioner with an energy efficiency 223.16 rating greater than 11.0; 223.17 (4) a clothes washer that uses less than 250 kilowatt-hours 223.18 per year or any horizontal axis washer; 223.19 (5) a central air conditioner with a seasonal energy 223.20 efficiency rating greater than 14.0; and 223.21 (6) a natural gas furnace with an annual fuel utilization 223.22 efficiency greater than 92 percent. 223.23 (c) For purposes of this subdivision, "energy star label" 223.24 means the label granted to certain products that meet United 223.25 States Environmental Protection Agency and United States 223.26 Department of Energy criteria for energy efficiency. For 223.27 purposes of this subdivision, "energyguide label" means the 223.28 label that the United State Federal Trade Commissioner requires 223.29 manufacturers to apply to certain appliances under United States 223.30 Code, title 16, part 305. 223.31 [EFFECTIVE DATE.] This section is effective for sales and 223.32 purchases made after June 30, 2001, and before July 1, 2005. 223.33 Sec. 22. Minnesota Statutes 2000, section 297A.68, 223.34 subdivision 3, is amended to read: 223.35 Subd. 3. [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 223.36 SERVICES.] (a) Materials stored, used, or consumed in providing 224.1 a taxable service listed in section 297A.61, subdivision 16, 224.2 paragraph(g)(f), intended to be sold ultimately at retail are 224.3 exempt. 224.4 (b) This exemption includes, but is not limited to: 224.5 (1) chemicals, lubricants, packaging materials, seeds, 224.6 trees, fertilizers, and herbicides, if these items are used or 224.7 consumed in providing the taxable service; 224.8 (2) chemicals used to treat waste generated as a result of 224.9 providing the taxable service; 224.10 (3) accessory tools, equipment, and other items that are 224.11 separate detachable units used in providing the service and that 224.12 have an ordinary useful life of less than 12 months; and 224.13 (4) fuel, electricity, gas, and steam used or consumed in 224.14 the production process, except that electricity, gas, or steam 224.15 used for space heating or lighting is exempt only if it is 224.16 necessary to produce that particular taxable service. 224.17 (c) This exemption does not include machinery, equipment, 224.18 implements, tools, accessories, appliances, contrivances, 224.19 furniture, and fixtures used in providing the taxable service. 224.20 [EFFECTIVE DATE.] This section is effective for sales and 224.21 purchases made after June 30, 2001. 224.22 Sec. 23. Minnesota Statutes 2000, section 297A.68, 224.23 subdivision 5, is amended to read: 224.24 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 224.25 exempt.The tax must be imposed and collected as if the rate224.26under section 297A.62, subdivision 1, applied, and then refunded224.27in the manner provided in section 297A.75.224.28 "Capital equipment" means machinery and equipment purchased 224.29 or leased and used in this state by the purchaser or lessee 224.30 primarily for manufacturing, fabricating, mining, or refining 224.31 tangible personal property to be sold ultimately at retail. 224.32 Capital equipment means machinery and equipment essential 224.33 to the integrated production process. Capital equipment also 224.34 includes machinery and equipment used to electronically transmit 224.35 results retrieved by a customer of an online computerized data 224.36 retrieval system. 225.1 (b) Capital equipment includes, but is not limited to: 225.2 (1) machinery and equipment used to operate, control, or 225.3 regulate the production equipment; 225.4 (2) machinery and equipment used for research and 225.5 development, design, quality control, and testing activities; 225.6 (3) environmental control devices that are used to maintain 225.7 conditions such as temperature, humidity, light, or air pressure 225.8 when those conditions are essential to and are part of the 225.9 production process; 225.10 (4) materials and supplies used to construct and install 225.11 machinery or equipment; 225.12 (5) repair and replacement parts, including accessories, 225.13 whether purchased as spare parts, repair parts, or as upgrades 225.14 or modifications to machinery or equipment; 225.15 (6) materials used for foundations that support machinery 225.16 or equipment; 225.17 (7) materials used to construct and install special purpose 225.18 buildings used in the production process; and 225.19 (8) ready-mixed concrete trucks in which the ready-mixed 225.20 concrete is mixed as part of the delivery process. 225.21 (c) Capital equipment does not include the following: 225.22 (1) motor vehicles taxed under chapter 297B; 225.23 (2) machinery or equipment used to receive or store raw 225.24 materials; 225.25 (3) building materials, except for materials included in 225.26 paragraph (b), clauses (6) and (7); 225.27 (4) machinery or equipment used for nonproduction purposes, 225.28 including, but not limited to, the following: plant security,; 225.29 fire prevention,; first aid,and hospital stations; support 225.30 operations or administration; pollution control;andplant 225.31 cleaning,; disposal of scrap and waste,; plant communications 225.32,; space heating,and lighting, or; and safety; 225.33 (5) farm machinery and aquaculture production equipment as 225.34 defined by section 297A.61, subdivisions 12 and 13; 225.35 (6) machinery or equipment purchased and installed by a 225.36 contractor as part of an improvement to real property; or 226.1 (7) any other item that is not essential to the integrated 226.2 process of manufacturing, fabricating, mining, or refining. 226.3 (d) For purposes of this subdivision: 226.4 (1) "Machinery" means mechanical, electronic, or electrical 226.5 devices, including computers and computer software, that are 226.6 purchased or constructed to be used for the activities set forth 226.7 in paragraph (a). 226.8 (2) "Equipment" means independent devices or tools separate 226.9 from machinery, including computers and computer software, used 226.10 in operating, controlling, or regulating machinery and 226.11 equipment; and any subunit or assembly comprising a component of 226.12 any machinery or accessory or attachment parts of machinery, 226.13 such as tools, dies, jigs, patterns, and molds. 226.14 (3) "Primarily" means machinery and equipment used 50 226.15 percent or more of the time in an activity described in 226.16 paragraph (a). 226.17 (4) "Manufacturing" means an operation or series of 226.18 operations where raw materials are changed in form, composition, 226.19 or condition by machinery and equipment and which results in the 226.20 production of a new article of tangible personal property. For 226.21 purposes of this subdivision, "manufacturing" includes the 226.22 generation of electricity or steam to be sold at retail. 226.23 (5) "Fabricating" means to make, build, create, produce, or 226.24 assemble components or property to work in a new or different 226.25 manner. 226.26 (6) "Mining" means the extraction of minerals, ores, stone, 226.27 or peat. 226.28 (7) "Refining" means the process of converting a natural 226.29 resource to a product, including the treatment of water to be 226.30 sold at retail. 226.31 (8) "Integrated production process" means a process 226.32 beginning with the removal of raw materials from inventory 226.33 through the completion of the product, including packaging of 226.34 the product. 226.35 (9) "Online data retrieval system" means a system whose 226.36 cumulation of information is equally available and accessible to 227.1 all its customers. 227.2 (10) "Machinery and equipment used for pollution control" 227.3 means machinery and equipment used solely to eliminate, prevent, 227.4 or reduce pollution resulting from an activity described in 227.5 paragraph (a). 227.6 [EFFECTIVE DATE.] This section is effective for purchases 227.7 made after June 30, 2001. 227.8 Sec. 24. Minnesota Statutes 2000, section 297A.68, is 227.9 amended by adding a subdivision to read: 227.10 Subd. 35. [TELECOMMUNICATIONS EQUIPMENT.] (a) 227.11 Telecommunications machinery and equipment purchased or leased 227.12 for use directly by a telecommunications service provider 227.13 primarily in the provision of telecommunications services that 227.14 are ultimately to be sold at retail are exempt, regardless of 227.15 whether purchased by the owner, a contractor, or a subcontractor. 227.16 (b) For purposes of this subdivision, "telecommunications 227.17 machinery and equipment" includes, but is not limited to: 227.18 (1) machinery, equipment, and fixtures utilized in 227.19 receiving, initiating, amplifying, processing, transmitting, 227.20 retransmitting, recording, switching, or monitoring 227.21 telecommunications services, such as computers, transformers, 227.22 amplifiers, routers, bridges, repeaters, multiplexers, and other 227.23 items performing comparable functions; 227.24 (2) machinery, equipment, and fixtures used in the 227.25 transportation of telecommunications services, radio 227.26 transmitters and receivers, satellite equipment, microwave 227.27 equipment, and other transporting media, but not wire, cable, 227.28 fiber, poles, or conduit; 227.29 (3) ancillary machinery, equipment, and fixtures that 227.30 regulate, control, protect, or enable the machinery in clauses 227.31 (1) and (2) to accomplish its intended function, such as 227.32 auxiliary power supply, test equipment, towers, heating, 227.33 ventilating and air conditioning equipment necessary to the 227.34 operation of the telecommunications equipment; and software 227.35 necessary to the operation of the telecommunications equipment; 227.36 and 228.1 (4) repair and replacement parts, including accessories, 228.2 whether purchased as spare parts, repair parts, or as upgrades 228.3 or modifications to qualified machinery or equipment. 228.4 (c) For purposes of this subdivision, "telecommunications 228.5 services" means telecommunications services as defined in 228.6 section 297A.61, subdivision 24, paragraph (a), only. 228.7 [EFFECTIVE DATE.] This section is effective for purchases 228.8 and lease payments, including payments made on existing leases, 228.9 made after June 30, 2001. 228.10 Sec. 25. Minnesota Statutes 2000, section 297A.68, is 228.11 amended by adding a subdivision to read: 228.12 Subd. 36. [RESEARCH SUPPLIES AND EQUIPMENT.] Tangible 228.13 personal property and taxable services are exempt if: 228.14 (1) the purchase was made by or to be used by a person 228.15 engaged in a trade or business; 228.16 (2) the expenditure by the person qualified as a deductible 228.17 expense under section 174 of the Internal Revenue Code or the 228.18 expenditures would have qualified as a deductible expense under 228.19 section 174, if the disallowance of items subject to allowance 228.20 under section 167 or 611 of the Internal Revenue Code were not 228.21 in effect; and 228.22 (3) the items purchased or used do not constitute an 228.23 improvement to real property. 228.24 [EFFECTIVE DATE.] This section is effective for sales made 228.25 after June 30, 2001. 228.26 Sec. 26. Minnesota Statutes 2000, section 297A.68, is 228.27 amended by adding a subdivision to read: 228.28 Subd. 37. [COIN-OPERATED AMUSEMENT DEVICES.] Coin, 228.29 currency, and token-operated amusement devices are exempt if 228.30 they are purchased or leased by a person for the purpose of 228.31 making the device available to the general public for a fee. 228.32 [EFFECTIVE DATE.] This section is effective for sales and 228.33 purchases made after June 30, 2001. 228.34 Sec. 27. Minnesota Statutes 2000, section 297A.70, 228.35 subdivision 2, is amended to read: 228.36 Subd. 2. [SALES TO GOVERNMENT.] (a) All sales, except 229.1 those listed in paragraph (b), to the following governments and 229.2 political subdivisions, or to the listed agencies or 229.3 instrumentalities of governments and political subdivisions, are 229.4 exempt: 229.5 (1) the United States and its agencies and 229.6 instrumentalities; 229.7 (2) school districts, the University of Minnesota, state 229.8 universities, community colleges, technical colleges, state 229.9 academies, the Perpich Minnesota center for arts education, and 229.10 an instrumentality of a political subdivision that is accredited 229.11 as an optional/special function school by the North Central 229.12 Association of Colleges and Schools; 229.13 (3) hospitals and nursing homes owned and operated by 229.14 political subdivisions of the state; 229.15 (4) other states or political subdivisions of other states, 229.16 if the sale would be exempt from taxation if it occurred in that 229.17 state; and 229.18 (5) sales to public libraries, public library systems, 229.19 multicounty, multitype library systems as defined in section 229.20 134.001, county law libraries under chapter 134A, state agency 229.21 libraries, the state library under section 480.09, and the 229.22 legislative reference library. 229.23 (b) This exemption does not apply to the sales of the 229.24 following products and services: 229.25 (1) building, construction, or reconstruction materials 229.26 purchased by a contractor or a subcontractor as a part of a 229.27 lump-sum contract or similar type of contract with a guaranteed 229.28 maximum price covering both labor and materials for use in the 229.29 construction, alteration, or repair of a building or facility, 229.30 except for correctional facilities for which construction 229.31 materials are exempt under section 297A.71, subdivision 3; 229.32 (2) construction materials purchased by tax exempt entities 229.33 or their contractors to be used in constructing buildings or 229.34 facilities which will not be used principally by the tax exempt 229.35 entities; 229.36 (3) the leasing of a motor vehicle as defined in section 230.1 297B.01, subdivision 5, except for leases entered into by the 230.2 United States or its agencies or instrumentalities; or 230.3 (4) meals and lodging as defined under section 297A.61, 230.4 subdivisions 3, paragraph (d), and 16, paragraph (c), except for 230.5 meals and lodging purchased directly by the United States or its 230.6 agencies or instrumentalities. 230.7 (c) As used in this subdivision, "school districts" means 230.8 public school entities and districts of every kind and nature 230.9 organized under the laws of the state of Minnesota, and any 230.10 instrumentality of a school district, as defined in section 230.11 471.59. 230.12 [EFFECTIVE DATE.] This section is effective for sales and 230.13 purchases occurring after June 30, 2001. 230.14 Sec. 28. Minnesota Statutes 2000, section 297A.70, 230.15 subdivision 3, is amended to read: 230.16 Subd. 3. [SALES OF CERTAIN GOODS AND SERVICES TO 230.17 GOVERNMENT.] (a) The following sales to or use by the specified 230.18 governments and political subdivisions of the state are exempt: 230.19 (1)supplies and equipment used to provide medical care in230.20the operation of an ambulance service owned and operated by a230.21political subdivision of the state;230.22(2)repair and replacement parts for emergency rescue 230.23 vehicles, fire trucks, and fire apparatus to a political 230.24 subdivision; 230.25(3)(2) machinery and equipment, except for motor vehicles, 230.26 used directly for mixed municipal solid waste management 230.27 services at a solid waste disposal facility as defined in 230.28 section 115A.03, subdivision 10; 230.29(4)(3) chore and homemaking services to a political 230.30 subdivision of the state to be provided to elderly or disabled 230.31 individuals; 230.32(5)(4) telephone services to the department of 230.33 administration that are used to provide telecommunications 230.34 services through the intertechnologies revolving fund; 230.35(6)(5) firefighter personal protective equipment as 230.36 defined in paragraph (b), if purchased or authorized by and for 231.1 the use of an organized fire department, fire protection 231.2 district, or fire company regularly charged with the 231.3 responsibility of providing fire protection to the state or a 231.4 political subdivision; 231.5(7)(6) bullet-resistant body armor that provides the 231.6 wearer with ballistic and trauma protection, if purchased by a 231.7 law enforcement agency of the state or a political subdivision 231.8 of the state, or a licensed peace officer, as defined in section 231.9 626.84, subdivision 1; 231.10(8)(7) motor vehicles purchased or leased by political 231.11 subdivisions of the state if the vehicles are exempt from 231.12 registration under section 168.012, subdivision 1, paragraph 231.13 (b), or exempt from taxation under section 473.448; 231.14(9)(8) equipment designed to process, dewater, and 231.15 recycle biosolids for wastewater treatment facilities of 231.16 political subdivisions, and materials incidental to installation 231.17 of that equipment; and materials used to construct buildings to 231.18 house the equipment, if the materials are purchased after June 231.19 30, 1998, and before July 1, 2001; and 231.20(10)(9) sales to a town of gravel and of machinery, 231.21 equipment, and accessories, except motor vehicles, used 231.22 exclusively for road and bridge maintenance, and leases by a 231.23 town of motor vehicles exempt from tax under section 297B.03, 231.24 clause (10). 231.25 (b) For purposes of this subdivision, "firefighters 231.26 personal protective equipment" means helmets, including face 231.27 shields, chin straps, and neck liners; bunker coats and pants, 231.28 including pant suspenders; boots; gloves; head covers or hoods; 231.29 wildfire jackets; protective coveralls; goggles; self-contained 231.30 breathing apparatus; canister filter masks; personal alert 231.31 safety systems; spanner belts; optical or thermal imaging search 231.32 devices; and all safety equipment required by the Occupational 231.33 Safety and Health Administration. 231.34 [EFFECTIVE DATE.] This section is effective for sales and 231.35 purchases made after June 30, 2001. 231.36 Sec. 29. Minnesota Statutes 2000, section 297A.70, 232.1 subdivision 4, is amended to read: 232.2 Subd. 4. [SALES TO NONPROFIT GROUPS.] (a) All sales, 232.3 except those listed in paragraph (b), to the following 232.4 "nonprofit organizations" are exempt: 232.5 (1) an entity organized and operated exclusively for 232.6 charitable, religious, or educational purposes if the item 232.7 purchased is used in the performance of charitable, religious, 232.8 or educational functions; 232.9 (2) any senior citizen group or association of groups that: 232.10 (i) in general limits membership to persons who are either 232.11 age 55 or older, or physically disabled; and 232.12 (ii) is organized and operated exclusively for pleasure, 232.13 recreation, and other nonprofit purposes, no part of the net 232.14 earnings of which inures to the benefit of any private 232.15 shareholders; and 232.16 (3) an entity organized and operated exclusively to 232.17 maintain a cemetery owned by a religious organization. 232.18 (b) This exemption does not apply to the following sales: 232.19 (1) building, construction, or reconstruction materials 232.20 purchased by a contractor or a subcontractor as a part of a 232.21 lump-sum contract or similar type of contract with a guaranteed 232.22 maximum price covering both labor and materials for use in the 232.23 construction, alteration, or repair of a building or facility; 232.24 (2) construction materials purchased by tax-exempt entities 232.25 or their contractors to be used in constructing buildings or 232.26 facilities that will not be used principally by the tax-exempt 232.27 entities; and 232.28 (3) meals and lodging as defined under section 297A.61, 232.29 subdivisions 3, paragraph (d), and 16, paragraph (c); and 232.30 (4) leasing of a motor vehicle as defined in section 232.31 297B.01, subdivision 5, except as provided in paragraph (c). 232.32 (c) This exemption applies to the leasing of a motor 232.33 vehicle as defined in section 297B.01, subdivision 5, only if 232.34 the vehicle is: 232.35 (1) a truck, as defined in section 168.011, a bus, as 232.36 defined in section 168.011, or a passenger automobile, as 233.1 defined in section 168.011, if the automobile is designed and 233.2 used for carrying more than nine persons including the driver; 233.3 and 233.4 (2) intended to be used primarily to transport tangible 233.5 personal property or individuals, other than employees, to whom 233.6 the organization provides service in performing its charitable, 233.7 religious, or educational purpose. 233.8 (d) A limited liability company also qualifies for 233.9 exemption under this subdivision if (1) it consists of a sole 233.10 member that would qualify for the exemption, and (2) the items 233.11 purchased qualify for the exemption. 233.12 Sec. 30. Minnesota Statutes 2000, section 297A.70, 233.13 subdivision 7, is amended to read: 233.14 Subd. 7. [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 233.15 Sales, except for those listed in paragraph (c), to a hospital 233.16 are exempt, if the items purchased are used in providing 233.17 hospital services. For purposes of this subdivision, "hospital" 233.18 means a hospital organized and operated for charitable purposes 233.19 within the meaning of section 501(c)(3) of the Internal Revenue 233.20 Code, and licensed under chapter 144 or by any other 233.21 jurisdiction, and "hospital services" are services authorized or 233.22 required to be performed by a "hospital" under chapter 144. 233.23 (b) Sales, except for those listed in paragraph (c), to an 233.24 outpatient surgical center are exempt, if the items purchased 233.25 are used in providing outpatient surgical services. For 233.26 purposes of this subdivision, "outpatient surgical center" means 233.27 an outpatient surgical center organized and operated for 233.28 charitable purposes within the meaning of section 501(c)(3) of 233.29 the Internal Revenue Code, and licensed under chapter 144 or by 233.30 any other jurisdiction. For the purposes of this subdivision, 233.31 "outpatient surgical services" means: (1) services authorized 233.32 or required to be performed by an outpatient surgical center 233.33 under chapter 144 or under the applicable licensure law of any 233.34 other jurisdiction; and (2) urgent care. For purposes of this 233.35 subdivision, "urgent care" means health services furnished to a 233.36 person whose medical condition is sufficiently acute to require 234.1 treatment unavailable through, or inappropriate to be provided 234.2 by, a clinic or physician's office, but not so acute as to 234.3 require treatment in a hospital emergency room. 234.4 (c) This exemption does not apply to the following products 234.5 and services: 234.6 (1) purchases made by a clinic, physician's office, or any 234.7 other medical facility not operating as a hospital or outpatient 234.8 surgical center, even though the clinic, office, or facility may 234.9 be owned and operated by a hospital or outpatient surgical 234.10 center; 234.11 (2) sales under section 297A.61, subdivisions 3, paragraph 234.12 (d), and 16, paragraph (c); 234.13 (3) building and construction materials used in 234.14 constructing buildings or facilities that will not be used 234.15 principally by the hospital or outpatient surgical center; 234.16 (4) building, construction, or reconstruction materials 234.17 purchased by a contractor or a subcontractor as a part of a 234.18 lump-sum contract or similar type of contract with a guaranteed 234.19 maximum price covering both labor and materials for use in the 234.20 construction, alteration, or repair of a hospital or outpatient 234.21 surgical center; or 234.22 (5) the leasing of a motor vehicle as defined in section 234.23 297B.01, subdivision 5. 234.24 (d) A limited liability company also qualifies for 234.25 exemption under this subdivision if (1) it consists of a sole 234.26 member that would qualify for the exemption, and (2) the items 234.27 purchased qualify for the exemption. 234.28 Sec. 31. Minnesota Statutes 2000, section 297A.70, 234.29 subdivision 10, is amended to read: 234.30 Subd. 10. [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 234.31 admissions tothe premises of or events sponsored by an234.32organization that providesan event are exempt if all the gross 234.33 receipts are recorded as such, in accordance with generally 234.34 accepted accounting principles, on the books of one or more 234.35 organizations that provide an opportunity for citizens of the 234.36 state to participate in the creation, performance, or 235.1 appreciation of the artsare exempt if the, and provided that 235.2 each organization is either: 235.3 (1)a tax-exemptan organizationwithin the meaning of235.4Minnesota Statutes 1980, section 290.05, subdivision 1, clause235.5(i),described in section 501(c)(3) of the Internal Revenue Code 235.6 and at least five percent of the organization's annual revenue 235.7 in its most recently completed 12-month fiscal year, or in the 235.8 current year if the organization has not completed a 12-month 235.9 fiscal year, consisted of voluntary contributions; or 235.10 (2) a municipal board that promotes cultural and arts 235.11 activities.The exemption provided with respect to a municipal235.12board applies only to tickets and admissions to events sponsored235.13by the board.235.14 The exemption only applies if the entire proceeds, after 235.15 reasonable expenses, are used solely to provide opportunities 235.16 for citizens of the state to participate in the creation, 235.17 performance, or appreciation of the arts. 235.18 [EFFECTIVE DATE.] This section is effective for tickets and 235.19 admissions to events held after June 30, 2001, but does not 235.20 apply to events for which sales of tickets or admissions were 235.21 made prior to July 1, 2001. 235.22 Sec. 32. Minnesota Statutes 2000, section 297A.70, 235.23 subdivision 13, is amended to read: 235.24 Subd. 13. [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 235.25 (a) The following sales by the specified organizations for 235.26 fundraising purposes are exempt, subject to the limitations 235.27 listed in paragraph (b): 235.28 (1) all sales made by an organization that exists solely 235.29 for the purpose of providing educational or social activities 235.30 for young people primarily age 18 and under; 235.31 (2) all sales made by an organization that is a senior 235.32 citizen group or association of groups if (i) in general it 235.33 limits membership to persons age 55 or older; (ii) it is 235.34 organized and operated exclusively for pleasure, recreation, and 235.35 other nonprofit purposes; and (iii) no part of its net earnings 235.36 inures to the benefit of any private shareholders; 236.1 (3) the sale or use of tickets or admissions to a golf 236.2 tournament held in Minnesota if the beneficiary of the 236.3 tournament's net proceeds qualifies as a tax-exempt organization 236.4 under section 501(c)(3) of the Internal Revenue Code; and 236.5 (4) sales of gum, candy, and candy products sold for 236.6 fundraising purposes by a nonprofit organization that provides 236.7 educational and social activities primarily for young people 18 236.8 years of age and under. 236.9 (b) The exemptions listed in paragraph (a) are limited in 236.10 the following manner: 236.11 (1) the exemption under paragraph (a), clauses (1) and (2), 236.12 applies only if the gross annual receipts of the organization 236.13 from fundraising do not exceed $10,000; and 236.14 (2) the exemption under paragraph (a), clause (1), does not 236.15 apply if the sales are derived from admission charges or from 236.16 activities for which the money must be deposited with the school 236.17 district treasurer under section 123B.49, subdivision 2, or be 236.18 recorded in the same manner as other revenues or expenditures of 236.19 the school district under section 123B.49, subdivision 4. 236.20 (c) Sales of tangible personal property are exempt if the 236.21 entire proceeds, less the necessary expenses for obtaining the 236.22 property, will be contributed to a registered combined 236.23 charitable organization described in section 309.501, to be used 236.24 exclusively for charitable, religious, or educational purposes, 236.25 and the registered combined charitable organization has given 236.26 its written permission for the sale. Sales that occur over a 236.27 period of more than 24 days per year are not exempt under this 236.28 paragraph. 236.29 (d) For purposes of this subdivision, a club, association, 236.30 or other organization of elementary or secondary school students 236.31 organized for the purpose of carrying on sports, educational, or 236.32 other extracurricular activities is a separate organization from 236.33 the school district or school for purposes of applying the 236.34 $10,000 limit. 236.35 [EFFECTIVE DATE.] This section is effective for sales and 236.36 purchases made after June 30, 2001. 237.1 Sec. 33. Minnesota Statutes 2000, section 297A.70, 237.2 subdivision 14, is amended to read: 237.3 Subd. 14. [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 237.4 GROUPS.] (a) Sales of tangible personal property at, and 237.5 admission charges for fundraising events sponsored by, a 237.6 nonprofit organization are exempt if the entire proceeds, less 237.7 the necessary expenses for the event, will be used solely and 237.8 exclusively for charitable, religious, or educational purposes. 237.9 Exempt sales include the sale of food, meals, drinks, and 237.10 taxable services at the fundraising event. 237.11 (b) This exemption is limited in the following manner: 237.12 (1) it does not apply to admission charges for events 237.13 involving bingo or other gambling activities or to charges for 237.14 use of amusement devices involving bingo or other gambling 237.15 activities; 237.16 (2) all gross receipts are taxable if the profits are not 237.17 used solely and exclusively for charitable, religious, or 237.18 educational purposes; 237.19 (3) it does not apply unlessthe organization keeps a237.20separate accounting record, including receipts and disbursements237.21from each fundraising event thatall the gross receipts and 237.22 disbursements from the event are recorded as such, in accordance 237.23 with generally accepted accounting principles, on the books of 237.24 the sponsoring organization, and the organization documents all 237.25 deductions from gross receipts with receipts and other records; 237.26 (4) it does not apply to any sale made by or in the name of 237.27 a nonprofit corporation as the active or passive agent of a 237.28 person that is not a nonprofit corporation; 237.29 (5) all gross receipts are taxable if fundraising events 237.30 exceed 24 days per year; and 237.31 (6) it does not apply to fundraising events conducted on 237.32 premises leased for more than five days but less than 30 days. 237.33 (c) For purposes of this subdivision, a "nonprofit 237.34 organization" means any unit of government, corporation, 237.35 society, association, foundation, or institution organized and 237.36 operated for charitable, religious, educational, civic, 238.1 fraternal, and senior citizens' or veterans' purposes, no part 238.2 of the net earnings of which inures to the benefit of a private 238.3 individual. 238.4 [EFFECTIVE DATE.] This section is effective for tickets and 238.5 admissions to events held after June 30, 2001. 238.6 Sec. 34. Minnesota Statutes 2000, section 297A.71, 238.7 subdivision 3, is amended to read: 238.8 Subd. 3. [CORRECTIONAL FACILITIES.] Building materials and 238.9 supplies for constructing or improving an adult or juvenile 238.10 correctional facility by a county, home rule charter city, or 238.11 statutory city are exempt if the project is mandated by state or 238.12 federal law, rule, or regulation.The tax must be imposed and238.13collected as if the rate under section 297A.62, subdivision 1,238.14applied and then refunded in the manner provided in section238.15297A.75.238.16 [EFFECTIVE DATE.] This section is effective for sales and 238.17 purchases occurring after June 30, 2001. 238.18 Sec. 35. Minnesota Statutes 2000, section 297A.71, 238.19 subdivision 6, is amended to read: 238.20 Subd. 6. [BUSINESS INCUBATOR AND INDUSTRIAL PARK.] 238.21 Building materials and supplies for construction of a facility 238.22 that includes a business incubator and industrial park are 238.23 exempt if the facility: 238.24 (1) is owned and operated by a nonprofit charitable 238.25 organization that qualifies for tax exemption under section 238.26 501(c)(3) of the Internal Revenue Code; 238.27 (2) is used for the development of nonretail businesses, 238.28 offering access to equipment, space, services, and advice to the 238.29 tenant businesses, for the purpose of encouraging economic 238.30 development and job creation in the area served by the 238.31 organization, and emphasizes development of businesses that 238.32 manufacture products from materials found in the waste stream, 238.33 or manufacture alternative energy and conservation systems, or 238.34 make use of emerging environmental technologies; 238.35 (3) includes in its structure systems of material and 238.36 energy exchanges that use waste products from one industrial 239.1 process as sources of energy and material for other processes; 239.2 and 239.3 (4) makes use of solar and wind energy technology and 239.4 incorporates salvaged materials in its construction. 239.5 A limited liability company also qualifies for exemption 239.6 under this subdivision if (1) it consists of a sole member that 239.7 would qualify for the exemption, and (2) the items purchased 239.8 qualify for the exemption. 239.9 Sec. 36. Minnesota Statutes 2000, section 297A.71, is 239.10 amended by adding a subdivision to read: 239.11 Subd. 23. [CONSTRUCTION MATERIALS AND EQUIPMENT; 239.12 AGRICULTURAL PROCESSING MATERIALS.] Materials and supplies used 239.13 or consumed in, and machinery and equipment incorporated into 239.14 the construction, improvement, or expansion of an agricultural 239.15 processing facility are exempt if: 239.16 (1) the facility is owned and operated by a cooperative 239.17 organized under chapter 308A; and 239.18 (2) the total capital investment in the processing facility 239.19 is at least $1,000,000 but no more than $100,000,000. 239.20 The tax must be imposed and collected as if the rate under 239.21 section 297A.62, subdivision 1, applied, and then refunded in 239.22 the manner provided in section 297A.75. 239.23 [EFFECTIVE DATE.] This section is effective for sales and 239.24 purchases made after June 30, 2001. 239.25 Sec. 37. Minnesota Statutes 2000, section 297A.71, is 239.26 amended by adding a subdivision to read: 239.27 Subd. 24. [CONSTRUCTION MATERIALS; YELLOW MEDICINE COUNTY 239.28 LAW ENFORCEMENT AND FAMILY SERVICE CENTER.] Materials and 239.29 supplies used or consumed in, and fixtures, furnishings, and 239.30 equipment incorporated into, the construction, improvement, or 239.31 expansion of the Yellow Medicine county law enforcement and 239.32 family service center are exempt. The tax must be imposed and 239.33 collected as if the rate under section 297A.62, subdivision 1, 239.34 applied and then refunded in the manner prescribed for refunds 239.35 in section 297A.75. 239.36 [EFFECTIVE DATE.] This section is effective for sales and 240.1 purchases made after June 30, 2000, and before January 1, 2003. 240.2 Sec. 38. Minnesota Statutes 2000, section 297A.71, is 240.3 amended by adding a subdivision to read: 240.4 Subd. 25. [POULTRY LITTER BIOMASS GENERATION FACILITY 240.5 CONSTRUCTION MATERIALS AND EQUIPMENT.] Materials and supplies 240.6 used or consumed in, and equipment incorporated into, the 240.7 construction, improvement, or expansion of a facility using 240.8 biomass to generate electricity are exempt if: 240.9 (1) the facility is designed to utilize poultry litter 240.10 biomass as a primary fuel source; and 240.11 (2) the facility generates power under a contract approved 240.12 by the public utilities commission in accordance with the 240.13 biomass mandate imposed under section 216B.2424. 240.14 [EFFECTIVE DATE.] This section is effective for purchases 240.15 and sales after June 30, 2001, and before January 1, 2003. 240.16 Sec. 39. Minnesota Statutes 2000, section 297A.71, is 240.17 amended by adding a subdivision to read: 240.18 Subd. 26. [CONSTRUCTION MATERIALS AND EQUIPMENT; WASTE 240.19 TIRES COGENERATION ELECTRIC GENERATING FACILITY.] Materials and 240.20 supplies used or consumed in, and equipment incorporated into, 240.21 the construction, improvement, or expansion of a facility using 240.22 waste tires to generate electricity are exempt if: 240.23 (1) the facility utilizes waste tires as a primary fuel in 240.24 generating electricity; 240.25 (2) the facility is a cogeneration facility; and 240.26 (3) the installed capacity of the facility is 1 to 25 240.27 megawatts. 240.28 [EFFECTIVE DATE.] This section is effective for purchases 240.29 and sales made on or after June 1, 2001. 240.30 Sec. 40. Minnesota Statutes 2000, section 297A.75, is 240.31 amended to read: 240.32 297A.75 [REFUND; APPROPRIATION.] 240.33 Subdivision 1. [TAX COLLECTED.] The tax on the gross 240.34 receipts from the sale of the following exempt items must be 240.35 imposed and collected as if the sale were taxable and the rate 240.36 under section 297A.62, subdivision 1, applied. The exempt items 241.1 include: 241.2 (1)capital equipment exempt under section 297A.68,241.3subdivision 5;241.4(2)building materials for an agricultural processing 241.5 facility exempt under section 297A.71, subdivision 13; 241.6(3)(2) building materials for mineral production 241.7 facilities exempt under section 297A.71, subdivision 14; 241.8(4) building materials for correctional facilities under241.9section 297A.71, subdivision 3;241.10(5)(3) building materials used in a residence for disabled 241.11 veterans exempt under section 297A.71, subdivision 11;and241.12(6)(4) chair lifts, ramps, elevators, and associated 241.13 building materials exempt under section 297A.71, subdivision 12; 241.14 (5) building materials, supplies, machinery, and equipment 241.15 for an agricultural processing facility under section 297A.71, 241.16 subdivision 23; and 241.17 (6) materials, supplies, fixtures, furnishings, and 241.18 equipment for a county law enforcement and family service center 241.19 under section 297A.71, subdivision 24. 241.20 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 241.21 forms prescribed by the commissioner, a refund equal to the tax 241.22 paid on the gross receipts of the exempt items must be paid to 241.23 the applicant. Only the following persons may apply for the 241.24 refund: 241.25 (1) for subdivision 1, clauses (1)to (3)and (2), the 241.26 applicant must be the purchaser; 241.27 (2) for subdivision 1, clause(4)(6), the applicant must 241.28 be the governmental subdivision; 241.29 (3) for subdivision 1, clause(5)(3), the applicant must 241.30 be the recipient of the benefits provided in United States Code, 241.31 title 38, chapter 21;and241.32 (4) for subdivision 1, clause(6)(4), the applicant must 241.33 be the owner of the homestead property; and 241.34 (5) for subdivision 1, clause (5), the applicant must be 241.35 the owner of the agricultural processing facility. 241.36 Subd. 3. [APPLICATION.](a)The application must include 242.1 sufficient information to permit the commissioner to verify the 242.2 tax paid. If the tax was paid by a contractor, subcontractor, 242.3 or builder, under subdivision 1, clause (3), (4), (5), or (6), 242.4 the contractor, subcontractor, or builder must furnish to the 242.5 refund applicant a statement including the cost of the exempt 242.6 items and the taxes paid on the items unless otherwise 242.7 specifically provided by this subdivision. The provisions of 242.8 sections 289A.40 and 289A.50 apply to refunds under this section. 242.9(b) An applicant may not file more than two applications242.10per calendar year for refunds for taxes paid on capital242.11equipment exempt under section 297A.68, subdivision 5.242.12 Subd. 4. [INTEREST.] Interest must be paid on the refund 242.13 at the rate in section 270.76 from the date the refund claim is 242.14 filed for taxes paid under subdivision 1, clauses (1)to, 242.15 (2), (3), and (5), and from 60 days after the date the refund 242.16 claim is filed with the commissioner for claims filed under 242.17 subdivision 1, clauses (4) and (6). 242.18 Subd. 5. [APPROPRIATION.] The amount required to make the 242.19 refunds is annually appropriated to the commissioner. 242.20 [EFFECTIVE DATE.] This section is effective for sales and 242.21 purchases made after June 30, 2001, except that clause (6) and 242.22 references to clause (6) are effective June 30, 2001, for 242.23 purchases made after June 30, 2000, and before January 1, 2003. 242.24 Sec. 41. Minnesota Statutes 2000, section 297A.80, is 242.25 amended to read: 242.26 297A.80 [TAXES IN OTHER STATES; OFFSET AGAINST USE TAX.] 242.27 If an article of tangible personal property or an item 242.28 listed in section 297A.63 has already been taxed by another 242.29 state and any subdivision thereof for its sale, storage, use, or 242.30 other consumption in an amount less than the tax imposed by this 242.31 chapter, then as to the person who paid the tax in the other 242.32 state or any subdivision thereof, section 297A.63 applies only 242.33 at a rate measured by the difference between the rate imposed 242.34 under section 297A.62 and the rate by which the previous tax was 242.35 computed. If the tax imposed in the other state or any 242.36 subdivision thereof is equal to or greater than the tax imposed 243.1 in this state, then no tax is due from that person under section 243.2 297A.63. The credit shall be applied first against the amount 243.3 of any use tax due the state, and any unused portion of the 243.4 credit shall then be applied against any use tax due a 243.5 subdivision. 243.6 [EFFECTIVE DATE.] This section is effective for sales and 243.7 purchases occurring after December 31, 2001. 243.8 Sec. 42. Minnesota Statutes 2000, section 297A.82, 243.9 subdivision 3, is amended to read: 243.10 Subd. 3. [PAYMENT OF TAXTO COMMISSIONER.] If the aircraft 243.11 is purchased from a person who is not the holder of a valid 243.12 sales and use tax permit under this chapter, the purchaser shall 243.13 pay the taxto the commissioner of revenueprior to registering 243.14 or licensing the aircraft in this state.The commissioner of243.15revenue shall issue a certificate stating that the sales and use243.16tax in respect to the transaction has been paid.243.17 [EFFECTIVE DATE.] This section is effective for sales and 243.18 purchases occurring after the day following final enactment. 243.19 Sec. 43. Minnesota Statutes 2000, section 297A.82, is 243.20 amended by adding a subdivision to read: 243.21 Subd. 7. [AGREEMENT WITH COMMISSIONER OF 243.22 TRANSPORTATION.] Notwithstanding subdivisions 1 to 4, the 243.23 commissioner may enter into an agreement with the commissioner 243.24 of transportation whereby, upon approval of both commissioners, 243.25 the commissioner of transportation will collect the sales tax on 243.26 aircraft from persons required to register or license aircraft 243.27 in this state. For purposes of collecting the tax, the 243.28 commissioner of transportation shall act as agent of the 243.29 commissioner of revenue and shall be subject to all rules not 243.30 inconsistent with the provisions of this chapter, that may be 243.31 prescribed by the commissioner. 243.32 [EFFECTIVE DATE.] This section is effective the day 243.33 following final enactment. 243.34 Sec. 44. Minnesota Statutes 2000, section 297A.94, is 243.35 amended to read: 243.36 297A.94 [DEPOSIT OF REVENUES.] 244.1 (a) Except as provided in this section, the commissioner 244.2 shall deposit the revenues, including interest and penalties, 244.3 derived from the taxes imposed by this chapter in the state 244.4 treasury and credit them to the general fund. 244.5 (b) The commissioner shall deposit taxes in the Minnesota 244.6 agricultural and economic account in the special revenue fund if: 244.7 (1) the taxes are derived from sales and use of property 244.8 and services purchased for the construction and operation of an 244.9 agricultural resource project; and 244.10 (2) the purchase was made on or after the date on which a 244.11 conditional commitment was made for a loan guaranty for the 244.12 project under section 41A.04, subdivision 3. 244.13 The commissioner of finance shall certify to the commissioner 244.14 the date on which the project received the conditional 244.15 commitment. The amount deposited in the loan guaranty account 244.16 must be reduced by any refunds and by the costs incurred by the 244.17 department of revenue to administer and enforce the assessment 244.18 and collection of the taxes. 244.19 (c) The commissioner shall deposit the revenues, including 244.20 interest and penalties, derived from the taxes imposed on sales 244.21 and purchases included in section 297A.61, subdivision 16, 244.22 paragraphs (b) and(f)(e), in the state treasury, and credit 244.23 them as follows: 244.24 (1) first to the general obligation special tax bond debt 244.25 service account in each fiscal year the amount required by 244.26 section 16A.661, subdivision 3, paragraph (b); and 244.27 (2) after the requirements of clause (1) have been met, the 244.28 balance to the general fund. 244.29 (d) The commissioner shall deposit the revenues, including 244.30 interest and penalties, collected under section 297A.64, 244.31 subdivision 5, in the state treasury and credit them to the 244.32 general fund. By July 15 of each year the commissioner shall 244.33 transfer to the highway user tax distribution fund an amount 244.34 equal to the excess fees collected under section 297A.64, 244.35 subdivision 5, for the previous calendar year. 244.36 (e) For fiscal year 2001, 97 percent, and for fiscal year 245.1 2002 and thereafter, 87 percent of the revenues, including 245.2 interest and penalties, transmitted to the commissioner under 245.3 section 297A.65, must be deposited by the commissioner in the 245.4 state treasury as follows: 245.5 (1) 50 percent of the receipts must be deposited in the 245.6 heritage enhancement account in the game and fish fund, and may 245.7 be spent only on activities that improve, enhance, or protect 245.8 fish and wildlife resources, including conservation, 245.9 restoration, and enhancement of land, water, and other natural 245.10 resources of the state; 245.11 (2) 22.5 percent of the receipts must be deposited in the 245.12 natural resources fund, and may be spent only for state parks 245.13 and trails; 245.14 (3) 22.5 percent of the receipts must be deposited in the 245.15 natural resources fund, and may be spent only on metropolitan 245.16 park and trail grants; 245.17 (4) three percent of the receipts must be deposited in the 245.18 natural resources fund, and may be spent only on local trail 245.19 grants; and 245.20 (5) two percent of the receipts must be deposited in the 245.21 natural resources fund, and may be spent only for the Minnesota 245.22 zoological garden, the Como park zoo and conservatory, and the 245.23 Duluth zoo. 245.24 (f) The revenue dedicated under paragraph (e) may not be 245.25 used as a substitute for traditional sources of funding for the 245.26 purposes specified, but the dedicated revenue shall supplement 245.27 traditional sources of funding for those purposes. Land 245.28 acquired with money deposited in the game and fish fund under 245.29 paragraph (e) must be open to public hunting and fishing during 245.30 the open season. At least 87 percent of the money deposited in 245.31 the game and fish fund for improvement, enhancement, or 245.32 protection of fish and wildlife resources under paragraph (e) 245.33 must be allocated for field operations. 245.34 [EFFECTIVE DATE.] This section is effective for sales and 245.35 purchases made after June 30, 2001. 245.36 Sec. 45. Minnesota Statutes 2000, section 297B.03, is 246.1 amended to read: 246.2 297B.03 [EXEMPTIONS.] 246.3 There is specifically exempted from the provisions of this 246.4 chapter and from computation of the amount of tax imposed by it 246.5 the following: 246.6 (1) purchase or use, including use under a lease purchase 246.7 agreement or installment sales contract made pursuant to section 246.8 465.71, of any motor vehicle by the United States and its 246.9 agencies and instrumentalities and by any person described in 246.10 and subject to the conditions provided in section 297A.25, 246.11 subdivision 18; 246.12 (2) purchase or use of any motor vehicle by any person who 246.13 was a resident of another state or country at the time of the 246.14 purchase and who subsequently becomes a resident of Minnesota, 246.15 provided the purchase occurred more than 60 days prior to the 246.16 date such person began residing in the state of Minnesota and 246.17 the motor vehicle was registered in the person's name in the 246.18 other state or country; 246.19 (3) purchase or use of any motor vehicle by any person 246.20 making a valid election to be taxed under the provisions of 246.21 section 297A.211; 246.22 (4) purchase or use of any motor vehicle previously 246.23 registered in the state of Minnesota when such transfer 246.24 constitutes a transfer within the meaning of section 118, 331, 246.25 332, 336, 337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 246.26 1563(a) of the Internal Revenue Code of 1986, as amended through 246.27 December 31, 1999; 246.28 (5) purchase or use of any vehicle owned by a resident of 246.29 another state and leased to a Minnesota based private or for 246.30 hire carrier for regular use in the transportation of persons or 246.31 property in interstate commerce provided the vehicle is titled 246.32 in the state of the owner or secured party, and that state does 246.33 not impose a sales tax or sales tax on motor vehicles used in 246.34 interstate commerce; 246.35 (6) purchase or use of a motor vehicle by a private 246.36 nonprofit or public educational institution for use as an 247.1 instructional aid in automotive training programs operated by 247.2 the institution. "Automotive training programs" includes motor 247.3 vehicle body and mechanical repair courses but does not include 247.4 driver education programs; 247.5 (7) purchase of a motor vehicle for use as an ambulance by 247.6 an ambulance service licensed under section 144E.10; 247.7 (8) purchase of a motor vehicle by or for a public library, 247.8 as defined in section 134.001, subdivision 2, as a bookmobile or 247.9 library delivery vehicle; 247.10 (9) purchase of a ready-mixed concrete truck; 247.11 (10) purchase or use of a motor vehicle by a town for use 247.12 exclusively for road maintenance, including snowplows and dump 247.13 trucks, but not including automobiles, vans, or pickup trucks; 247.14 (11) purchase or use of a motor vehicle by a corporation, 247.15 society, association, foundation, or institution organized and 247.16 operated exclusively for charitable, religious, or educational 247.17 purposes, except a public school, university, or library, but 247.18 only if the vehicle is: 247.19 (i) a truck, as defined in section 168.011, a bus, as 247.20 defined in section 168.011, or a passenger automobile, as 247.21 defined in section 168.011, if the automobile is designed and 247.22 used for carrying more than nine persons including the driver; 247.23 and 247.24 (ii) intended to be used primarily to transport tangible 247.25 personal property or individuals, other than employees, to whom 247.26 the organization provides service in performing its charitable, 247.27 religious, or educational purpose.; and 247.28 (12) a purchase or use of a motor vehicle that draws its 247.29 propulsion energy either: 247.30 (i) solely from an alternative fuel source; or 247.31 (ii) from a rechargeable energy storage system and either 247.32 unleaded gasoline, diesel fuel, or an alternative fuel or a 247.33 mixture of two or more of these fuels. 247.34 For purposes of this clause, "alternative fuel source" 247.35 means a fuel that the United States Department of Energy 247.36 recognizes and classifies as an alternative fuel, including, but 248.1 not limited to: 248.2 (1) alcohol fuels where the fuel mixture consists of at 248.3 least 70 percent by volume of an alcohol product such as 248.4 methanol or denatured alcohol; 248.5 (2) natural gas, whether compressed or liquefied; 248.6 (3) liquefied petroleum gas; 248.7 (4) hydrogen; 248.8 (5) coal-derived liquid fuels; 248.9 (6) fuels derived from biological materials; and 248.10 (7) electricity, including solar power. 248.11 [EFFECTIVE DATE.] This section is effective the day 248.12 following final enactment, except that the amendment to clause 248.13 (11) is effective for sales and purchases occurring after June 248.14 30, 2000, and except that clause (12) is effective for sales and 248.15 purchases made after June 30, 2001, and before January 1, 2005. 248.16 Sec. 46. Minnesota Statutes 2000, section 469.190, 248.17 subdivision 3, is amended to read: 248.18 Subd. 3. [DISPOSITION OF PROCEEDS.] Ninety-five percent of 248.19 the gross proceeds from any tax imposed under subdivision 1 248.20 shall be used by the statutory or home rule charter city or town 248.21 either: 248.22 (1) to fund a local convention or tourism bureau for the 248.23 purpose of marketing and promoting the city or town as a tourist 248.24 or convention center; or 248.25 (2) to be transferred to the regional development 248.26 commission established under section 462.387 operating in the 248.27 region in which the city or town is located for use by the 248.28 commission exclusively to promote tourism in the region. 248.29 This subdivision shall not apply to any statutory or home 248.30 rule charter city or town that has a lodging tax authorized by 248.31 special law or enacted prior to 1972 at the time of enactment of 248.32 this section. 248.33 [EFFECTIVE DATE.] This section is effective for tax 248.34 proceeds received by the city or town after December 31, 2000. 248.35 Sec. 47. Laws 1986, chapter 396, section 5, is amended to 248.36 read: 249.1 Sec. 5. [LIQUOR, LODGING, AND RESTAURANT TAXES.] 249.2 The city may, by resolution, levy in addition to taxes 249.3 authorized by other law: 249.4 (1) a sales tax of not more than three percent on the gross 249.5 receipts on retail on-sales of intoxicating liquor and fermented 249.6 malt beverages described in section 473.592 occurring in the 249.7 downtown taxing area, provided that this tax may not be imposed 249.8 if sales of intoxicating liquor and fermented malt beverages are 249.9 exempt from taxation under chapter 297A; 249.10 (2) a sales tax of not more than three percent on the gross 249.11 receipts from the furnishing for consideration of lodging 249.12 described in section 473.592 by a hotel or motel which has more 249.13 than 50 rooms available for lodging; the tax imposed under this 249.14 clause shall be at a rate that, when added to the sum of the 249.15 rate of the sales tax imposed under Minnesota Statutes, chapter 249.16 297A, the rate of the sales tax imposed under section 4, and the 249.17 rate of any other taxes on lodging in the city of Minneapolis, 249.18 equals1213 percent; and 249.19 (3) a sales tax of not more than three percent on the gross 249.20 receipts on all sales of food primarily for consumption on or 249.21 off the premises by restaurants and places of refreshment as 249.22 defined by resolution of the city that occur within the downtown 249.23 taxing area. 249.24 These taxes shall be applied solely to pay costs of collection 249.25 and to pay or secure the payment of any principal of, premium 249.26 and interest on any bonds or any costs referred to in section 4, 249.27 subdivision 3. The commissioner of revenue may enter into 249.28 appropriate agreements with the city to provide for the 249.29 collection of these taxes by the state on behalf of the city. 249.30 The commissioner may charge the city a reasonable fee for its 249.31 collection from the proceeds of any taxes. These taxes shall be 249.32 subject to the same interest penalties and enforcement 249.33 provisions as the taxes imposed under section 473.592. 249.34 Sec. 48. Laws 1999, chapter 243, article 4, section 19, is 249.35 amended to read: 249.36 Sec. 19. [EFFECTIVE DATES.] 250.1 Sections 1, 2, 5, 7, 9, and 11 are effective for sales and 250.2 purchases made after June 30, 1999. 250.3 Section 3 is effective for amended returns and refund 250.4 claims filed on or after July 1, 1999. 250.5 Section 4 is effective the day following final enactment 250.6 and applies retroactively to all open tax years and to 250.7 assessments and appeals under Minnesota Statutes, sections 250.8 289A.38 and 289A.65, for which the time limits have not expired 250.9 on the date of final enactment of this act. The provisions of 250.10 Minnesota Statutes, section 289A.50, apply to refunds claimed 250.11 under section 4. Refunds claimed under section 4 must be filed 250.12 by the later of December 31, 1999, or the time limit under 250.13 Minnesota Statutes, section 289A.40, subdivision 1. 250.14 Section 6 is effective retroactively for sales and 250.15 purchases made after June 30, 1998. 250.16 Section 8 is effective for purchases and sales made after 250.17 the date of final enactment. 250.18 Section 10 is effective for purchases made after the date 250.19 of final enactment and before July 1,20012003. 250.20 Section 12 is effective the day after final enactment. 250.21 Section 12, paragraphs (a) to (c), apply to all local sales 250.22 taxes enacted after July 1, 1999. Section 12, paragraph (d), 250.23 applies to all local sales taxes in effect at the time of, or 250.24 imposed after the day of, the enactment of this section. 250.25 Section 13 is effective the day following final enactment. 250.26 [EFFECTIVE DATE.] This section is effective the day after 250.27 final enactment. 250.28 Sec. 49. Laws 2000, chapter 490, article 8, section 17, 250.29 the effective date, is amended to read: 250.30 EFFECTIVE DATE: This section is effective for sales and 250.31 purchases made after January 1, 2000, and before December 250.32 31,20002001. 250.33 [EFFECTIVE DATE.] This section is effective the day 250.34 following final enactment and applies retroactively to sales and 250.35 purchases made on or after December 31, 2000. 250.36 Sec. 50. [REPORT.] 251.1 By December 1, 2004, the commissioner of commerce, in 251.2 consultation with the commissioner of revenue, shall report to 251.3 the legislative committees over energy and efficiency and tax 251.4 issues, the impact and effectiveness of the exemptions 251.5 authorized in Minnesota Statutes, sections 297A.67, subdivision 251.6 27 and 297B.03, clause (12). This report shall include an 251.7 estimate of the revenue loss to the state as well as an estimate 251.8 on changes in energy consumption. The commissioner shall 251.9 include in the report legislative recommendations as to whether 251.10 and how to reform or extend these exemptions. 251.11 Sec. 51. [REPEALER.] 251.12 (a) Minnesota Statutes 2000, section 289A.60, subdivision 251.13 15, is repealed effective beginning with returns filed after 251.14 January 1, 2002. 251.15 (b) Minnesota Statutes 2000, section 297A.71, subdivisions 251.16 2, 15, and 16, are repealed effective for sales and purchases 251.17 made after June 30, 2002. 251.18 (c) Minnesota Statutes 2000, section 297B.032, is repealed 251.19 effective the day following final enactment. 251.20 ARTICLE 9 251.21 PROPERTY TAXES 251.22 Section 1. [3.99] [LEGISLATIVE COMMISSION ON METROPOLITAN 251.23 GOVERNMENT.] 251.24 Subdivision 1. [ESTABLISHED.] The legislative commission 251.25 on metropolitan government is established to oversee the 251.26 metropolitan council's operating and capital budgets, work 251.27 program, and capital improvement program. 251.28 Subd. 2. [MEMBERSHIP.] The commission consists of four 251.29 senators appointed by the senate subcommittee on committees of 251.30 the committee on rules and administration, three senators 251.31 appointed by the senate minority leader, four state 251.32 representatives appointed by the speaker of the house, and three 251.33 state representatives appointed by the house minority leader. 251.34 All members must reside in or represent a portion of the 251.35 seven-county metropolitan area. The appointing authorities must 251.36 ensure balanced geographic representation. Each appointing 252.1 authority must make appointments as soon as possible after the 252.2 opening of the next regular session of the legislature in each 252.3 odd-numbered year. 252.4 Subd. 3. [TERMS; VACANCIES.] Members of the commission 252.5 serve for a two-year term beginning upon appointment and 252.6 expiring upon appointment of a successor after the opening of 252.7 the next regular session of the legislature in the odd-numbered 252.8 year. A vacancy in the membership of the commission must be 252.9 filled for the unexpired term in a manner that will preserve the 252.10 representation established by this section. 252.11 Subd. 4. [CHAIR.] The commission must meet as soon as 252.12 practicable after members are appointed in each odd-numbered 252.13 year to elect its chair and other officers as it may determine 252.14 necessary. A chair serves a two-year term, expiring in the 252.15 odd-numbered year after a successor is elected. The chair 252.16 alternates biennially between the senate and the house. 252.17 Subd. 5. [COMPENSATION.] Members serve without 252.18 compensation but may be reimbursed for their reasonable expenses 252.19 as members of the legislature. 252.20 Subd. 6. [STAFF.] Legislative staff must provide 252.21 administrative and research assistance to the commission. 252.22 Subd. 7. [MEETINGS; PROCEDURES.] The commission must meet 252.23 at the call of the chair. If there is a quorum, the commission 252.24 may take action by a simple majority vote of commission members 252.25 present. 252.26 Subd. 8. [POWERS; DUTIES; METROPOLITAN COUNCIL LEVY, 252.27 BUDGET OVERSIGHT.] The commission must monitor, review, and make 252.28 recommendations to the metropolitan council and to the 252.29 legislature for the following calendar year on: 252.30 (1) the tax rate and dollar amount of the metropolitan 252.31 council's property tax levies and any proposed increases in the 252.32 rate or dollar amount of tax; 252.33 (2) any request for an increase in the debt of the 252.34 metropolitan council; 252.35 (3) the overall work and role of the metropolitan council; 252.36 (4) the metropolitan council's proposed operating and 253.1 capital budgets, work program, and capital improvement program; 253.2 and 253.3 (5) the metropolitan council's implementation of the 253.4 operating and capital budgets, work program, and capital 253.5 improvement program. 253.6 Subd. 9. [POWERS; DUTIES; METROPOLITAN COUNCIL 253.7 APPOINTMENTS OVERSIGHT.] The commission must monitor 253.8 appointments to the metropolitan council and may make 253.9 recommendations on appointments to the nominating committee 253.10 under section 473.123, subdivision 3, or to the governor before 253.11 the governor makes the appointments. The commission may also 253.12 make recommendations to the senate before appointments are 253.13 presented to the senate for its advice and consent. 253.14 Subd. 10. [EXPIRATION.] This section expires July 1, 2007. 253.15 [EFFECTIVE DATE.] This section is effective July 1, 2001. 253.16 Sec. 2. [103B.253] [COUNTY LEVY AUTHORITY.] 253.17 Notwithstanding any other law to the contrary, a county 253.18 levying a tax under section 103B.241, 103B.245, or 103B.251 253.19 shall not include any taxes levied under those authorities in 253.20 the levy certified under section 275.07, subdivision 1, 253.21 paragraph (a). A county levying under section 103B.241, 253.22 103B.245, or 103B.251 shall separately certify that amount and 253.23 the auditor shall extend that levy as a special taxing district 253.24 levy under sections 275.066 and 275.07, subdivision 1, paragraph 253.25 (b). 253.26 [EFFECTIVE DATE.] This section is effective for taxes 253.27 levied in 2001, payable in 2002, and thereafter. 253.28 Sec. 3. Minnesota Statutes 2000, section 103D.905, 253.29 subdivision 3, is amended to read: 253.30 Subd. 3. [ADMINISTRATIVEGENERAL FUND.]An administrative253.31 A general fund, consisting of an ad valorem tax levy, may not 253.32 exceed0.024180.048 percent of taxable market value, or 253.33$125,000$250,000, whichever is less. The money in the fund 253.34 shall be used for general administrative expenses and for the 253.35 construction or implementation and maintenance of projects of 253.36 common benefit to the watershed district. The managers may make 254.1 an annual levy for theadministrativegeneral fund as provided 254.2 in section 103D.911. In addition to the annualadministrative254.3 general levy, the managers may annually levy a tax not to exceed 254.4 0.00798 percent of taxable market value for a period not to 254.5 exceed 15 consecutive years to pay the cost attributable to the 254.6 basic water management features of projects initiated by 254.7 petition of amunicipality ofpolitical subdivision within the 254.8 watershed district or by petition of at least 50 resident owners 254.9 whose property is within the watershed district. 254.10 [EFFECTIVE DATE.] This section is effective for taxes 254.11 levied in 2001, payable in 2002, and thereafter. 254.12 Sec. 4. [126C.455] [SWIMMING POOL LEVY.] 254.13 Each year, a school district with its home office located 254.14 in a county that has (i) a population density of ten or fewer 254.15 persons per square mile according to the 2000 census of 254.16 population; (ii) an international border; and (iii) more than 254.17 one school district within its boundaries, may levy for the net 254.18 operational costs of a swimming pool. The levy may not exceed 254.19 the net actual costs of operation of the swimming pool for the 254.20 previous year. Net actual costs are defined as operating costs 254.21 less any operating revenues and less any payments from other 254.22 local governmental units. 254.23 [EFFECTIVE DATE.] This section is effective for taxes 254.24 payable in 2002 and later. 254.25 Sec. 5. [144F.01] [EMERGENCY MEDICAL SERVICES SPECIAL 254.26 TAXING DISTRICTS.] 254.27 Subdivision 1. [POLITICAL SUBDIVISION DEFINED.] In this 254.28 section, "political subdivision" means a county, a statutory or 254.29 home rule charter city, or a township organized to provide town 254.30 government. 254.31 Subd. 2. [WHO MAY ESTABLISH.] Two or more political 254.32 subdivisions, or parts of them, may establish by resolution of 254.33 their governing bodies a special taxing district for emergency 254.34 medical services. The participating territory of a 254.35 participating political subdivision need not abut any other 254.36 participating territory to be in the special taxing district. 255.1 Subd. 3. [BOARD.] The special taxing district under this 255.2 section is governed by a board made up initially of 255.3 representatives of each participating political subdivision in 255.4 the proportions set out in the establishing resolution, subject 255.5 to change as provided in the district's charter, if any, or in 255.6 the district's bylaws. Each participant's representative serves 255.7 at the pleasure of that participant's governing body. 255.8 Subd. 4. [PROPERTY TAX LEVY AUTHORITY.] The district's 255.9 board may levy a tax on the taxable real and personal property 255.10 in the district. The ad valorem tax levy may not exceed 0.048 255.11 percent of the taxable market value of the district or $250,000, 255.12 whichever is less. The proceeds of the levy must be used as 255.13 provided in subdivision 5. The board shall certify the levy at 255.14 the times as provided under section 275.07. The board shall 255.15 provide the county with whatever information is necessary to 255.16 identify the property that is located within the district. If 255.17 the boundaries include a part of a parcel, the entire parcel 255.18 shall be included in the district. The county auditors must 255.19 spread, collect, and distribute the proceeds of the tax at the 255.20 same time and in the same manner as provided by law for all 255.21 other property taxes. 255.22 Subd. 5. [USE OF LEVY PROCEEDS.] The proceeds of property 255.23 taxes levied under this section must be used to support the 255.24 providing of out-of-hospital emergency medical services 255.25 including, but not limited to, first responder or rescue squads 255.26 recognized by the district, ambulance services licensed under 255.27 chapter 144E and recognized by the district, medical control 255.28 functions set out in chapter 144E, communications equipment and 255.29 systems, and programs of regional emergency medical services 255.30 authorized by regional boards described in section 144E.52. 255.31 Subd. 6. [ADVISORY COMMITTEE.] A special taxing district 255.32 board under this section must have an advisory committee to 255.33 advise the board on issues involving emergency medical services 255.34 and EMS communications. The committee's membership must be 255.35 comprised of representatives of first responders, ambulance 255.36 services, ambulance medical directors, and EMS communication 256.1 experts. The advisory committee members serve at the pleasure 256.2 of the appointing board. 256.3 Subd. 7. [POWERS.] (a) In addition to authority expressly 256.4 granted in this section, a special taxing district under this 256.5 section may exercise any power that may be exercised by any of 256.6 its participating political subdivisions, except that the board 256.7 may not incur debt. The special taxing district may only use 256.8 the power to do what is necessary or reasonable to support the 256.9 services set out in subdivision 5. 256.10 (b) Notwithstanding paragraph (a), the district may only 256.11 levy the taxes authorized in this section. 256.12 Subd. 8. [ADDITIONS AND WITHDRAWALS.] (a) Additional 256.13 eligible political subdivisions may be added to a special taxing 256.14 district under this section as provided by the board of the 256.15 district and agreed to in a resolution of the governing body of 256.16 the political subdivision proposed to be added. 256.17 (b) A political subdivision may withdraw from a special 256.18 taxing district under this section by resolution of its 256.19 governing body. The political subdivision must notify the board 256.20 of the special taxing district of the withdrawal by providing a 256.21 copy of the resolution at least one year in advance of the 256.22 proposed withdrawal. The taxable property of the withdrawing 256.23 member is subject to the property tax levy under subdivision 4 256.24 for the taxes payable year following the notice of the 256.25 withdrawal, unless the board and the withdrawing member agree 256.26 otherwise by action of their governing bodies. 256.27 (c) Notwithstanding subdivision 2, if the district is 256.28 comprised of only two political subdivisions and one of the 256.29 political subdivisions withdraws, the district can continue to 256.30 exist. 256.31 Subd. 9. [DISSOLUTION.] If the special taxing district is 256.32 dissolved, the assets and liabilities may be assigned to a 256.33 successor entity, if any, or otherwise disposed of for public 256.34 purposes as provided by law. 256.35 [EFFECTIVE DATE.] This section is effective for taxes 256.36 levied in 2002, payable in 2003, through taxes levied in 2007, 257.1 payable in 2008. 257.2 Sec. 6. Minnesota Statutes 2000, section 216B.2424, 257.3 subdivision 5, is amended to read: 257.4 Subd. 5. [MANDATE.] (a) A public utility, as defined in 257.5 section 216B.02, subdivision 4, that operates a nuclear-powered 257.6 electric generating plant within this state must construct and 257.7 operate, purchase, or contract to construct and operate (1) by 257.8 December 31, 1998, 50 megawatts of electric energy installed 257.9 capacity generated by farm-grown closed-loop biomass scheduled 257.10 to be operational by December 31, 2001; and (2) by December 31, 257.11 1998, an additional 75 megawatts of installed capacity so 257.12 generated scheduled to be operational by December 31, 2002. 257.13 (b) Of the 125 megawatts of biomass electricity installed 257.14 capacity required under this subdivision, no more than 50 257.15 megawatts of this capacity may be provided by a facility that 257.16 uses poultry litter as its primary fuel source and any such 257.17 facility: 257.18 (1) need not use biomass that complies with the definition 257.19 in subdivision 1; 257.20 (2) must enter into a contract with the public utility for 257.21 such capacity, that has an average purchase price per megawatt 257.22 hour over the life of the contract that is equal to or less than 257.23 the average purchase price per megawatt hour over the life of 257.24 the contract in contracts approved by the public utilities 257.25 commission before April 1, 2000, to satisfy the mandate of this 257.26 section, and file that contract with the public utilities 257.27 commission prior to September 1, 2000; and 257.28 (3) such capacity must be scheduled to be operational by 257.29 December 31, 2002. 257.30 (c) Of the total 125 megawatts of biomass electric energy 257.31 installed capacity required under this section, no more than 75 257.32 megawatts may be provided by a single project. 257.33 (d) Of the 75 megawatts of biomass electric energy 257.34 installed capacity required under paragraph (a), clause (2), no 257.35 more than 25 megawatts of this capacity may be provided by a St. 257.36 Paul district heating and cooling system cogeneration facility 258.1 utilizing waste wood as a primary fuel source. The St. Paul 258.2 district heating and cooling system cogeneration facility need 258.3 not use biomass that complies with the definition in subdivision 258.4 1. 258.5 (e) The public utility must accept and consider on an equal 258.6 basis with other biomass proposals: 258.7 (1) a proposal to satisfy the requirements of this section 258.8 that includes a project that exceeds the megawatt capacity 258.9 requirements of either paragraph (a), clause (1) or (2), and 258.10 that proposes to sell the excess capacity to the public utility 258.11 or to other purchasers; and 258.12 (2) a proposal for a new facility to satisfy more than ten 258.13 but not more than 20 megawatts of the electrical generation 258.14 requirements by a small business-sponsored independent power 258.15 producer facility to be located within the northern quarter of 258.16 the state, which means the area located north of Constitutional 258.17 Route No. 8 as described in section 161.114, subdivision 2, and 258.18 that utilizes biomass residue wood, sawdust, bark, chipped wood, 258.19 or brush to generate electricity. A facility described in this 258.20 clause is not required to utilize biomass complying with the 258.21 definition in subdivision 1, but must have the capacity required 258.22 by this clause operational by December 31, 2002. 258.23(e)(f) If a public utility files a contract with the 258.24 commission for electric energy installed capacity that uses 258.25 poultry litter as its primary fuel source, the commission must 258.26 do a preliminary review of the contract to determine if it meets 258.27 the purchase price criteria provided in paragraph (b), clause 258.28 (2), of this subdivision. The commission shall perform its 258.29 review and advise the parties of its determination within 30 258.30 days of filing of such a contract by a public utility. A public 258.31 utility may submit by September 1, 2000, a revised contract to 258.32 address the commission's preliminary determination. 258.33(f)(g) The commission shall finally approve, modify, or 258.34 disapprove no later than July 1, 2001, all contracts submitted 258.35 by a public utility as of September 1, 2000, to meet the mandate 258.36 set forth in this subdivision. 259.1(g)(h) If a public utility subject to this section 259.2 exercises an option to increase the generating capacity of a 259.3 project in a contract approved by the commission prior to April 259.4 25, 2000, to satisfy the mandate in this subdivision, the public 259.5 utility must notify the commission by September 1, 2000, that it 259.6 has exercised the option and include in the notice the amount of 259.7 additional megawatts to be generated under the option 259.8 exercised. Any review by the commission of the project after 259.9 exercise of such an option shall be based on the same criteria 259.10 used to review the existing contract. 259.11 (i) A facility specified in this subdivision qualifies for 259.12 exemption from property taxation under section 272.02, 259.13 subdivision 43. 259.14 [EFFECTIVE DATE.] This section is effective the day 259.15 following final enactment. 259.16 Sec. 7. Minnesota Statutes 2000, section 270.11, is 259.17 amended by adding a subdivision to read: 259.18 Subd. 8. [SPECIALIZED ASSISTANCE TO ASSESSORS.] Upon 259.19 request of a county assessor, the commissioner of revenue shall, 259.20 through the commissioner's regional representatives, advise and 259.21 assist the assessor in assessing commercial and industrial 259.22 single-use property, preparing for tax court proceedings, and 259.23 performing other functions or duties requiring specialized 259.24 knowledge or experience. 259.25 Sec. 8. Minnesota Statutes 2000, section 271.01, 259.26 subdivision 5, is amended to read: 259.27 Subd. 5. [JURISDICTION.] The tax court shall have 259.28 statewide jurisdiction. Except for an appeal to the supreme 259.29 court or any other appeal allowed under this subdivision, the 259.30 tax court shall be the sole, exclusive, and final authority for 259.31 the hearing and determination of all questions of law and fact 259.32 arising under the tax laws of the state, as defined in this 259.33 subdivision, in those cases that have been appealed to the tax 259.34 court and in any case that has been transferred by the district 259.35 court to the tax court. The tax court shall have no 259.36 jurisdiction in any case that does not arise under the tax laws 260.1 of the state or in any criminal case or in any case determining 260.2 or granting title to real property or in any case that is under 260.3 the probate jurisdiction of the district court. The small 260.4 claims division of the tax court shall have no jurisdiction in 260.5 any case dealing with property valuation or assessment for 260.6 property tax purposes until the taxpayer has appealed the 260.7 valuation or assessment to the county board of equalization, and 260.8 in those towns and cities which have not transferred their 260.9 duties to the county, the town or city board of equalization, 260.10 except for: (i) those taxpayers whose original assessments are 260.11 determined by the commissioner of revenue;and(ii) those 260.12 taxpayers appealing a denial of a current year application for 260.13 the homestead classification for their property and the denial 260.14 was not reflected on a valuation notice issued in the year; and 260.15 (iii) any case dealing with property valuation, assessment, or 260.16 taxation for property tax purposes and meeting the 260.17 jurisdictional requirements of section 271.21, subdivision 2, 260.18 paragraph (c). The tax court shall have no jurisdiction in any 260.19 case involving an order of the state board of equalization 260.20 unless a taxpayer contests the valuation of property. Laws 260.21 governing taxes, aids, and related matters administered by the 260.22 commissioner of revenue, laws dealing with property valuation, 260.23 assessment or taxation of property for property tax purposes, 260.24 and any other laws that contain provisions authorizing review of 260.25 taxes, aids, and related matters by the tax court shall be 260.26 considered tax laws of this state subject to the jurisdiction of 260.27 the tax court. This subdivision shall not be construed to 260.28 prevent an appeal, as provided by law, to an administrative 260.29 agency, board of equalization, review under section 274.13, 260.30 subdivision 1c, or to the commissioner of revenue. Wherever 260.31 used in this chapter, the term commissioner shall mean the 260.32 commissioner of revenue, unless otherwise specified. 260.33 Sec. 9. Minnesota Statutes 2000, section 271.21, 260.34 subdivision 2, is amended to read: 260.35 Subd. 2. [JURISDICTION.] At the election of the taxpayer, 260.36 the small claims division shall have jurisdiction only in the 261.1 following matters: 261.2 (a) cases involving valuation, assessment, or taxation of 261.3 real or personal property, if the taxpayer has satisfied the 261.4 requirements of section 271.01, subdivision 5, and: (i) the 261.5 issue is a denial of a current year application for the 261.6 homestead classification for the taxpayer's property and the 261.7 denial was not reflected on a valuation notice issued in the 261.8 year; or (ii) in the case of nonhomestead property, the 261.9 assessor's estimated market value is less than $100,000;or261.10 (b) any other case concerning the tax laws as defined in 261.11 section 271.01, subdivision 5, in which the amount in 261.12 controversy does not exceed $5,000, including penalty and 261.13 interest; or 261.14 (c) cases involving valuation, assessment, or taxation of 261.15 real or personal property if: 261.16 (i) the issue is a denial of a current year application for 261.17 the homestead classification for the taxpayer's property; 261.18 (ii) only one parcel is included in the petition, the 261.19 entire parcel is classified as homestead 1a or 1b pursuant to 261.20 section 273.13, and the parcel contains no more than one 261.21 dwelling unit; or 261.22 (iii) the assessor's estimated market value of the property 261.23 included in the petition is less than $300,000. 261.24 Sec. 10. Minnesota Statutes 2000, section 272.02, 261.25 subdivision 9, is amended to read: 261.26 Subd. 9. [PERSONAL PROPERTY; EXCEPTIONS.] Except for the 261.27 taxable personal property enumerated below, all personal 261.28 property and the property described insectionsections 272.03, 261.29 subdivision 1, paragraphs (c) and (d), and 272.028 shall be 261.30 exempt. 261.31 The following personal property shall be taxable: 261.32 (a) except as provided in section 272.028, personal 261.33 property which is part of an electric generating, transmission, 261.34 or distribution system or a pipeline system transporting or 261.35 distributing water, gas, crude oil, or petroleum products or 261.36 mains and pipes used in the distribution of steam or hot or 262.1 chilled water for heating or cooling buildings and structures; 262.2 (b) railroad docks and wharves which are part of the 262.3 operating property of a railroad company as defined in section 262.4 270.80; 262.5 (c) personal property defined in section 272.03, 262.6 subdivision 2, clause (3); 262.7 (d) leasehold or other personal property interests which 262.8 are taxed pursuant to section 272.01, subdivision 2; 273.124, 262.9 subdivision 7; or 273.19, subdivision 1; or any other law 262.10 providing the property is taxable as if the lessee or user were 262.11 the fee owner; 262.12 (e) manufactured homes and sectional structures, including 262.13 storage sheds, decks, and similar removable improvements 262.14 constructed on the site of a manufactured home, sectional 262.15 structure, park trailer or travel trailer as provided in section 262.16 273.125, subdivision 8, paragraph (f); and 262.17 (f) flight property as defined in section 270.071. 262.18 [EFFECTIVE DATE.] This section is effective for the 2001 262.19 assessment and thereafter. 262.20 Sec. 11. Minnesota Statutes 2000, section 272.02, 262.21 subdivision 10, is amended to read: 262.22 Subd. 10. [PERSONAL PROPERTY USED FOR POLLUTION CONTROL.] 262.23 Personal property used primarily for the abatement and control 262.24 of air, water, or land pollution is exempt to the extent that it 262.25 is so used, and real property is exempt if it is used primarily 262.26 for abatement and control of air, water, or land pollution as 262.27 part of an agricultural operation, as a part of a centralized 262.28 treatment and recovery facility operating under a permit issued 262.29 by the Minnesota pollution control agency pursuant to chapters 262.30 115 and 116 and Minnesota Rules, parts 7001.0500 to 7001.0730, 262.31 and 7045.0020 to 7045.1260, as a wastewater treatment facility 262.32 and for the treatment, recovery, and stabilization of metals, 262.33 oils, chemicals, water, sludges, or inorganic materials from 262.34 hazardous industrial wastes, or as part of an electric 262.35 generation system. For purposes of this subdivision, personal 262.36 property includes ponderous machinery and equipment used in a 263.1 business or production activity that at common law is considered 263.2 real property. 263.3 Any taxpayer requesting exemption of all or a portion of 263.4 any real property or any equipment or device, or part thereof, 263.5 operated primarily for the control or abatement of airor, 263.6 water, or land pollution shall file an application with the 263.7 commissioner of revenue.The equipment or device shall meet263.8standards, rules, or criteria prescribed by the Minnesota263.9pollution control agency, and must be installed or operated in263.10accordance with a permit or order issued by that agency.The 263.11 Minnesota pollution control agency shall upon request of the 263.12 commissioner furnish informationorand advice to the 263.13 commissioner. 263.14 The information and advice furnished by the Minnesota 263.15 pollution control agency must include statements as to whether 263.16 the equipment, device, or real property meets a standard, rule, 263.17 criteria, guideline, policy, or order of the Minnesota pollution 263.18 control agency, and whether the equipment, device, or real 263.19 property is installed or operated in accordance with it. On 263.20 determining that property qualifies for exemption, the 263.21 commissioner shall issue an order exempting the property from 263.22 taxation. The equipmentor, device, or real property shall 263.23 continue to be exempt from taxation as long as thepermitorder 263.24 issued by theMinnesota pollution control agencycommissioner 263.25 remains in effect. 263.26 [EFFECTIVE DATE.] This section is effective for exemption 263.27 applications received on or after July 1, 2001. 263.28 Sec. 12. Minnesota Statutes 2000, section 272.02, 263.29 subdivision 22, is amended to read: 263.30 Subd. 22. [WIND ENERGY CONVERSION SYSTEMS.] (a) Small 263.31 scale wind energy conversion systems installed after January 1, 263.32 1991, and used as an electric power source are exempt. 263.33 "Small scale wind energy conversion systems" are wind 263.34 energy conversion systems, as defined in section 216C.06, 263.35 subdivision 12, including the foundation or support pad, which 263.36 (i) are used as an electric power source; (ii) are located 264.1 within one county and owned by the same owner; and (iii) produce 264.2 two megawatts or less of electricity as measured by nameplate 264.3 ratings. 264.4 (b) Medium scale wind energy conversion systems installed 264.5 after January 1, 1991, are treated as follows: (i) the 264.6 foundation and support pad are taxable; (ii) the associated 264.7 supporting and protective structures are exempt for the first 264.8 five assessment years after they have been constructed, and 264.9 thereafter, 30 percent of the market value of the associated 264.10 supporting and protective structures are taxable; and (iii) the 264.11 turbines, blades, transformers, and its related equipment, are 264.12 exempt. "Medium scale wind energy conversion systems" are wind 264.13 energy conversion systems as defined in section 216C.06, 264.14 subdivision 12, including the foundation or support pad, which: 264.15 (i) are used as an electric power source; (ii) are located 264.16 within one county and owned by the same owner; and (iii) produce 264.17 more than two but equal to or less than 12 megawatts of energy 264.18 as measured by nameplate ratings. 264.19 (c) Large scale wind energy conversion systems installed 264.20 after January 1, 1991, are treated as follows: 25 percent of 264.21 the market value of all property is taxable, including (i) the 264.22 foundation and support pad; (ii) the associated supporting and 264.23 protective structures; and (iii) the turbines, blades, 264.24 transformers, and its related equipment. "Large scale wind 264.25 energy conversion systems" are wind energy conversion systems as 264.26 defined in section 216C.06, subdivision 12, including the 264.27 foundation or support pad, which (i) are used as an electric 264.28 power source; and (ii) produce more than 12 megawatts of energy 264.29 as measured by nameplate ratings. 264.30 (d) The total size of a wind energy conversion system under 264.31 this subdivision shall be determined according to this paragraph. 264.32 Unless the systems are interconnected with different 264.33 distribution systems, the nameplate capacity of one wind energy 264.34 conversion system shall be combined with the nameplate capacity 264.35 of any other wind energy conversion system that is: 264.36 (1) located within five miles of the wind energy conversion 265.1 system; 265.2 (2) constructed within the same calendar year as the wind 265.3 energy conversion system; and 265.4 (3) under common ownership. 265.5 In the case of a dispute, the commissioner of commerce 265.6 shall determine the total size of the system, and shall draw all 265.7 reasonable inferences in favor of combining the systems. 265.8 (e) In making a determination under paragraph (d), the 265.9 commissioner of commerce may determine that two wind energy 265.10 conversion systems are under common ownership when the 265.11 underlying ownership structure contains similar persons or 265.12 entities, even if the ownership shares differ between the two 265.13 systems. Wind energy conversion systems are not under common 265.14 ownership solely because the same person or entity provided 265.15 equity financing for the systems. 265.16 [EFFECTIVE DATE.] This section is effective for wind energy 265.17 conversion systems installed after January 1, 2001. 265.18 Sec. 13. Minnesota Statutes 2000, section 272.02, is 265.19 amended by adding a subdivision to read: 265.20 Subd. 45. [PUBLICLY OWNED PARKING FACILITIES.] Parking 265.21 lots, ramps, structures, garages, and other facilities for 265.22 vehicle parking owned by a municipality or authority established 265.23 under chapter 469 or any affiliate nonprofit corporate entity 265.24 organized by a municipality or authority are exempt, including 265.25 those parking lots, ramps, structures, garages, and other 265.26 facilities that are in whole or in part operated by, used by, 265.27 leased, or subleased to an individual or nonprofit or for-profit 265.28 entity. 265.29 [EFFECTIVE DATE.] This section is effective for assessment 265.30 year 2001 and thereafter. 265.31 Sec. 14. Minnesota Statutes 2000, section 272.02, is 265.32 amended by adding a subdivision to read: 265.33 Subd. 46. [RESIDENTIAL BUILDINGS ON TEMPORARY SITES.] A 265.34 newly constructed building that is situated on real property is 265.35 exempt if it is: 265.36 (1) intended for future residential occupancy; 266.1 (2) on a temporary foundation and intended to be moved; 266.2 (3) not used as a model or for any other business purposes; 266.3 (4) not connected to any utilities; and 266.4 (5) located on land that will not be sold with the building. 266.5 The exemption under this subdivision is allowable for only 266.6 one assessment year after the date of the initial construction 266.7 of the building. 266.8 [EFFECTIVE DATE.] This section is effective for assessment 266.9 year 2001 and thereafter. 266.10 Sec. 15. Minnesota Statutes 2000, section 272.02, is 266.11 amended by adding a subdivision to read: 266.12 Subd. 47. [POULTRY LITTER BIOMASS GENERATION FACILITY; 266.13 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 266.14 attached machinery and other personal property which is part of 266.15 an electrical generating facility that meets the requirements of 266.16 this subdivision is exempt. At the time of construction, the 266.17 facility must: 266.18 (1) be designed to utilize poultry litter as a primary fuel 266.19 source; and 266.20 (2) be constructed for the purpose of generating power at 266.21 the facility that will be sold pursuant to a contract approved 266.22 by the public utilities commission in accordance with the 266.23 biomass mandate imposed under section 216B.2424. 266.24 Construction of the facility must be commenced after 266.25 January 1, 2000, and before December 31, 2002. Property 266.26 eligible for this exemption does not include electric 266.27 transmission lines and interconnections or gas pipelines and 266.28 interconnections appurtenant to the property or the facility. 266.29 [EFFECTIVE DATE.] This section is effective for assessment 266.30 year 2001 and thereafter. 266.31 Sec. 16. Minnesota Statutes 2000, section 272.02, is 266.32 amended by adding a subdivision to read: 266.33 Subd. 48. [WASTE TIRE COGENERATION FACILITY; PERSONAL 266.34 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached 266.35 machinery and other personal property which is part of an 266.36 electric generating facility that meets the requirements of this 267.1 subdivision is exempt. At the time of construction, the 267.2 facility must: 267.3 (1) be designed to utilize waste tires as a primary fuel 267.4 source; and 267.5 (2) be a cogeneration electric generating facility of 15 to 267.6 25 megawatts of installed capacity. 267.7 Construction of the facility must be commenced after 267.8 January 1, 2000, and before January 1, 2004. Property eligible 267.9 for this exemption does not include electric transmission lines 267.10 and interconnections or gas pipelines and interconnections 267.11 appurtenant to the property or the facility. 267.12 [EFFECTIVE DATE.] This section is effective for assessment 267.13 year 2001 and thereafter. 267.14 Sec. 17. Minnesota Statutes 2000, section 272.02, is 267.15 amended by adding a subdivision to read: 267.16 Subd. 49. [BIOMASS ELECTRICAL GENERATION FACILITY; 267.17 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a), 267.18 attached machinery and other personal property which is part of 267.19 an electrical generating facility that meets the requirements of 267.20 this subdivision is exempt. At the time of construction, the 267.21 facility must: 267.22 (1) be designed to utilize biomass as established in 267.23 section 216B.2424 as a primary fuel source; and 267.24 (2) be constructed for the purpose of generating power at 267.25 the facility that will be sold pursuant to a contract approved 267.26 by the public utilities commission in accordance with the 267.27 biomass mandate imposed under section 216B.2424. 267.28 Construction of the facility must be commenced after 267.29 January 1, 2000, and before December 31, 2002. Property 267.30 eligible for this exemption does not include electric 267.31 transmission lines and interconnections or gas pipelines and 267.32 interconnections appurtenant to the property or facility. 267.33 [EFFECTIVE DATE.] This section is effective for assessment 267.34 year 2001 and thereafter. 267.35 Sec. 18. Minnesota Statutes 2000, section 272.02, is 267.36 amended by adding a subdivision to read: 268.1 Subd. 50. [AGRICULTURAL HISTORICAL SOCIETY PROPERTY; 268.2 EDUCATIONAL PURPOSES.] Property is exempt from taxation if it: 268.3 (1) is owned and operated by a nonprofit charitable 268.4 organization that qualifies for tax exemption under section 268.5 501(c)(3) of the Internal Revenue Code of 1986, as amended; and 268.6 (2) is primarily used for agricultural educational purposes 268.7 including acquiring, preserving, restoring, and exhibiting 268.8 artifacts and other items useful in providing an understanding 268.9 of local or regional agricultural history. 268.10 The exemption under this subdivision is limited to a 268.11 maximum of $100,000 market value for a nonprofit charitable 268.12 organization. 268.13 [EFFECTIVE DATE.] This section is effective for assessment 268.14 year 2001 and thereafter. 268.15 Sec. 19. [272.028] [PERSONAL PROPERTY USED TO GENERATE 268.16 ELECTRICITY.] 268.17 Subdivision 1. [NEW PLANT CONSTRUCTION AFTER JANUARY 1, 268.18 2001.] For a new generating plant or a new natural gas peaking 268.19 storage facility built and placed in service after January 1, 268.20 2001, personal property used to generate electric power or used 268.21 to store natural gas or similar fuels is exempt if an exemption 268.22 of generation personal property form, with an attached siting 268.23 agreement, signed by the utility and the host taxing authorities 268.24 is filed with the department of revenue. The siting agreement 268.25 may include a plan to provide fees or compensation to the host 268.26 jurisdictions. 268.27 Subd. 2. [EXISTING PLANT; INCREASE IN NAMEPLATE CAPACITY.] 268.28 For a plant existing or under construction on the day of final 268.29 enactment of this act, a partial exemption applies if (1) an 268.30 exemption of generation personal property form, with an attached 268.31 siting agreement, signed by the utility and the host taxing 268.32 authorities is filed with the department of revenue; (2) the 268.33 nameplate capacity of the plant is increased from that existing 268.34 on the day of final enactment of this act; and (3) the 268.35 construction has the effect of increasing the facility's 268.36 compliance with the new source performance standards and maximum 269.1 achievable control technology standards of the federal Clean Air 269.2 Act, title 42, United States Code, section 7401 et seq. The 269.3 siting agreement may include a plan to provide fees or 269.4 compensation to the host jurisdictions. This partial exemption 269.5 must be computed by taking the increase in megawatts over the 269.6 total megawatt nameplate capacity after construction is 269.7 complete, multiplied by the market value of all taxable tools, 269.8 implements, and machinery of the generating plant as determined 269.9 by the commissioner of revenue. The resulting exemption is 269.10 effective beginning in the next assessment year. 269.11 Subd. 3. [DEFINITION; APPLICABILITY.] For purposes of this 269.12 section, "personal property" means tools, implements, and 269.13 machinery of the generating plant. The exemption under this 269.14 section does not apply to transformers, transmission lines, 269.15 distribution lines, or any other tools, implements, and 269.16 machinery that are part of an electric substation, wherever 269.17 located. 269.18 [EFFECTIVE DATE.] This section is effective the day 269.19 following final enactment. 269.20 Sec. 20. Minnesota Statutes 2000, section 273.061, 269.21 subdivision 1, is amended to read: 269.22 Subdivision 1. [OFFICE CREATED; APPOINTMENT, 269.23 QUALIFICATIONS.] Every county in this state shall have a county 269.24 assessor. The county assessor shall be appointed by the board 269.25 of county commissioners. The assessor shall be selected and 269.26 appointed because of knowledge and training in the field of 269.27 property taxation and appointment shall be approved by the 269.28 commissioner of revenue before the same shall become effective. 269.29 Upon receipt by the county commissioners of the commissioner of 269.30 revenue's refusal to approve an appointment, the term of the 269.31 appointee shall terminate at the end of that day. 269.32 The commissioner of revenue may grant approval on a 269.33 probationary basis for a period of two years. The commissioner 269.34 must base the decision to impose a probationary period on 269.35 objective and consistent criteria. At the end of the two-year 269.36 probationary period, the commissioner may either refuse to 270.1 approve the person's appointment for the remainder of the 270.2 person's four-year term, approve the person's appointment but 270.3 only for another two-year probationary period, or 270.4 unconditionally approve the person's appointment for the 270.5 remainder of the four-year term for which the person was 270.6 originally appointed by the county board. The criteria shall 270.7 not be considered rules and are not subject to the 270.8 Administrative Procedure Act. 270.9 Notwithstanding any law to the contrary, a county assessor 270.10 must have senior accreditation from the state board of assessors 270.11 by January 1, 1992, or within two years of the assessor's first 270.12 appointment under this section, whichever is later. 270.13 [EFFECTIVE DATE.] This section is effective the day 270.14 following final enactment. 270.15 Sec. 21. Minnesota Statutes 2000, section 273.061, 270.16 subdivision 2, is amended to read: 270.17 Subd. 2. [TERM; VACANCY.] (a) The terms of county 270.18 assessors appointed under this section shall be four years. A 270.19 new term shall begin on January 1 of every fourth year after 270.20 1973. When any vacancy in the office occurs, the board of 270.21 county commissioners, within3090 days thereafter, shall fill 270.22 the same by appointment for the remainder of the term, following 270.23 the procedure prescribed in subdivision 1. The term of the 270.24 county assessor may be terminated by the board of county 270.25 commissioners at any time, on charges ofinefficiency or neglect270.26of dutymalfeasance, misfeasance, or nonfeasance by the 270.27 commissioner of revenue. If the board of county commissioners 270.28 does not intend to reappoint a county assessor who has been 270.29 certified by the state board of assessors, the board shall 270.30 present written notice to the county assessor not later than 90 270.31 days prior to the termination of the assessor's term, that it 270.32 does not intend to reappoint the assessor. If written notice is 270.33 not timely made, the county assessor will automatically be 270.34 reappointed by the board of county commissioners. 270.35 The commissioner of revenue may recommend to the state 270.36 board of assessors the nonrenewal, suspension, or revocation of 271.1 an assessor's license as provided in sections 270.41 to 270.53. 271.2 (b) In the event of a vacancy in the office of county 271.3 assessor, through death, resignation or other reasons, the 271.4 deputy (or chief deputy, if more than one) shall perform the 271.5 functions of the office. If there is no deputy, the county 271.6 auditor shall designate a person to perform the duties of the 271.7 office until an appointment is made as provided in clause (a). 271.8 Such person shall perform the duties of the office for a period 271.9 not exceeding3090 days during which the county board must 271.10 appoint a county assessor. Such30-day90-day period may, 271.11 however, be extended by written approval of the commissioner of 271.12 revenue. 271.13 (c) In the case of the first appointment under paragraph 271.14 (a) of a county assessor who is accredited but who does not have 271.15 senior accreditation, an approval of the appointment by the 271.16 commissioner shall be provisional, provided that a county 271.17 assessor appointed to a provisional term under this paragraph 271.18 must reapply to the commissioner at the end of the provisional 271.19 term. A provisional term may not exceed two years. The 271.20 commissioner shall not approve the appointment for the remainder 271.21 of the four-year term unless the assessor has obtained senior 271.22 accreditation. 271.23 [EFFECTIVE DATE.] This section is effective the day 271.24 following final enactment. 271.25 Sec. 22. Minnesota Statutes 2000, section 273.061, 271.26 subdivision 8, is amended to read: 271.27 Subd. 8. [POWERS AND DUTIES.] The county assessor shall 271.28 have the following powers and duties: 271.29 (1) To call upon and confer with the township and city 271.30 assessors in the county, and advise and give them the necessary 271.31 instructions and directions as to their duties under the laws of 271.32 this state, to the end that a uniform assessment of all real 271.33 property in the county will be attained. 271.34 (2) To assist and instruct the local assessors in the 271.35 preparation and proper use of land maps and record cards, in the 271.36 property classification of real and personal property, and in 272.1 the determination of proper standards of value. 272.2 (3) To keep the local assessors in the county advised of 272.3 all changes in assessment laws and all instructions which the 272.4 assessor receives from the commissioner of revenue relating to 272.5 their duties. 272.6 (4) Tohave authority torequire the attendance of groups 272.7 of local assessors at sectional meetings called by the assessor 272.8 for the purpose of giving them further assistance and 272.9 instruction as to their duties. 272.10 (5) To require the attendance of all licensed assessors 272.11 working in that county at annual instructional meetings 272.12 presented in part by the department of revenue regional 272.13 representative to provide assistance and instruction as to their 272.14 duties under the law and the proper implementation of assessment 272.15 procedures. 272.16 (6) To immediately commence the preparation of a large 272.17 scale topographical land map of the county, in such form as may 272.18 be prescribed by the commissioner of revenue, showing thereon 272.19 the location of all railroads, highways and roads, bridges, 272.20 rivers and lakes, swamp areas, wooded tracts, stony ridges and 272.21 other features which might affect the value of the land. 272.22 Appropriate symbols shall be used to indicate the best, the 272.23 fair, and the poor land of the county. For use in connection 272.24 with the topographical land map, the assessor shall prepare and 272.25 keep available in the assessor's office tables showing fair 272.26 average minimum and maximum market values per acre of 272.27 cultivated, meadow, pasture, cutover, timber and waste lands of 272.28 each township. The assessor shall keep the map and tables 272.29 available in the office for the guidance of town assessors, 272.30 boards of review, and the county board of equalization. 272.31(6)(7) To also prepare and keep available in the office 272.32 for the guidance of town assessors, boards of review and the 272.33 county board of equalization, a land valuation map of the 272.34 county, in such form as may be prescribed by the commissioner of 272.35 revenue. This map, which shall include the bordering tier of 272.36 townships of each county adjoining, shall show the average 273.1 market value per acre, both with and without improvements, as 273.2 finally equalized in the last assessment of real estate, of all 273.3 land in each town or unorganized township which lies outside the 273.4 corporate limits of cities. 273.5(7)(8) To regularly examine all conveyances of land 273.6 outside the corporate limits of cities of the first and second 273.7 class, filed with the county recorder of the county, and keep a 273.8 file, by descriptions, of the considerations shown thereon. 273.9 From the information obtained by comparing the considerations 273.10 shown with the market values assessed, the assessor shall make 273.11 recommendations to the county board of equalization of necessary 273.12 changes in individual assessments or aggregate valuations. 273.13(8)(9) To become familiar with the values of the different 273.14 items of personal property so as to be in a position when called 273.15 upon to advise the boards of review and the county board of 273.16 equalization concerning property, market values thereof. 273.17(9)(10) While the county board of equalization is in 273.18 session, to give it every possible assistance to enable it to 273.19 perform its duties. The assessor shall furnish the board with 273.20 all necessary charts, tables, comparisons, and data which it 273.21 requires in its deliberations, and shall make whatever 273.22 investigations the board may desire. 273.23(10)(11) At the request of either the board of county 273.24 commissioners or the commissioner of revenue, to investigate 273.25 applications for reductions of valuation and abatements and 273.26 settlements of taxes, examine the real or personal property 273.27 involved, and submit written reports and recommendations with 273.28 respect to the applications, in such form as may be prescribed 273.29 by the board of county commissioners and commissioner of revenue. 273.30(11)(12) To make diligent search each year for real and 273.31 personal property which has been omitted from assessment in the 273.32 county, and report all such omissions to the county auditor. 273.33(12)(13) To regularly confer with county assessors in all 273.34 adjacent counties about the assessment of property in order to 273.35 uniformly assess and equalize the value of similar properties 273.36 and classes of property located in adjacent counties. The 274.1 conference shall emphasize the assessment of agricultural and 274.2 commercial and industrial property or other properties that may 274.3 have an inadequate number of sales in a single county. 274.4(13)(14) To render such other services pertaining to the 274.5 assessment of real and personal property in the county as are 274.6 not inconsistent with the duties set forth in this section, and 274.7 as may be required by the board of county commissioners or by 274.8 the commissioner of revenue. 274.9(14)(15) To maintain a record, in conjunction with other 274.10 county offices, of all transfers of property to assist in 274.11 determining the proper classification of property, including but 274.12 not limited to, transferring homestead property and name changes 274.13 on homestead property. 274.14(15)(16) To determine if a homestead application is 274.15 required due to the transfer of homestead property or an owner's 274.16 name change on homestead property. 274.17 [EFFECTIVE DATE.] This section is effective July 1, 2001, 274.18 and thereafter. 274.19 Sec. 23. Minnesota Statutes 2000, section 273.072, 274.20 subdivision 1, is amended to read: 274.21 Subdivision 1. Any county and any city or town lying 274.22 wholly or partially within the county and constituting a 274.23 separate assessment district may, by agreement entered into 274.24 under section 471.59and approved by the commissioner of274.25revenue, provide for the assessment of property in the 274.26 municipality or town by the county assessor. Any two or more 274.27 cities or towns constituting separate assessment districts,274.28whether their assessors are elective or appointive,may enter 274.29 into an agreement under section 471.59 for the assessment of 274.30 property in the contracting units by the assessor of one of the 274.31 units or by an assessor who is jointly employed. 274.32 [EFFECTIVE DATE.] This section is effective the day 274.33 following final enactment. 274.34 Sec. 24. [273.0755] [TRAINING AND EDUCATION OF PROPERTY 274.35 TAX PERSONNEL.] 274.36 (a) Beginning with the four-year period starting on July 1, 275.1 2000, every person licensed by the state board of assessors at 275.2 the Accredited Minnesota Assessor level or higher, shall 275.3 successfully complete at least once in every four-year licensing 275.4 period a week-long Minnesota laws course sponsored by the 275.5 department of revenue. An assessor need not attend the course 275.6 if they successfully pass the test for the course. 275.7 (b) The commissioner of revenue may require that each 275.8 county, and each city for which the city assessor performs the 275.9 duties of county assessor, have (i) a person on the assessor's 275.10 staff who is certified by the department of revenue in sales 275.11 ratio calculations, (ii) an officer or employee who is certified 275.12 by the department of revenue in tax calculations, and (iii) an 275.13 officer or employee who is certified by the department of 275.14 revenue in the proper preparation of abstracts of assessment. 275.15 (c) The commissioner of revenue may require that each 275.16 county have an officer or employee who is certified by the 275.17 department of revenue in the proper preparation of abstracts of 275.18 tax lists. 275.19 [EFFECTIVE DATE.] This section is effective July 1, 2001, 275.20 and thereafter. 275.21 Sec. 25. Minnesota Statutes 2000, section 273.11, 275.22 subdivision 1a, is amended to read: 275.23 Subd. 1a. [LIMITED MARKET VALUE.] In the case of all 275.24 property classified as agricultural homestead or nonhomestead, 275.25 residential homestead or nonhomestead, or noncommercial seasonal 275.26 recreational residential, the assessor shall compare the value 275.27 withthatthe taxable portion of the value determined in the 275.28 preceding assessment.The amount of the increase entered in the275.29current assessment shall not exceed the greater of (1) 8.5275.30percent of the value in the preceding assessment, or (2) 15275.31percent of the difference between the current assessment and the275.32preceding assessment.275.33 For assessment year 2002, the amount of the increase shall 275.34 not exceed the greater of (1) 12 percent of the value in the 275.35 preceding assessment, or (2) 20 percent of the difference 275.36 between the current assessment and the preceding assessment. 276.1 For assessment year 2003, the amount of the increase shall 276.2 not exceed the greater of (1) 12 percent of the value in the 276.3 preceding assessment, or (2) 25 percent of the difference 276.4 between the current assessment and the preceding assessment. 276.5 For assessment year 2004, the amount of the increase shall 276.6 not exceed the greater of (1) 12 percent of the value in the 276.7 preceding assessment, or (2) 33 percent of the difference 276.8 between the current assessment and the preceding assessment. 276.9 For assessment year 2005, the amount of the increase shall 276.10 not exceed the greater of (1) 12 percent of the value in the 276.11 preceding assessment, or (2) 50 percent of the difference 276.12 between the current assessment and the preceding assessment. 276.13 This limitation shall not apply to increases in value due 276.14 to improvements. For purposes of this subdivision, the term 276.15 "assessment" means the value prior to any exclusion under 276.16 subdivision 16. 276.17 The provisions of this subdivision shall be in effectonly276.18 through assessment year20012005 as provided in this 276.19 subdivision. 276.20 For purposes of the assessment/sales ratio study conducted 276.21 under section 127A.48, and the computation of state aids paid 276.22 under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and 276.23 477A, market values and net tax capacities determined under this 276.24 subdivision and subdivision 16, shall be used. 276.25 [EFFECTIVE DATE.] This section is effective the day 276.26 following final enactment. 276.27 Sec. 26. Minnesota Statutes 2000, section 273.11, 276.28 subdivision 14, is amended to read: 276.29 Subd. 14. [VACANT LAND PLATTEDON OR AFTERBEFORE AUGUST 276.30 1,19912001.] (a) All land plattedon or afterbefore August 1, 276.3119912001, and not improved with a permanent structure, shall be 276.32 assessed as provided in this subdivision. The assessor shall 276.33 determine the market value of each individual lot based upon the 276.34 highest and best use of the property as unplatted land. In 276.35 establishing the market value of the property, the assessor 276.36 shall consider the sale price of the unplatted land or 277.1 comparable sales of unplatted land of similar use and similar 277.2 availability of public utilities. 277.3 (b) The market value determined in paragraph (a) shall be 277.4 increased as follows for each of the three assessment years 277.5 immediately following the final approval of the plat: one-third 277.6 of the difference between the property's unplatted market value 277.7 as determined under paragraph (a) and the market value based 277.8 upon the highest and best use of the land as platted property 277.9 shall be added in each of the three subsequent assessment years. 277.10 (c) Any increase in market value after the first assessment 277.11 year following the plat's final approval shall be added to the 277.12 property's market value in the next assessment year. 277.13 Notwithstanding paragraph (b), if construction begins before the 277.14 expiration of the three years in paragraph (b), that lot shall 277.15 be eligible for revaluation in the next assessment year. The 277.16 market value of a platted lot determined under this subdivision 277.17 shall not exceed the value of that lot based upon the highest 277.18 and best use of the property as platted land. 277.19 [EFFECTIVE DATE.] This section is effective for land 277.20 platted after July 31, 2001. 277.21 Sec. 27. Minnesota Statutes 2000, section 273.11, is 277.22 amended by adding a subdivision to read: 277.23 Subd. 14a. [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 277.24 2001; LOCATED IN METROPOLITAN COUNTIES.] (a) All land platted on 277.25 or after August 1, 2001, located in a metropolitan county, and 277.26 not improved with a permanent structure, shall be assessed as 277.27 provided in this subdivision. The assessor shall determine the 277.28 market value of each individual lot based upon the highest and 277.29 best use of the property as unplatted land. In establishing the 277.30 market value of the property, the assessor shall consider the 277.31 sale price of the unplatted land or comparable sales of 277.32 unplatted land of similar use and similar availability of public 277.33 utilities. 277.34 (b) The market value determined in paragraph (a) shall be 277.35 increased as follows for each of the three assessment years 277.36 immediately following the final approval of the plat: one-third 278.1 of the difference between the property's unplatted market value 278.2 as determined under paragraph (a) and the market value based 278.3 upon the highest and best use of the land as platted property 278.4 shall be added in each of the three subsequent assessment years. 278.5 (c) Any increase in market value after the first assessment 278.6 year following the plat's final approval shall be added to the 278.7 property's market value in the next assessment year. 278.8 Notwithstanding paragraph (b), if construction begins before the 278.9 expiration of the three years in paragraph (b), that lot shall 278.10 be eligible for revaluation in the next assessment year. The 278.11 market value of a platted lot determined under this subdivision 278.12 shall not exceed the value of that lot based upon the highest 278.13 and best use of the property as platted land. 278.14 (d) For purposes of this section, "metropolitan county" 278.15 means the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, 278.16 Scott, and Washington. 278.17 [EFFECTIVE DATE.] This section is effective for land 278.18 platted after July 31, 2001. 278.19 Sec. 28. Minnesota Statutes 2000, section 273.11, is 278.20 amended by adding a subdivision to read: 278.21 Subd. 14b. [VACANT LAND PLATTED ON OR AFTER AUGUST 1, 278.22 2001; LOCATED IN NONMETROPOLITAN COUNTIES.] (a) All land platted 278.23 on or after August 1, 2001, located in a nonmetropolitan county, 278.24 and not improved with a permanent structure, shall be assessed 278.25 as provided in this subdivision. The assessor shall determine 278.26 the market value of each individual lot based upon the highest 278.27 and best use of the property as unplatted land. In establishing 278.28 the market value of the property, the assessor shall consider 278.29 the sale price of the unplatted land or comparable sales of 278.30 unplatted land of similar use and similar availability of public 278.31 utilities. 278.32 (b) The market value determined in paragraph (a) shall be 278.33 increased as follows for each of the five assessment years 278.34 immediately following the final approval of the plat: one-fifth 278.35 of the difference between the property's unplatted market value 278.36 as determined under paragraph (a) and the market value based 279.1 upon the highest and best use of the land as platted property 279.2 shall be added in each of the five subsequent assessment years. 279.3 (c) Any increase in market value after the first assessment 279.4 year following the plat's final approval shall be added to the 279.5 property's market value in the next assessment year. 279.6 Notwithstanding paragraph (b), if construction begins before the 279.7 expiration of the five years in paragraph (b), that lot shall be 279.8 eligible for revaluation in the next assessment year. The 279.9 market value of a platted lot determined under this subdivision 279.10 shall not exceed the value of that lot based upon the highest 279.11 and best use of the property as platted land. 279.12 [EFFECTIVE DATE.] This section is effective for land 279.13 platted after July 31, 2001. 279.14 Sec. 29. Minnesota Statutes 2000, section 273.111, 279.15 subdivision 4, is amended to read: 279.16 Subd. 4. [DETERMINATION OF VALUE.] The value of any real 279.17 estate described in subdivision 3 shall upon timely application 279.18 by the owner, in the manner provided in subdivision 8, be 279.19 determined solely with reference to its appropriate agricultural 279.20 classification and value notwithstanding sections 272.03, 279.21 subdivision 8, and 273.11. In determining the value for ad 279.22 valorem tax purposes, the assessor shall use sales dataobtained279.23fromfor agricultural lands located outside the seven 279.24 metropolitan countiesbut within the region used for computing279.25the range of values under section 273.11, subdivision 10. The279.26sales shall havehaving similar soil types, number of degree 279.27 days, and other similar agricultural characteristicsas279.28contained in section 273.11, subdivision 10. Furthermore, the 279.29 assessor shall not consider any added values resulting from 279.30 nonagricultural factors. 279.31 [EFFECTIVE DATE.] This section is effective the day 279.32 following final enactment. 279.33 Sec. 30. [273.1115] [MINNESOTA ENVIRONMENTAL PRESERVATION 279.34 PROPERTY TAX LAW.] 279.35 Subdivision 1. [CITATION.] This section may be cited as 279.36 the "Minnesota Environmental Preservation Property Tax Law." 280.1 Subd. 2. [PUBLIC POLICY.] The present general system of ad 280.2 valorem property taxation in the state of Minnesota does not 280.3 provide an equitable basis for the taxation of certain real 280.4 property and may result in excessive taxes on some land. It is 280.5 therefore declared to be the public policy of this state that 280.6 the public interest would best be served by imposing property 280.7 tax burdens through appropriate taxing measures upon certain 280.8 properties within this state based upon their current use and 280.9 not on their potential alternative or future use. 280.10 Subd. 3. [REQUIREMENTS.] (a) Real estate consisting of at 280.11 least 20 acres classified under section 273.13, subdivision 22 280.12 or 23, is entitled to valuation and tax deferment under this 280.13 section only if it meets all of the following criteria: 280.14 (1) the property is either (i) the homestead of the owner, 280.15 the owner's spouse, or the owner or spouse's son or daughter, or 280.16 (ii) has been in possession of the owner, the owner's spouse, or 280.17 the owner or spouse's son or daughter for a period of at least 280.18 seven years prior to application for benefits under this 280.19 section; 280.20 (2) the land consists of forestland, woodland, meadowland, 280.21 slough, wasteland, or a combination thereof; 280.22 (3) revenues derived from the property in the year 280.23 immediately preceding application for enrollment in the program 280.24 must not exceed $5 per acre and must continue to be less than $5 280.25 per acre in each year that the property continues to be enrolled 280.26 in the program; and 280.27 (4) the property must border public waters and the land 280.28 bordering the water must be substantially undeveloped and must 280.29 not be platted. For purposes of this clause, "undeveloped" 280.30 means that the property contains no docks or landings on its 280.31 shoreline and its natural terrain and vegetation has not been 280.32 disturbed. For purposes of this clause, "public waters" has the 280.33 meaning given in section 103G.005, subdivision 15, paragraph 280.34 (a), clauses (1) to (5) and (7) to (9). 280.35 (b) If only a portion of the property meets the 280.36 qualifications of this subdivision then only that portion 281.1 qualifies for deferment under this section. 281.2 (c) Valuation of real estate under this section is limited 281.3 to parcels owned by noncorporate entities. 281.4 Subd. 4. [DETERMINATION OF VALUE.] Notwithstanding 281.5 sections 272.03, subdivision 8, and 273.11, subdivision 1, upon 281.6 timely application by the owner, in the manner provided in 281.7 subdivision 6, the value of any real estate described in 281.8 subdivision 3 must be determined with reference to its current 281.9 use, except that in determining its value, the assessor shall 281.10 ignore any value resulting from proximity to the public waters. 281.11 The market value determined under this section cannot be less 281.12 than the market value of the property for the assessment year 281.13 preceding the year of enrollment. 281.14 Subd. 5. [SEPARATE DETERMINATION OF MARKET VALUE AND TAX; 281.15 HIGHEST AND BEST USE.] The assessor shall annually make a 281.16 separate determination of the market value of the real estate at 281.17 its highest and best use. The tax based upon the appropriate 281.18 local tax rate and the highest and best use value must be 281.19 recorded on the property assessment records. 281.20 Subd. 6. [APPLICATION.] Application for deferment of taxes 281.21 and assessment under this section must be filed by May 1 of the 281.22 assessment year. Any application filed and granted continues in 281.23 effect for subsequent years until the property no longer 281.24 qualifies. The application must be filed with the assessor of 281.25 the taxing district in which the real property is located on 281.26 such form as may be prescribed by the commissioner of revenue. 281.27 The assessor may require proof by affidavit or otherwise that 281.28 the property initially qualifies under subdivision 3, and 281.29 continues to qualify each subsequent year. 281.30 Subd. 7. [ADDITIONAL TAXES.] When real property which has 281.31 been valued and assessed under this section no longer qualifies 281.32 under subdivision 3, the property is subject to additional 281.33 taxes, in the amount equal to the difference between the taxes 281.34 determined in accordance with subdivision 4, and the tax amount 281.35 determined under subdivision 5, provided, however, that if the 281.36 property was sold in an arms-length transaction the tax amount 282.1 determined under subdivision 5 must not be greater than it would 282.2 have been had the actual bona fide sale price of the property 282.3 been used in lieu of the market value determined under 282.4 subdivision 5. The additional taxes under this subdivision 282.5 apply to the entire property if any portion of the property is 282.6 sold, provided that the sold portion does not continue to 282.7 qualify under this section. 282.8 The additional taxes must be extended against the property 282.9 on the tax list for the current year, provided, however, that no 282.10 interest or penalties shall be levied on the additional taxes if 282.11 timely paid, and provided further, that the additional taxes 282.12 must only be levied with respect to the last three years that 282.13 the property has been valued and assessed under this section. 282.14 For purposes of this subdivision, "timely paid" means paid (i) 282.15 within 60 days after notification from the county that the 282.16 property no longer qualifies, or (ii) prior to the recording of 282.17 the conveyance of the property, whichever is earlier. 282.18 Subd. 8. [LIEN.] The tax imposed by this section is a lien 282.19 upon the property assessed to the same extent and for the same 282.20 duration as other taxes imposed upon property within this 282.21 state. The tax must be annually extended by the county auditor 282.22 and if and when payable must be collected and distributed in the 282.23 manner provided by law for the collection and distribution of 282.24 other property taxes. 282.25 Any additional taxes due under subdivision 7 must be paid 282.26 prior to the recording of the conveyance under section 272.12. 282.27 Subd. 9. [CONTINUATION OF TAX TREATMENT UPON 282.28 SALE.] Notwithstanding subdivision 7, when real property 282.29 qualifying under subdivision 3 is sold, no additional taxes 282.30 shall be extended against the property if the property continues 282.31 to qualify under subdivision 3. 282.32 Subd. 10. [APPLICATION.] This section does not apply to 282.33 property located in the counties of Anoka, Carver, Dakota, 282.34 Hennepin, Ramsey, Scott, and Washington. 282.35 [EFFECTIVE DATE.] This section is effective beginning with 282.36 the 2001 assessment year, for taxes payable in 2002 and 283.1 thereafter, except that for the 2001 assessment year, the 283.2 application date under subdivision 6 shall be September 1, 2001. 283.3 Sec. 31. Minnesota Statutes 2000, section 273.121, is 283.4 amended to read: 283.5 273.121 [VALUATION OF REAL PROPERTY, NOTICE.] 283.6 Any county assessor or city assessor having the powers of a 283.7 county assessor, valuing or classifying taxable real property 283.8 shall in each year notify those persons whose property is to be 283.9assessed or reclassifiedincluded on the assessment roll that 283.10 year if the person's address is known to the assessor, otherwise 283.11 the occupant of the property. The notice shall be in writing 283.12 and shall be sent by ordinary mail at least ten days before the 283.13 meeting of the local board of review or equalization under 283.14 section 274.01 or the review process established under section 283.15 274.13, subdivision 1c. It shall contain: (1) the market value 283.16 for the current and prior assessment, (2) the limited market 283.17 value under section 273.11, subdivision 1a for the current and 283.18 prior assessment, (3) the qualifying amount of any improvements 283.19 under section 273.11, subdivision 16 for the current assessment, 283.20 (4) the market value subject to taxation after subtracting the 283.21 amount of any qualifying improvements for the current 283.22 assessment, (5) thenewclassification of the property for the 283.23 current and prior assessment, (6) a note that if the property is 283.24 homestead and at least 35 years old, improvements made to the 283.25 property may be eligible for a valuation exclusion under section 283.26 273.11, subdivision 16, (7) the assessor's office address, and 283.27 (8) the dates, places, and times set for the meetings of the 283.28 local board of review or equalization, the review process 283.29 established under section 274.13, subdivision 1c, and the county 283.30 board of appeal and equalization.If the assessment roll is not283.31complete, the notice shall be sent by ordinary mail at least ten283.32days prior to the date on which the board of review has283.33adjournedThe commissioner of revenue shall specify the form of 283.34 the notice. The assessor shall attach to the assessment roll a 283.35 statement that the notices required by this section have been 283.36 mailed. Any assessor who is not provided sufficient funds from 284.1 the assessor's governing body to provide such notices, may make 284.2 application to the commissioner of revenue to finance such 284.3 notices. The commissioner of revenue shall conduct an 284.4 investigation and, if satisfied that the assessor does not have 284.5 the necessary funds, issue a certification to the commissioner 284.6 of finance of the amount necessary to provide such notices. The 284.7 commissioner of finance shall issue a warrant for such amount 284.8 and shall deduct such amount from any state payment to such 284.9 county or municipality. The necessary funds to make such 284.10 payments are hereby appropriated. Failure to receive the notice 284.11 shall in no way affect the validity of the assessment, the 284.12 resulting tax, the procedures of any board of review or 284.13 equalization, or the enforcement of delinquent taxes by 284.14 statutory means. 284.15 [EFFECTIVE DATE.] This section is effective for notices 284.16 required to be mailed in 2002 and thereafter. 284.17 Sec. 32. Minnesota Statutes 2000, section 273.124, 284.18 subdivision 8, is amended to read: 284.19 Subd. 8. [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM 284.20 CORPORATION, JOINT FAMILY FARM VENTURE, LIMITED LIABILITY 284.21 COMPANY, OR PARTNERSHIP.] (a) Each family farm corporation, each 284.22 joint family farm venture, each limited liability company, and 284.23 each partnership operating a family farm is entitled to class 1b 284.24 under section 273.13, subdivision 22, paragraph (b), or class 2a 284.25 assessment for one homestead occupied by a shareholder, member, 284.26 or partner thereof who is residing on the landexcept as284.27provided in subdivision 14, paragraph (g), and actively engaged 284.28 in farming of the land owned by the family farm corporation, 284.29 joint family farm venture, limited liability company, or 284.30 partnership operating a family farm. Homestead treatment 284.31 applies even if legal title to the property is in the name of 284.32 the family farm corporation, joint family farm venture, limited 284.33 liability company, or partnership operating the family farm, and 284.34 not in the name of the person residing on it. 284.35 "Family farm corporation," "family farm," and "farm284.36 partnership operating a family farm" have the meanings given in 285.1 section 500.24, except that the number of allowable 285.2 shareholders, members, or partners under this subdivision shall 285.3 not exceed 12. "Limited liability company" has the meaning 285.4 contained insectionsections 322B.03, subdivision 28, and 285.5 500.24, subdivision 2, paragraphs (l) and (m). "Joint family 285.6 farm venture" means a cooperative agreement among two or more 285.7 farm enterprises authorized to operate a family farmlandunder 285.8 section 500.24. 285.9 (b) In addition to property specified in paragraph (a), any 285.10 other residences owned by family farm corporations, joint family 285.11 farm ventures, limited liability companies, or 285.12 partnerships operating a family farm described in paragraph (a) 285.13 which are located on agricultural land and occupied as 285.14 homesteads by its shareholders, members, or partners who are 285.15 actively engaged in farming on behalf ofthethat corporation, 285.16 joint farm venture, limited liability company, or partnership 285.17 must also be assessed as class 2a property or as class 1b 285.18 property under section 273.13, subdivision 22, paragraph (b). 285.19 (c) Agricultural property that is owned by a member, 285.20 partner, or shareholder of a family farm corporation or 285.21 joint family farm venture,as defined in paragraph (a), or by a285.22member of alimited liability company, or by apartner in a285.23 partnership operating a family farm and leased to the family 285.24 farm corporationby the shareholder, or to a member of a, 285.25 limited liability company, orto thepartnershipby the partner285.26 operating a family farm, or joint farm venture, as defined in 285.27 paragraph (a), is eligible for classification as class 1b or 285.28 class 2a under section 273.13,subdivision 22, paragraph (b), or285.29class 2a under section 273.13, subdivision 23, paragraph (a),if 285.30 the owner is actually residing on the propertyexcept as285.31provided in subdivision 14, paragraph (g), and is actually 285.32 engaged in farming the land on behalf ofthethat corporation, 285.33 joint farm venture, limited liability company, or partnership. 285.34 This paragraph applies without regard to any legal possession 285.35 rights of the family farm corporation, joint family farm 285.36 venture, limited liability company, or partnership operating a 286.1 family farm under the lease. 286.2 [EFFECTIVE DATE.] This section is effective for the 2001 286.3 assessment, taxes payable in 2002, and thereafter. 286.4 Sec. 33. Minnesota Statutes 2000, section 273.124, 286.5 subdivision 13, is amended to read: 286.6 Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets 286.7 the homestead requirements under subdivision 1 must file a 286.8 homestead application with the county assessor to initially 286.9 obtain homestead classification. 286.10 (b) On or before January 2, 1993, each county assessor 286.11 shall mail a homestead application to the owner of each parcel 286.12 of property within the county which was classified as homestead 286.13 for the 1992 assessment year. The format and contents of a 286.14 uniform homestead application shall be prescribed by the 286.15 commissioner of revenue. The commissioner shall consult with 286.16 the chairs of the house and senate tax committees on the 286.17 contents of the homestead application form. The application 286.18 must clearly inform the taxpayer that this application must be 286.19 signed by all owners who occupy the property or by the 286.20 qualifying relative and returned to the county assessor in order 286.21 for the property to continue receiving homestead treatment. The 286.22 envelope containing the homestead application shall clearly 286.23 identify its contents and alert the taxpayer of its necessary 286.24 immediate response. 286.25 (c) Every property owner applying for homestead 286.26 classification must furnish to the county assessor the social 286.27 security number of each occupant who is listed as an owner of 286.28 the property on the deed of record, the name and address of each 286.29 owner who does not occupy the property, and the name and social 286.30 security number of each owner's spouse who occupies the 286.31 property. The application must be signed by each owner who 286.32 occupies the property and by each owner's spouse who occupies 286.33 the property, or, in the case of property that qualifies as a 286.34 homestead under subdivision 1, paragraph (c), by the qualifying 286.35 relative. 286.36 If a property owner occupies a homestead, the property 287.1 owner's spouse may not claim another property as a homestead 287.2 unless the property owner and the property owner's spouse file 287.3 with the assessor an affidavit or other proof required by the 287.4 assessor stating that the property qualifies as a homestead 287.5 under subdivision 1, paragraph (e). 287.6 Owners or spouses occupying residences owned by their 287.7 spouses and previously occupied with the other spouse, either of 287.8 whom fail to include the other spouse's name and social security 287.9 number on the homestead application or provide the affidavits or 287.10 other proof requested, will be deemed to have elected to receive 287.11 only partial homestead treatment of their residence. The 287.12 remainder of the residence will be classified as nonhomestead 287.13 residential. When an owner or spouse's name and social security 287.14 number appear on homestead applications for two separate 287.15 residences and only one application is signed, the owner or 287.16 spouse will be deemed to have elected to homestead the residence 287.17 for which the application was signed. 287.18 The social security numbers or affidavits or other proofs 287.19 of the property owners and spouses are private data on 287.20 individuals as defined by section 13.02, subdivision 12, but, 287.21 notwithstanding that section, the private data may be disclosed 287.22 to the commissioner of revenue, or, for purposes of proceeding 287.23 under the Revenue Recapture Act to recover personal property 287.24 taxes owing, to the county treasurer. 287.25 (d) If residential real estate is occupied and used for 287.26 purposes of a homestead by a relative of the owner and qualifies 287.27 for a homestead under subdivision 1, paragraph (c), in order for 287.28 the property to receive homestead status, a homestead 287.29 application must be filed with the assessor. The social 287.30 security number of each relative occupying the property and the 287.31 social security number of each owner who is related to an 287.32 occupant of the property shall be required on the homestead 287.33 application filed under this subdivision. If a different 287.34 relative of the owner subsequently occupies the property, the 287.35 owner of the property must notify the assessor within 30 days of 287.36 the change in occupancy. The social security number of a 288.1 relative occupying the property is private data on individuals 288.2 as defined by section 13.02, subdivision 12, but may be 288.3 disclosed to the commissioner of revenue. 288.4 (e) The homestead application shall also notify the 288.5 property owners that the application filed under this section 288.6 will not be mailed annually and that if the property is granted 288.7 homestead status for the 1993 assessment, or any assessment year 288.8 thereafter, that same property shall remain classified as 288.9 homestead until the property is sold or transferred to another 288.10 person, or the owners, the spouse of the owner, or the relatives 288.11 no longer use the property as their homestead. Upon the sale or 288.12 transfer of the homestead property, a certificate of value must 288.13 be timely filed with the county auditor as provided under 288.14 section 272.115. Failure to notify the assessor within 30 days 288.15 that the property has been sold, transferred, or that the owner, 288.16 the spouse of the owner, or the relative is no longer occupying 288.17 the property as a homestead, shall result in the penalty 288.18 provided under this subdivision and the property will lose its 288.19 current homestead status. 288.20 (f) If the homestead application is not returned within 30 288.21 days, the county will send a second application to the present 288.22 owners of record. The notice of proposed property taxes 288.23 prepared under section 275.065, subdivision 3, shall reflect the 288.24 property's classification. Beginning with assessment year 1993 288.25 for all properties, if a homestead application has not been 288.26 filed with the county by December 15, the assessor shall 288.27 classify the property as nonhomestead for the current assessment 288.28 year for taxes payable in the following year, provided that the 288.29 owner may be entitled to receive the homestead classification by 288.30 proper application under section 375.192. 288.31 (g) At the request of the commissioner, each county must 288.32 give the commissioner a list that includes the name and social 288.33 security number of each property owner and the property owner's 288.34 spouse occupying the property, or relative of a property owner, 288.35 applying for homestead classification under this subdivision. 288.36 The commissioner shall use the information provided on the lists 289.1 as appropriate under the law, including for the detection of 289.2 improper claims by owners, or relatives of owners, under chapter 289.3 290A. 289.4 (h) If the commissioner finds that a property owner may be 289.5 claiming a fraudulent homestead, the commissioner shall notify 289.6 the appropriate counties. Within 90 days of the notification, 289.7 the county assessor shall investigate to determine if the 289.8 homestead classification was properly claimed. If the property 289.9 owner does not qualify, the county assessor shall notify the 289.10 county auditor who will determine the amount of homestead 289.11 benefits that had been improperly allowed. For the purpose of 289.12 this section, "homestead benefits" means the tax reduction 289.13 resulting from the classification as a homestead under section 289.14 273.13, the taconite homestead credit under section 273.135, the 289.15 homestead and agricultural credits under section 273.1384, and 289.16 the supplemental homestead credit under section 273.1391. 289.17 The county auditor shall send a notice to the person who 289.18 owned the affected property at the time the homestead 289.19 application related to the improper homestead was filed, 289.20 demanding reimbursement of the homestead benefits plus a penalty 289.21 equal to 100 percent of the homestead benefits. The person 289.22 notified may appeal the county's determination by serving copies 289.23 of a petition for review with county officials as provided in 289.24 section 278.01 and filing proof of service as provided in 289.25 section 278.01 with the Minnesota tax court within 60 days of 289.26 the date of the notice from the county. Procedurally, the 289.27 appeal is governed by the provisions in chapter 271 which apply 289.28 to the appeal of a property tax assessment or levy, but without 289.29 requiring any prepayment of the amount in controversy. If the 289.30 amount of homestead benefits and penalty is not paid within 60 289.31 days, and if no appeal has been filed, the county auditor shall 289.32 certify the amount of taxes and penalty to the county 289.33 treasurer. The county treasurer will add interest to the unpaid 289.34 homestead benefits and penalty amounts at the rate provided in 289.35 section 279.03 for real property taxes becoming delinquent in 289.36 the calendar year during which the amount remains unpaid. 290.1 Interest may be assessed for the period beginning 60 days after 290.2 demand for payment was made. 290.3 If the person notified is the current owner of the 290.4 property, the treasurer may add the total amount of homestead 290.5 benefits, penalty, interest, and costs to the ad valorem taxes 290.6 otherwise payable on the property by including the amounts on 290.7 the property tax statements under section 276.04, subdivision 290.8 3. The amounts added under this paragraph to the ad valorem 290.9 taxes shall include interest accrued through December 31 of the 290.10 year preceding the taxes payable year for which the amounts are 290.11 first added. These amounts, when added to the property tax 290.12 statement, become subject to all the laws for the enforcement of 290.13 real or personal property taxes for that year, and for any 290.14 subsequent year. 290.15 If the person notified is not the current owner of the 290.16 property, the treasurer may collect the amounts due under the 290.17 Revenue Recapture Act in chapter 270A, or use any of the powers 290.18 granted in sections 277.20 and 277.21 without exclusion, to 290.19 enforce payment of the homestead benefits, penalty, interest, 290.20 and costs, as if those amounts were delinquent tax obligations 290.21 of the person who owned the property at the time the application 290.22 related to the improperly allowed homestead was filed. The 290.23 treasurer may relieve a prior owner of personal liability for 290.24 the homestead benefits, penalty, interest, and costs, and 290.25 instead extend those amounts on the tax lists against the 290.26 property as provided in this paragraph to the extent that the 290.27 current owner agrees in writing. On all demands, billings, 290.28 property tax statements, and related correspondence, the county 290.29 must list and state separately the amounts of homestead 290.30 benefits, penalty, interest and costs being demanded, billed or 290.31 assessed. 290.32 (i) Any amount of homestead benefits recovered by the 290.33 county from the property owner shall be distributed to the 290.34 county, city or town, and school district where the property is 290.35 located in the same proportion that each taxing district's levy 290.36 was to the total of the three taxing districts' levy for the 291.1 current year. Any amount recovered attributable to taconite 291.2 homestead credit shall be transmitted to the St. Louis county 291.3 auditor to be deposited in the taconite property tax relief 291.4 account. Any amount recovered that is attributable to 291.5 supplemental homestead credit is to be transmitted to the 291.6 commissioner of revenue for deposit in the general fund of the 291.7 state treasury. The total amount of penalty collected must be 291.8 deposited in the county general fund. 291.9 (j) If a property owner has applied for more than one 291.10 homestead and the county assessors cannot determine which 291.11 property should be classified as homestead, the county assessors 291.12 will refer the information to the commissioner. The 291.13 commissioner shall make the determination and notify the 291.14 counties within 60 days. 291.15 (k) In addition to lists of homestead properties, the 291.16 commissioner may ask the counties to furnish lists of all 291.17 properties and the record owners. The social security numbers 291.18 and federal identification numbers that are maintained by a 291.19 county or city assessor for property tax administration 291.20 purposes, and that may appear on the lists retain their 291.21 classification as private or nonpublic data; but may be viewed, 291.22 accessed, and used by the county auditor or treasurer of the 291.23 same county for the limited purpose of assisting the 291.24 commissioner in the preparation of microdata samples under 291.25 section 270.0681. 291.26 [EFFECTIVE DATE.] This section is effective for homestead 291.27 applications submitted on or after the day following final 291.28 enactment. 291.29 Sec. 34. Minnesota Statutes 2000, section 273.124, 291.30 subdivision 14, is amended to read: 291.31 Subd. 14. [AGRICULTURAL HOMESTEADS; SPECIAL PROVISIONS.] 291.32 (a) Real estate of less than ten acres that is the homestead of 291.33 its owner must be classified as class 2a under section 273.13, 291.34 subdivision 23, paragraph (a), if: 291.35 (1) the parcel on which the house is located is contiguous 291.36 on at least two sides to (i) agricultural land, (ii) land owned 292.1 or administered by the United States Fish and Wildlife Service, 292.2 or (iii) land administered by the department of natural 292.3 resources on which in lieu taxes are paid under sections 477A.11 292.4 to 477A.14; 292.5 (2) its owner also owns a noncontiguous parcel of 292.6 agricultural land that is at least 20 acres; 292.7 (3) the noncontiguous land is located not farther than four 292.8 townships or cities, or a combination of townships or cities 292.9 from the homestead; and 292.10 (4) the agricultural use value of the noncontiguous land 292.11 and farm buildings is equal to at least 50 percent of the market 292.12 value of the house, garage, and one acre of land. 292.13 Homesteads initially classified as class 2a under the 292.14 provisions of this paragraph shall remain classified as class 292.15 2a, irrespective of subsequent changes in the use of adjoining 292.16 properties, as long as the homestead remains under the same 292.17 ownership, the owner owns a noncontiguous parcel of agricultural 292.18 land that is at least 20 acres, and the agricultural use value 292.19 qualifies under clause (4). Homestead classification under this 292.20 paragraph is limited to property that qualified under this 292.21 paragraph for the 1998 assessment. 292.22 (b)(i) Agricultural property consisting of at least 40 292.23 acres shall be classified as the owner's homestead, to the same 292.24 extent as other agricultural homestead property, if all of the 292.25 following criteria are met: 292.26 (1) the owner, the owner's spouse, or theowner'sson or 292.27 daughter of the owner or owner's spouse, is actively farming the 292.28 agricultural property, either on the person's own behalf as an 292.29 individual or on behalf of a partnership operating a family 292.30 farm, family farm corporation, joint family farm venture, or 292.31 limited liability company of which the person is a partner, 292.32 shareholder, or member; 292.33 (2) both the owner of the agricultural propertyis a292.34Minnesota resident,andiftheowner's son or daughterperson 292.35 who is actively farming the agricultural property under clause 292.36 (1),that person must also be aare Minnesota 293.1residentresidents; 293.2 (3) neither the owner nor the spouse of the owner claims 293.3 another agricultural homestead in Minnesota; and 293.4 (4) neither the ownerdoes not live, nor the person 293.5 actively farming the property, lives farther than four townships 293.6 or cities, or a combination of four townships or cities, from 293.7 the agricultural property, and if the owner's son or daughter is293.8actively farming the agricultural property under clause (1),293.9that person must also live within the four townships or cities,293.10or combination of four townships or cities from the agricultural293.11property. 293.12 The relationship under this paragraph may be either by 293.13 blood or marriage. 293.14 (ii) Real property held by a trustee under a trust is 293.15 eligible for agricultural homestead classification under this 293.16 paragraph if the qualifications in clause (i) are met, except 293.17 that "owner" means the grantor of the trust. 293.18(ii)(iii) Property containing the residence of an owner 293.19 who owns qualified property under clause (i) shall be classified 293.20 as part of the owner's agricultural homestead, if that property 293.21 is also used for noncommercial storage or drying of agricultural 293.22 crops. 293.23 (c)Except as provided in paragraph (e),Noncontiguous land 293.24 shall be included as part of a homestead under section 273.13, 293.25 subdivision 23, paragraph (a), only if the homestead is 293.26 classified as class 2a and the detached land is located in the 293.27 same township or city, or not farther than four townships or 293.28 cities or combination thereof from the homestead. Any taxpayer 293.29 of these noncontiguous lands must notify the county assessor 293.30 that the noncontiguous land is part of the taxpayer's homestead, 293.31 and, if the homestead is located in another county, the taxpayer 293.32 must also notify the assessor of the other county. 293.33 (d) Agricultural land used for purposes of a homestead and 293.34 actively farmed by a person holding a vested remainder interest 293.35 in it must be classified as a homestead under section 273.13, 293.36 subdivision 23, paragraph (a). If agricultural land is 294.1 classified class 2a, any other dwellings on the land used for 294.2 purposes of a homestead by persons holding vested remainder 294.3 interests who are actively engaged in farming the property, and 294.4 up to one acre of the land surrounding each homestead and 294.5 reasonably necessary for the use of the dwelling as a home, must 294.6 also be assessed class 2a. 294.7 (e) Agricultural land and buildings that were class 2a 294.8 homestead property under section 273.13, subdivision 23, 294.9 paragraph (a), for the 1997 assessment shall remain classified 294.10 as agricultural homesteads for subsequent assessments if: 294.11 (1) the property owner abandoned the homestead dwelling 294.12 located on the agricultural homestead as a result of the April 294.13 1997 floods; 294.14 (2) the property is located in the county of Polk, Clay, 294.15 Kittson, Marshall, Norman, or Wilkin; 294.16 (3) the agricultural land and buildings remain under the 294.17 same ownership for the current assessment year as existed for 294.18 the 1997 assessment year and continue to be used for 294.19 agricultural purposes; 294.20 (4) the dwelling occupied by the owner is located in 294.21 Minnesota and is within 30 miles of one of the parcels of 294.22 agricultural land that is owned by the taxpayer; and 294.23 (5) the owner notifies the county assessor that the 294.24 relocation was due to the 1997 floods, and the owner furnishes 294.25 the assessor any information deemed necessary by the assessor in 294.26 verifying the change in dwelling. Further notifications to the 294.27 assessor are not required if the property continues to meet all 294.28 the requirements in this paragraph and any dwellings on the 294.29 agricultural land remain uninhabited. 294.30 (f) Agricultural land and buildings that were class 2a 294.31 homestead property under section 273.13, subdivision 23, 294.32 paragraph (a), for the 1998 assessment shall remain classified 294.33 agricultural homesteads for subsequent assessments if: 294.34 (1) the property owner abandoned the homestead dwelling 294.35 located on the agricultural homestead as a result of damage 294.36 caused by a March 29, 1998, tornado; 295.1 (2) the property is located in the county of Blue Earth, 295.2 Brown, Cottonwood, LeSueur, Nicollet, Nobles, or Rice; 295.3 (3) the agricultural land and buildings remain under the 295.4 same ownership for the current assessment year as existed for 295.5 the 1998 assessment year; 295.6 (4) the dwelling occupied by the owner is located in this 295.7 state and is within 50 miles of one of the parcels of 295.8 agricultural land that is owned by the taxpayer; and 295.9 (5) the owner notifies the county assessor that the 295.10 relocation was due to a March 29, 1998, tornado, and the owner 295.11 furnishes the assessor any information deemed necessary by the 295.12 assessor in verifying the change in homestead dwelling. For 295.13 taxes payable in 1999, the owner must notify the assessor by 295.14 December 1, 1998. Further notifications to the assessor are not 295.15 required if the property continues to meet all the requirements 295.16 in this paragraph and any dwellings on the agricultural land 295.17 remain uninhabited. 295.18 (g) Agricultural property consisting of at least 40 acres 295.19 of a family farm corporation, joint family farm venture, limited 295.20 liability company, or partnership operating a family farm as 295.21 described under subdivision 8 shall be classified homestead, to 295.22 the same extent as other agricultural homestead property, if all 295.23 of the following criteria are met: 295.24 (1)thea shareholder, member, or partner of that entity is 295.25 actively farming the agricultural property; 295.26 (2)thethat shareholder, member, or partnerofwho is 295.27 actively farming the agricultural property is a Minnesota 295.28 resident; 295.29 (3) neitherthethat shareholder, member, or partner, nor 295.30 the spouse ofthethat shareholder, member, or partner claims 295.31 another agricultural homestead in Minnesota; and 295.32 (4)thethat shareholder, member, or partner does not live 295.33 farther than four townships or cities, or a combination of four 295.34 townships or cities, from the agricultural property. 295.35 Homestead treatment applies under this paragraph for 295.36 property leased to a family farm corporation, joint farm 296.1 venture, limited liability company, or partnership operating a 296.2 family farm if legal title to the property is in the name of an 296.3 individual who is a member, shareholder, or partner in the 296.4 entity. 296.5 [EFFECTIVE DATE.] This section is effective for the 2001 296.6 assessment, taxes payable in 2002, and thereafter. 296.7 Sec. 35. Minnesota Statutes 2000, section 274.01, 296.8 subdivision 1, is amended to read: 296.9 Subdivision 1. [ORDINARY BOARD; MEETINGS, DEADLINES, 296.10 GRIEVANCES.] (a) The town board of a town, or the council or 296.11 other governing body of a city, is the board ofreviewappeal 296.12 and equalization except (1) in cities whose charters provide for 296.13 a board of equalization or (2) in any city or town that has 296.14 transferred its local board of review power and duties to the 296.15 county board as provided in subdivision 3. The county assessor 296.16 shall fix a day and time when the board or the board of 296.17 equalization shall meet in the assessment districts of the 296.18 county. Notwithstanding any law or city charter to the 296.19 contrary, a city board of equalization shall be referred to as a 296.20 board of appeal and equalization. On or before February 15 of 296.21 each year the assessor shall give written notice of the time to 296.22 the city or town clerk. Notwithstanding the provisions of any 296.23 charter to the contrary, the meetings must be held between April 296.24 1 and May 31 each year. The clerk shall give published and 296.25 posted notice of the meeting at least ten days before the date 296.26 of the meeting. 296.27If in any county, at least 25 percent of the total net tax296.28capacity of a city or town is noncommercial seasonal residential296.29recreational property classified under section 273.13,296.30subdivision 25, the county must hold two countywide296.31informational meetings on Saturdays. The meetings will allow296.32noncommercial seasonal residential recreational taxpayers to296.33discuss their property valuation with the appropriate assessment296.34staff. These Saturday informational meetings must be scheduled296.35to allow the owner of the noncommercial seasonal residential296.36recreational property the opportunity to attend one of the297.1meetings prior to the scheduled board of review for their city297.2or town. The Saturday meeting dates must be contained on the297.3notice of valuation of real property under section 273.121.297.4 The board shall meet at the office of the clerk to review 297.5 the assessment and classification of property in the town or 297.6 city. No changes in valuation or classification which are 297.7 intended to correct errors in judgment by the county assessor 297.8 may be made by the county assessor after the boardof reviewhas 297.9 adjourned in those cities or towns that hold a local board of 297.10 review; however, corrections of errors that are merely clerical 297.11 in nature or changes that extend homestead treatment to property 297.12 are permitted after adjournment until the tax extension date for 297.13 that assessment year. The changes must be fully documented and 297.14 maintained in the assessor's office and must be available for 297.15 review by any person. A copy of the changes made during this 297.16 period in those cities or towns that hold a local board of 297.17 review must be sent to the county board no later than December 297.18 31 of the assessment year. 297.19 (b) The board shall determine whether the taxable property 297.20 in the town or city has been properly placed on the list and 297.21 properly valued by the assessor. If real or personal property 297.22 has been omitted, the board shall place it on the list with its 297.23 market value, and correct the assessment so that each tract or 297.24 lot of real property, and each article, parcel, or class of 297.25 personal property, is entered on the assessment list at its 297.26 market value. No assessment of the property of any person may 297.27 be raised unless the person has been duly notified of the intent 297.28 of the board to do so. On application of any person feeling 297.29 aggrieved, the board shall review the assessment or 297.30 classification, or both, and correct it as appears just. The 297.31 board may not make an individual market value adjustment or 297.32 classification change that would benefit the property in cases 297.33 where the owner or other person having control over the property 297.34 will not permit the assessor to inspect the property and the 297.35 interior of any buildings or structures. 297.36 (c) A local boardof reviewmay reduce assessments upon 298.1 petition of the taxpayer but the total reductions must not 298.2 reduce the aggregate assessment made by the county assessor by 298.3 more than one percent. If the total reductions would lower the 298.4 aggregate assessments made by the county assessor by more than 298.5 one percent, none of the adjustments may be made. The assessor 298.6 shall correct any clerical errors or double assessments 298.7 discovered by the boardof reviewwithout regard to the one 298.8 percent limitation. 298.9 (d) A majority of the members may act at the meeting, and 298.10 adjourn from day to day until they finish hearing the cases 298.11 presented. The assessor shall attend, with the assessment books 298.12 and papers, and take part in the proceedings, but must not 298.13 vote. The county assessor, or an assistant delegated by the 298.14 county assessor shall attend the meetings. The board shall list 298.15 separately, on a form appended to the assessment book, all 298.16 omitted property added to the list by the board and all items of 298.17 property increased or decreased, with the market value of each 298.18 item of property, added or changed by the board, placed opposite 298.19 the item. The county assessor shall enter all changes made by 298.20 the board in the assessment book. 298.21 (e) Except as provided in subdivision 3, if a person fails 298.22 to appear in person, by counsel, or by written communication 298.23 before the board after being duly notified of the board's intent 298.24 to raise the assessment of the property, or if a person feeling 298.25 aggrieved by an assessment or classification fails to apply for 298.26 a review of the assessment or classification, the person may not 298.27 appear before the county board of appeal and equalization for a 298.28 review of the assessment or classification. This paragraph does 298.29 not apply if an assessment was made after the local board 298.30 meeting, as provided in section 273.01, or if the person can 298.31 establish not having received notice of market value at least 298.32 five days before the local boardof reviewmeeting. 298.33 (f) The local boardof review or the board of equalization298.34 must complete its work and adjourn within 20 days from the time 298.35 of convening stated in the notice of the clerk, unless a longer 298.36 period is approved by the commissioner of revenue. No action 299.1 taken after that date is valid. All complaints about an 299.2 assessment or classification made after the meeting of the board 299.3 must be heard and determined by the county board of 299.4 equalization. A nonresident may, at any time, before the 299.5 meeting of the boardof reviewfile written objections to an 299.6 assessment or classification with the county assessor. The 299.7 objections must be presented to the boardof reviewat its 299.8 meeting by the county assessor for its consideration. 299.9 [EFFECTIVE DATE.] This section is effective January 1, 299.10 2002, and thereafter. 299.11 Sec. 36. Minnesota Statutes 2000, section 274.13, 299.12 subdivision 1, is amended to read: 299.13 Subdivision 1. [MEMBERS; MEETINGS; RULES FOR EQUALIZING 299.14 ASSESSMENTS.] The county commissioners, or a majority of them, 299.15 with the county auditor, or, if the auditor cannot be present, 299.16 the deputy county auditor, or, if there is no deputy, the court 299.17 administrator of the district court, shall form a board for the 299.18 equalization of the assessment of the property of the county, 299.19 including the property of all cities whose charters provide for 299.20 a board of equalization. This board shall be referred to as the 299.21 county board of appeal and equalization. The board shall meet 299.22 annually, on the date specified in section 274.14, at the office 299.23 of the auditor. Each member shall take an oath to fairly and 299.24 impartially perform duties as a member. The board shall examine 299.25 and compare the returns of the assessment of property of the 299.26 towns or districts, and equalize them so that each tract or lot 299.27 of real property and each article or class of personal property 299.28 is entered on the assessment list at its market value, subject 299.29 to the following rules: 299.30 (1) The board shall raise the valuation of each tract or 299.31 lot of real property which in its opinion is returned below its 299.32 market value to the sum believed to be its market value. The 299.33 board must first give notice of intention to raise the valuation 299.34 to the person in whose name it is assessed, if the person is a 299.35 resident of the county. The notice must fix a time and place 299.36 for a hearing. 300.1 (2) The board shall reduce the valuation of each tract or 300.2 lot which in its opinion is returned above its market value to 300.3 the sum believed to be its market value. 300.4 (3) The board shall raise the valuation of each class of 300.5 personal property which in its opinion is returned below its 300.6 market value to the sum believed to be its market value. It 300.7 shall raise the aggregate value of the personal property of 300.8 individuals, firms, or corporations, when it believes that the 300.9 aggregate valuation, as returned, is less than the market value 300.10 of the taxable personal property possessed by the individuals, 300.11 firms, or corporations, to the sum it believes to be the market 300.12 value. The board must first give notice to the persons of 300.13 intention to do so. The notice must set a time and place for a 300.14 hearing. 300.15 (4) The board shall reduce the valuation of each class of 300.16 personal property that is returned above its market value to the 300.17 sum it believes to be its market value. Upon complaint of a 300.18 party aggrieved, the board shall reduce the aggregate valuation 300.19 of the individual's personal property, or of any class of 300.20 personal property for which the individual is assessed, which in 300.21 its opinion has been assessed at too large a sum, to the sum it 300.22 believes was the market value of the individual's personal 300.23 property of that class. 300.24 (5) The board must not reduce the aggregate value of all 300.25 the property of its county, as submitted to the county board of 300.26 equalization, with the additions made by the auditor under this 300.27 chapter, by more than one percent of its whole valuation. The 300.28 board may raise the aggregate valuation of real property, and of 300.29 each class of personal property, of the county, or of any town 300.30 or district of the county, when it believes it is below the 300.31 market value of the property, or class of property, to the 300.32 aggregate amount it believes to be its market value. 300.33 (6) The board shall change the classification of any 300.34 property which in its opinion is not properly classified. 300.35 [EFFECTIVE DATE.] This section is effective January 1, 300.36 2002, and thereafter. 301.1 Sec. 37. Minnesota Statutes 2000, section 275.065, 301.2 subdivision 1, is amended to read: 301.3 Subdivision 1. [PROPOSED LEVY.] (a) Notwithstanding any 301.4 law or charter to the contrary, on or before September 15, each 301.5 taxing authority, other than a school district, and including 301.6 the state, shall adopt a proposed budget and shall certify to 301.7 the county auditor the proposed or, in the case of a town or the 301.8 state, the final property tax levy for taxes payable in the 301.9 following year. 301.10 (b) On or before September 30, each school district shall 301.11 certify to the county auditor the proposed property tax levy for 301.12 taxes payable in the following year. The school district shall 301.13 certify the proposed levy as: 301.14 (1)the state determined school levy amount as prescribed301.15under section 126C.13, subdivision 2;301.16(2)voter approved referendum and debt levies; and 301.17(3)(2) the sum of the remaining school levies, or the 301.18 maximum levy limitation certified by the commissioner of 301.19 children, families, and learning according to section 126C.48, 301.20 subdivision 1, less the amounts levied underclauses301.21 clause (1)and (2). 301.22 (c) If the board of estimate and taxation or any similar 301.23 board that establishes maximum tax levies for taxing 301.24 jurisdictions within a first class city certifies the maximum 301.25 property tax levies for funds under its jurisdiction by charter 301.26 to the county auditor by September 15, the city shall be deemed 301.27 to have certified its levies for those taxing jurisdictions. 301.28 (d) For purposes of this section, "taxing authority" 301.29 includes all home rule and statutory cities, towns, counties, 301.30 school districts, and special taxing districts as defined in 301.31 section 275.066. Intermediate school districts that levy a tax 301.32 under chapter 124 or 136D, joint powers boards established under 301.33 sections 123A.44 to 123A.446, and common school districts No. 301.34 323, Franconia, and No. 815, Prinsburg, are also special taxing 301.35 districts for purposes of this section. 301.36 [EFFECTIVE DATE.] This section is effective for taxes 302.1 payable in 2002 and subsequent years. 302.2 Sec. 38. Minnesota Statutes 2000, section 275.065, 302.3 subdivision 3, is amended to read: 302.4 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 302.5 county auditor shall prepare and the county treasurer shall 302.6 deliver after November 10 and on or before November 24 each 302.7 year, by first class mail to each taxpayer at the address listed 302.8 on the county's current year's assessment roll, a notice of 302.9 proposed property taxes. 302.10 (b) The commissioner of revenue shall prescribe the form of 302.11 the notice. 302.12 (c) The notice must inform taxpayers that it contains the 302.13 amount of property taxes each taxing authority proposes to 302.14 collect for taxes payable the following year. In the case of a 302.15 town, or in the case of the statedetermined portion of the302.16school districtgeneral levy, the final tax amount will be its 302.17 proposed tax. In the case of taxing authorities required to 302.18 hold a public meeting under subdivision 6, the notice must 302.19 clearly state that each taxing authority, including regional 302.20 library districts established under section 134.201, and 302.21 including the metropolitan taxing districts as defined in 302.22 paragraph (i), but excluding all other special taxing districts 302.23 and towns, will hold a public meeting to receive public 302.24 testimony on the proposed budget and proposed or final property 302.25 tax levy, or, in case of a school district, on the current 302.26 budget and proposed property tax levy. It must clearly state 302.27 the time and place of each taxing authority's meeting, a 302.28 telephone number for the taxing authority that taxpayers may 302.29 call if they have questions related to the notice, and an 302.30 address where comments will be received by mail. 302.31 (d) The notice must state for each parcel: 302.32 (1) the market value of the property as determined under 302.33 section 273.11, and used for computing property taxes payable in 302.34 the following year and for taxes payable in the current year as 302.35 each appears in the records of the county assessor on November 1 302.36 of the current year; and, in the case of residential property, 303.1 whether the property is classified as homestead or 303.2 nonhomestead. The notice must clearly inform taxpayers of the 303.3 years to which the market values apply and that the values are 303.4 final values; 303.5 (2) the items listed below, shown separately by county, 303.6 city or town, statedetermined schoolgeneral taxnet of the303.7education homestead credit under section 273.1382, voter 303.8 approved school levy, other local school levy, and the sum of 303.9 the special taxing districts, and as a total of all taxing 303.10 authorities in all cases net of the credit amounts determined 303.11 under section 273.1384: 303.12 (i) the actual tax for taxes payable in the current year; 303.13 (ii) the tax change due to spending factors, defined as the 303.14 proposed tax minus the constant spending tax amount; 303.15 (iii) the tax change due to other factors, defined as the 303.16 constant spending tax amount minus the actual current year tax; 303.17 and 303.18 (iv) the proposed tax amount. 303.19 In the case of a town or the statedetermined school303.20 general tax, the final tax shall also be its proposed tax unless 303.21 the town changes its levy at a special town meeting under 303.22 section 365.52. If a school district has certified under 303.23 section 126C.17, subdivision 9, that a referendum will be held 303.24 in the school district at the November general election, the 303.25 county auditor must note next to the school district's proposed 303.26 amount that a referendum is pending and that, if approved by the 303.27 voters, the tax amount may be higher than shown on the notice. 303.28 In the case of the city of Minneapolis, the levy for the 303.29 Minneapolis library board and the levy for Minneapolis park and 303.30 recreation shall be listed separately from the remaining amount 303.31 of the city's levy. In the case of a parcel where tax increment 303.32 or the fiscal disparities areawide tax under chapter 276A or 303.33 473F applies, the proposed tax levy on the captured value or the 303.34 proposed tax levy on the tax capacity subject to the areawide 303.35 tax must each be stated separately and not included in the sum 303.36 of the special taxing districts; and 304.1 (3) the increase or decrease between the total taxes 304.2 payable in the current year and the total proposed taxes, 304.3 expressed as a percentage. 304.4 For purposes of this section, the amount of the tax on 304.5 homesteads qualifying under the senior citizens' property tax 304.6 deferral program under chapter 290B is the total amount of 304.7 property tax before subtraction of the deferred property tax 304.8 amount. 304.9 (e) The notice must clearly state that the proposed or 304.10 final taxes do not include the following: 304.11 (1) special assessments; 304.12 (2) levies approved by the voters after the date the 304.13 proposed taxes are certified, including bond referenda, school 304.14 district levy referenda, and levy limit increase referenda; 304.15 (3) amounts necessary to pay cleanup or other costs due to 304.16 a natural disaster occurring after the date the proposed taxes 304.17 are certified; 304.18 (4) amounts necessary to pay tort judgments against the 304.19 taxing authority that become final after the date the proposed 304.20 taxes are certified; and 304.21 (5) the contamination tax imposed on properties which 304.22 received market value reductions for contamination. 304.23 (f) Except as provided in subdivision 7, failure of the 304.24 county auditor to prepare or the county treasurer to deliver the 304.25 notice as required in this section does not invalidate the 304.26 proposed or final tax levy or the taxes payable pursuant to the 304.27 tax levy. 304.28 (g) If the notice the taxpayer receives under this section 304.29 lists the property as nonhomestead, and satisfactory 304.30 documentation is provided to the county assessor by the 304.31 applicable deadline, and the property qualifies for the 304.32 homestead classification in that assessment year, the assessor 304.33 shall reclassify the property to homestead for taxes payable in 304.34 the following year. 304.35 (h) In the case of class 4 residential property used as a 304.36 residence for lease or rental periods of 30 days or more, the 305.1 taxpayer must either: 305.2 (1) mail or deliver a copy of the notice of proposed 305.3 property taxes to each tenant, renter, or lessee; or 305.4 (2) post a copy of the notice in a conspicuous place on the 305.5 premises of the property. 305.6 The notice must be mailed or posted by the taxpayer by 305.7 November 27 or within three days of receipt of the notice, 305.8 whichever is later. A taxpayer may notify the county treasurer 305.9 of the address of the taxpayer, agent, caretaker, or manager of 305.10 the premises to which the notice must be mailed in order to 305.11 fulfill the requirements of this paragraph. 305.12 (i) For purposes of this subdivision, subdivisions 5a and 305.13 6, "metropolitan special taxing districts" means the following 305.14 taxing districts in the seven-county metropolitan area that levy 305.15 a property tax for any of the specified purposes listed below: 305.16 (1) metropolitan council under section 473.132, 473.167, 305.17 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 305.18 (2) metropolitan airports commission under section 473.667, 305.19 473.671, or 473.672; and 305.20 (3) metropolitan mosquito control commission under section 305.21 473.711. 305.22 For purposes of this section, any levies made by the 305.23 regional rail authorities in the county of Anoka, Carver, 305.24 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 305.25 398A shall be included with the appropriate county's levy and 305.26 shall be discussed at that county's public hearing. 305.27 (j) If a statutory or home rule charter city or a town has 305.28 exercised the local levy option provided by section 473.388, 305.29 subdivision 7, it may include in the notice of its proposed 305.30 taxes the amount of its proposed taxes attributable to its 305.31 exercise of the option. In the first year of the city or town's 305.32 exercise of this option, the statement shall include an estimate 305.33 of the reduction of the metropolitan council's tax on the parcel 305.34 due to exercise of that option. The metropolitan council's levy 305.35 shall be adjusted accordingly. 305.36 [EFFECTIVE DATE.] This section is effective for notices of 306.1 proposed property taxes required in 2001 for taxes payable in 306.2 2002, and thereafter. 306.3 Sec. 39. Minnesota Statutes 2000, section 275.065, 306.4 subdivision 5a, is amended to read: 306.5 Subd. 5a. [PUBLIC ADVERTISEMENT.] (a) A city that has a 306.6 population of more than 2,500, county, a metropolitan special 306.7 taxing district as defined in subdivision 3, paragraph (i), a 306.8 regional library district established under section 134.201, or 306.9 school district shall advertise in a newspaper a notice of its 306.10 intent to adopt a budget and property tax levy or, in the case 306.11 of a school district, to review its current budget and proposed 306.12 property taxes payable in the following year, at a public 306.13 hearing. The notice must be published not less than two 306.14 business days nor more than six business days before the hearing. 306.15 The advertisement must be at least one-eighth page in size 306.16 of a standard-size or a tabloid-size newspaper. The 306.17 advertisement must not be placed in the part of the newspaper 306.18 where legal notices and classified advertisements appear. The 306.19 advertisement must be published in an official newspaper of 306.20 general circulation in the taxing authority. The newspaper 306.21 selected must be one of general interest and readership in the 306.22 community, and not one of limited subject matter. The 306.23 advertisement must appear in a newspaper that is published at 306.24 least once per week. 306.25 For purposes of this section, the metropolitan special 306.26 taxing district's advertisement must only be published in the 306.27 Minneapolis Star and Tribune and the Saint Paul Pioneer Press. 306.28 In addition to other requirements, a county, a city having 306.29 a population of more than 2,500, and a school district must show 306.30 in the public advertisement required under this section, the 306.31 lobbying expenditures of the county, city, and school district 306.32 as most recently reported under section 6.76. 306.33 In addition to other requirements, a county and a city 306.34 having a population of more than 2,500 must show in the public 306.35 advertisement required under this subdivision the current tax 306.36 rate, the proposed tax rate if no property tax levy increase is 307.1 adopted, and the proposed rate if the proposed levy is adopted. 307.2 In the case of cities for taxes levied in 2001, payable in 2002, 307.3 "property tax levy increase" means any levy in excess of the 307.4 city's payable 2001 levy and the city's 2001 homestead and 307.5 agricultural credit aid. In the case of cities for taxes levied 307.6 in 2002, payable in 2003, "property tax increase" means any levy 307.7 in excess of the greater of (1) the city's payable 2002 levy, or 307.8 (2) the sum of the city's payable 2001 levy and the city's 2001 307.9 homestead and agricultural credit aid. 307.10 (b) The advertisement for school districts, metropolitan 307.11 special taxing districts, and regional library districts must be 307.12 in the following form, except that the notice for a school 307.13 district may include references to the current budget in regard 307.14 to proposed property taxes. 307.15 "NOTICE OF 307.16 PROPOSED PROPERTY TAXES 307.17 (School District/Metropolitan 307.18 Special Taxing District/Regional 307.19 Library District) of ......... 307.20 The governing body of ........ will soon hold budget hearings 307.21 and vote on the property taxes for (metropolitan special taxing 307.22 district/regional library district services that will be 307.23 provided in (year)/school district services that will be 307.24 provided in (year) and (year)). 307.25 NOTICE OF PUBLIC HEARING: 307.26 All concerned citizens are invited to attend a public hearing 307.27 and express their opinions on the proposed (school 307.28 district/metropolitan special taxing district/regional library 307.29 district) budget and property taxes, or in the case of a school 307.30 district, its current budget and proposed property taxes, 307.31 payable in the following year. The hearing will be held on 307.32 (Month/Day/Year) at (Time) at (Location, Address)." 307.33 (c) The advertisement for cities and counties must be in 307.34 the following form. 307.35 "NOTICE OF PROPOSED 307.36 TOTAL BUDGET AND PROPERTY TAXES 308.1 The (city/county) governing body or board of commissioners will 308.2 hold a public hearing to discuss the budget and to vote on the 308.3 amount of property taxes to collect for services the 308.4 (city/county) will provide in (year). 308.5 308.6 SPENDING: The total budget amounts below compare 308.7 (city's/county's) (year) total actual budget with the amount the 308.8 (city/county) proposes to spend in (year). 308.9 308.10 (Year) Total Proposed (Year) Change from 308.11 Actual Budget Budget (Year)-(Year) 308.12 308.13 $....... $....... ...% 308.14 308.15 SPENDING: Lobbying expenditures (included in the budget amounts 308.16 listed above). 308.17 308.18 (Year) Proposed (Year) Change from 308.19 Amount Amount (Year)-(Year) 308.20 308.21 $....... $....... ...% 308.22 308.23 TAXES: The property tax amounts below compare that portion of 308.24 the current budget levied in property taxes in (city/county) for 308.25 (year) with the property taxes the (city/county) proposes to 308.26 collect in (year). 308.27 308.28 (Year) Property Proposed (Year) Change from 308.29 Taxes Property Taxes (Year)-(Year) 308.30 308.31 $....... $....... ...% 308.32 308.33 LOCAL TAX RATE COMPARISON: The current local tax rate, the 308.34 local tax rate if no tax levy increase is adopted, and the 308.35 proposed local tax rate if the proposed levy is adopted. 308.36 309.1 (Year) (Year) (Year) 309.2 Tax Rate Tax Rate if NO Proposed 309.3 Levy Increase Tax Rate 309.5 ....... ....... ....... 309.6 309.7 ATTEND THE PUBLIC HEARING 309.8 All (city/county) residents are invited to attend the public 309.9 hearing of the (city/county) to express your opinions on the 309.10 budget and the proposed amount of (year) property taxes. The 309.11 hearing will be held on: 309.12 (Month/Day/Year/Time) 309.13 (Location/Address) 309.14 If the discussion of the budget cannot be completed, a time and 309.15 place for continuing the discussion will be announced at the 309.16 hearing. You are also invited to send your written comments to: 309.17 (City/County) 309.18 (Location/Address)" 309.19 (d) For purposes of this subdivision, the budget amounts 309.20 listed on the advertisement mean: 309.21 (1) for cities, the total government fund expenditures, as 309.22 defined by the state auditor under section 471.6965, less any 309.23 expenditures for improvements or services that are specially 309.24 assessed or charged under chapter 429, 430, 435, or the 309.25 provisions of any other law or charter; and 309.26 (2) for counties, the total government fund expenditures, 309.27 as defined by the state auditor under section 375.169, less any 309.28 expenditures for direct payments to recipients or providers for 309.29 the human service aids listed below: 309.30 (i) Minnesota family investment program under chapters 256J 309.31 and 256K; 309.32 (ii) medical assistance under sections 256B.041, 309.33 subdivision 5, and 256B.19, subdivision 1; 309.34 (iii) general assistance medical care under section 309.35 256D.03, subdivision 6; 309.36 (iv) general assistance under section 256D.03, subdivision 310.1 2; 310.2 (v) emergency assistance under section 256J.48; 310.3 (vi) Minnesota supplemental aid under section 256D.36, 310.4 subdivision 1; 310.5 (vii) preadmission screening under section 256B.0911, and 310.6 alternative care grants under section 256B.0913; 310.7 (viii) general assistance medical care claims processing, 310.8 medical transportation and related costs under section 256D.03, 310.9 subdivision 4; 310.10 (ix) medical transportation and related costs under section 310.11 256B.0625, subdivisions 17 to 18a; 310.12 (x) group residential housing under section 256I.05, 310.13 subdivision 8, transferred from programs in clauses (iv) and 310.14 (vi); or 310.15 (xi) any successor programs to those listed in clauses (i) 310.16 to (x). 310.17 (e) A city with a population of over 500 but not more than 310.18 2,500 must advertise by posted notice as defined in section 310.19 645.12, subdivision 1. The advertisement must be posted at the 310.20 time provided in paragraph (a). It must be in the form required 310.21 in paragraph (b). 310.22 (f) For purposes of this subdivision, the population of a 310.23 city is the most recent population as determined by the state 310.24 demographer under section 4A.02. 310.25 (g) The commissioner of revenue, subject to the approval of 310.26 the chairs of the house and senate tax committees, shall 310.27 prescribe the form and format of the advertisement. 310.28 [EFFECTIVE DATE.] This section is effective for newspaper 310.29 advertisements in 2001 and thereafter. 310.30 Sec. 40. Minnesota Statutes 2000, section 275.066, is 310.31 amended to read: 310.32 275.066 [SPECIAL TAXING DISTRICTS; DEFINITION.] 310.33 For the purposes of property taxation and property tax 310.34 state aids, the term "special taxing districts" includes the 310.35 following entities: 310.36 (1) watershed districts under chapter 103D; 311.1 (2) sanitary districts under sections 115.18 to 115.37; 311.2 (3) regional sanitary sewer districts under sections 115.61 311.3 to 115.67; 311.4 (4) regional public library districts under section 311.5 134.201; 311.6 (5) park districts under chapter 398; 311.7 (6) regional railroad authorities under chapter 398A; 311.8 (7) hospital districts under sections 447.31 to 447.38; 311.9 (8) St. Cloud metropolitan transit commission under 311.10 sections 458A.01 to 458A.15; 311.11 (9) Duluth transit authority under sections 458A.21 to 311.12 458A.37; 311.13 (10) regional development commissions under sections 311.14 462.381 to 462.398; 311.15 (11) housing and redevelopment authorities under sections 311.16 469.001 to 469.047; 311.17 (12) port authorities under sections 469.048 to 469.068; 311.18 (13) economic development authorities under sections 311.19 469.090 to 469.1081; 311.20 (14) metropolitan council under sections 473.123 to 311.21 473.549; 311.22 (15) metropolitan airports commission under sections 311.23 473.601 to 473.680; 311.24 (16) metropolitan mosquito control commission under 311.25 sections 473.701 to 473.716; 311.26 (17) Morrison county rural development financing authority 311.27 under Laws 1982, chapter 437, section 1; 311.28 (18) Croft Historical Park District under Laws 1984, 311.29 chapter 502, article 13, section 6; 311.30 (19) East Lake county medical clinic district under Laws 311.31 1989, chapter 211, sections 1 to 6; 311.32 (20) Floodwood area ambulance district under Laws 1993, 311.33 chapter 375, article 5, section 39; 311.34 (21) Middle Mississippi river watershed management 311.35 organization under sections 103B.211 and 103B.241;and311.36 (22) emergency medical services special taxing districts 312.1 under section 144F.01; 312.2 (23) a county levying under the authority of section 312.3 103B.241, 103B.245, or 103B.251; and 312.4 (24) any other political subdivision of the state of 312.5 Minnesota, excluding counties, school districts, cities, and 312.6 towns, that has the power to adopt and certify a property tax 312.7 levy to the county auditor, as determined by the commissioner of 312.8 revenue. 312.9 [EFFECTIVE DATE.] Clause (22) of this section is effective 312.10 for taxes levied in 2001, payable in 2002, through taxes levied 312.11 in 2006, payable in 2007. Clause (23) of this section is 312.12 effective for taxes levied in 2001, payable in 2002, and 312.13 thereafter. 312.14 Sec. 41. Minnesota Statutes 2000, section 275.07, 312.15 subdivision 1, is amended to read: 312.16 Subdivision 1. [CERTIFICATION OF LEVY.] (a) Except as 312.17 provided under paragraph (b), the taxes voted by cities, 312.18 counties, school districts, and special districts shall be 312.19 certified by the proper authorities to the county auditor on or 312.20 before five working days after December 20 in each year. A town 312.21 must certify the levy adopted by the town board to the county 312.22 auditor by September 15 each year. If the town board modifies 312.23 the levy at a special town meeting after September 15, the town 312.24 board must recertify its levy to the county auditor on or before 312.25 five working days after December 20. The taxes certified shall 312.26 not be reduced by the county auditor by the aid received under 312.27 section 273.1398, subdivision 2, but shall be reduced by the 312.28 county auditor by the aid received under section 273.1398, 312.29 subdivision 3. If a city, town, county, school district, or 312.30 special district fails to certify its levy by that date, its 312.31 levy shall be the amount levied by it for the preceding year. 312.32 (b)(i) The taxes voted by counties under sections 103B.241, 312.33 103B.245, and 103B.251 shall be separately certified by the 312.34 county to the county auditor on or before five working days 312.35 after December 20 in each year. The taxes certified shall not 312.36 be reduced by the county auditor by the aid received under 313.1 section 273.1398, subdivisions 2 and 3. If a county fails to 313.2 certify its levy by that date, its levy shall be the amount 313.3 levied by it for the preceding year. 313.4 (ii) For purposes of the proposed property tax notice under 313.5 section 275.065 and the property tax statement under section 313.6 276.04, for the first year in which the county implements the 313.7 provisions of this paragraph, the county auditor shall reduce 313.8 the county's levy for the preceding year to reflect any amount 313.9 levied for water management purposes under clause (i) included 313.10 in the county's levy. 313.11 [EFFECTIVE DATE.] This section is effective for taxes 313.12 levied in 2001, payable in 2002, and thereafter. 313.13 Sec. 42. Minnesota Statutes 2000, section 276.04, 313.14 subdivision 2, is amended to read: 313.15 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer 313.16 shall provide for the printing of the tax statements. The 313.17 commissioner of revenue shall prescribe the form of the property 313.18 tax statement and its contents. The statement must contain a 313.19 tabulated statement of the dollar amount due to each taxing 313.20 authority and the amount of the statedetermined schoolgeneral 313.21 tax from the parcel of real property for which a particular tax 313.22 statement is prepared. The dollar amounts attributable to the 313.23 county, the statedetermined schoolgeneral tax, the voter 313.24 approved school tax, the other local school tax, the township or 313.25 municipality, and the total of the metropolitan special taxing 313.26 districts as defined in section 275.065, subdivision 3, 313.27 paragraph (i), must be separately stated. The amounts due all 313.28 other special taxing districts, if any, may be aggregated. The 313.29 amount of the tax on homesteads qualifying under the senior 313.30 citizens' property tax deferral program under chapter 290B is 313.31 the total amount of property tax before subtraction of the 313.32 deferred property tax amount. The amount of the tax on 313.33 contamination value imposed under sections 270.91 to 270.98, if 313.34 any, must also be separately stated. The dollar amounts, 313.35 including the dollar amount of any special assessments, may be 313.36 rounded to the nearest even whole dollar. For purposes of this 314.1 section whole odd-numbered dollars may be adjusted to the next 314.2 higher even-numbered dollar. The amount of market value 314.3 excluded under section 273.11, subdivision 16, if any, must also 314.4 be listed on the tax statement.The statement shall include the314.5following sentences, printed in upper case letters in boldface314.6print: "EVEN THOUGH THE STATE OF MINNESOTA DOES NOT RECEIVE ANY314.7PROPERTY TAX REVENUES, IT SETS THE AMOUNT OF THE314.8STATE-DETERMINED SCHOOL TAX LEVY. THE STATE OF MINNESOTA314.9REDUCES YOUR PROPERTY TAX BY PAYING CREDITS AND REIMBURSEMENTS314.10TO LOCAL UNITS OF GOVERNMENT."314.11 (b) The property tax statements for manufactured homes and 314.12 sectional structures taxed as personal property shall contain 314.13 the same information that is required on the tax statements for 314.14 real property. 314.15 (c) Real and personal property tax statements must contain 314.16 the following information in the order given in this paragraph. 314.17 The information must contain the current year tax information in 314.18 the right column with the corresponding information for the 314.19 previous year in a column on the left: 314.20 (1) the property's estimated market value under section 314.21 273.11, subdivision 1; 314.22 (2) the property's taxable market value after reductions 314.23 under section 273.11, subdivisions 1a and 16; 314.24 (3) the property's gross tax, calculated by adding the 314.25 property's total property tax to the sum of the aids enumerated 314.26 in clause (4); 314.27 (4) a total of the following aids: 314.28 (i) education aids payable under chapters 122A, 123A, 123B, 314.29 124D, 125A, 126C, and 127A; 314.30 (ii) local government aids for cities, towns, and counties 314.31 under chapter 477A; 314.32 (iii) disparity reduction aid under section 273.1398; and 314.33 (iv) homestead and agricultural credit aid under section 314.34 273.1398; 314.35 (5) for homestead residential and agricultural properties, 314.36 theeducationhomestead credit under section273.1382273.1384; 315.1 (6) any credits received under sections 273.119; 273.123; 315.2 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and 315.3 473H.10, except that the amount of credit received under section 315.4 273.135 must be separately stated and identified as "taconite 315.5 tax relief"; and 315.6 (7) the net tax payable in the manner required in paragraph 315.7 (a). 315.8 (d) If the county uses envelopes for mailing property tax 315.9 statements and if the county agrees, a taxing district may 315.10 include a notice with the property tax statement notifying 315.11 taxpayers when the taxing district will begin its budget 315.12 deliberations for the current year, and encouraging taxpayers to 315.13 attend the hearings. If the county allows notices to be 315.14 included in the envelope containing the property tax statement, 315.15 and if more than one taxing district relative to a given 315.16 property decides to include a notice with the tax statement, the 315.17 county treasurer or auditor must coordinate the process and may 315.18 combine the information on a single announcement. 315.19 The commissioner of revenue shall certify to the county 315.20 auditor the actual or estimated aids enumerated in clause (4) 315.21 that local governments will receive in the following year. The 315.22 commissioner must certify this amount by January 1 of each year. 315.23 [EFFECTIVE DATE.] This section is effective July 1, 2001, 315.24 and thereafter, for statements required in 2002 and thereafter. 315.25 Sec. 43. Minnesota Statutes 2000, section 282.01, 315.26 subdivision 1, is amended to read: 315.27 Subdivision 1. [CLASSIFICATION AS CONSERVATION OR 315.28 NONCONSERVATION.] It is the general policy of this state to 315.29 encourage the best use of tax-forfeited lands, recognizing that 315.30 some lands in public ownership should be retained and managed 315.31 for public benefits while other lands should be returned to 315.32 private ownership. Parcels of land becoming the property of the 315.33 state in trust under law declaring the forfeiture of lands to 315.34 the state for taxes must be classified by the county board of 315.35 the county in which the parcels lie as conservation or 315.36 nonconservation. In making the classification the board shall 316.1 consider the present use of adjacent lands, the productivity of 316.2 the soil, the character of forest or other growth, accessibility 316.3 of lands to established roads, schools, and other public 316.4 services, their peculiar suitability or desirability for 316.5 particular uses and the suitability of the forest resources on 316.6 the land for multiple use, sustained yield management. The 316.7 classification, furthermore, must encourage and foster a mode of 316.8 land utilization that will facilitate the economical and 316.9 adequate provision of transportation, roads, water supply, 316.10 drainage, sanitation, education, and recreation; facilitate 316.11 reduction of governmental expenditures; conserve and develop the 316.12 natural resources; and foster and develop agriculture and other 316.13 industries in the districts and places best suited to them. 316.14 In making the classification the county board may use 316.15 information made available by any office or department of the 316.16 federal, state, or local governments, or by any other person or 316.17 agency possessing pertinent information at the time the 316.18 classification is made. The lands may be reclassified from time 316.19 to time as the county board considers necessary or desirable, 316.20 except for conservation lands held by the state free from any 316.21 trust in favor of any taxing district. 316.22 If the lands are located within the boundaries of an 316.23 organized town, with taxable valuation in excess of $20,000, or 316.24 incorporated municipality, the classification or 316.25 reclassification and sale must first be approved by the town 316.26 board of the town or the governing body of the municipality in 316.27 which the lands are located. The town board of the town or the 316.28 governing body of the municipality is considered to have 316.29 approved the classification or reclassification and sale if the 316.30 county board is not notified of the disapproval of the 316.31 classification or reclassification and sale within 60 days of 316.32 the date the request for approval was transmitted to the town 316.33 board of the town or governing body of the municipality. If the 316.34 town board or governing body desires to acquire any parcel lying 316.35 in the town or municipality by procedures authorized in this 316.36 section, it must file a written application with the county 317.1 board to withhold the parcel from public sale. The application 317.2 must be filed within 60 days of the request for classification 317.3 or reclassification and sale. The county board shall then 317.4 withhold the parcel from public sale for six months. A 317.5 municipality or governmental subdivision shall pay maintenance 317.6 costs incurred by the county during the six-month period while 317.7 the property is withheld from public sale, provided the property 317.8 is not offered for public sale after the six-month period. A 317.9 clerical error made by county officials does not serve to 317.10 eliminate the request of the town board or governing body if the 317.11 board or governing body has forwarded the application to the 317.12 county auditor. If the town board or governing body of the 317.13 municipality fails to submit an application and a resolution of 317.14 the board or governing body to acquire the property within the 317.15 withholding period, the county may offer the property for sale 317.16 upon the expiration of the withholding period. 317.17 Sec. 44. Minnesota Statutes 2000, section 282.01, 317.18 subdivision 1a, is amended to read: 317.19 Subd. 1a. [CONVEYANCE; GENERALLY.] Tax-forfeited lands may 317.20 be sold by the county board to an organized or incorporated 317.21 governmental subdivision of the state for any public purpose for 317.22 which the subdivision is authorized to acquire property or may 317.23 be released from the trust in favor of the taxing districts on 317.24 application of a state agency for an authorized use at not less 317.25 than their value as determined by the county board.The317.26commissioner of revenue may convey by deed in the name of the317.27state a tract of tax-forfeited land held in trust in favor of317.28the taxing districts to a governmental subdivision for an317.29authorized public use, if an application is submitted to the317.30commissioner which includes a statement of facts as to the use317.31to be made of the tract and the need therefor and the317.32recommendation of the county board.317.33 [EFFECTIVE DATE.] This section is effective for deeds 317.34 issued on or after July 1, 2001. 317.35 Sec. 45. Minnesota Statutes 2000, section 282.01, 317.36 subdivision 1b, is amended to read: 318.1 Subd. 1b. [CONVEYANCE; TARGETED NEIGHBORHOOD LANDS.] (a) 318.2 Notwithstanding subdivision 1a, in the case of tax-forfeited 318.3 lands located in a targeted neighborhood, as defined in section 318.4 469.201, subdivision 10,outside the metropolitan area, as318.5defined inand section 473.121, subdivision 2, the commissioner 318.6 of revenuemayshall convey by deed in the name of the state any 318.7 tract of tax-forfeited land held in trust in favor of the taxing 318.8 districts, to a political subdivision that submits an 318.9 application to the commissioner of revenue and the 318.10 recommendation of the county board. 318.11 (b)Notwithstanding subdivision 1a, in the case of318.12tax-forfeited lands located in a targeted neighborhood, as318.13defined in section 469.201, subdivision 10, in a county in the318.14metropolitan area, as defined in section 473.121, subdivision 2,318.15the commissioner of revenue shall convey by deed in the name of318.16the state any tract of tax-forfeited land held in trust in favor318.17of the taxing districts, to a political subdivision that submits318.18an application to the commissioner of revenue and the county318.19board.318.20(c)The application under paragraph (a)or (b)must include 318.21 a statement of facts as to the use to be made of the tract, the 318.22 need therefor, and a resolution, adopted by the governing body 318.23 of the political subdivision, finding that the conveyance of a 318.24 tract of tax-forfeited land to the political subdivision is 318.25 necessary to provide for the redevelopment of land as productive 318.26 taxable property. Deeds of conveyance issued under paragraph 318.27 (a) are not conditioned on continued use of the property for the 318.28 use stated in the application. 318.29 [EFFECTIVE DATE.] This section is effective for deeds 318.30 issued on or after July 1, 2001. 318.31 Sec. 46. Minnesota Statutes 2000, section 282.04, 318.32 subdivision 2, is amended to read: 318.33 Subd. 2. [RIGHTS BEFORE SALE; IMPROVEMENTS, INSURANCE, 318.34 DEMOLITION.] Before the sale of a parcel of forfeited land the 318.35 county auditor may, with the approval of the county board of 318.36 commissioners, provide for the repair and improvement of any 319.1 building or structure located upon the parcel, and may provide 319.2 for maintenance of tax-forfeited lands, if it is determined by 319.3 the county board that such repairs, improvements, or maintenance 319.4 are necessary for the operation, use, preservation and safety of 319.5 the building or structure. If so authorized by the county 319.6 board, the county auditor may insure the building or structure 319.7 against loss or damage resulting from fire or windstorm, may 319.8 purchase workers' compensation insurance to insure the county 319.9 against claims for injury to the persons employed in the 319.10 building or structure by the county, and may insure the county, 319.11 its officers and employees against claims for injuries to 319.12 persons or property because of the management, use or operation 319.13 of the building or structure. The county auditor may, with the 319.14 approval of the county board, provide for the demolition of the 319.15 building or structure, which has been determined by the county 319.16 board to be within the purview of section 299F.10, and for the 319.17 sale of salvaged materials from the building or structure. The 319.18 county auditor, with the approval of the county board, may 319.19 provide for the sale of abandoned personal propertyunder either319.20chapter 345 or 566, as appropriate. The sale may be made by the 319.21 sheriff using the procedures for the sale of abandoned property 319.22 in section 345.15 or by the county auditor using the procedures 319.23 for the sale of abandoned property in section 504B.271. The net 319.24 proceeds from any sale of the personal property, salvaged 319.25 materials, timber or other products, or leases made under this 319.26 law must be deposited in the forfeited tax sale fund and must be 319.27 distributed in the same manner as if the parcel had been sold. 319.28 The county auditor, with the approval of the county board, 319.29 may provide for the demolition of any structure on tax-forfeited 319.30 lands, if in the opinion of the county board, the county 319.31 auditor, and the land commissioner, if there is one, the sale of 319.32 the land with the structure on it, or the continued existence of 319.33 the structure by reason of age, dilapidated condition or 319.34 excessive size as compared with nearby structures, will result 319.35 in a material lessening of net tax capacities of real estate in 319.36 the vicinity of the tax-forfeited lands, or if the demolition of 320.1 the structure or structures will aid in disposing of the 320.2 tax-forfeited property. 320.3 Before the sale of a parcel of forfeited land located in an 320.4 urban area, the county auditor may with the approval of the 320.5 county board provide for the grading of the land by filling or 320.6 the removal of any surplus material from it. If the physical 320.7 condition of forfeited lands is such that a reasonable grading 320.8 of the lands is necessary for the protection and preservation of 320.9 the property of any adjoining owner, the adjoining property 320.10 owner or owners may apply to the county board to have the 320.11 grading done. If, after considering the application, the county 320.12 board believes that the grading will enhance the value of the 320.13 forfeited lands commensurate with the cost involved, it may 320.14 approve it, and the work must be performed under the supervision 320.15 of the county or city engineer, as the case may be, and the 320.16 expense paid from the forfeited tax sale fund. 320.17 Sec. 47. Minnesota Statutes 2000, section 469.040, 320.18 subdivision 5, is amended to read: 320.19 Subd. 5. [DESIGNATED HOUSING CORPORATION.] Property 320.20 located within the exterior boundaries ofthe White Earthan 320.21 Indian reservation in the state that is owned by the tribe's 320.22 designated housing entity as defined in United States Code, 320.23 title 25, section 4103(21), and that is a housing project or a 320.24 housing development project, as defined in section 469.002, 320.25 subdivisions 13 and 15, is exempt from all real and personal 320.26 property taxes of the city, the county, the state, or any 320.27 political subdivision thereof, but the property is subject to 320.28 subdivision 3. A copy of those portions of the annual reports 320.29 submitted on behalf of the housing entity to the Secretary of 320.30 the United States Department of Housing and Urban Development 320.31 for the project that contain information sufficient to determine 320.32 the amount due under subdivision 3 satisfies the reporting 320.33 requirements of subdivision 3 for the project. 320.34 [EFFECTIVE DATE.] This section is effective for taxes 320.35 levied in 2001, payable in 2002, and thereafter. 320.36 Sec. 48. Minnesota Statutes 2000, section 469.202, 321.1 subdivision 2, is amended to read: 321.2 Subd. 2. [ELIGIBILITY REQUIREMENTS FOR TARGETED 321.3 NEIGHBORHOODS.] An area within a city is eligible for 321.4 designation as a targeted neighborhood if the area meets two of 321.5 the following three criteria: 321.6 (a) The area had an unemployment rate that was twice the 321.7 unemployment rate for the Minneapolis and Saint Paul standard 321.8 metropolitan statistical area as determined by the1980most 321.9 recent federal decennial census. 321.10 (b) The median household income in the area was no more 321.11 than half the median household income for the Minneapolis and 321.12 Saint Paul standard metropolitan statistical area as determined 321.13 by the1980most recent federal decennial census. 321.14 (c) The area is characterized by residential dwelling units 321.15 in need of substantial rehabilitation. An area qualifies under 321.16 this paragraph if 25 percent or more of the residential dwelling 321.17 units are in substandard condition as determined by the city, or 321.18 if 70 percent or more of the residential dwelling units in the 321.19 area were built before 1940 as determined by the1980most 321.20 recent federal decennial census. 321.21 [EFFECTIVE DATE.] This section is effective beginning July 321.22 1, 2001. 321.23 Sec. 49. [473.246] [LEGISLATIVE COMMISSION ON METROPOLITAN 321.24 GOVERNMENT; REVIEW.] 321.25 Subdivision 1. [METROPOLITAN COUNCIL INFORMATION; REVIEW 321.26 BY LEGISLATIVE COMMISSION ON METROPOLITAN GOVERNMENT.] The 321.27 metropolitan council must submit to the legislative commission 321.28 on metropolitan government information on the council's tax 321.29 rates and dollar amounts levied for the current year, proposed 321.30 property tax rates and levies, operating and capital budgets, 321.31 work program, capital improvement program, and any other 321.32 information requested by the commission, for review by the 321.33 legislative commission, as provided in section 3.99. 321.34 Subd. 2. [EXPIRATION.] This section expires July 1, 2007. 321.35 [EFFECTIVE DATE; APPLICATION.] This section is effective 321.36 July 1, 2001, and applies in the counties of Anoka, Carver, 322.1 Dakota, Hennepin, Ramsey, Scott, and Washington. 322.2 Sec. 50. Minnesota Statutes 2000, section 473H.10, 322.3 subdivision 3, is amended to read: 322.4 Subd. 3. [COMPUTATION OF TAX; STATE REIMBURSEMENT.] (a) 322.5 After having determined the market value of all land valued 322.6 according to subdivision 2, the assessor shall compute the net 322.7 tax capacity of those properties by applying the appropriate 322.8 class rates. When computing the rate of tax pursuant to section 322.9 275.08, the county auditor shall include the net tax capacity of 322.10 land as provided in this clause. 322.11 (b) The county auditor shall compute the tax on lands 322.12 valued according to subdivision 2 and nonresidential buildings 322.13 by multiplying the net tax capacity times the total local tax 322.14 rate for all purposes as provided in clause (a). 322.15 (c) The county auditor shall then compute the tax on lands 322.16 valued according to subdivision 2 and nonresidential buildings 322.17 by multiplying the net tax capacity times the total local tax 322.18 rate for all purposes as provided in clause (a), subtracting 322.19 $1.50 per acre of land in the preserve. 322.20 (d) The county auditor shall then compute the maximum ad 322.21 valorem property tax on lands valued according to subdivision 2 322.22 and nonresidential buildings by multiplying the net tax capacity 322.23 times 105 percent of the previous year's statewide average local 322.24 tax rate levied on property located within townships for all 322.25 purposes. 322.26 (e) The tax due and payable by the owner of preserve land 322.27 valued according to subdivision 2 and nonresidential buildings 322.28 will be the amount determined in clause (c) or (d), whichever is 322.29 less. The state shall reimburse the taxing jurisdictions for 322.30 the amount of the difference between the net tax determined 322.31 under this clause and the gross tax in clause (b). Residential 322.32 buildings shall continue to be valued and classified according 322.33 to the provisions of sections 273.11 and 273.13, as they would 322.34 be in the absence of this section, and the tax on those 322.35 buildings shall not be subject to the limitation contained in 322.36 this clause. 323.1 The county may transfer money from the county conservation 323.2 account created in section 40A.152 to the county revenue fund to 323.3 reimburse the fund for the tax lost as a result of this 323.4 subdivision or to pay taxing jurisdictions within the county for 323.5 the tax lost. The county auditor shall certify to the 323.6 commissioner of revenue on or before June 1 the total amount of 323.7 tax lost to the county and taxing jurisdictions located within 323.8 the county as a result of this subdivision and the extent that 323.9 the tax lost exceeds funds available in the county conservation 323.10 account. Payment shall be made by the state on December2615 323.11 to each of the affected taxing jurisdictions, other than school 323.12 districts, in the same proportion that the ad valorem tax is 323.13 distributed if the county conservation account is insufficient 323.14 to make the reimbursement. There is annually appropriated from 323.15 the Minnesota conservation fund under section 40A.151 to the 323.16 commissioner of revenue an amount sufficient to make the 323.17 reimbursement provided in this subdivision. If the amount 323.18 available in the Minnesota conservation fund is insufficient, 323.19 the balance that is needed is appropriated from the general fund. 323.20 Sec. 51. Minnesota Statutes 2000, section 477A.12, is 323.21 amended to read: 323.22 477A.12 [ANNUAL APPROPRIATIONS; LANDS ELIGIBLE; 323.23 CERTIFICATION OF ACREAGE.] 323.24 Subdivision 1. [TYPES OF LAND; PAYMENTS.] (a) As an offset 323.25 for expenses incurred by counties and towns in support of 323.26 natural resources lands, the following amounts are annually 323.27 appropriated to the commissioner of natural resources from the 323.28 general fund for transfer to the commissioner of revenue. The 323.29 commissioner of revenue shall pay the transferred funds to 323.30 counties as required by sections 477A.11 to 477A.145. The 323.31 amounts are: 323.32 (1) for acquired natural resources land, $3, as adjusted 323.33 for inflation under section 477A.145, multiplied by the total 323.34 number of acres of acquired natural resources land or, at the 323.35 county's option three-fourths of one percent of the appraised 323.36 value of all acquired natural resources land in the county, 324.1 whichever is greater; 324.2 (2) 75 cents, as adjusted for inflation under section 324.3 477A.145, multiplied by the number of acres of 324.4 county-administered other natural resources land; and 324.5 (3) 37.5 cents, as adjusted for inflation under section 324.6 477A.145, multiplied by the number of acres of 324.7 commissioner-administered other natural resources land located 324.8 in each county as of July 1 of each year prior to the payment 324.9 year. 324.10 (b) The amount determined under paragraph (a), clause (1), 324.11 is payable for land that is acquired from a private owner and 324.12 owned by the department of transportation for the purpose of 324.13 replacing wetland losses caused by transportation projects, but 324.14 only if the county contains more than 500 acres of such land at 324.15 the time the certification is made under subdivision 2. 324.16 Subd. 2. [PROCEDURE.] Lands for which payments in lieu are 324.17 made pursuant to section 97A.061, subdivision 3, and Laws 1973, 324.18 chapter 567, shall not be eligible for payments under this 324.19 section. Each county auditor shall certify to the department of 324.20 natural resources during July of each year prior to the payment 324.21 year the number of acres of county-administered other natural 324.22 resources land within the county. The department of natural 324.23 resources may, in addition to the certification of acreage, 324.24 require descriptive lists of land so certified. The 324.25 commissioner of natural resources shall determine and certify to 324.26 the commissioner of revenue by March 1 of the payment year: 324.27 (1) the number of acres and most recent appraised value of 324.28 acquired natural resources land within each county; 324.29 (2) the number of acres of commissioner-administered 324.30 natural resources land within each county; and 324.31 (3) the number of acres of county-administered other 324.32 natural resources land within each county, based on the reports 324.33 filed by each county auditor with the commissioner of natural 324.34 resources. 324.35 The commissioner of transportation shall determine and 324.36 certify to the commissioner of revenue by March 1 of the payment 325.1 year the number of acres of land and the appraised value of the 325.2 land described in subdivision 1, paragraph (b), but only if it 325.3 exceeds 500 acres. 325.4 The commissioner of revenue shall determine the 325.5 distributions provided for in this section using the number of 325.6 acres and appraised values certified by the commissioner of 325.7 natural resources and the commissioner of transportation by 325.8 March 1 of the payment year. 325.9(c)Subd 3. [DETERMINATION OF APPRAISED VALUE.] For the 325.10 purposes of this section, the appraised value of acquired 325.11 natural resources land is the purchase price for the first five 325.12 years after acquisition. The appraised value of acquired 325.13 natural resources land received as a donation is the value 325.14 determined for the commissioner of natural resources by a 325.15 licensed appraiser, or the county assessor's estimated market 325.16 value if no appraisal is done. The appraised value must be 325.17 determined by the county assessor every five years after the 325.18 land is acquired. 325.19 [EFFECTIVE DATE.] This section is effective for payments in 325.20 2002 and thereafter. 325.21 Sec. 52. Minnesota Statutes 2000, section 477A.14, is 325.22 amended to read: 325.23 477A.14 [USE OF FUNDS.] 325.24 Except as provided in section 97A.061, subdivision 5, 40 325.25 percent of the total payment to the county shall be deposited in 325.26 the county general revenue fund to be used to provide property 325.27 tax levy reduction. The remainder shall be distributed by the 325.28 county in the following priority: 325.29 (a) 37.5 cents, as adjusted for inflation under section 325.30 477A.145, for each acre of county-administered other natural 325.31 resources land shall be deposited in a resource development fund 325.32 to be created within the county treasury for use in resource 325.33 development, forest management, game and fish habitat 325.34 improvement, and recreational development and maintenance of 325.35 county-administered other natural resources land. Any county 325.36 receiving less than $5,000 annually for the resource development 326.1 fund may elect to deposit that amount in the county general 326.2 revenue fund; 326.3 (b) From the funds remaining, within 30 days of receipt of 326.4 the payment to the county, the county treasurer shall pay each 326.5 organized township 30 cents, as adjusted for inflation under 326.6 section 477A.145, for each acre of acquired natural resources 326.7 land and each acre of land described in section 477A.12, 326.8 subdivision 1, paragraph (b), and 7.5 cents, as adjusted for 326.9 inflation under section 477A.145, for each acre of other natural 326.10 resources land located within its boundaries. Payments for 326.11 natural resources lands not located in an organized township 326.12 shall be deposited in the county general revenue fund. Payments 326.13 to counties and townships pursuant to this paragraph shall be 326.14 used to provide property tax levy reduction, except that of the 326.15 payments for natural resources lands not located in an organized 326.16 township, the county may allocate the amount determined to be 326.17 necessary for maintenance of roads in unorganized townships. 326.18 Provided that, if the total payment to the county pursuant to 326.19 section 477A.12 is not sufficient to fully fund the distribution 326.20 provided for in this clause, the amount available shall be 326.21 distributed to each township and the county general revenue fund 326.22 on a pro rata basis; and 326.23 (c) Any remaining funds shall be deposited in the county 326.24 general revenue fund. Provided that, if the distribution to the 326.25 county general revenue fund exceeds $35,000, the excess shall be 326.26 used to provide property tax levy reduction. 326.27 [EFFECTIVE DATE.] This section is effective for payments in 326.28 2002 and thereafter. 326.29 Sec. 53. [STUDY REQUIRED; METROPOLITAN FISCAL DISPARITIES 326.30 PROGRAM.] 326.31 The commissioner of revenue, in conjunction with one 326.32 representative from each of the seven metropolitan counties to 326.33 be appointed by the respective county boards and legislative 326.34 staff, shall conduct a study of the metropolitan revenue 326.35 distribution program contained in Minnesota Statutes, chapter 326.36 473F, commonly known as the fiscal disparities program. The 327.1 commissioner shall make a report to the legislature by February 327.2 1, 2002, consisting of the findings of the study and any 327.3 recommendations resulting from the study. 327.4 The study shall primarily address the question of whether 327.5 the program is achieving the purposes for which it was created. 327.6 Additionally, the study shall address the following questions: 327.7 (1) How has the program affected property tax disparities 327.8 across the Twin Cities metropolitan area? 327.9 (2) Is the formula for contributing tax base to the 327.10 areawide pool reasonable? Should certain commercial-industrial 327.11 tax base continue to be exempt from contribution to the areawide 327.12 pool, such as tax base in existence prior to 1979, tax base in 327.13 tax increment financing districts established before 1979, and 327.14 tax base located at the Minneapolis-Saint Paul International 327.15 Airport? Should contribution amounts be adjusted for 327.16 differences in sales ratios between communities? 327.17 (3) Is the formula for distributing tax base from the 327.18 areawide pool reasonable? Should the formula reflect measures 327.19 of need in addition to population? Should the distribution 327.20 formula be based on tax capacity rather than market value? 327.21 (4) Does the program help promote orderly growth and 327.22 encourage environmentally sound land use? 327.23 (5) Does the program reduce competition for 327.24 commercial-industrial tax base between communities? Is reduced 327.25 competition for commercial-industrial tax base desirable? 327.26 (6) Do local governments derive sufficient tax revenues 327.27 from commercial-industrial property to cover the costs of 327.28 providing services to the property, considering the tax base 327.29 that must be contributed to the areawide pool? 327.30 (7) Could improvements be made in the administration of the 327.31 program? 327.32 [EFFECTIVE DATE.] This section is effective July 1, 2001. 327.33 Sec. 54. [LAKES REGION EMS SERVICE CHARGES.] 327.34 Subdivision 1. [AUTHORIZATION.] The Lakes Region emergency 327.35 medical services district may charge and collect through the 327.36 county with county property taxes, an annual service charge of 328.1 $7 per unit for properties in the primary service area within 328.2 Chisago county and $3.50 per unit for properties in the 328.3 secondary service area within Chisago county according to the 328.4 schedule in subdivision 2 for emergency medical services 328.5 authorized as provided in subdivision 3. 328.6 Subd. 2. [EMS FEE SCHEDULE.] 328.7 (a) RESIDENTIAL PROPERTIES UNIT VALUE 328.8 (1) Agricultural with Dwelling 1.0 328.9 (2) Seasonal/Recreational 1.0 328.10 (3) Residential Homestead 1.0 328.11 (4) Residential Non-Homestead 1.0 for up to three 328.12 living units 328.13 1.0 for each additional 328.14 living unit 328.15 thereafter 328.16 (5) Mobile Homes 1.0 328.17 (b) COMMERCIAL PROPERTIES 328.18 (1) Up to $100,000 valuation 1.0 328.19 (2) $100,001 to $150,000 2.0 328.20 (3) $150,001 to $200,000 3.0 328.21 (4) $200,001 to $250,000 4.0 328.22 (5) $250,001 to $300,000 5.0 328.23 (6) $300,001 to $350,000 6.0 328.24 (7) $350,001 to $400,000 7.0 328.25 (8) $400,001 to $450,000 8.0 328.26 (9) $450,001 to $500,000 9.0 328.27 (10) $500,001 to $550,000 10.0 328.28 (11) $550,001 to $600,000 11.0 328.29 (12) Over $600,000 12.0 328.30 Subd. 3. [USE OF FEE PROCEEDS.] The proceeds of fees 328.31 charged and collected under this section must be used to support 328.32 the providing of out-of-hospital emergency medical services 328.33 including, but not limited to, first responder or rescue squads 328.34 recognized by the Lakes Region emergency medical services 328.35 district, ambulance services licensed under Minnesota Statutes, 328.36 chapter 144E, and recognized by the district, medical control 329.1 functions set out in Minnesota Statutes, chapter 144E, and 329.2 communications equipment and systems. 329.3 Subd. 4. [BOARD.] (a) The district is governed by a board 329.4 made up of the members of the governing bodies including town 329.5 boards of local governmental units in Chisago county, as follows: 329.6 (1) three members chosen by all of the cities in a manner 329.7 convenient to them that reflects geographic balance; and 329.8 (2) three members chosen by all of the town boards in a 329.9 manner convenient to them that reflects geographic balance. 329.10 (b) If the members are not selected as provided in 329.11 paragraph (a), clause (1) or (2), by September 1, 2001, the 329.12 county board must make the appointments from the governing 329.13 bodies of cities under paragraph (a), clause (1), or from the 329.14 governing bodies of town boards under paragraph (a), clause (2), 329.15 respectively, and, in either case, reflecting geographic balance. 329.16 (c) A representative from the county board chosen by the 329.17 county board must serve as the chair of the district board. 329.18 (d) All members of the district board serve a three-year 329.19 term. 329.20 (e) A vacancy on the district board must be filled as 329.21 provided for the initial appointment. If the vacancy is not 329.22 filled within 30 days by the initial appointing authority under 329.23 paragraph (a), clause (1) or (2), the county board must make the 329.24 appointment as provided in paragraph (b). 329.25 Subd. 5. [PROCEDURE.] The Chisago county board must charge 329.26 and collect, and disburse the fees authorized in this section in 329.27 the same manner authorized by ordinance for the charging, 329.28 collection, and disbursing of solid waste management fees within 329.29 the county. The county may proceed to collect unpaid fees under 329.30 this section in the same manner and extent, including interest 329.31 charges, as provided by ordinance for collection of unpaid solid 329.32 waste management fees. 329.33 Subd. 6. [ADMINISTRATIVE SHARE.] The county may retain up 329.34 to one percent of the fees collected under this section each 329.35 year for administration of the fee collection and disbursal. 329.36 Subd. 7. [SUNSET.] The fee authorized under this section 330.1 may be imposed in 2001 through 2003 and collected with property 330.2 taxes payable in 2002 through 2004 only. 330.3 Sec. 55. [CONVEYANCE OF TAX-FORFEITED LAND; DAKOTA 330.4 COUNTY.] 330.5 (a) If special school district No. 6 conveys the land 330.6 described in paragraph (c) to the state according to Minnesota 330.7 Statutes, section 282.01, subdivision 1d, then, notwithstanding 330.8 any other provision of Minnesota Statutes, chapter 282, the 330.9 commissioner of revenue shall reconvey the land described in 330.10 paragraph (c) to special school district No. 6 for no 330.11 consideration. 330.12 (b) The conveyance must be in a form approved by the 330.13 attorney general. Notwithstanding Minnesota Statutes, chapter 330.14 282, or other law to the contrary, special school district No. 6 330.15 may use or sell the land for other than a public use. 330.16 Notwithstanding Minnesota Statutes, chapter 282, or other law to 330.17 the contrary, the state shall not retain a reversionary interest 330.18 and shall convey the land free of the trust in favor of the 330.19 taxing district. 330.20 (c) The land to be conveyed is in the city of South St. 330.21 Paul, Dakota county, and is described as: 330.22 (1) Lots 4, 5, 6, and 7, Block 1, Lookout Park Addition; 330.23 (2) Lots 25 and 26, Block 1, Lookout Park Addition; 330.24 (3) Lots 11, 12, 13, 14, 15, 16, 17, 18, 19, and 20, Block 330.25 2, Lookout Park Addition; 330.26 (4) Lots 1, 2, 3, 4, and 5, Block 1, Bryants First Addition 330.27 to the city of South St. Paul; and 330.28 (5) Lot 21, Block 1, Bryants First Addition to the city of 330.29 South St. Paul, together with that part of the vacated alley and 330.30 vacated Stanley Place accruing thereto. 330.31 [EFFECTIVE DATE.] This section is effective the day 330.32 following final enactment. 330.33 Sec. 56. [INDEPENDENT SCHOOL DISTRICT NO. 319, 330.34 NASHWAUK-KEEWATIN, ADDITIONAL LEVY.] 330.35 In addition to other levies, independent school district 330.36 No. 319, Nashwauk-Keewatin, may levy an amount up to $25,000 331.1 each year to finance the Nashwauk School-Community Library and 331.2 Community Service Project. 331.3 [EFFECTIVE DATE.] This section is effective July 1, 2001. 331.4 Sec. 57. [PROPERTY TAX ABATEMENTS; PROPERTY DAMAGED BY 331.5 TORNADO; YELLOW MEDICINE AND CHIPPEWA COUNTIES.] 331.6 Subdivision 1. [AUTHORIZATION.] Notwithstanding the 331.7 requirements of Minnesota Statutes, section 375.192, a city 331.8 council by resolution may request the county board of a 331.9 qualified county to grant abatements on eligible property for 331.10 taxes payable in 2001 as provided in this section. Up to 50 331.11 percent of the taxes payable in 2001 on an eligible property 331.12 that does not qualify for reimbursement under Minnesota 331.13 Statutes, section 273.123, subdivision 4, may be abated. The 331.14 owner of the eligible property is not required to apply for the 331.15 abatement. 331.16 Subd. 2. [DEFINITIONS.] (a) As used in this section, the 331.17 terms defined in this subdivision have the meanings given them. 331.18 (b) "Qualified county" means any county in the area added 331.19 to the Presidential Declaration of Major Disaster, DR1333, by 331.20 amendment number 5 dated July 28, 2000, and amendment number 6 331.21 dated August 14, 2000. 331.22 (c) "Eligible property" means a parcel of taxable property 331.23 located in a qualified county that contains a structure that has 331.24 been determined by the assessor to have lost over 50 percent of 331.25 its estimated market value due to wind damage. In the case of 331.26 agricultural property, the abatement is limited to the taxes on 331.27 the parcel attributable to the value of the house, garage, and 331.28 surrounding one acre, if the house has lost over 50 percent of 331.29 its estimated market value; and the tax attributable to the 331.30 value of any farm buildings and structures that have lost over 331.31 50 percent of their estimated market value. 331.32 Subd. 3. [ASSESSORS' DUTIES.] As soon as practicable, 331.33 local and county assessors in qualified counties shall notify 331.34 the county board and property owners of parcels of eligible 331.35 property. 331.36 Subd. 4. [APPROPRIATION.] $100,000 is appropriated to the 332.1 commissioner of revenue for fiscal year 2002 to be apportioned 332.2 among the counties in amendment number 5 and amendment number 6 332.3 to the Presidential Declaration of Major Disaster, DR1333, to 332.4 provide reimbursement for abatements granted under this section 332.5 for taxes payable in 2001 to properties damaged from tornadoes 332.6 on July 25, 2000. The apportionment shall be based upon the 332.7 amount of disaster-related market value loss in each county. 332.8 Counties must be reimbursed only for property taxes that were 332.9 actually abated, not to exceed each county's apportioned amount. 332.10 Sec. 58. [MINNEHAHA CREEK WATERSHED DISTRICT.] 332.11 Subdivision 1. [LEVY AUTHORIZED.] Notwithstanding 332.12 Minnesota Statutes, section 103D.905, subdivision 3, the 332.13 Minnehaha Creek watershed district may annually levy an 332.14 additional amount up to $50,000 for enforcing rules and permits. 332.15 Subd. 2. [EFFECTIVE DATE.] This section is effective, 332.16 without local approval, beginning with taxes levied in 2001, 332.17 payable in 2002. 332.18 Sec. 59. [PRIVATE SALE OF TAX-FORFEITED LAND; ST. LOUIS 332.19 COUNTY.] 332.20 (a) Notwithstanding the public sale provisions of Minnesota 332.21 Statutes, chapter 282, or other law to the contrary, St. Louis 332.22 county may sell by private sale the tax-forfeited land described 332.23 in paragraph (c) to one or more of the owners at the time of 332.24 forfeiture. 332.25 (b) The conveyance must be in a form approved by the 332.26 attorney general for a consideration of taxes due on the 332.27 property and any penalties, interest, and costs. 332.28 (c) The land to be sold is located in St. Louis county and 332.29 is described as: 332.30 (1) Parcel 200-10-1720: Sec. 11, Twp. 61, Rge 19 NW 1/4 of 332.31 NW 1/4; and 332.32 (2) Parcel 200-10-280: Sec. 2, Twp. 61, Rge 19 SW 1/4 of 332.33 SW 1/4. 332.34 (d) The county has determined that the county's land 332.35 management interests would best be served if the lands were 332.36 returned to private ownership. 333.1 [EFFECTIVE DATE.] This section is effective the day 333.2 following final enactment. 333.3 Sec. 60. [REPEALER.] 333.4 (a) Minnesota Statutes 2000, section 275.078, is repealed. 333.5 (b) Laws 1988, chapter 426, section 1; Laws 1988, chapter 333.6 702, section 16; Laws 1992, chapter 511, article 2, section 52, 333.7 as amended by Laws 1997, chapter 231, article 2, section 50, and 333.8 Laws 1998, chapter 389, article 3, section 32; Laws 1996, 333.9 chapter 471, article 8, section 45; Laws 1999, chapter 243, 333.10 article 6, section 14; Laws 1999, chapter 243, article 6, 333.11 section 15; and Laws 2000, chapter 490, article 6, section 17, 333.12 are repealed. 333.13 [EFFECTIVE DATE.] This section is effective for taxes 333.14 levied in 2001, payable in 2002 and thereafter. 333.15 ARTICLE 10 333.16 PROPERTY TAX REFUND 333.17 Section 1. Minnesota Statutes 2000, section 290A.03, 333.18 subdivision 6, is amended to read: 333.19 Subd. 6. [HOMESTEAD.] "Homestead" means the dwelling 333.20 occupied as the claimant's principal residence and so much of 333.21 the land surrounding it, not exceeding ten acres, as is 333.22 reasonably necessary for use of the dwelling as a home and any 333.23 other property used for purposes of a homestead as defined in 333.24 section 273.13, subdivision 22, except for agricultural land 333.25 assessed as part of a homestead pursuant to section 273.13, 333.26 subdivision 23, "homestead" is limited to thefirst $600,000 of333.27market value or, where the farm homestead is rented,house and 333.28 garage and immediately surrounding one acre of land. The 333.29 homestead may be owned or rented and may be a part of a 333.30 multidwelling or multipurpose building and the land on which it 333.31 is built. A manufactured home, as defined in section 273.125, 333.32 subdivision 8, or a park trailer taxed as a manufactured home 333.33 under section 168.012, subdivision 9, assessed as personal 333.34 property may be a dwelling for purposes of this subdivision. 333.35 [EFFECTIVE DATE.] This section is effective beginning with 333.36 refunds based on property taxes payable in 2002. 334.1 Sec. 2. Minnesota Statutes 2000, section 290A.03, 334.2 subdivision 11, is amended to read: 334.3 Subd. 11. [RENT CONSTITUTING PROPERTY TAXES.] "Rent 334.4 constituting property taxes" means19the percent of the gross 334.5 rent, as provided under section 290A.046, actually paid in cash, 334.6 or its equivalent, or the portion of rent paid in lieu of 334.7 property taxes, in any calendar year by a claimant for the right 334.8 of occupancy of the claimant's Minnesota homestead in the 334.9 calendar year, and which rent constitutes the basis, in the 334.10 succeeding calendar year of a claim for relief under this 334.11 chapter by the claimant. 334.12 [EFFECTIVE DATE.] This section is effective beginning with 334.13 refunds based on rent paid in calendar year 2001. 334.14 Sec. 3. Minnesota Statutes 2000, section 290A.03, 334.15 subdivision 12, is amended to read: 334.16 Subd. 12. [GROSS RENT.] (a) "Gross rent" means rental paid 334.17 for the right of occupancy, at arms-length, of a homestead, 334.18 exclusive of charges for any medical services furnished by the 334.19 landlord as a part of the rental agreement, whether expressly 334.20 set out in the rental agreement or not. 334.21 (b) The gross rent of a resident of a nursing home or 334.22 intermediate care facility is $350 per month. The gross rent of 334.23 a resident of an adult foster care home is $550 per month. 334.24 Beginning for rent paid in 2002, the commissioner shall annually 334.25 adjust for inflation the gross rent amounts stated in this 334.26 paragraph. The adjustment must be made in accordance with 334.27 section 1f of the Internal Revenue Code, except that for 334.28 purposes of this paragraph the percentage increase shall be 334.29 determined from the year ending on June 30, 2001, to the year 334.30 ending on June 30 of the year in which the rent is paid. The 334.31 commissioner shall round the gross rents to the nearest $10 334.32 amount. If the amount ends in $5, the commissioner shall round 334.33 it up to the next $10 amount. The determination of the 334.34 commissioner under this paragraph is not a rule under the 334.35 Administrative Procedure Act. 334.36 (c) If the landlord and tenant have not dealt with each 335.1 other at arms-length and the commissioner determines that the 335.2 gross rent charged was excessive, the commissioner may adjust 335.3 the gross rent to a reasonable amount for purposes of this 335.4 chapter. 335.5 (d) Any amount paid by a claimant residing in property 335.6 assessed pursuant to section 273.124, subdivision 3, 4, 5, or 6 335.7 for occupancy in that property shall be excluded from gross rent 335.8 for purposes of this chapter. However, property taxes imputed 335.9 to the homestead of the claimant or the dwelling unit occupied 335.10 by the claimant that qualifies for homestead treatment pursuant 335.11 to section 273.124, subdivision 3, 4, 5, or 6 shall be included 335.12 within the term "property taxes payable" as defined in 335.13 subdivision 13, notwithstanding the fact that ownership is not 335.14 in the name of the claimant. 335.15 [EFFECTIVE DATE.] This section is effective for refunds 335.16 based on rent paid after December 31, 2000. 335.17 Sec. 4. Minnesota Statutes 2000, section 290A.03, 335.18 subdivision 13, is amended to read: 335.19 Subd. 13. [PROPERTY TAXES PAYABLE.] "Property taxes 335.20 payable" means the property tax exclusive of special 335.21 assessments, penalties, and interest payable on a claimant's 335.22 homestead after deductions made under sections 273.135, 335.23 273.1382, 273.1391, 273.42, subdivision 2, and any other state 335.24 paid property tax credits in any calendar year. In the case of 335.25 a claimant who makes ground lease payments, "property taxes 335.26 payable" includes the amount of the payments directly 335.27 attributable to the property taxes assessed against the parcel 335.28 on which the house is located. No apportionment or reduction of 335.29 the "property taxes payable" shall be required for the use of a 335.30 portion of the claimant's homestead for a business purpose if 335.31 the claimant does not deduct any business depreciation expenses 335.32 for the use of a portion of the homestead in the determination 335.33 of federal adjusted gross income. For homesteads which are 335.34 manufactured homes as defined in section 273.125, subdivision 8, 335.35 and for homesteads which are park trailers taxed as manufactured 335.36 homes under section 168.012, subdivision 9, "property taxes 336.1 payable" shall also include19the percent, as provided under 336.2 section 290A.046, of the gross rent paid in the preceding year 336.3 for the site on which the homestead is located. When a 336.4 homestead is owned by two or more persons as joint tenants or 336.5 tenants in common, such tenants shall determine between them 336.6 which tenant may claim the property taxes payable on the 336.7 homestead. If they are unable to agree, the matter shall be 336.8 referred to the commissioner of revenue whose decision shall be 336.9 final. Property taxes are considered payable in the year 336.10 prescribed by law for payment of the taxes. 336.11 In the case of a claim relating to "property taxes 336.12 payable," the claimant must have owned and occupied the 336.13 homestead on January 2 of the year in which the tax is payable 336.14 and (i) the property must have been classified as homestead 336.15 property pursuant to section 273.124, on or before December 15 336.16 of the assessment year to which the "property taxes payable" 336.17 relate; or (ii) the claimant must provide documentation from the 336.18 local assessor that application for homestead classification has 336.19 been made on or before December 15 of the year in which the 336.20 "property taxes payable" were payable and that the assessor has 336.21 approved the application. 336.22 [EFFECTIVE DATE.] This section is effective beginning with 336.23 refunds based on rent paid in calendar year 2001. 336.24 Sec. 5. Minnesota Statutes 2000, section 290A.04, 336.25 subdivision 2, is amended to read: 336.26 Subd. 2. [HOMEOWNERS.] A claimant whose property taxes 336.27 payable are in excess of the percentage of the household income 336.28 stated below shall pay an amount equal to the percent of income 336.29 shown for the appropriate household income level along with the 336.30 percent to be paid by the claimant of the remaining amount of 336.31 property taxes payable. The state refund equals the amount of 336.32 property taxes payable that remain, up to the state refund 336.33 amount shown below. 336.34 Percent Percent Maximum 336.35 Household Income of Income Paid by State 336.36 Claimant Refund 336.37$0 to 1,029336.38 $0 to 1,189 1.2 percent 18 percent$440$1,190 337.11,030 to 2,059337.2 1,190 to 2,389 1.3 percent 18 percent$440$1,190 337.32,060 to 3,099337.4 2,390 to 3,589 1.4 percent 20 percent$440$1,190 337.53,100 to 4,129337.6 3,590 to 4,779 1.6 percent 20 percent$440$1,190 337.74,130 to 5,159337.8 4,780 to 5,969 1.7 percent 20 percent$440$1,190 337.95,160 to 7,229337.10 5,970 to 8,369 1.9 percent 25 percent$440$1,190 337.117,230 to 8,259337.12 8,370 to 9,559 2.1 percent 25 percent$440$1,190 337.138,260 to 9,289337.14 9,560 to 10,759 2.2 percent 25 percent$440$1,190 337.159,290 to 10,319337.16 10,760 to 11,949 2.3 percent 30 percent$440$1,190 337.1710,320 to 11,349337.18 11,950 to 13,139 2.4 percent 30 percent$440$1,190 337.1911,350 to 12,389337.20 13,140 to 14,349 2.5 percent 30 percent$440$1,190 337.2112,390 to 14,449337.22 14,350 to 16,729 2.6 percent 30 percent$440$1,190 337.2314,450 to 15,479337.24 16,730 to 17,919 2.8 percent 35 percent$440$1,190 337.2515,480 to 16,509337.26 17,920 to 19,119 3.0 percent 35 percent$440$1,190 337.2716,510 to 17,549337.28 19,120 to 20,319 3.2 percent 40 percent$440$1,190 337.2917,550 to 21,669337.30 20,320 to 25,089 3.3 percent 40 percent$440$1,190 337.3121,670 to 24,769337.32 25,090 to 28,679 3.4 percent 45 percent$440$1,190 337.3324,770 to 30,959337.34 28,680 to 41,819 3.5 percent 45 percent$440$1,190 337.3530,960 to 36,1193.5 percent45 percent$440337.3636,120 to 41,279337.37 41,820 to 47,789 3.7 percent 50 percent$440$1,190 337.3841,280 to 58,829337.39 47,790 to 63,329 4.0 percent 50 percent$440$1,190 337.40 63,330 to 64,519 4.0 percent 50 percent $1,080 337.41 64,520 to 65,719 4.0 percent 50 percent $ 960 337.42 65,720 to 66,909 4.0 percent 50 percent $ 830 337.43 66,910 to 68,109 4.0 percent 50 percent $ 720 337.4458,830 to 59,859337.45 68,110 to 69,309 4.0 percent 50 percent$310$600 337.4659,860 to 60,889337.47 69,310 to 70,499 4.0 percent 50 percent$210$360 337.4860,890 to 61,929337.49 70,500 to 71,699 4.0 percent 50 percent$100$120 337.50 The payment made to a claimant shall be the amount of the 337.51 state refund calculated under this subdivision. No payment is 337.52 allowed if the claimant's household income is$61,930$71,700 or 337.53 more. 337.54 [EFFECTIVE DATE.] This section is effective beginning with 337.55 refunds based on property taxes payable in 2002. 337.56 Sec. 6. Minnesota Statutes 2000, section 290A.04, 337.57 subdivision 2a, is amended to read: 337.58 Subd. 2a. [RENTERS.] A claimant whose rent constituting 337.59 property taxes exceeds the percentage of the household income 337.60 stated below must pay an amount equal to the percent of income 338.1 shown for the appropriate household income level along with the 338.2 percent to be paid by the claimant of the remaining amount of 338.3 rent constituting property taxes. The state refund equals the 338.4 amount of rent constituting property taxes that remain, up to 338.5 the maximum state refund amount shown below. 338.6 Percent Percent Maximum 338.7 Household Income of Income Paid by State 338.8 Claimant Refund 338.9 $0 to 3,099338.10 0 to 3,589 1.0 percent 5 percent$1,030$1,190 338.113,100 to 4,129338.12 3,590 to 4,779 1.0 percent 10 percent$1,030$1,190 338.134,130 to 5,159338.14 4,780 to 5,969 1.1 percent 10 percent$1,030$1,190 338.155,160 to 7,229338.16 5,970 to 8,369 1.2 percent 10 percent$1,030$1,190 338.177,230 to 9,289338.18 8,370 to 10,759 1.3 percent 15 percent$1,030$1,190 338.199,290 to 10,319338.20 10,760 to 11,949 1.4 percent 15 percent$1,030$1,190 338.2110,320 to 11,349338.22 11,950 to 13,139 1.4 percent 20 percent$1,030$1,190 338.2311,350 to 13,419338.24 13,140 to 15,539 1.5 percent 20 percent$1,030$1,190 338.2513,420 to 14,449338.26 15,540 to 16,729 1.6 percent 20 percent$1,030$1,190 338.2714,450 to 15,479338.28 16,730 to 17,919 1.7 percent 25 percent$1,030$1,190 338.2915,480 to 17,549338.30 17,920 to 20,319 1.8 percent 25 percent$1,030$1,190 338.3117,550 to 18,579338.32 20,320 to 21,509 1.9 percent 30 percent$1,030$1,190 338.3318,580 to 19,609338.34 21,510 to 22,699 2.0 percent 30 percent$1,030$1,190 338.3519,610 to 20,639338.36 22,700 to 23,899 2.2 percent 30 percent$1,030$1,190 338.3720,640 to 21,669338.38 23,900 to 25,089 2.4 percent 30 percent$1,030$1,190 338.3921,670 to 22,709338.40 25,090 to 26,289 2.6 percent 35 percent$1,030$1,190 338.4122,710 to 23,739338.42 26,290 to 27,489 2.7 percent 35 percent$1,030$1,190 338.4323,740 to 24,769338.44 27,490 to 28,679 2.8 percent 35 percent$1,030$1,190 338.4524,770 to 25,799338.46 28,680 to 29,869 2.9 percent 40 percent$1,030$1,190 338.4725,800 to 26,839338.48 29,870 to 31,079 3.0 percent 40 percent$1,030$1,190 338.4926,840 to 27,869338.50 31,080 to 32,269 3.1 percent 40 percent$1,030$1,190 338.5127,870 to 28,899338.52 32,270 to 33,459 3.2 percent 40 percent$1,030$1,190 338.5328,900 to 29,929338.54 33,460 to 34,649 3.3 percent 45 percent$ 930$1,080 338.5529,930 to 30,959338.56 34,650 to 35,849 3.4 percent 45 percent$ 830$ 960 338.5730,960 to 31,999338.58 35,850 to 37,049 3.5 percent 45 percent$ 720$ 830 338.5932,000 to 33,029338.60 37,050 to 38,239 3.5 percent 50 percent$ 620$ 720 338.6133,030 to 34,059338.62 38,240 to 39,439 3.5 percent 50 percent$ 520$ 600 338.6334,060 to 35,089338.64 39,440 to 40,629 3.5 percent 50 percent$ 310$ 360 338.6535,090 to 36,119338.66 40,630 to 41,819 3.5 percent 50 percent$ 100$ 120 339.1 The payment made to a claimant is the amount of the state 339.2 refund calculated under this subdivision. No payment is allowed 339.3 if the claimant's household income is$36,120$41,820 or more. 339.4 [EFFECTIVE DATE.] This section is effective beginning with 339.5 refunds based on rent constituting property taxes paid in 2001. 339.6 Sec. 7. Minnesota Statutes 2000, section 290A.04, 339.7 subdivision 4, is amended to read: 339.8 Subd. 4. [INFLATION ADJUSTMENT.] Beginning for property 339.9 tax refunds payable in calendar year19962002, the commissioner 339.10 shall annually adjust the dollar amounts of the income 339.11 thresholds and the maximum refunds under subdivisions 2 and 2a 339.12 for inflation. The commissioner shall make the inflation 339.13 adjustments in accordance with section290.06, subdivision 2d1f 339.14 of the Internal Revenue Code, except that for purposes of this 339.15 subdivision the percentage increase shall be determined from the 339.16 year ending on June 30,19942000, to the year ending on June 30 339.17 of the year preceding that in which the refund is payable. The 339.18 commissioner shall use the appropriate percentage increase to 339.19 annually adjust the income thresholds and maximum refunds under 339.20 subdivisions 2 and 2a for inflation without regard to whether or 339.21 not the income tax brackets are adjusted for inflation in that 339.22 year. The commissioner shall round the thresholds and the 339.23 maximum amounts, as adjusted to the nearest $10 amount. If the 339.24 amount ends in $5, the commissioner shall round it up to the 339.25 next $10 amount. 339.26 The commissioner shall annually announce the adjusted 339.27 refund schedule at the same time provided under section 290.06. 339.28 The determination of the commissioner under this subdivision is 339.29 not a rule under the Administrative Procedure Act. 339.30 [EFFECTIVE DATE.] This section is effective the day 339.31 following final enactment. 339.32 Sec. 8. [290A.046] [RENT CONSTITUTING PROPERTY TAXES.] 339.33 (a)(1) For claims based on rent paid in calendar years 2001 339.34 and 2002, the percentage of rent constituting property taxes is 339.35 19 percent. 340.1 (2) For claims based on rent paid in calendar year 2003 and 340.2 later calendar years, the percentage is the percentage 340.3 determined under paragraph (c), rounded to the nearest whole 340.4 percent. 340.5 (b)(1) By September 30, 2002, the commissioner shall 340.6 estimate the average percentage that property taxes consist of 340.7 rent paid for occupancy of residential properties in Minnesota 340.8 for taxes and rents payable in the immediately preceding 340.9 calendar year and make the estimate available to the public. In 340.10 preparing the estimate, the commissioner shall separately 340.11 estimate the percentage for, at least, the metropolitan area, as 340.12 defined in section 473.121, and the rest of the state and 340.13 provide this information to the chairs of the committees of the 340.14 house and senate with jurisdiction over taxes and tax laws. This 340.15 percentage must be used in making the determination under 340.16 paragraph (c) for refunds based on rent paid in calendar years 340.17 2003 through 2008. 340.18 (2) Beginning in 2008 and each year after 2008 that is 340.19 evenly divisible by four, the commissioner shall estimate the 340.20 average percentage that property taxes consist of rent paid for 340.21 occupancy of residential properties in Minnesota for taxes and 340.22 rents payable in the immediately preceding calendar year. The 340.23 commissioner shall make the estimate available to the public by 340.24 September 30 of the year in which it was prepared. This 340.25 estimate must be used in making the determination under 340.26 paragraph (c) for refunds based on rent paid in the four 340.27 calendar years immediately following the year in which the 340.28 estimate is published. 340.29 (c) For claims based on rent paid in calendar year 2004 and 340.30 later years, the percentage of rent constituting property taxes 340.31 is the greater of: 340.32 (1) the percentage estimate determined under paragraph (b); 340.33 or 340.34 (2) the percentage used in the immediately previous year 340.35 minus the greater of (i) one-third of the difference between the 340.36 percentage determined under paragraph (b) and the percentage 341.1 used in the year the estimate was prepared or (ii) one 341.2 percentage point. 341.3 (d) In preparing the estimates under this section, the 341.4 commissioner may use surveys of landlords, information obtained 341.5 from assessors, or any other information that the commissioner 341.6 considers appropriate. The estimates are not subject to chapter 341.7 14. 341.8 [EFFECTIVE DATE.] This section is effective beginning with 341.9 refunds based on rent paid in calendar year 2001. 341.10 Sec. 9. Minnesota Statutes 2000, section 290A.15, is 341.11 amended to read: 341.12 290A.15 [CLAIM APPLIED AGAINST OUTSTANDING LIABILITY.] 341.13 The amount of any claim otherwise payable under this 341.14 chapter may be applied by the commissioner against any 341.15 delinquent tax liability ofthe claimant or spouse of the341.16claimant payable to the department of revenueany member of the 341.17 household. If there are two members of the household, the 341.18 commissioner may apply only one-half of a refund to the separate 341.19 liability of either member of the household. 341.20 [EFFECTIVE DATE.] This section is effective beginning with 341.21 refunds paid on or after July 1, 2001. 341.22 Sec. 10. [REPEALER.] 341.23 Minnesota Statutes 2000, section 290A.04, subdivision 2j, 341.24 is repealed. 341.25 [EFFECTIVE DATE.] This section is effective for taxable 341.26 years beginning after December 31, 2001. 341.27 ARTICLE 11 341.28 SUSTAINABLE FOREST INCENTIVE ACT 341.29 Section 1. Minnesota Statutes 2000, section 88.49, 341.30 subdivision 5, is amended to read: 341.31 Subd. 5. [CANCELLATION.] Upon the failure of the owner 341.32 faithfully to fulfill and perform such contract or any provision 341.33 thereof, or any requirement of sections 88.47 to 88.53, or any 341.34 rule adopted by the commissioner thereunder, the commissioner 341.35 may cancel the contract in the manner herein provided. The 341.36 commissioner shall give to the owner, in the manner prescribed 342.1 in section 88.48, subdivision 4, 60 days' notice of a hearing 342.2 thereon at which the owner may appear and show cause, if any, 342.3 why the contract should not be canceled. The commissioner shall 342.4 thereupon determine whether the contract should be canceled and 342.5 make an order to that effect. Notice of the commissioner's 342.6 determination and the making of the order shall be given to the 342.7 owner in the manner provided in section 88.48, subdivision 4. 342.8 On determining that the contract should be canceled and no 342.9 appeal therefrom be taken, the commissioner shall send notice 342.10 thereof to the auditor of the county and to the town clerk of 342.11 the town affected and file with the recorder a certified copy of 342.12 the order, who shall forthwith note the cancellation upon the 342.13 record thereof, and thereupon the land therein described shall 342.14 cease to be an auxiliary forest and, together with the timber 342.15 thereon, become liable to all taxes and assessments that 342.16 otherwise would have been levied against it had it never been an 342.17 auxiliary forest from the time of the making of the contract, 342.18 any provisions of the statutes of limitation to the contrary 342.19 notwithstanding, less the amount of taxes paid under the 342.20 provisions of section 88.51, subdivision 1, together with 342.21 interest on such taxes and assessments at six percent per annum, 342.22 but without penalties. 342.23 The commissioner may in like manner and with like effect 342.24 cancel the contract upon written application of the owner. 342.25 The commissioner shall cancel any contract if the owner has 342.26 made successful application under sections270.31 to 270.39342.27 290C.01 to 290C.11 inclusive, theMinnesota Tree Growth Tax Law342.28 Sustainable Forest Incentive Act, and has paid to the county 342.29 treasurer the difference between the amount which would have 342.30 been paid had the land under contract been subject to the 342.31 Minnesota Tree Growth Tax Law and the Sustainable Forest 342.32 Incentive Act from the date of the filing of the contract and 342.33 the amount actually paid under section 88.51, subdivisions 1 and 342.34 2. This tax difference must be calculated based on the years 342.35 the lands would have been taxed under the Tree Growth Tax Law 342.36 and the Sustainable Forest Incentive Act. The sustainable 343.1 forest tax difference is net of the incentive payment provision 343.2 of section 290C.07. If the amount which would have been paid, 343.3 had the land under contract been under the Minnesota Tree Growth 343.4 Tax Law and the Sustainable Forest Incentive Act from the date 343.5 of the filing of the contract, is less than the amount actually 343.6 paid under the contract, the cancellation shall be made without 343.7 further payment by the owner. 343.8 When the execution of any contract creating an auxiliary 343.9 forest shall have been procured through fraud or deception 343.10 practiced upon the county board or the commissioner or any other 343.11 person or body representing the state, it may be canceled upon 343.12 suit brought by the attorney general at the direction of the 343.13 commissioner. This cancellation shall have the same effect as 343.14 the cancellation of a contract by the commissioner. 343.15 Sec. 2. Minnesota Statutes 2000, section 88.49, 343.16 subdivision 9a, is amended to read: 343.17 Subd. 9a. [LAND TRADES WITH GOVERNMENTAL UNITS.] 343.18 Notwithstanding subdivisions 6 and 9, or section 88.491, 343.19 subdivision 2, if an owner trades land under auxiliary forest 343.20 contract for land owned by a governmental unit and the owner 343.21 agrees to use the land received in trade from the governmental 343.22 unit for the production of forest products, upon resolution of 343.23 the county board, no taxes and assessments shall be levied 343.24 against the land traded, except that any current or delinquent 343.25 annual taxes or yield taxes due on that land while it was under 343.26 the auxiliary forest provision must be paid prior to the land 343.27 exchange. The land received from the governmental unit in the 343.28 land trade automatically qualifies for inclusion in theTree343.29Growth Tax LawSustainable Forest Incentive Act. 343.30 Sec. 3. Minnesota Statutes 2000, section 88.491, 343.31 subdivision 2, is amended to read: 343.32 Subd. 2. [EFFECT OF EXPIRED CONTRACT.] When auxiliary 343.33 forest contracts expire, or prior to expiration by mutual 343.34 agreement between the land owner and the appropriate county 343.35 office, the lands previously covered by an auxiliary forest 343.36 contract automatically qualify for inclusionin the Tree Growth344.1Tax Lawunder the provisions of the Sustainable Forest Incentive 344.2 Act; provided that when such lands are included in theTree344.3Growth Tax LawSustainable Forest Incentive Act prior to 344.4 expiration of the auxiliary forest contract they will be 344.5 transferred and a tax paid as provided inaccordance with the344.6provisions ofsection 88.49, subdivision 5, upon application and 344.7 inclusion in the sustainable forest incentive program. The land 344.8 owner shall pay taxes in an amount equal to the difference 344.9 between the amount which would have been paid from the date of 344.10 the filing of the contract had the land under contract been 344.11 subject to the Minnesota Tree Growth Tax Lawfrom the date of344.12the filing of the contractand, beginning with taxes payable in 344.13 2003 enrolled in the sustainable forest incentive program, and 344.14 the amount actually paid under section 88.51, subdivisions 1 and 344.15 2. 344.16 Sec. 4. Minnesota Statutes 2000, section 270A.03, 344.17 subdivision 7, is amended to read: 344.18 Subd. 7. [REFUND.] "Refund" means an individual income tax 344.19 refund or political contribution refund, pursuant to chapter 344.20 290, or a property tax credit or refund, pursuant to chapter 344.21 290A, or a sustainable forest tax payment to a claimant under 344.22 chapter 290C. 344.23 For purposes of this chapter, lottery prizes, as set forth 344.24 in section 349A.08, subdivision 8, and amounts granted to 344.25 persons by the legislature on the recommendation of the joint 344.26 senate-house of representatives subcommittee on claims shall be 344.27 treated as refunds. 344.28 In the case of a joint property tax refund payable to 344.29 spouses under chapter 290A, the refund shall be considered as 344.30 belonging to each spouse in the proportion of the total refund 344.31 that equals each spouse's proportion of the total income 344.32 determined under section 290A.03, subdivision 3. In the case of 344.33 a joint income tax refund under chapter 289A, the refund shall 344.34 be considered as belonging to each spouse in the proportion of 344.35 the total refund that equals each spouse's proportion of the 344.36 total taxable income determined under section 290.01, 345.1 subdivision 29. The commissioner shall remit the entire refund 345.2 to the claimant agency, which shall, upon the request of the 345.3 spouse who does not owe the debt, determine the amount of the 345.4 refund belonging to that spouse and refund the amount to that 345.5 spouse. For court fines, fees, and surcharges and court-ordered 345.6 restitution under section 611A.04, subdivision 2, the notice 345.7 provided by the commissioner of revenue under section 270A.07, 345.8 subdivision 2, paragraph (b), serves as the appropriate legal 345.9 notice to the spouse who does not owe the debt. 345.10 [EFFECTIVE DATE.] This section is effective for refunds in 345.11 2003 and thereafter. 345.12 Sec. 5. [290C.01] [PURPOSE.] 345.13 It is the policy of this state to promote sustainable 345.14 forest resource management on the state's public and private 345.15 lands. Recognizing that private forests comprise approximately 345.16 one-half of the state forest land resources, that healthy and 345.17 robust forest land provides significant benefits to the state of 345.18 Minnesota, and that ad valorem property taxes represent a 345.19 significant annual cost that can discourage long-term forest 345.20 management investments, this chapter, hereafter referred to as 345.21 the "Sustainable Forest Incentive Act," is enacted to encourage 345.22 the state's private forest landowners to make a long-term 345.23 commitment to sustainable forest management. 345.24 [EFFECTIVE DATE.] This section is effective for taxes 345.25 levied in 2002, payable in 2003, and thereafter. 345.26 Sec. 6. [290C.02] [DEFINITIONS.] 345.27 Subdivision 1. [APPLICATION.] When used in sections 345.28 290C.01 to 290C.11, the terms in this section have the meanings 345.29 given them. 345.30 Subd. 2. [APPROVED PLAN WRITERS.] "Approved plan writers" 345.31 are natural resource professionals who are self-employed, 345.32 employed by private companies or individuals, nonprofit 345.33 organizations, local units of government, or public agencies, 345.34 and who are approved by the commissioner of natural resources. 345.35 Persons determined to be certified foresters by the Society of 345.36 American Foresters shall be deemed to meet the standards 346.1 required under this subdivision. The commissioner of natural 346.2 resources shall issue a unique identification number to each 346.3 approved planner. 346.4 Subd. 3. [CLAIMANT.] "Claimant" means a person, as that 346.5 term is defined in section 290.01, subdivision 2, who owns 346.6 forest land in Minnesota and files an application authorized by 346.7 the Sustainable Forest Incentive Act. No more than one claimant 346.8 is entitled to a payment under this act with respect to any 346.9 tract, parcel, or piece of land enrolled under this act. When 346.10 enrolled forest land is owned by two or more persons, the owners 346.11 must determine between them which person may claim the payments 346.12 provided under sections 290C.01 to 290C.11. 346.13 Subd. 4. [COMMISSIONER.] "Commissioner" means the 346.14 commissioner of revenue. 346.15 Subd. 5. [CURRENT USE VALUE.] "Current use value" means 346.16 the statewide average annual income per acre, multiplied by 90 346.17 percent and divided by the capitalization rate determined under 346.18 subdivision 9. The statewide net annual income shall be a 346.19 weighted average based on the most recent data as of July 1 of 346.20 the computation year on stumpage prices and annual tree growth 346.21 rates and acreage by cover type provided by the department of 346.22 natural resources and the United States Department of 346.23 Agriculture Forest Service North Central Research Station. 346.24 Subd. 6. [FOREST LAND.] "Forest land" means land 346.25 containing a minimum of 20 contiguous acres for which the owner 346.26 has implemented a forest management plan that was prepared or 346.27 updated within the past ten years by an approved plan writer. 346.28 At least 50 percent of the contiguous acreage must meet the 346.29 definition of forest land in section 88.01, subdivision 7. For 346.30 the purposes of sections 290C.01 to 209C.11, forest land does 346.31 not include (i) land used for residential or agricultural 346.32 purposes, (ii) land enrolled in the reinvest in Minnesota 346.33 program, a state or federal conservation reserve or easement 346.34 reserve program under sections 103F.501 to 103F.531, the 346.35 Minnesota agricultural property tax law under section 273.111, 346.36 or land subject to agricultural land preservation controls or 347.1 restrictions as defined in section 40A.02 or under the 347.2 Metropolitan Agricultural Preserves Act under chapter 473H, or 347.3 (iii) land improved with a structure, pavement, sewer, campsite, 347.4 or any road, other than a township road, used for purposes not 347.5 prescribed in the forest management plan. 347.6 Subd. 7. [FOREST MANAGEMENT PLAN.] "Forest management plan" 347.7 means a written document providing a framework for site-specific 347.8 healthy, productive, and sustainable forest resources. A forest 347.9 management plan must include at least the following: (i) 347.10 owner-specific forest management goals for the property 347.11 including, when available, goals for individual cover types; 347.12 (ii) a reliable field inventory of the individual forest cover 347.13 types, their age, and density; (iii) a description of the soil 347.14 type and quality; (iv) an aerial photo and/or map of the 347.15 vegetation and other natural features of the property clearly 347.16 indicating the boundaries of the property and of the forest 347.17 land; (v) the proposed future conditions of the property; (vi) 347.18 prescriptions to meet proposed future conditions of the 347.19 property; (vii) a recommended timetable for implementing the 347.20 prescribed activities; and (viii) a legal description of the 347.21 parcels encompassing the parcels included in the plan. All 347.22 management activities prescribed in a plan must be in accordance 347.23 with the recommended timber harvesting and forest management 347.24 guidelines. The commissioner of natural resources shall provide 347.25 a framework for plan content and updating and revising plans. 347.26 Subd. 8. [TIMBER HARVESTING AND FOREST MANAGEMENT 347.27 GUIDELINES.] "Timber harvesting and forest management guidelines" 347.28 means guidelines developed under section 89A.05 and adopted by 347.29 the Minnesota forest resources council in 1998. 347.30 Subd. 9. [CAPITALIZATION RATE.] By July 1 of each year, 347.31 the commissioner shall determine a statewide capitalization rate 347.32 for use under this act. The rate shall be the average annual 347.33 effective interest rate for St. Paul on new loans under the Farm 347.34 Credit Bank system calculated under section 2032A(e)(7)(A) of 347.35 the Internal Revenue Code. 347.36 [EFFECTIVE DATE.] This section is effective for taxes 348.1 levied in 2002, payable in 2003, and thereafter. 348.2 Sec. 7. [290C.03] [ELIGIBILITY REQUIREMENTS.] 348.3 (a) Property may be enrolled in the sustainable forest 348.4 incentive program under this chapter if all of the following 348.5 conditions are met: 348.6 (1) property consists of at least 20 contiguous acres and 348.7 at least 50 percent of the land must meet the definition of 348.8 forest land in section 88.01, subdivision 7, during the 348.9 enrollment; 348.10 (2) a forest management plan for the property must be 348.11 prepared by an approved plan writer and implemented during the 348.12 period in which the land is enrolled; 348.13 (3) timber harvesting and forest management guidelines must 348.14 be used in conjunction with any timber harvesting or forest 348.15 management activities conducted on the land during the period in 348.16 which the land is enrolled; 348.17 (4) the property must be enrolled for a minimum of eight 348.18 years; 348.19 (5) there are no delinquent property taxes on the property; 348.20 and 348.21 (6) claimants enrolling at least 640 contiguous acres in 348.22 the sustainable forest incentive program must allow year-round, 348.23 nonmotorized access to fish and wildlife resources on enrolled 348.24 land except within one-fourth mile of a permanent dwelling or 348.25 during periods of high fire hazard as determined by the 348.26 commissioner of natural resources. For purposes of this clause, 348.27 acres are considered to be contiguous even if they are separated 348.28 by a road, waterway, railroad track, or other similar 348.29 intervening type of property. 348.30 (b) Claimants required to allow access under clause (6) do 348.31 not by that action: 348.32 (1) extend any assurance that the land is safe for any 348.33 purpose; 348.34 (2) confer upon the person the legal status of an invitee 348.35 or licensee to whom a duty of care is owed; or 348.36 (3) assume responsibility for or incur liability for any 349.1 injury to the person or property caused by an act or omission of 349.2 the person. 349.3 [EFFECTIVE DATE.] This section is effective for taxes 349.4 levied in 2002, payable in 2003, and thereafter. 349.5 Sec. 8. [290C.04] [APPLICATIONS.] 349.6 (a) A landowner may apply to enroll forest land for the 349.7 sustainable forest incentive program under this act. The 349.8 claimant must complete, sign, and submit an application to the 349.9 commissioner by September 30 in order for the land to become 349.10 eligible beginning in the next year. The application shall be 349.11 on a form prescribed by the commissioner and must include the 349.12 information the commissioner deems necessary. At a minimum, the 349.13 application must show the following information for the land and 349.14 the claimant: (i) the claimant's social security number or 349.15 state or federal business tax registration number and date of 349.16 birth, (ii) the claimant's address, (iii) the claimant's 349.17 signature, (iv) the county's parcel identification numbers for 349.18 the tax parcels that completely contain the claimant's forest 349.19 land that is sought to be enrolled, (v) the number of acres 349.20 eligible for enrollment in the program, (vi) the approved plan 349.21 writer's signature and identification number, and (vii) proof, 349.22 in a form specified by the commissioner, that the claimant has 349.23 executed and acknowledged in the manner required by law for a 349.24 deed, and recorded, a covenant that the land is not and shall 349.25 not be developed in a manner inconsistent with the requirements 349.26 and conditions of chapter 290C. The covenant shall state in 349.27 writing that the covenant is binding on the claimant and the 349.28 claimant's successor or assignee, and that it runs with the land 349.29 for a period of not less than eight years. The commissioner 349.30 shall specify the form of the covenant and provide copies upon 349.31 request. The covenant must include a legal description that 349.32 encompasses all the forest land that the claimant wishes to 349.33 enroll under this section or the certificate of title number for 349.34 that land if it is registered land. 349.35 (b) In all cases, the commissioner shall notify the 349.36 claimant within 90 days after receipt of a completed application 350.1 that either the land has or has not been approved for enrollment. 350.2 The claimant for which the application is denied may, within 60 350.3 days of receipt of a notice of denial, appeal the denial to the 350.4 commissioner. 350.5 (c) Within 45 days after the denial of an application, or 350.6 within 45 days after the denial of an appeal, the commissioner 350.7 shall execute and acknowledge a document releasing the land from 350.8 the covenant required under this chapter. The document must be 350.9 mailed to the claimant and is entitled to be recorded. 350.10 (d) The social security numbers collected from individuals 350.11 under this section are private data as provided in section 13.49. 350.12 The state or federal business tax registration number and date 350.13 of birth data collected under this section are also private data 350.14 but may be shared with county assessors for purposes of tax 350.15 administration and with county treasurers for purposes of the 350.16 revenue recapture under chapter 270A. 350.17 [EFFECTIVE DATE.] This section is effective for taxes 350.18 levied in 2002, payable in 2003, and thereafter. 350.19 Sec. 9. [290C.05] [ANNUAL CERTIFICATION.] 350.20 On or before July 1 of each year, beginning with the year 350.21 after the claimant has received an approved application, the 350.22 commissioner shall send each claimant enrolled under the 350.23 sustainable forest incentive program a certification form. The 350.24 claimant must sign the certification, attesting that the 350.25 requirements and conditions for continued enrollment in the 350.26 program are currently being met, and must return the signed 350.27 certification form to the commissioner by August 15 of that same 350.28 year. Failure to return an annual certification form by the due 350.29 date shall result in removal of the lands from the provisions of 350.30 the sustainable forest incentive program, and the imposition of 350.31 any applicable removal penalty. The claimant may appeal the 350.32 removal and any associated penalty according to the procedures 350.33 and within the time allowed under this chapter. 350.34 [EFFECTIVE DATE.] This section is effective for taxes 350.35 levied in 2002, payable in 2003, and thereafter. 350.36 Sec. 10. [290C.06] [CALCULATION OF AVERAGE ESTIMATED 351.1 MARKET VALUE; TIMBERLAND.] 351.2 The commissioner shall annually calculate a statewide 351.3 average estimated market value per acre for class 2b timberland 351.4 under section 273.13, subdivision 23, paragraph (b). 351.5 [EFFECTIVE DATE.] This section is effective for taxes 351.6 levied in 2002, payable in 2003, and thereafter. 351.7 Sec. 11. [290C.07] [CALCULATION OF INCENTIVE PAYMENT.] 351.8 An approved claimant under the sustainable forest incentive 351.9 program is eligible to receive an annual payment. The payment 351.10 shall equal the greater of: 351.11 (1) the difference between the property tax that would be 351.12 paid on the property using the previous year's statewide average 351.13 total township tax rate and the class rate for class 2b 351.14 timberland under section 273.13, subdivision 23, paragraph (b), 351.15 if the property were valued at (i) the average statewide 351.16 timberland market value per acre calculated under section 351.17 290C.06, and (ii) the average statewide timberland current use 351.18 value per acre calculated under section 290C.02, subdivision 5; 351.19 (2) two-thirds of the property tax amount determined by 351.20 using the previous year's statewide average total township tax 351.21 rate, the estimated market value per acre as calculated in 351.22 section 290C.06, and the class rate for 2b timberland under 351.23 section 273.13, subdivision 23, paragraph (b); or 351.24 (3) $1.50 per acre for each acre enrolled in the 351.25 sustainable forest incentive program. 351.26 [EFFECTIVE DATE.] This section is effective for taxes 351.27 levied in 2002, payable in 2003, and thereafter. 351.28 Sec. 12. [290C.08] [ANNUAL INCENTIVE PAYMENT; 351.29 APPROPRIATION.] 351.30 Subdivision 1. [ANNUAL PAYMENT.] An incentive payment for 351.31 each acre of enrolled land will be made annually to each 351.32 claimant in the amount determined under section 290C.07. The 351.33 incentive payment shall be paid on or before October 1 each year 351.34 based on the certifications due August 15 of that year. 351.35 Interest at the annual rate determined under section 270.75 351.36 shall be included with any incentive payment not paid by the 352.1 later of October 1 of the year the certification was due, or 45 352.2 days after the completed certification was returned or filed if 352.3 the commissioner accepts a certification filed after August 15 352.4 of the taxes payable year as the resolution of an appeal. 352.5 Subd. 2. [APPROPRIATION.] The amount necessary to make the 352.6 payments under this section is annually appropriated to the 352.7 commissioner from the general fund. 352.8 [EFFECTIVE DATE.] This section is effective for taxes 352.9 levied in 2002, payable in 2003, and thereafter. 352.10 Sec. 13. [290C.09] [REMOVAL FOR PROPERTY TAX DELINQUENCY.] 352.11 The commissioner shall immediately remove any property 352.12 enrolled in the sustainable forest incentive program for which 352.13 taxes are determined to be delinquent as provided in chapter 279 352.14 and shall notify the claimant of such action. Lands terminated 352.15 from the sustainable forest incentive program under this section 352.16 are not entitled to any payments provided in this chapter and 352.17 are subject to removal penalties prescribed in section 290C.11. 352.18 The claimant has 90 days from the receipt of notice from the 352.19 commissioner under this section to pay the delinquent taxes. If 352.20 the delinquent taxes are paid within this 90-day period, the 352.21 lands shall be reinstated in the program as if they had not been 352.22 withdrawn and without the payment of a penalty. 352.23 [EFFECTIVE DATE.] This section is effective for taxes 352.24 levied in 2002, payable in 2003, and thereafter. 352.25 Sec. 14. [290C.10] [WITHDRAWAL PROCEDURES.] 352.26 An approved claimant under the sustainable forest incentive 352.27 program for a minimum of four years may notify the commissioner 352.28 of the intent to terminate enrollment. Within 90 days of 352.29 receipt of notice to terminate enrollment, the commissioner 352.30 shall inform the claimant in writing, acknowledging receipt of 352.31 this notice and indicating the effective date of termination 352.32 from the sustainable forest incentive program. Termination of 352.33 enrollment in the sustainable forest incentive program occurs on 352.34 January 1 of the fifth calendar year that begins after receipt 352.35 by the commissioner of the termination notice. After the 352.36 commissioner issues an effective date of termination, a claimant 353.1 wishing to continue the property's enrollment in the sustainable 353.2 forest incentive program beyond the termination date must apply 353.3 for enrollment as prescribed in section 290C.04. A claimant who 353.4 withdraws a parcel of land from this program may not reenroll 353.5 the parcel for a period of three years. Within 45 days after 353.6 the termination date, the commissioner shall execute and 353.7 acknowledge a document releasing the land from the covenant 353.8 required under this chapter. The document must be mailed to the 353.9 claimant and is entitled to be recorded. The commissioner may 353.10 allow early withdrawal from the Sustainable Forest Incentive Act 353.11 without penalty in cases of condemnation for a public purpose 353.12 notwithstanding the provisions of this section. 353.13 [EFFECTIVE DATE.] This section is effective for taxes 353.14 levied in 2002, payable in 2003, and thereafter. 353.15 Sec. 15. [290C.11] [PENALTIES FOR REMOVAL.] 353.16 (a) If the commissioner determines that property enrolled 353.17 in the sustainable forest incentive program is in violation of 353.18 the conditions for enrollment as specified in section 290C.03, 353.19 the commissioner shall notify the claimant of the intent to 353.20 remove all enrolled land from the sustainable forest incentive 353.21 program. The claimant has 90 days to appeal this determination. 353.22 The appeal must be made in writing to the commissioner, who 353.23 shall, within 60 days, notify the claimant as to the outcome of 353.24 the appeal. Within 60 days after the commissioner denies an 353.25 appeal, or within 120 days after the commissioner received a 353.26 written appeal if the commissioner has not made a determination 353.27 in that time, the owner may appeal to tax court under chapter 353.28 271 as if the appeal is from an order of the commissioner. 353.29 (b) If the commissioner determines the property is to be 353.30 removed from the sustainable forest incentive program, the 353.31 claimant is liable for payment to the commissioner in the amount 353.32 equal to the payments received under this chapter for the 353.33 previous four-year period, plus interest. The claimant has 90 353.34 days to satisfy the payment for removal of land from the 353.35 sustainable forest incentive program under this section. If the 353.36 penalty is not paid within the 90-day period under paragraph 354.1 (a), the commissioner shall certify the amount to the county 354.2 auditor for collection as a part of the general ad valorem real 354.3 property taxes on the land in the following taxes payable year. 354.4 [EFFECTIVE DATE.] This section is effective for taxes 354.5 levied in 2002, payable in 2003, and thereafter. 354.6 Sec. 16. [REPEALER.] 354.7 Minnesota Statutes 2000, sections 270.31; 270.32; 270.33; 354.8 270.34; 270.35; 270.36; 270.37; 270.38; and 270.39, are repealed. 354.9 [EFFECTIVE DATE.] This section is effective for taxes 354.10 levied in 2002, payable in 2003, and thereafter. 354.11 ARTICLE 12 354.12 LOCAL DEVELOPMENT 354.13 Section 1. Minnesota Statutes 2000, section 276A.01, 354.14 subdivision 3, is amended to read: 354.15 Subd. 3. [COMMERCIAL-INDUSTRIAL PROPERTY.] 354.16 "Commercial-industrial property" means the following categories 354.17 of property, as defined in section 273.13, excluding that 354.18 portion of the property (i) that may, by law, constitute the tax 354.19 base for a tax increment pledged pursuant to section 469.042 or 354.20 469.162 or sections 469.174 to 469.178, certification of which 354.21 was requested prior to May 1, 1996, to the extent and while the 354.22 tax increment is so pledged; or (ii) that is exempt from 354.23 taxation under section 272.02: 354.24 (1) that portion of class 5 property consisting of unmined 354.25 iron ore and low-grade iron-bearing formations as defined in 354.26 section 273.14, tools, implements, and machinery, except the 354.27 portion of high voltage transmission lines, the value of which 354.28 is deducted from net tax capacity under section 273.425; and 354.29 (2) that portion of class 3 and class 5 property which is 354.30 either used or zoned for use for any commercial or industrial 354.31 purpose, except for such property which is, or, in the case of 354.32 property under construction, will when completed be used 354.33 exclusively for residential occupancy and the provision of 354.34 services to residential occupants thereof. Property must be 354.35 considered as used exclusively for residential occupancy only if 354.36 each of not less than 80 percent of its occupied residential 355.1 units is, or, in the case of property under construction, will 355.2 when completed be occupied under an oral or written agreement 355.3 for occupancy over a continuous period of not less than 30 days. 355.4 If the classification of property prescribed by section 355.5 273.13 is modified by legislative amendment, the references in 355.6 this subdivision are to the successor class or classes of 355.7 property, or portions thereof, that include the kinds of 355.8 property designated in this subdivision. 355.9 [EFFECTIVE DATE.] This section is effective retroactive to 355.10 July 1, 1997, for taxes levied in 1997, payable in 1998, and 355.11 subsequent years. 355.12 Sec. 2. Minnesota Statutes 2000, section 469.169, is 355.13 amended by adding a subdivision to read: 355.14 Subd. 15. [ADDITIONAL BORDER CITY ALLOCATIONS.] In 355.15 addition to tax reductions authorized in subdivisions 7 to 14, 355.16 the commissioner shall allocate $1,500,000 for tax reductions to 355.17 border city enterprise zones in cities located on the western 355.18 border of the state. The commissioner shall make allocations to 355.19 zones in cities on the western border on a per capita basis. 355.20 Allocations made under this subdivision may be used for tax 355.21 reductions as provided in section 469.171, or for other offsets 355.22 of taxes imposed on or remitted by businesses located in the 355.23 enterprise zone, but only if the municipality determines that 355.24 the granting of the tax reduction or offset is necessary in 355.25 order to retain a business within or attract a business to the 355.26 zone. Limitations on allocations under subdivision 7 do not 355.27 apply to this allocation. 355.28 [EFFECTIVE DATE.] This section is effective the day 355.29 following final enactment. 355.30 Sec. 3. Minnesota Statutes 2000, section 469.174, 355.31 subdivision 1, is amended to read: 355.32 Subdivision 1. [GENERALLY.] In sections 469.174 to469.179355.33 469.1799, the terms defined in this section have the meanings 355.34 given them herein, unless the context indicates a different 355.35 meaning. 355.36 [EFFECTIVE DATE.] This section is effective for all tax 356.1 increment financing districts, regardless of when the request 356.2 for certification was made. 356.3 Sec. 4. Minnesota Statutes 2000, section 469.174, 356.4 subdivision 3, is amended to read: 356.5 Subd. 3. [BONDS.] "Bonds" means any bonds, including 356.6 refunding bonds, notes, interim certificates, 356.7 debentures, interfund loans or advances, or other obligations 356.8 issued by an authority under section 469.178 or which were 356.9 issued in aid of a project under any other law, except revenue 356.10 bonds issued pursuant to sections 469.152 to 469.165, prior to 356.11 August 1, 1979. 356.12 Sec. 5. Minnesota Statutes 2000, section 469.174, 356.13 subdivision 10, is amended to read: 356.14 Subd. 10. [REDEVELOPMENT DISTRICT.] (a) "Redevelopment 356.15 district" means a type of tax increment financing district 356.16 consisting of a project, or portions of a project, within which 356.17 the authority finds by resolution that one or more of the 356.18 following conditions, reasonably distributed throughout the 356.19 district, exists: 356.20 (1) parcels consisting of 70 percent of the area of the 356.21 district are occupied by buildings, streets, utilities, paved or 356.22 gravel parking lots, or otherimprovementssimilar structures 356.23 and more than 50 percent of the buildings, not including 356.24 outbuildings, are structurally substandard to a degree requiring 356.25 substantial renovation or clearance; or 356.26 (2) the property consists of vacant, unused, underused, 356.27 inappropriately used, or infrequently used railyards, rail 356.28 storage facilities, or excessive or vacated railroad 356.29 rights-of-way; or 356.30 (3) tank facilities, or property whose immediately previous 356.31 use was for tank facilities, as defined in section 115C.02, 356.32 subdivision 15, if the tank facilities: 356.33 (i) have or had a capacity of more than 1,000,000 gallons; 356.34 (ii) are located adjacent to rail facilities; and 356.35 (iii) have been removed or are unused, underused, 356.36 inappropriately used, or infrequently used. 357.1 (b) For purposes of this subdivision, "structurally 357.2 substandard"shall mean containing defects in structural357.3elements or a combination of deficiencies in essential utilities357.4and facilities, light and ventilation, fire protection including357.5adequate egress, layout and condition of interior partitions, or357.6similar factors, which defects or deficiencies are of sufficient357.7total significance to justify substantial renovation or357.8clearancemeans a building that: 357.9 (1) is in an advanced state of disrepair or neglect of 357.10 necessary repairs to the primary and structural components of 357.11 the building that a documented building condition analysis 357.12 determines that major repair is required or the defects are so 357.13 serious and so extensive that the building must be removed; or 357.14 (2) has major defects in secondary building components, 357.15 such as doors, windows, porches, gutters and downspouts, and 357.16 fascia, requiring repairs costing 25 percent of the estimated 357.17 market value of the building. 357.18 (c) A building is not structurally substandard if it is in 357.19 compliance with the building code applicable to new buildings or 357.20 could be modified to satisfy the building code at a cost of less 357.21 than 15 percent of the cost of constructing a new structure of 357.22 the same square footage and type on the site. The municipality 357.23 may find that a building is not disqualified as structurally 357.24 substandard under the preceding sentence on the basis of 357.25 reasonably available evidence, such as the size, type, and age 357.26 of the building, the average cost of plumbing, electrical, or 357.27 structural repairs, or other similar reliable evidence. The 357.28 municipality may not make such a determination without an 357.29 interior inspection of the property, but need not have an 357.30 independent, expert appraisal prepared of the cost of repair and 357.31 rehabilitation of the building. An interior inspection of the 357.32 property is not required, if the municipality finds that (1) the 357.33 municipality or authority is unable to gain access to the 357.34 property after using its best efforts to obtain permission from 357.35 the party that owns or controls the property; and (2) the 357.36 evidence otherwise supports a reasonable conclusion that the 358.1 building is structurally substandard. Items of evidence that 358.2 support such a conclusion include recent fire or police 358.3 inspections, on-site property tax appraisals or housing 358.4 inspections, exterior evidence of deterioration, or other 358.5 similar reliable evidence. Written documentation of the 358.6 findings and reasons why an interior inspection was not 358.7 conducted must be made and retained under section 469.175, 358.8 subdivision 3, clause (1). 358.9 (d) A parcel is deemed to be occupied by a structurally 358.10 substandard building for purposes of the finding under paragraph 358.11 (a) if all of the following conditions are met: 358.12 (1) the parcel was occupied by a substandard building 358.13 within three years of the filing of the request for 358.14 certification of the parcel as part of the district with the 358.15 county auditor; 358.16 (2) the substandard building was demolished or removed by 358.17 the authority or the demolition or removal was financed by the 358.18 authority or was done by a developer under a development 358.19 agreement with the authority; 358.20 (3) the authority found by resolution before the demolition 358.21 or removal that the parcel was occupied by a structurally 358.22 substandard building and that after demolition and clearance the 358.23 authority intended to include the parcel within a district; and 358.24 (4) upon filing the request for certification of the tax 358.25 capacity of the parcel as part of a district, the authority 358.26 notifies the county auditor that the original tax capacity of 358.27 the parcel must be adjusted as provided by section 469.177, 358.28 subdivision 1, paragraph (h). 358.29 (e) For purposes of this subdivision, a parcel is not 358.30 occupied by buildings, streets, utilities, paved or gravel 358.31 parking lots, or otherimprovementssimilar structures unless 15 358.32 percent of the area of the parcel containsimprovements358.33 buildings, streets, utilities, paved or gravel parking lots, or 358.34 other similar structures. 358.35 (f) For districts consisting of two or more noncontiguous 358.36 areas, each area must qualify as a redevelopment district under 359.1 paragraph (a) to be included in the district, and the entire 359.2 area of the district must satisfy paragraph (a). 359.3 [EFFECTIVE DATE.] This section is effective for districts 359.4 for which the request for certification is made after June 30, 359.5 2001, except that the amendments to paragraph (b) are effective 359.6 for districts for which the request for certification is made 359.7 after September 30, 2001. 359.8 Sec. 6. Minnesota Statutes 2000, section 469.174, 359.9 subdivision 10a, is amended to read: 359.10 Subd. 10a. [RENEWAL AND RENOVATION DISTRICT.] (a) "Renewal 359.11 and renovation district" means a type of tax increment financing 359.12 district consisting of a project, or portions of a project, 359.13 within which the authority finds by resolution that: 359.14 (1)(i) parcels consisting of 70 percent of the area of the 359.15 district are occupied by buildings, streets, utilities, paved or 359.16 gravel parking lots, or otherimprovementssimilar structures; 359.17 (ii) 20 percent of the buildings are structurally substandard; 359.18 and (iii) 30 percent of the other buildings require substantial 359.19 renovation or clearance to remove existing conditions such as: 359.20 inadequate street layout, incompatible uses or land use 359.21 relationships, overcrowding of buildings on the land, excessive 359.22 dwelling unit density, obsolete buildings not suitable for 359.23 improvement or conversion, or other identified hazards to the 359.24 health, safety, and general well-being of the community; and 359.25 (2) the conditions described in clause (1) are reasonably 359.26 distributed throughout the geographic area of the district. 359.27 (b) For purposes of determining whether a building is 359.28 structurally substandard, whether parcels are occupied by 359.29 buildings, streets, utilities, paved or gravel parking lots, or 359.30 otherimprovementssimilar structures, or whether noncontiguous 359.31 areas qualify, the provisions of subdivision 10, 359.32 paragraphs(b),(c), (e), and(d)(f) apply. 359.33 [EFFECTIVE DATE.] This section is effective for districts 359.34 for which the requests for certification are made after June 30, 359.35 1997, except the provision requiring parcels to be occupied by 359.36 structures is effective for districts for which the request for 360.1 certification is made after June 30, 2001. 360.2 Sec. 7. Minnesota Statutes 2000, section 469.174, 360.3 subdivision 12, is amended to read: 360.4 Subd. 12. [ECONOMIC DEVELOPMENT DISTRICT.] "Economic 360.5 development district" means a type of tax increment financing 360.6 district which consists of any project, or portions of a 360.7 project,not meeting the requirements found in the definition of360.8redevelopment district, renewal and renovation district, soils360.9condition district, or housing district, butwhich the authority 360.10 finds to be in the public interest because: 360.11 (1) it will discourage commerce, industry, or manufacturing 360.12 from moving their operations to another state or municipality; 360.13 or 360.14 (2) it will result in increased employment in the state; or 360.15 (3) it will result in preservation and enhancement of the 360.16 tax base of the state. 360.17 [EFFECTIVE DATE.] This section is effective for districts 360.18 for which the request for certification is made after June 30, 360.19 2001. 360.20 Sec. 8. Minnesota Statutes 2000, section 469.174, 360.21 subdivision 25, is amended to read: 360.22 Subd. 25. [INCREMENT.] "Increment," "tax increment," "tax 360.23 increment revenues," "revenues derived from tax increment," and 360.24 other similar terms for a district include: 360.25 (1) taxes paid by the captured net tax capacity, but 360.26 excluding any excess taxes, as computed under section 469.177; 360.27 (2) the proceeds from the sale or lease of property, 360.28 tangible or intangible, purchased by the authority with tax 360.29 increments; 360.30 (3)repayments ofdebt service payments received on loans 360.31 or other advances made by the authority with tax increments; and 360.32 (4) interest or other investment earnings, other than 360.33 payments under loans or other advances within the meaning of 360.34 clause (3), on or from tax increments. 360.35 [EFFECTIVE DATE.] This section is effective retroactive to 360.36 the effective date of Minnesota Statutes, section 469.174, 361.1 subdivision 25. 361.2 Sec. 9. Minnesota Statutes 2000, section 469.175, 361.3 subdivision 1, is amended to read: 361.4 Subdivision 1. [TAX INCREMENT FINANCING PLAN.](a)A tax 361.5 increment financing plan shall contain: 361.6 (1) a statement of objectives of an authority for the 361.7 improvement of a project; 361.8 (2) a statement as to the development program for the 361.9 project, including the property within the project, if any, that 361.10 the authority intends to acquire; 361.11 (3) a list of any development activities that the plan 361.12 proposes to take place within the project, for which contracts 361.13 have been entered into at the time of the preparation of the 361.14 plan, including the names of the parties to the contract, the 361.15 activity governed by the contract, the cost stated in the 361.16 contract, and the expected date of completion of that activity; 361.17 (4) identification or description of the type of any other 361.18 specific development reasonably expected to take place within 361.19 the project, and the date when the development is likely to 361.20 occur; 361.21 (5) estimates of the following: 361.22 (i)cost of the project, including administration expenses;361.23(ii) amount of bonded indebtedness to be incurred;361.24(iii)sources of revenue to finance or otherwise pay public 361.25 costs; 361.26(iv)(ii) the most recent net tax capacity of taxable real 361.27 property within the tax increment financing district and within 361.28 any subdistrict; 361.29(v)(iii) the estimated captured net tax capacity of the 361.30 tax increment financing district at completion; and 361.31(vi)(iv) the duration of the tax increment financing 361.32 district's and any subdistrict's existence; 361.33 (6) a budget specifying the following items for the project 361.34 to be paid with tax increments from the district: 361.35 (i) the total cost of the district, broken down by at least 361.36 the following items (to the extent the plan permits spending for 362.1 items within these categories and subcategories within an item, 362.2 if the authority so elects): 362.3 (A) administrative expenses; 362.4 (B) property acquisition and site preparation, including 362.5 but not limited to clearance and soils preparation; 362.6 (C) public improvements (other than public improvements 362.7 that are part of site preparation); and 362.8 (D) amounts for assistance to construct, acquire, or 362.9 improve other improvements or other eligible forms of 362.10 assistance; and 362.11 (ii) the amount of bonded indebtedness to be incurred; 362.12(6)(7) statements of the authority's alternate estimates 362.13 of the impact of tax increment financing on the net tax 362.14 capacities of all taxing jurisdictions in which the tax 362.15 increment financing district is located in whole or in part. 362.16 For purposes of one statement, the authority shall assume that 362.17 the estimated captured net tax capacity would be available to 362.18 the taxing jurisdictions without creation of the district, and 362.19 for purposes of the second statement, the authority shall assume 362.20 that none of the estimated captured net tax capacity would be 362.21 available to the taxing jurisdictions without creation of the 362.22 district or subdistrict; 362.23(7)(8) identification and description of studies and 362.24 analyses used to make the determination set forth in subdivision 362.25 3, clause (2); and 362.26(8)(9) identification of all parcels to be included in the 362.27 district or any subdistrict. 362.28(b) For a housing district, redevelopment district, or a362.29hazardous substance subdistrict, the authority may elect in the362.30tax increment financing plan to provide for the identification362.31of a minimum market value in the plan, development agreement, or362.32assessment agreement, and provide that increment is first362.33received by the authority when (1) the market value of the362.34improvements as determined by the assessor reaches or exceeds362.35the minimum market value, or (2) four years has elapsed from the362.36date of certification of the original net tax capacity of the363.1taxable real property in the district or subdistrict by the363.2county auditor, whichever is earlier.363.3 [EFFECTIVE DATE.] The amendments to paragraph (a) are 363.4 effective for tax increment financing plans approved after June 363.5 30, 2001, and for amendments to tax increment financing plans 363.6 modifying the total estimated tax increment expenditures 363.7 approved after June 30, 2001. The amendments to paragraph (b) 363.8 are effective for requests for certification of tax increment 363.9 financing districts received after June 30, 2001. 363.10 Sec. 10. Minnesota Statutes 2000, section 469.175, 363.11 subdivision 3, is amended to read: 363.12 Subd. 3. [MUNICIPALITY APPROVAL.] A county auditor shall 363.13 not certify the original net tax capacity of a tax increment 363.14 financing district until the tax increment financing plan 363.15 proposed for that district has been approved by the municipality 363.16 in which the district is located. If an authority that proposes 363.17 to establish a tax increment financing district and the 363.18 municipality are not the same, the authority shall apply to the 363.19 municipality in which the district is proposed to be located and 363.20 shall obtain the approval of its tax increment financing plan by 363.21 the municipality before the authority may use tax increment 363.22 financing. The municipality shall approve the tax increment 363.23 financing plan only after a public hearing thereon after 363.24 published notice in a newspaper of general circulation in the 363.25 municipality at least once not less than ten days nor more than 363.26 30 days prior to the date of the hearing. The published notice 363.27 must include a map of the area of the district from which 363.28 increments may be collected and, if the project area includes 363.29 additional area, a map of the project area in which the 363.30 increments may be expended. The hearing may be held before or 363.31 after the approval or creation of the project or it may be held 363.32 in conjunction with a hearing to approve the project. Before or 363.33 at the time of approval of the tax increment financing plan, the 363.34 municipality shall make the following findings, and shall set 363.35 forth in writing the reasons and supporting facts for each 363.36 determination: 364.1 (1) that the proposed tax increment financing district is a 364.2 redevelopment district, a renewal or renovation district, a 364.3 housing district, a soils condition district, or an economic 364.4 development district; if the proposed district is a 364.5 redevelopment district or a renewal or renovation district, the 364.6 reasons and supporting facts for the determination that the 364.7 district meets the criteria of section 469.174, subdivision 10, 364.8 paragraph (a), clauses (1) and (2), or subdivision 10a, must be 364.9 documented in writing and retained and made available to the 364.10 public by the authority until the district has been terminated. 364.11 (2) that the proposed development or redevelopment, in the 364.12 opinion of the municipality, would not reasonably be expected to 364.13 occur solely through private investment within the reasonably 364.14 foreseeable future and that the increased market value of the 364.15 site that could reasonably be expected to occur without the use 364.16 of tax increment financing would be less than the increase in 364.17 the market value estimated to result from the proposed 364.18 development after subtracting the present value of the projected 364.19 tax increments for the maximum duration of the district 364.20 permitted by the plan. The requirements of this clause do not 364.21 apply if the district is a qualified housing district, as 364.22 defined in section 273.1399, subdivision 1. 364.23 (3) that the tax increment financing plan conforms to the 364.24 general plan for the development or redevelopment of the 364.25 municipality as a whole. 364.26 (4) that the tax increment financing plan will afford 364.27 maximum opportunity, consistent with the sound needs of the 364.28 municipality as a whole, for the development or redevelopment of 364.29 the project by private enterprise. 364.30 (5) that the municipality elects the method of tax 364.31 increment computation set forth in section 469.177, subdivision 364.32 3, clause (b), if applicable. 364.33 When the municipality and the authority are not the same, 364.34 the municipality shall approve or disapprove the tax increment 364.35 financing plan within 60 days of submission by the authority. 364.36 When the municipality and the authority are not the same, the 365.1 municipality may not amend or modify a tax increment financing 365.2 plan except as proposed by the authority pursuant to subdivision 365.3 4.Once approved, the determination of the authority to365.4undertake the project through the use of tax increment financing365.5and the resolution of the governing body shall be conclusive of365.6the findings therein and of the public need for the financing.365.7 [EFFECTIVE DATE.] This section is effective for districts 365.8 for which the request for certification is made after September 365.9 30, 2001. 365.10 Sec. 11. Minnesota Statutes 2000, section 469.175, is 365.11 amended by adding a subdivision to read: 365.12 Subd. 4a. [FILING PLAN WITH STATE.] (a) The authority must 365.13 file a copy of the tax increment financing plan and amendments 365.14 to the plan with the commissioner of revenue. The authority 365.15 must also file a copy of the development plan or the project 365.16 plan for the project area with the commissioner of revenue. The 365.17 commissioner of revenue shall provide a copy of a plan to the 365.18 state auditor upon request. 365.19 (b) Filing under this subdivision must be made within 60 365.20 days after the latest of: 365.21 (1) the filing of the request for certification of the 365.22 district; 365.23 (2) approval of the plan by the municipality; or 365.24 (3) adoption of the plan by the authority. 365.25 [EFFECTIVE DATE.] This section is effective for plans and 365.26 amendments approved after July 1, 2000. 365.27 Sec. 12. Minnesota Statutes 2000, section 469.175, 365.28 subdivision 6, is amended to read: 365.29 Subd. 6. [ANNUAL FINANCIAL REPORTING.] (a) The state 365.30 auditor shall develop a uniform system of accounting and 365.31 financial reporting for tax increment financing districts. The 365.32 system of accounting and financial reporting shall, as nearly as 365.33 possible: 365.34 (1) provide for full disclosure of the sources and uses of 365.35 public funds in the district; 365.36 (2) permit comparison and reconciliation with the affected 366.1 local government's accounts and financial reports; 366.2 (3) permit auditing of the funds expended on behalf of a 366.3 district, including a single district that is part of a 366.4 multidistrict project or that is funded in part or whole through 366.5 the use of a development account funded with tax increments from 366.6 other districts or with other public money; 366.7 (4) be consistent with generally accepted accounting 366.8 principles. 366.9 (b) The authority must annually submit to the state auditor 366.10 a financial report in compliance with paragraph (a). Copies of 366.11 the report must also be provided to the county auditor and to 366.12 the governing body of the municipality, if the authority is not 366.13 the municipality. To the extent necessary to permit compliance 366.14 with the requirement of financial reporting, the county and any 366.15 other appropriate local government unit or private entity must 366.16 provide the necessary records or information to the authority or 366.17 the state auditor as provided by the system of accounting and 366.18 financial reporting developed pursuant to paragraph (a). The 366.19 authority must submit the annual report for a year on or before 366.20 August 1 of the next year. 366.21 (c) The annual financial report must also include the 366.22 following items: 366.23 (1) the original net tax capacity of the district and any 366.24 subdistrict under section 469.177, subdivision 1; 366.25 (2) the net tax capacity for the reporting period of the 366.26 district and any subdistrict; 366.27 (3) the captured net tax capacity of the district; 366.28 (4) any fiscal disparity deduction from the captured net 366.29 tax capacity under section 469.177, subdivision 3; 366.30 (5) the captured net tax capacity retained for tax 366.31 increment financing under section 469.177, subdivision 2, 366.32 paragraph (a), clause (1); 366.33 (6) any captured net tax capacity distributed among 366.34 affected taxing districts under section 469.177, subdivision 2, 366.35 paragraph (a), clause (2); 366.36 (7) the type of district; 367.1 (8) the date the municipality approved the tax increment 367.2 financing plan and the date of approval of any modification of 367.3 the tax increment financing plan, the approval of which requires 367.4 notice, discussion, a public hearing, and findings under 367.5 subdivision 4, paragraph (a); 367.6 (9) the date the authority first requested certification of 367.7 the original net tax capacity of the district and the date of 367.8 the request for certification regarding any parcel added to the 367.9 district; 367.10 (10) the date the county auditor first certified the 367.11 original net tax capacity of the district and the date of 367.12 certification of the original net tax capacity of any parcel 367.13 added to the district; 367.14 (11) the month and year in which the authority has received 367.15 or anticipates it will receive the first increment from the 367.16 district; 367.17 (12) the date the district must be decertified; 367.18 (13) for the reporting period and prior years of the 367.19 district, the actual amount received from, at least, the 367.20 following categories: 367.21 (i) tax increments paid by the captured net tax capacity 367.22 retained for tax increment financing under section 469.177, 367.23 subdivision 2, paragraph (a), clause (1), but excluding any 367.24 excess taxes; 367.25 (ii) tax increments that are interest or other investment 367.26 earnings on or from tax increments; 367.27 (iii) tax increments that are proceeds from the sale or 367.28 lease of property, tangible or intangible, purchased by the 367.29 authority with tax increments; 367.30 (iv) tax increments that are repayments of loans or other 367.31 advances made by the authority with tax increments; 367.32 (v) bond or loan proceeds; 367.33 (vi) special assessments; 367.34 (vii) grants; and 367.35 (viii) transfers from funds not exclusively associated with 367.36 the district; 368.1 (14) for the reporting period and for the prior years of 368.2 the district,the amount budgeted under the tax increment368.3financing plan,and the actual amount expended for, at least, 368.4 the following categories: 368.5 (i) acquisition of land and buildings through condemnation 368.6 or purchase; 368.7 (ii) site improvements or preparation costs; 368.8 (iii) installation of public utilities, parking facilities, 368.9 streets, roads, sidewalks, or other similar public improvements; 368.10 (iv) administrative costs, including the allocated cost of 368.11 the authority; 368.12 (v) public park facilities, facilities for social, 368.13 recreational, or conference purposes, or other similar public 368.14 improvements; and 368.15 (vi) transfers to funds not exclusively associated with the 368.16 district; 368.17 (15) for properties sold to developers, the total cost of 368.18 the property to the authority and the price paid by the 368.19 developer; 368.20 (16) the amount of any payments and the value of any 368.21 in-kind benefits, such as physical improvements and the use of 368.22 building space, that are paid or financed with tax increments 368.23 and are provided to another governmental unit other than the 368.24 municipality during the reporting period; 368.25 (17) the amount of any payments for activities and 368.26 improvements located outside of the district that are paid for 368.27 or financed with tax increments; 368.28 (18) the amount of payments of principal and interest that 368.29 are made during the reporting period on any nondefeased: 368.30 (i) general obligation tax increment financing bonds; 368.31 (ii) other tax increment financing bonds; and 368.32 (iii) notes and pay-as-you-go contracts; 368.33 (19) the principal amount, at the end of the reporting 368.34 period, of any nondefeased: 368.35 (i) general obligation tax increment financing bonds; 368.36 (ii) other tax increment financing bonds; and 369.1 (iii) notes and pay-as-you-go contracts; 369.2 (20) the amount of principal and interest payments that are 369.3 due for the current calendar year on any nondefeased: 369.4 (i) general obligation tax increment financing bonds; 369.5 (ii) other tax increment financing bonds; and 369.6 (iii) notes and pay-as-you-go contracts; 369.7 (21) if the fiscal disparities contribution under chapter 369.8 276A or 473F for the district is computed under section 469.177, 369.9 subdivision 3, paragraph (a), the amount of increased property 369.10 taxes imposed on other properties in the municipality that 369.11 approved the tax increment financing plan as a result of the 369.12 fiscal disparities contribution; 369.13 (22) whether the tax increment financing plan or other 369.14 governing document permits increment revenues to be expended: 369.15 (i) to pay bonds, the proceeds of which were or may be 369.16 expended on activities outside of the district; 369.17 (ii) for deposit into a common bond fund from which money 369.18 may be expended on activities located outside of the district; 369.19 or 369.20 (iii) to otherwise finance activities located outside of 369.21 the tax increment financing district; and 369.22 (23) any additional information the state auditor may 369.23 require. 369.24 (d) The commissioner of revenue shall prescribe the method 369.25 of calculating the increased property taxes under paragraph (c), 369.26 clause (21), and the form of the statement disclosing this 369.27 information on the annual statement under subdivision 5. 369.28 (e) The reporting requirements imposed by this subdivision 369.29 apply to districts certified before, on, and after August 1, 369.30 1979. 369.31 [EFFECTIVE DATE.] This section is effective for reports 369.32 filed after January 1, 2002. 369.33 Sec. 13. Minnesota Statutes 2000, section 469.175, 369.34 subdivision 6b, is amended to read: 369.35 Subd. 6b. [DURATION OF DISCLOSURE AND REPORTING 369.36 REQUIREMENTS.] The disclosure and reporting requirements imposed 370.1 by subdivisions 5,and 6, and 6aapply with respect to a tax 370.2 increment financing district beginning with the annual 370.3 disclosure and reports for the year in which the original net 370.4 tax capacity of the district was certified and ending with the 370.5 annual disclosure and reports for the year in which both of the 370.6 following events have occurred: 370.7 (1) decertification of the district; and 370.8 (2) expenditure or return to the county auditor of all 370.9 remaining revenues derived from tax increments paid by 370.10 properties in the district. 370.11 [EFFECTIVE DATE.] This section is effective for reports 370.12 filed after December 31, 2000. 370.13 Sec. 14. Minnesota Statutes 2000, section 469.176, 370.14 subdivision 1b, is amended to read: 370.15 Subd. 1b. [DURATION LIMITS; TERMS.] (a) No tax increment 370.16 shall in any event be paid to the authority 370.17 (1) after 15 years after receipt by the authority of the 370.18 first increment for a renewal and renovation district, 370.19 (2) after 20 years after receipt by the authority of the 370.20 first increment for a soils condition district, 370.21 (3) after eight years after receipt by the authority of the 370.22 first increment for an economic development district, 370.23 (4) for a housing district or a redevelopment district, 370.24after 20 years from the date of receipt by the authority of the370.25first tax increment by the authority pursuant to section370.26469.175, subdivision 1, paragraph (b); or, if no provision is370.27made under section 469.175, subdivision 1, paragraph (b),after 370.28 25 years from the date of receipt by the authority of the first 370.29 increment. 370.30 (b) For purposes of determining a duration limit under this 370.31 subdivision or subdivision 1e that is based on the receipt of an 370.32 increment, any increments from taxes payable in the year in 370.33 which the district terminates shall be paid to the authority. 370.34 This paragraph does not affect a duration limit calculated from 370.35 the date of approval of the tax increment financing plan or 370.36 based on the recovery of costs or to a duration limit under 371.1 subdivision 1c. This paragraph does not supersede the 371.2 restrictions on payment of delinquent taxes in subdivision 1f. 371.3 (c)Except as authorized by section 469.175, subdivision 1,371.4paragraph (b),An action by the authority to waive or decline to 371.5 accept an increment has no effect for purposes of computing a 371.6 duration limit based on the receipt of increment under this 371.7 subdivision or any other provision of law. The authority is 371.8 deemed to have received an increment for any year in which it 371.9 waived or declined to accept an increment, regardless of whether 371.10 the increment was paid to the authority. 371.11 (d) Receipt by a hazardous substance subdistrict of an 371.12 increment as a result of a reduction in original net tax 371.13 capacity under section 469.174, subdivision 7, paragraph (b), 371.14 does not constitute receipt of increment by the overlying 371.15 district for purpose of calculating the duration limit under 371.16 this section. 371.17 [EFFECTIVE DATE.] This section is effective for districts 371.18 for which the request for certification is made after June 30, 371.19 2001. 371.20 Sec. 15. Minnesota Statutes 2000, section 469.176, 371.21 subdivision 1c, is amended to read: 371.22 Subd. 1c. [DURATION LIMITS; PRE-1979 DISTRICTS.] For tax 371.23 increment financing districts created prior to August 1, 1979, 371.24 no tax increment shall be paid to the authority after April 1, 371.25 2001, or the term of a nondefeased bond or obligation 371.26 outstanding on April 1, 1990, secured by increments from the 371.27 district or project area, whichever time is greater, provided 371.28 that in no case will a tax increment be paid to an authority 371.29 after August 1, 2009, from such a district. If a district's 371.30 termination date is extended beyond April 1, 2001, because bonds 371.31 were outstanding on April 1, 1990, with maturities extending 371.32 beyond April 1, 2001, the following restrictions apply.No371.33 Increment collected from the districtmayat any time, and 371.34 interest earned on increment from the district and received 371.35 after December 31, 2001, must be expended after April 1, 371.36 2001,exceptonly to pay or defease (i) bonds issued before 372.1 April 1, 1990, or (ii) bonds issued to refund the principal of 372.2 the outstanding bonds and pay associated issuance costs, 372.3 provided the average maturity of the refunding bonds does not 372.4 exceed the bonds refunded. When sufficient money has been 372.5 received to defease or pay the bonds, the tax increment project 372.6 or district must be decertified. 372.7 [EFFECTIVE DATE.] This section is effective for tax 372.8 increment financing districts and projects for which the request 372.9 for certification was made before August 1, 1979. 372.10 Sec. 16. Minnesota Statutes 2000, section 469.176, 372.11 subdivision 1e, is amended to read: 372.12 Subd. 1e. [DURATION LIMITS; HAZARDOUS SUBSTANCE 372.13 SUBDISTRICTS.] If a parcel of a district is part of a designated 372.14 hazardous substance site or a hazardous substance subdistrict, 372.15 tax increment may be paid to the authority from the parcel for 372.16 longer than the period otherwise provided by subdivisions 1 to 372.17 1f for the overlying district. The extended period for 372.18 collection of tax increment begins on the date of receipt of the 372.19 first tax increment from the parcel that is more than any tax 372.20 increment received from the parcel before the date of the 372.21 certification under section 469.174, subdivision 7, paragraph 372.22 (b), and received after the date of certification to the county 372.23 auditor described in section 469.174, subdivision 7, paragraph 372.24 (b). The extended period for collection of tax increment is the 372.25 lesser of: (1) 25 years from the date of commencement of the 372.26 extended periodor 20 years if the authority elects under372.27section 469.175, subdivision 1, paragraph (b), to defer receipt372.28of the first increment; or (2) the period necessary to recover 372.29 the costs of removal actions or remedial actions specified in a 372.30 development response action plan. 372.31 [EFFECTIVE DATE.] This section is effective for requests 372.32 for certification of subdistricts made after June 30, 2001. 372.33 Sec. 17. Minnesota Statutes 2000, section 469.176, 372.34 subdivision 3, is amended to read: 372.35 Subd. 3. [LIMITATION ON ADMINISTRATIVE EXPENSES.] (a) For 372.36 districts for which certification was requested before August 1, 373.1 1979, or after June 30, 1982, no tax increment shall be used to 373.2 pay any administrative expenses for a project which exceed ten 373.3 percent of the total tax increment expenditures authorized by 373.4 the tax increment financing plan or the total tax increment 373.5 expenditures for the project, whichever is less. 373.6 (b) For districts for which certification was requested 373.7 after July 31, 1979, and before July 1, 1982, no tax increment 373.8 shall be used to pay administrative expenses, as defined in 373.9 Minnesota Statutes 1980, section 273.73, for aprojectdistrict 373.10 which exceeds five percent of the total tax increment 373.11 expenditures authorized by the tax increment financing plan or 373.12 the total tax increment expenditures for theprojectdistrict, 373.13 whichever is less. 373.14 (c) For districts for which certification was requested 373.15 after June 30, 2001, no tax increment may be used to pay any 373.16 administrative expenses for a project which exceed ten percent 373.17 of total tax increment expenditures authorized by the tax 373.18 increment financing plan or the total tax increments from the 373.19 district, whichever is less. 373.20 [EFFECTIVE DATE.] This section is effective for districts 373.21 for which the request for certification is received after June 373.22 30, 2001. 373.23 Sec. 18. Minnesota Statutes 2000, section 469.176, 373.24 subdivision 4, is amended to read: 373.25 Subd. 4. [LIMITATION ON USE OF TAX INCREMENT; GENERAL 373.26 RULE.] (a)All revenues derived fromTaxincrement shall373.27 increments must be used in accordance with the tax increment 373.28 financing plan, including the separate line items amounts 373.29 required by section 469.175, subdivision 1, clause (6), but 373.30 excluding any subcategories within the required items that the 373.31 authority elects to include. If a tax increment financing plan 373.32 does not include an amount for a separate line item required by 373.33 section 469.175, subdivision 1, clause (6), the amount for the 373.34 line item is zero. 373.35 (b) Therevenues shalltax increments may be used solely 373.36 for the following purposes: 374.1 (1) to pay the principal of and interest on bonds issued to 374.2 finance a project; 374.3 (2) as permitted by an enabling development authority law, 374.4 whether made by the authority or the municipality or another 374.5 entity authorized to exercise the powers of the respective 374.6 authority, as specified in paragraph (c). 374.7 (c) The following purposes are permitted: 374.8 (1) by a rural development financing authority for the 374.9 purposes stated in section 469.142,; 374.10 (2) by a port authorityor municipality exercising the374.11powers of a port authorityto finance or otherwise pay the cost 374.12 of redevelopmentpursuant tounder sections 469.048 to 469.068,; 374.13 (3) by an economic development authority to finance or 374.14 otherwise pay the cost of redevelopmentpursuant tounder 374.15 sections 469.090 to 469.108,; 374.16 (4) by a housing and redevelopment authorityor economic374.17development authorityto finance or otherwise pay public 374.18 redevelopment costspursuant tounder sections 469.001 to 374.19 469.047,; 374.20 (5) by a municipalityor economic development authorityto 374.21 finance or otherwise pay the capital and administration costs of 374.22 a development districtpursuant tounder sections 469.124 to 374.23 469.134,; 374.24 (6) by a municipality or authority to finance or otherwise 374.25 pay the costs of developing and implementing a development 374.26 action response plan,; 374.27 (7) by a municipality or redevelopment agency to finance or 374.28 otherwise pay premiums for insurance or other security 374.29 guaranteeing the payment when due of principal of and interest 374.30 on the bondspursuant tounder chapter 462C, sections 469.152 to 374.31 469.165, or both, or to accumulate and maintain a reserve 374.32 securing the payment when due of the principal of and interest 374.33 on the bondspursuant tounder chapter 462C, sections 469.152 to 374.34 469.165, or both, which revenues in the reserveshallmay not 374.35 exceed,subsequent toafter the fifth anniversary of the date of 374.36 issue of the first bond issue secured by the reserve, an amount375.1equal to20 percent of the aggregate principal amount of the 375.2 outstanding and nondefeased bonds secured by the reserve. 375.3 [EFFECTIVE DATE.] This section is effective for tax 375.4 increment financing plans approved after June 30, 2001, and for 375.5 amendments to tax increment financing plans modifying the total 375.6 estimated tax increment expenditures approved after June 30, 375.7 2001. Amounts spent in excess of the estimates or budget items 375.8 in the tax increment financing plan are deemed to be spent in 375.9 accordance within the plan, notwithstanding that they exceeded 375.10 the estimates or budget items, for purposes of this section if 375.11 the plan and amendments to it were approved before July 1, 2001, 375.12 and if the total amounts spent are within the total estimated 375.13 tax increment expenditures under the plan for the district. 375.14 Sec. 19. Minnesota Statutes 2000, section 469.176, 375.15 subdivision 4g, is amended to read: 375.16 Subd. 4g. [GENERAL GOVERNMENT USE PROHIBITED.] (a)These375.17revenues shallTax increments may not be used to circumvent 375.18 existing levy limit law. 375.19 (b) Norevenues derived fromtax increment from any 375.20 district, whether certified before or after August 1, 1979,375.21shallmay be used for the acquisition, construction, renovation, 375.22 operation, or maintenance of a building to be used primarily and 375.23 regularly for conducting the business of a municipality, county, 375.24 school district, or any other local unit of government or the 375.25 state or federal governmentor for a commons area used as a375.26public park, or a facility used for social, recreational, or375.27conference purposes. This provisionshalldoes not prohibit the 375.28 use of revenues derived from tax increments for the construction 375.29 or renovation of a parking structureor of a privately owned375.30facility for conference purposes. 375.31(b) If any publicly owned facility used for social,375.32recreational, or conference purposes and financed in whole or in375.33part from revenues derived from a district is operated or375.34managed by an entity other than the authority, the operating and375.35management policies of the facility must be approved by the375.36governing body of the authority.376.1 (c)(1) Tax increments may not be used to pay for the cost 376.2 of public improvements, equipment, or other items, if: 376.3 (i) the improvements, equipment, or other items are located 376.4 outside of the area of the tax increment financing district from 376.5 which the increments were collected; and 376.6 (ii) the improvements, equipment, or items that (A) 376.7 primarily serve a decorative or aesthetic purpose, or (B) serve 376.8 a functional purpose, but their cost is increased by more than 376.9 100 percent as a result of the selection of materials, design, 376.10 or type as compared with more commonly used materials, designs, 376.11 or types for similar improvements, equipment, or items. 376.12 (2) The provisions of this paragraph do not apply to 376.13 expenditures related to the rehabilitation of historic 376.14 structures that are: 376.15 (i) individually listed on the National Register of 376.16 Historic Places; or 376.17 (ii) a contributing element to a historic district listed 376.18 on the National Register of Historic Places. 376.19 [EFFECTIVE DATE.] This section is effective for 376.20 expenditures of increment made after June 30, 2001. 376.21 Sec. 20. Minnesota Statutes 2000, section 469.176, is 376.22 amended by adding a subdivision to read: 376.23 Subd. 41. [PROHIBITED FACILITIES.] (a) No tax increment 376.24 from any district may be used for: 376.25 (1) a commons area used as a public park; or 376.26 (2) a facility used for social, recreational, or conference 376.27 purposes. 376.28 (b) This subdivision does not apply to a privately owned 376.29 facility for conference purposes or a parking structure. 376.30 [EFFECTIVE DATE.] This section is effective for 376.31 expenditures of increment made after June 30, 2001, but does not 376.32 apply to (1) expenditures made before January 1, 2000; (2) 376.33 expenditures made under a binding contract entered before 376.34 January 1, 2000; or (3) expenditures made under a binding 376.35 contract entered pursuant to a letter of intent with the 376.36 developer or contractor or its assigns if the letter of intent 377.1 was entered before January 1, 2000. 377.2 Sec. 21. Minnesota Statutes 2000, section 469.1763, 377.3 subdivision 6, is amended to read: 377.4 Subd. 6. [POOLING PERMITTED FOR DEFICITS.] (a) This 377.5 subdivision applies only to districts for which the request for 377.6 certification was made before June 2,19972001. 377.7 (b) The municipality for the district may transfer 377.8 available increments from another tax increment financing 377.9 district located in the municipality, if the transfer is 377.10 necessary to eliminate a deficit in the district to which the 377.11 increments are transferred. A deficit in the district for 377.12 purposes of this subdivision means the lesser of the following 377.13 two amounts: 377.14 (1)(i) the amount due during the calendar year to pay 377.15 preexisting obligations of the district; minus 377.16 (ii) the total increments to be collected from properties 377.17 located within the district that are available for the calendar 377.18 year; plus 377.19 (iii) total increments from properties located in other 377.20 districts in the municipality that are available to be used to 377.21 meet the district's obligations under this section, excluding 377.22 this subdivision, or other provisions of law (but excluding a 377.23 special tax under section 469.1791 and the grant program under 377.24 Laws 1997, chapter 231, article 1, section 19, or this act); or 377.25 (2) the reduction in increments collected from properties 377.26 located in the district for the calendar year as a result of the 377.27 changes in class rates in Laws 1997, chapter 231, article 1; 377.28 Laws 1998, chapter 389, article 2; and Laws 1999, chapter 377.29 243 and this act or the elimination of the general education tax 377.30 levy under this act. 377.31 (c) A preexisting obligation means: 377.32 (1) bonds issued and sold before June 2,19972001, and 377.33 bonds issued to refund such bonds or to reimburse expenditures 377.34 made in conjunction with a signed contractual agreement entered 377.35 into before June 2,19972001, to the extent that the bonds are 377.36 secured by a pledge of increments from the tax increment 378.1 financing district. For purposes of this subdivision, bonds378.2exclude an obligation to reimburse or pay a developer or owner378.3of property located in the district for amounts incurred or paid378.4by the developer or owner; and 378.5 (2) binding contracts entered into before June 2, 2001, to 378.6 the extent that the contracts require payments secured by a 378.7 pledge of increments from the tax increment financing district. 378.8 (d) The municipality may require a development authority, 378.9 other than a seaway port authority, to transfer available 378.10 increments for any of its tax increment financing districts in 378.11 the municipality to make up an insufficiency in another district 378.12 in the municipality, regardless of whether the district was 378.13 established by the development authority or another development 378.14 authority. This authority applies notwithstanding any law to 378.15 the contrary, but applies only to a development authority that: 378.16 (1) was established by the municipality; or 378.17 (2) the governing body of which is appointed, in whole or 378.18 part, by the municipality or an officer of the municipality or 378.19 which consists, in whole or part, of members of the governing 378.20 body of the municipality. 378.21 (e) The authority under this subdivision to spend tax 378.22 increments outside of the area of the district from which the 378.23 tax increments were collected: 378.24 (1) may only be exercised after obtaining approval of the 378.25 use of the increments, in writing, by the commissioner of 378.26 revenue; 378.27 (2) is an exception to the restrictions under section 378.28 469.176, subdivision 4i, and the other provisions of this 378.29 section, and the percentage restrictions under subdivision 2 378.30 must be calculated after deducting increments spent under this 378.31 subdivision from the total increments for the district; and 378.32 (3) applies notwithstanding the provisions of the Tax 378.33 Increment Financing Act in effect for districts for which the 378.34 request for certification was made before June 30, 1982, or any 378.35 other law to the contrary. 378.36 [EFFECTIVE DATE.] This section is effective January 2, 379.1 2003, and thereafter. 379.2 Sec. 22. Minnesota Statutes 2000, section 469.177, 379.3 subdivision 1, is amended to read: 379.4 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or 379.5 after adoption of a tax increment financing plan, the auditor of 379.6 any county in which the district is situated shall, upon request 379.7 of the authority, certify the original net tax capacity of the 379.8 tax increment financing district and that portion of the 379.9 district overlying any subdistrict as described in the tax 379.10 increment financing plan and shall certify in each year 379.11 thereafter the amount by which the original net tax capacity has 379.12 increased or decreased as a result of a change in tax exempt 379.13 status of property within the district and any subdistrict, 379.14 reduction or enlargement of the district or changes pursuant to 379.15 subdivision 4. 379.16 (b) For districts approved under section 469.175, 379.17 subdivision 3, or parcels added to existing districts after May 379.18 1, 1988, if the classification under section 273.13 of property 379.19 located in a district changes to a classification that has a 379.20 different assessment ratio, the original net tax capacity of 379.21 that property must be redetermined at the time when its use is 379.22 changed as if the property had originally been classified in the 379.23 same class in which it is classified after its use is changed. 379.24 (c) The amount to be added to the original net tax capacity 379.25 of the district as a result of previously tax exempt real 379.26 property within the district becoming taxable equals the net tax 379.27 capacity of the real property as most recently assessed pursuant 379.28 to section 273.18 or, if that assessment was made more than one 379.29 year prior to the date of title transfer rendering the property 379.30 taxable, the net tax capacity assessed by the assessor at the 379.31 time of the transfer. If improvements are made to tax exempt 379.32 property after certification of the district and before the 379.33 parcel becomes taxable, the assessor shall, at the request of 379.34 the authority, separately assess the estimated market value of 379.35 the improvements. If the property becomes taxable, the county 379.36 auditor shall add to original net tax capacity, the net tax 380.1 capacity of the parcel, excluding the separately assessed 380.2 improvements. If substantial taxable improvements were made to 380.3 a parcel after certification of the district and if the property 380.4 later becomes tax exempt, in whole or part, as a result of the 380.5 authority acquiring the property through foreclosure or exercise 380.6 of remedies under a lease or other revenue agreement or as a 380.7 result of tax forfeiture, the amount to be added to the original 380.8 net tax capacity of the district as a result of the property 380.9 again becoming taxable is the amount of the parcel's value that 380.10 was included in original net tax capacity when the parcel was 380.11 first certified. The amount to be added to the original net tax 380.12 capacity of the district as a result of enlargements equals the 380.13 net tax capacity of the added real property as most recently 380.14 certified by the commissioner of revenue as of the date of 380.15 modification of the tax increment financing plan pursuant to 380.16 section 469.175, subdivision 4. 380.17 (d) For districts approved under section 469.175, 380.18 subdivision 3, or parcels added to existing districts after May 380.19 1, 1988, if the net tax capacity of a property increases because 380.20 the property no longer qualifies under the Minnesota 380.21 Agricultural Property Tax Law, section 273.111; the Minnesota 380.22 Open Space Property Tax Law, section 273.112; or the 380.23 Metropolitan Agricultural Preserves Act, chapter 473H, or 380.24 because platted, unimproved property is improved or three years 380.25 pass after approval of the plat under section 273.11, 380.26 subdivision 1, the increase in net tax capacity must be added to 380.27 the original net tax capacity. 380.28 (e) The amount to be subtracted from the original net tax 380.29 capacity of the district as a result of previously taxable real 380.30 property within the district becoming tax exempt, or a reduction 380.31 in the geographic area of the district, shall be the amount of 380.32 original net tax capacity initially attributed to the property 380.33 becoming tax exempt or being removed from the district. If the 380.34 net tax capacity of property located within the tax increment 380.35 financing district is reduced by reason of a court-ordered 380.36 abatement, stipulation agreement, voluntary abatement made by 381.1 the assessor or auditor or by order of the commissioner of 381.2 revenue, the reduction shall be applied to the original net tax 381.3 capacity of the district when the property upon which the 381.4 abatement is made has not been improved since the date of 381.5 certification of the district and to the captured net tax 381.6 capacity of the district in each year thereafter when the 381.7 abatement relates to improvements made after the date of 381.8 certification. The county auditor may specify reasonable form 381.9 and content of the request for certification of the authority 381.10 and any modification thereof pursuant to section 469.175, 381.11 subdivision 4. 381.12 (f) If a parcel of property contained a substandard 381.13 building that was demolished or removed and if the authority 381.14 elects to treat the parcel as occupied by a substandard building 381.15 under section 469.174, subdivision 10, paragraph (b), the 381.16 auditor shall certify the original net tax capacity of the 381.17 parcel using the greater of (1) the current net tax capacity of 381.18 the parcel, or (2) the estimated market value of the parcel for 381.19 the year in which the building was demolished or removed, but 381.20 applying the class rates for the current year. 381.21 [EFFECTIVE DATE.] This section is effective for parcels 381.22 that become taxable after June 30, 2001, and applies to tax 381.23 increment financing districts, regardless of when the request 381.24 for certification was made. 381.25 Sec. 23. Minnesota Statutes 2000, section 469.177, is 381.26 amended by adding a subdivision to read: 381.27 Subd. 1b. [STATE TAX AND INCREMENT COMPUTATION.] The 381.28 original local tax rate and any other tax rate or amount used to 381.29 calculate the amount of tax increment does not include any rate 381.30 or amount attributable to a state levy, whether the state levy 381.31 is imposed by section 275.02 or another provision of law. 381.32 Sec. 24. Minnesota Statutes 2000, section 469.177, 381.33 subdivision 11, is amended to read: 381.34 Subd. 11. [DEDUCTION FOR ENFORCEMENT COSTS; 381.35 APPROPRIATION.] (a) The county treasurer shall deduct an amount 381.36 equal to0.250.34 percent of any increment distributed to an 382.1 authority or municipality. The county treasurer shall pay the 382.2 amount deducted to the state treasurer for deposit in the state 382.3 general fund. 382.4 (b) The amounts deducted and paid under paragraph (a) are 382.5 appropriated to the state auditor for the cost of (1) the 382.6 financial reporting of tax increment financing information and 382.7 (2) the cost of examining and auditing of authorities' use of 382.8 tax increment financing as provided under section 469.1771, 382.9 subdivision 1. Notwithstanding section 16A.28 or any other law 382.10 to the contrary, this appropriation does not cancel and remains 382.11 available until spent. 382.12 [EFFECTIVE DATE.] This section is effective for taxes 382.13 payable in 2002 and thereafter. 382.14 Sec. 25. Minnesota Statutes 2000, section 469.1771, 382.15 subdivision 1, is amended to read: 382.16 Subdivision 1. [ENFORCEMENT.] (a) The owner of taxable 382.17 property located in the city, town, school district, or county 382.18 in which the tax increment financing district is located may 382.19 bring suit for equitable relief or for damages, as provided in 382.20 subdivisions 2, 3, and 4, arising out of a failure of a 382.21 municipality or authority to comply with the provisions of 382.22 sections 469.174 to469.179469.1799, or related provisions of 382.23 this chapter. The prevailing party in a suit filed under the 382.24 preceding sentence is entitled to costs, including reasonable 382.25 attorney fees. 382.26 (b) The state auditor may examine and audit political 382.27 subdivisions' use of tax increment financing. Without previous 382.28 notice, the state auditor may examine or audit accounts and 382.29 records on a random basis as the auditor deems to be in the 382.30 public interest. If the state auditor finds evidence that an 382.31 authority or municipality has violated a provision of the law 382.32 for which a remedy is provided under this section, the state 382.33 auditor shall forward the relevant information to the county 382.34 attorney. The county attorney may bring an action to enforce 382.35 the provisions of sections 469.174 to469.179469.1799 or 382.36 related provisions of this chapter, for matters referred by the 383.1 state auditor or on behalf of the county. If the county 383.2 attorney determines not to bring an action or if the county 383.3 attorney has not brought an action within 12 months after 383.4 receipt of the initial notification by the state auditor of the 383.5 violation, the county attorney shall notify the state auditor in 383.6 writing. 383.7 (c) If the state auditor finds an authority is not in 383.8 compliance with sections 469.174 to469.179469.1799 or related 383.9 provisions of law, the auditor shall notify the governing body 383.10 of the municipality that approved the tax increment financing 383.11 district of its findings. The governing body of the 383.12 municipality must respond in writing to the state auditor within 383.13 60 days after receiving the notification. Its written response 383.14 must state whether the municipality accepts, in whole or part, 383.15 the auditor's findings. If the municipality does not accept the 383.16 findings, the statement must indicate the basis for its 383.17 disagreement. The state auditor shall annually summarize the 383.18 responses it receives under this section and send the summary 383.19 and copies of the responses to the chairs of the committees of 383.20 the legislature with jurisdiction over tax increment financing. 383.21 (d) The state auditor shall notify the attorney general in 383.22 writing and provide supporting materials for a violation found 383.23 by the auditor, if the: 383.24 (1) auditor receives notification from the county attorney 383.25 under paragraph (b) or receives no notification for a 12-month 383.26 period after initially notifying the county attorney and the 383.27 state auditor confirms with the county attorney or the 383.28 municipality that no action has been brought regarding the 383.29 matter; and 383.30 (2) municipality or development authority have not 383.31 eliminated or resolved the violation to the satisfaction of the 383.32 state auditor. 383.33 The auditor shall provide the municipality and development 383.34 authority a copy of the notification sent to the attorney 383.35 general. 383.36 [EFFECTIVE DATE.] This section applies to violations 384.1 occurring after July 1, 2001. 384.2 Sec. 26. Minnesota Statutes 2000, section 469.178, is 384.3 amended by adding a subdivision to read: 384.4 Subd. 7. [INTERFUND LOANS.] The authority or municipality 384.5 may advance or loan money to finance expenditures under section 384.6 469.176, subdivision 4, from its general fund or any other fund 384.7 regarding which it has legal authority to do so. The loan or 384.8 advance must be approved, by resolution of the governing body, 384.9 before money is transferred, advanced, or spent, whichever is 384.10 earliest. The terms and conditions for repayment of the loan 384.11 must be provided in writing and include, at a minimum, the 384.12 principal amount, the interest rate, maturity, and repayment 384.13 schedule. The maximum rate of interest permitted to be charged 384.14 is limited to the greater of the rates specified under section 384.15 270.75 or 549.09. 384.16 [EFFECTIVE DATE.] This section is effective for loans and 384.17 advances made after June 30, 2001. Interfund loans and advances 384.18 made before July 1, 2001, are ratified and approved, subject to 384.19 the requirement that interest accrued or paid after July 1, 384.20 2001, may not exceed the limit in this section. An authority or 384.21 municipality may modify the terms of an interfund loan or 384.22 advance made before July 1, 2001, to comply with any of the 384.23 requirements of this section as the authority or municipality 384.24 deems appropriate. 384.25 Sec. 27. Minnesota Statutes 2000, section 469.1791, 384.26 subdivision 1, is amended to read: 384.27 Subdivision 1. [DEFINITIONS.] (a) As used in this section, 384.28 the terms defined in this subdivision have the meanings given 384.29 them. 384.30 (b) "City" means acitymunicipality containing a tax 384.31 increment financing district, the request for certification of 384.32 which was made before June 2,19972001. 384.33 (c) "Enabling ordinance" means an ordinance adopted by a 384.34 city council establishing a special taxing district. 384.35 (d) "Special taxing district" means all or any portion of 384.36 the property located within a tax increment financing district, 385.1 the request for certification of which was made before June 2, 385.219972001. 385.3 (e) "Development or redevelopment services" has the meaning 385.4 given in the city's enabling ordinance, and may include any 385.5 services or expenditures the city or its economic development 385.6 authority or housing and redevelopment authority or port 385.7 authority may provide or incur under sections 469.001 to 385.8 469.1081 and 469.124 to 469.134, including, without limitation, 385.9 amounts necessary to pay the principal of or interest on bonds 385.10 issued by the city or its economic development authority or 385.11 housing and redevelopment authority or port authority under 385.12 section 469.178, for the tax increment financing districts 385.13 contained within the special taxing district or projects to be 385.14 funded with increments from tax increment financing districts 385.15 contained within the special taxing district. 385.16 (f) "Preexisting obligations" means bonds issued and sold 385.17 before June 2,19972001, and binding contracts entered into 385.18 before June 2,19972001, to the extent that the bonds and 385.19 contracts are secured by a pledge of increments from the tax 385.20 increment financing district contained within the special taxing 385.21 district. 385.22 [EFFECTIVE DATE.] This section is effective for all tax 385.23 increment financing districts, regardless of when the request 385.24 for certification was made. 385.25 Sec. 28. Minnesota Statutes 2000, section 469.1791, 385.26 subdivision 3, is amended to read: 385.27 Subd. 3. [PRECONDITIONS TO ESTABLISH DISTRICT.] (a) A city 385.28 may establish a special taxing district within a tax increment 385.29 financing district under this section only if the conditions 385.30 under paragraphs (b) and (c) are met or if the city elects to 385.31 exercise the authority under paragraph (d). 385.32 (b) The city has determined that: 385.33 (1) total tax increments from the district, including 385.34 unspent increments from previous years and increments 385.35 transferred under paragraph (c), will be insufficient to pay the 385.36 amounts due in a year on preexisting obligations; and 386.1 (2) this insufficiency of increments resulted from the 386.2 reduction in property tax class rates enacted in the 1997and, 386.3 1998, and 2001 legislative sessions. 386.4 (c) The city has agreed to transfer any available 386.5 increments from other tax increment financing districts in the 386.6 city to pay the preexisting obligations of the district under 386.7 section 469.1763, subdivision 6. This requirement does not 386.8 apply to any available increments of a qualified housing 386.9 district, as defined in Minnesota Statutes 2000, section 386.10 273.1399, subdivision 1. 386.11 (d) If a tax increment financing district does not qualify 386.12 under paragraphs (b) and (c), the governing body may elect to 386.13 establish a special taxing district under this section. If the 386.14 city elects to exercise this authority, increments from the tax 386.15 increment financing district and the proceeds of the tax imposed 386.16 under this section may only be used to pay preexisting 386.17 obligations and reasonable administrative expenses of the 386.18 authority for the tax increment financing district. The tax 386.19 increment financing district must be decertified when all 386.20 preexisting obligations have been paid. 386.21 [EFFECTIVE DATE.] This section is effective for all tax 386.22 increment financing districts, regardless of when the request 386.23 for certification was made. 386.24 Sec. 29. Minnesota Statutes 2000, section 469.1791, 386.25 subdivision 9, is amended to read: 386.26 Subd. 9. [LIMITS ON TAX.] (a) The maximum levy for any 386.27 year may not exceed the least of: 386.28 (1) the amount specified in the assessment agreement or 386.29 development agreement; 386.30 (2) the amount needed to pay preexisting obligations, less 386.31 available increments including increments transferred from other 386.32 districts; and 386.33 (3) the amount of the general ad valorem tax that would 386.34 have been paid by the captured net tax capacity of the tax 386.35 increment financing district, if the property tax class rates 386.36 for taxes payable in19972001 were in effect, less the amount 387.1 of the general ad valorem tax imposed for the payable year on 387.2 the captured net tax capacity. 387.3 (b) If the city uses the proceeds of a tax imposed under 387.4 this section to pay preexisting obligations secured by 387.5 increments from more than one tax increment financing district, 387.6 the city must establish a special taxing district in each of the 387.7 districts and impose a uniform rate upon all the districts. The 387.8 maximum limits under paragraph (a) must be calculated in 387.9 aggregate for all of the affected districts. 387.10 (c) If neither the assessment agreement nor the development 387.11 agreement specify a tax amount but state an agreed market value 387.12 for the property, the amount specified for purposes of paragraph 387.13 (a), clause (1), is the market value of the property under the 387.14 agreement multiplied by the class rate for taxes payable in1997387.15 2001 and multiplied by the sum of the ad valorem tax rates for 387.16 all the taxing jurisdictions. 387.17 (d) If neither the assessment agreement nor the development 387.18 agreement specify a tax amount or an agreed market value for the 387.19 property, the amount for purposes of paragraph (a), clause (1), 387.20 is the amount specified in the development agreement to be paid 387.21 or provided by the development authority on behalf of 387.22 development of the district, less the amount of increment paid 387.23 or collected in prior years and estimated to be collected in the 387.24 current year and any tax imposed under this section in prior 387.25 years. 387.26 (e) If neither the assessment agreement nor the development 387.27 agreement specify a tax amount, an agreed market value for the 387.28 property, or an amount to be paid or provided by the development 387.29 authority on behalf of development of the district, the 387.30 provisions of paragraph (a), clause (1), do not apply. 387.31 [EFFECTIVE DATE.] This section is effective for all tax 387.32 increment financing districts, regardless of when the request 387.33 for certification was made. 387.34 Sec. 30. [469.1792] [CERTAIN DISTRICTS; LIMITATIONS.] 387.35 Subdivision 1. [TAX INCREMENT FINANCING PLAN MODIFICATION 387.36 PROHIBITED.] Notwithstanding any other law to the contrary, no 388.1 tax increment financing district the certification of which was 388.2 requested before May 1, 1990, may modify its tax increment 388.3 financing plan after April 30, 2001. 388.4 Subd. 2. [LIMITS ON USE OF TAX INCREMENT REVENUES.] (a) 388.5 After April 30, 2001, tax increments from a tax increment 388.6 financing district the certification of which was requested 388.7 after July 31, 1979, and before May 1, 1990, may be expended on 388.8 an activity as defined under section 469.1763, subdivision 2, 388.9 only if one of the following occurs: 388.10 (1) on or before April 30, 2002, the revenues are actually 388.11 paid to a third party with respect to the activity; 388.12 (2) bonds, the proceeds of which must be used to finance 388.13 the activity, are issued and sold to a third party on or before 388.14 April 30, 2002, the revenues are spent to repay the bonds, and 388.15 the proceeds of the bonds either are, on the date of issuance, 388.16 reasonably expected to be spent on or before April 30, 2002, or 388.17 are deposited in a reasonably required reserve or replacement 388.18 fund; 388.19 (3) binding contracts with a third party are entered into 388.20 for performance of the activity on or before April 30, 2002, and 388.21 the revenues are spent under the contractual obligation; or 388.22 (4) costs with respect to the activity are paid on or 388.23 before April 30, 2002, and the revenues are spent to reimburse a 388.24 party for payment of the costs, including interest on 388.25 unreimbursed costs. 388.26 (b) For purposes of this section, bonds include subsequent 388.27 refunding bonds if the original refunded bonds meet the 388.28 requirements of paragraph (a), clause (2). 388.29 (c) Nothing in this section extends the duration of a 388.30 district beyond the earlier of: 388.31 (1) the duration limit of the district as established in 388.32 its tax increment financing plan; or 388.33 (2) the duration limit of the district as established by 388.34 law. 388.35 Subd. 3. [USE OF REVENUES FOR DECERTIFICATION.] (a) For 388.36 any tax increment financing district subject to subdivision 2, 389.1 any revenues derived from tax increments paid by properties in 389.2 the district that remain after the expenditures permitted under 389.3 subdivision 2 must be used only to pay: 389.4 (1) outstanding bonds, as defined in subdivision 2, 389.5 paragraphs (a), clause (2), and (b); 389.6 (2) contractual obligations, as defined in subdivision 2, 389.7 paragraph (a), clauses (3) and (4); or 389.8 (3) credit enhanced bonds as defined in section 469.1763, 389.9 subdivision 5, to which the revenues derived from tax increments 389.10 are pledged, but only to the extent that revenues of the 389.11 district for which the credit enhanced bonds were issued are 389.12 insufficient to pay the bonds and to the extent that the 389.13 increments from the applicable pooling percent share for the 389.14 district are insufficient. 389.15 (b) When the outstanding bonds have been defeased and when 389.16 sufficient money has been set aside to pay contractual 389.17 obligations as defined in subdivision 2, paragraph (a), clauses 389.18 (3) and (4), the district must be decertified and the pledge of 389.19 tax increment discharged. 389.20 Subd. 4. [EXEMPTIONS.] The provisions of this section do 389.21 not apply if any of the following apply: 389.22 (1) the county board approves, by resolution, a request by 389.23 the authority and municipality to exempt the district from this 389.24 section by April 1, 2002; 389.25 (2) the increments are spent to obtain matching federal 389.26 funds for a portion of the project; 389.27 (3) a special law applies to authorize the spending; or 389.28 (4) a special law extended the duration of the district and 389.29 the district is subject to section 469.1782, subdivision 1, and 389.30 was approved under section 469.1782, subdivision 2. 389.31 [EFFECTIVE DATE.] This section is effective the day 389.32 following final enactment for districts for which the request 389.33 for certification was made before May 1, 1990. 389.34 Sec. 31. [469.1793] [TIF CONSULTANTS.] 389.35 Subdivision 1. [DEFINITIONS.] (a) For purposes of this 389.36 section, the definitions under section 469.174 apply and the 390.1 following terms have the meanings given. 390.2 (b) "Act" means sections 469.174 to 469.1791. 390.3 (c) "Commissioner" means the commissioner of revenue. 390.4 (d) "Consultant" means an individual, partnership, 390.5 association, private corporation, or any other legal entity that 390.6 provides consulting services. 390.7 (e) "Consulting services" include the rendering of 390.8 professional opinion, advice, or analysis regarding application 390.9 of the act for a municipality or authority, including legal, 390.10 accounting, and fiscal services. 390.11 Subd. 2. [REGISTRATION.] (a) All consultants who provide 390.12 consulting services to municipalities or development authorities 390.13 must register with the commissioner. Registrations must be 390.14 annually renewed. In order to register, consultants must meet 390.15 and demonstrate compliance with the following criteria: 390.16 (1) provide a signed statement agreeing to abide by the 390.17 act; 390.18 (2) provide a signed statement agreeing to make available 390.19 for inspection any records requested by the commissioner, state 390.20 auditor, or commissioner of commerce for field or financial 390.21 audits under the scope of the act; 390.22 (3) certify knowledge of the requirements of the act and 390.23 guidelines published by the state auditor; 390.24 (4) obtain and maintain professional liability coverage; 390.25 and 390.26 (5) agree to submit to the commissioner a certificate or 390.27 certificates verifying the existence of the required insurance 390.28 coverage. 390.29 (b) The commissioner shall maintain a list of all 390.30 registered consultants. 390.31 (c) All consulting services must be performed by registered 390.32 consultants. A municipality or authority may not contract for 390.33 consulting services other than with registered consultants. 390.34 This requirement does not apply to employees of the municipality 390.35 or development authority. Reimbursement for services performed 390.36 by an unregistered consultant does not qualify for payment using 391.1 tax increments. Consulting services performed by a consultant 391.2 before the consultant's removal from the registration list may 391.3 be paid with tax increments. A municipality or development 391.4 authority may not enter into a contract or other arrangement 391.5 with a consultant that provides that the consultant's 391.6 compensation is contingent upon establishment of a tax increment 391.7 district or completion of a financing arrangement to be paid 391.8 with tax increments or that provides compensation to the 391.9 consultant is based on a percentage of increments or eligible 391.10 costs of a tax increment financing district. 391.11 (d) If the information in an application for registration 391.12 becomes inaccurate or incomplete in any material respect, the 391.13 registered consultant must promptly file a corrected application 391.14 with the commissioner. 391.15 (e) Registration is effective 30 days after a complete 391.16 application is received by the commissioner. 391.17 (f) Registration under this section remains in force until 391.18 voluntarily terminated by the registrant, until the registrant 391.19 fails to renew, or until suspended or revoked by the 391.20 commissioner of revenue. All registrants must comply with 391.21 registration criteria under this subdivision. 391.22 (g) The fee for filing an application for registration 391.23 under this section is $100. The fee for filing an application 391.24 for renewal of registration under this section is $50. The 391.25 commissioner shall deposit the fees in the general fund. 391.26 Subd. 3. [CONSULTANT AND CONTRACTOR SANCTIONS.] (a) The 391.27 commissioner of commerce may, by order, revoke a registration, 391.28 censure or suspend a registrant and require payment of all costs 391.29 of proceedings resulting in an action instituted under this 391.30 section and impose a civil penalty of not more than $10,000 if 391.31 the commissioner of commerce finds: 391.32 (1) that the order is in the public interest; and 391.33 (2) that the registrant or, in the case of a registrant 391.34 that is not a natural person, any partner, officer, or director, 391.35 any person occupying a similar status or performing similar 391.36 functions, or any person directly or indirectly controlling the 392.1 registrant committed a violation enumerated in paragraph (b). 392.2 (b) A consultant violates the provisions of this section if 392.3 the consultant: 392.4 (1) has engaged in conduct that departs from or fails to 392.5 conform to the minimal standards of acceptable and prevailing 392.6 legal, accounting, or fiscal practices under the act within the 392.7 reasonable control of the consultant; 392.8 (2) has committed fraud, embezzlement, theft, forgery, 392.9 bribery, falsified or destroyed records, made false statements, 392.10 received stolen property, made false claims, or obstructed 392.11 justice; 392.12 (3) is the subject of an order revoking, suspending, 392.13 restricting, limiting, or imposing other disciplinary action 392.14 against the consultant's license or certification in this or 392.15 another state or jurisdiction; 392.16 (4) has failed to comply with any of the ongoing 392.17 obligations for registration; 392.18 (5) has failed to comply with any provision or order under 392.19 the act or chapter 45; 392.20 (6) has provided consulting services without having an 392.21 accurate and complete registration on file with the 392.22 commissioner; 392.23 (7) has been shown to be incompetent, untrustworthy, or 392.24 financially irresponsible; 392.25 (8) has made or assisted another in making any material 392.26 misrepresentation or omission to the governing body or staff of 392.27 the authority or the municipality or to the commissioner or upon 392.28 reasonable request has withheld or concealed information from, 392.29 or refused to furnish information to, the authority, 392.30 municipality, commissioner, or the commissioner of commerce; or 392.31 (9) has entered into a compensation arrangement for 392.32 consulting services that is contingent upon establishment of a 392.33 tax increment financing district or completion of a financing 392.34 arrangement to be paid with tax increments or that provides 392.35 compensation to the consultant based on a percentage of 392.36 increments or eligible costs of a tax increment financing 393.1 district. 393.2 Subd. 4. [ORDERS.] The commissioner of commerce may issue 393.3 an order requiring a registrant or applicant for registration to 393.4 show cause why the registration should not be revoked or 393.5 suspended, the registrant censured, the application denied, or 393.6 other sanction imposed under this section. The order must be 393.7 calculated to give reasonable notice of the time and place for 393.8 hearing on the matter and must state the reasons for the entry 393.9 of the order. The commissioner of commerce may, by order, 393.10 summarily suspend a registration pending final determination of 393.11 an order to show cause. A hearing on the merits must be held 393.12 within 30 days of the issuance of the order of summary 393.13 suspension. All hearings must be conducted under chapter 14. 393.14 After the hearing, the commissioner of commerce shall enter an 393.15 order disposing of the matter as the facts require. If the 393.16 registrant or applicant for registration fails to appear at a 393.17 hearing after having been duly notified of it, the person is in 393.18 default and the proceeding may be determined against the 393.19 registrant or applicant for registration upon consideration of 393.20 the order to show cause, the allegations of which may be 393.21 considered to be true. 393.22 [EFFECTIVE DATE.] This section is effective for consulting 393.23 services provided after July 1, 2002. 393.24 Sec. 32. Minnesota Statutes 2000, section 469.1812, 393.25 subdivision 2, is amended to read: 393.26 Subd. 2. [GOVERNING BODY.] "Governing body" means, for a 393.27 city, the city council; for a school district, the school board; 393.28 for a county, the county board; and for a town, theannual393.29meeting of the townboard of supervisors. 393.30 [EFFECTIVE DATE.] This section is effective retroactive to 393.31 May 26, 1999. 393.32 Sec. 33. Minnesota Statutes 2000, section 469.1813, 393.33 subdivision 4, is amended to read: 393.34 Subd. 4. [PROPERTY LOCATED IN TAX INCREMENT FINANCING 393.35 DISTRICTS.] The governing body of a political subdivision may 393.36 not enter into a property tax abatement agreement under sections 394.1 469.1812 to 469.1815 that provides for abatement of taxes on a 394.2 parcel,if the abatement will occur either: 394.3 (1) while the parcel is located in a tax increment 394.4 financing district; or 394.5 (2) within two years after the parcel was eliminated from a 394.6 tax increment financing district, other than by decertification 394.7 of the entire district. 394.8 [EFFECTIVE DATE.] This section is effective for abatement 394.9 resolutions approved after June 30, 2001. 394.10 Sec. 34. Minnesota Statutes 2000, section 469.1813, 394.11 subdivision 6, is amended to read: 394.12 Subd. 6. [DURATION LIMIT.] (a) A political subdivision may 394.13 grant an abatement for a period no longer than ten years, except 394.14 as provided under paragraph (b). The subdivision may specify in 394.15 the abatement resolution a shorter duration. If the resolution 394.16 does not specify a period of time, the abatement is for eight 394.17 years. If an abatement has been granted to a parcel of property 394.18 and the period of the abatement has expired, the political 394.19 subdivision that granted the abatement may not grant another 394.20 abatement for eight years after the expiration of the first 394.21 abatement. This prohibition does not apply to improvements 394.22 added after and not subject to the first abatement. 394.23 (b) A political subdivision proposing to abate taxes for a 394.24 parcel may request, in writing, that the other political 394.25 subdivisions in which the parcel is located grant an abatement 394.26 for the property. If one of the other political subdivisions 394.27 declines, in writing, to grant an abatement or if 90 days pass 394.28 after receipt of the request to grant an abatement without a 394.29 written response from one of the political subdivisions, the 394.30 duration limit for an abatement for the parcel by the requesting 394.31 political subdivision and any other participating political 394.32 subdivision is increased to 15 years. If the political 394.33 subdivision which declined to grant an abatement later grants an 394.34 abatement for the parcel, the 15-year duration limit is reduced 394.35 by one year for each year that the declining political 394.36 subdivision grants an abatement for the parcel during the period 395.1 of the abatement granted by the requesting political 395.2 subdivision. The duration limit may not be reduced below the 395.3 limit under paragraph (a). 395.4 [EFFECTIVE DATE.] This section is effective for abatements 395.5 approved after the day following final enactment. 395.6 Sec. 35. Minnesota Statutes 2000, section 475.58, 395.7 subdivision 1, is amended to read: 395.8 Subdivision 1. [APPROVAL BY ELECTORS; EXCEPTIONS.] 395.9 Obligations authorized by law or charter may be issued by any 395.10 municipality upon obtaining the approval of a majority of the 395.11 electors voting on the question of issuing the obligations, but 395.12 an election shall not be required to authorize obligations 395.13 issued: 395.14 (1) to pay any unpaid judgment against the municipality; 395.15 (2) for refunding obligations; 395.16 (3) for an improvement or improvement program, which 395.17 obligation is payable wholly or partly from the proceeds of 395.18 special assessments levied upon property specially benefited by 395.19 the improvement or by an improvement within the improvement 395.20 program, or of taxes levied upon the increased value of property 395.21 within a district for the development of which the improvement 395.22 is undertaken, including obligations which are the general 395.23 obligations of the municipality, if the municipality is entitled 395.24 to reimbursement in whole or in part from the proceeds of such 395.25 special assessments or taxes and not less than 20 percent of the 395.26 cost of the improvement or the improvement program is to be 395.27 assessed against benefited property or is to be paid from the 395.28 proceeds of federal grant funds or a combination thereof, or is 395.29 estimated to be received from such taxes within the district; 395.30 (4) payable wholly from the income of revenue producing 395.31 conveniences; 395.32 (5) under the provisions of a home rule charter which 395.33 permits the issuance of obligations of the municipality without 395.34 election; 395.35 (6) under the provisions of a law which permits the 395.36 issuance of obligations of a municipality without an election; 396.1 (7) to fund pension or retirement fund liabilities pursuant 396.2 to section 475.52, subdivision 6; 396.3 (8) under a capital improvement plan under section 373.40; 396.4 (9) to fund facilities as provided in subdivision 3; and 396.5 (10) under sections 469.1813 to 469.1815 (property tax 396.6 abatement authority bonds), if the proceeds of the bonds are not 396.7 used for a purpose prohibited under section 469.176, subdivision 396.8 4g, paragraph (b). 396.9 [EFFECTIVE DATE.] This section is effective for bonds 396.10 issued or sold after the day following final enactment. 396.11 Sec. 36. Laws 1997, chapter 231, article 10, section 25, 396.12 is amended to read: 396.13 Sec. 25. [EFFECTIVE DATE.] 396.14 Sections 1, 3 to 6, 7, and 10, are effective for districts 396.15 for which the requests for certification are made after June 30, 396.16 1997. 396.17 Section 2,clausesclause (1)and (4), areis effective for 396.18 all districtsfor whichregardless of when the requests for 396.19 certification were madeafter July 31, 1979, and for payments396.20and investment earnings received after July 1, 1997and 396.21 regardless of when the increments were received. Section 2, 396.22 clauses (2) and (3), are effective for districts for which the 396.23 request for certification was made after June 30, 1982, and 396.24 proceeds from sales and leases of properties purchased by the 396.25 authority after June 30, 1997, and repayments of advances and 396.26 loans that were made after June 30, 1997. Section 2, clause 396.27 (4), is effective for districts for which the requests for 396.28 certification were made (i) after July 31, 1979, and for 396.29 investment earnings received after July 1, 1997, and (ii) before 396.30 August 1, 1979, and for interest and investment earnings 396.31 received after December 31, 2001. 396.32 Sections 8 and 9 apply to all tax increment districts, 396.33 whenever certified, insofar as the underlying law applies to 396.34 them, and any uses of tax increment expended prior to the date 396.35 of enactment of this act which are in compliance with the 396.36 provisions of those sections are deemed valid. 397.1 Sections 12 and 13 are effective on the day the chief 397.2 clerical officer of the city of Columbia Heights complies with 397.3 Minnesota Statutes, sections 645.021, subdivision 3. 397.4 Sections 17 to 20 are effective the day following final 397.5 enactment and upon compliance by the governing body with 397.6 Minnesota Statutes, section 645.021, subdivision 3. 397.7 Section 24 is effective the day following final enactment. 397.8 [EFFECTIVE DATE.] This section is effective the day 397.9 following final enactment. 397.10 Sec. 37. Laws 2000, chapter 490, article 11, section 26, 397.11 the effective date, is amended to read: 397.12 EFFECTIVE DATE: This section is effective for increments 397.13 spent after July 1, 2000, from districts for which certification 397.14 was requested afterMay 1, 1990June 30, 1982. 397.15 [EFFECTIVE DATE.] This section is effective the day 397.16 following final enactment. 397.17 Sec. 38. [HOLLMAN DECREE HOUSING.] 397.18 To implement a federal court order or decree relating to 397.19 the provision of low-rent public housing finance, in whole or in 397.20 part, with federal financial assistance under section 5 of the 397.21 United States Housing Act, or any successor legislation, the 397.22 Minneapolis public housing authority or the metropolitan 397.23 council, acting under the powers of Minnesota Statutes, sections 397.24 469.001 to 469.047, may enter a cooperation agreement with the 397.25 governing body of any municipality or county within the 397.26 metropolitan area, as defined in Minnesota Statutes, section 397.27 473.121, subdivision 2, to provide exemption from all real and 397.28 personal taxes levied or imposed by the state, city, county, or 397.29 other political subdivision, for which the Minneapolis public 397.30 housing authority or the metropolitan council shall make, or 397.31 cause to be made, payments in lieu of taxes as provided under 397.32 Minnesota Statutes, section 469.040. This exemption and 397.33 obligation to make payments in lieu of taxes continues until the 397.34 housing is no longer subject to the provisions of section 5 of 397.35 the United States Housing Act, or any successor legislation. 397.36 [EFFECTIVE DATE.] This section is effective with respect to 398.1 any cooperation agreement entered into on or after November 1, 398.2 1997. Any owner of low-rent public housing acquired and 398.3 renovated or constructed under a cooperation agreement under 398.4 this section may apply for abatement of the real or personal 398.5 property taxes under Minnesota Statutes, section 375.192, 398.6 notwithstanding the time limitation for filing application under 398.7 section 375.192. This section applies in counties of Anoka, 398.8 Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 398.9 Sec. 39. [AURORA; TAX INCREMENT DISTRICT EXTENSION.] 398.10 Subdivision 1. [DISTRICT EXTENSION.] Notwithstanding the 398.11 provisions of Minnesota Statutes, section 469.176, subdivision 398.12 1c, upon approval of the governing body of the city of Aurora by 398.13 resolution, the housing and redevelopment authority in and for 398.14 the city of Aurora may extend to December 31, 2009, the duration 398.15 of its downtown tax increment financing district originally 398.16 certified in 1978. 398.17 Subd. 2. [SPECIAL RULES.] Increments permitted to be paid 398.18 to and retained by the authority by subdivision 1 may only be 398.19 used to: 398.20 (1) pay or defease bonds or other contractual obligations; 398.21 (2) fund public redevelopment costs within the 398.22 redevelopment project or costs provided for in the tax increment 398.23 financing plan; or 398.24 (3) pay or defease bonds issued to refund the bonds. 398.25 [EFFECTIVE DATE.] This section is effective the day after 398.26 compliance with Minnesota Statutes, sections 469.1782, 398.27 subdivision 2, and 645.021, subdivision 2. 398.28 Sec. 40. [GAYLORD; TIF DISTRICT EXTENSION.] 398.29 Notwithstanding the provisions of Minnesota Statutes, 398.30 section 469.176, subdivision 1c, or any other law, the city of 398.31 Gaylord may, by resolution, extend the duration of a tax 398.32 increment financing district originally certified in 1978. If 398.33 the city extends the district, the district is deemed to 398.34 continue to be in effect, beginning for taxes payable in 2002, 398.35 and notwithstanding the decertification of the district for 398.36 taxes payable in 2001. The city may not extend the duration 399.1 beyond December 31, 2008. Notwithstanding the provisions of 399.2 Minnesota Statutes, section 469.176, subdivision 1c, the city 399.3 may spend increments from the district on project costs other 399.4 than bonds issued before April 1, 1990. 399.5 [EFFECTIVE DATE.] This section is effective upon completion 399.6 with the requirements of Minnesota Statutes, sections 469.1782 399.7 and 645.021. 399.8 Sec. 41. [CITY OF NORTH ST. PAUL; TIF GRANT.] 399.9 Notwithstanding Laws 1997, chapter 231, article 1, sections 399.10 19 and 22, as amended by Laws 1997, First Special Session 399.11 chapter 5, section 36, Laws 1999, chapter 243, article 10, 399.12 sections 16, 17, 27, and 28, and Laws 2000, chapter 490, article 399.13 11, section 36, the commissioner of revenue shall pay to the 399.14 city of North St. Paul the amount of $12,800 as a tax increment 399.15 financing grant provided for under those laws. This amount 399.16 compensates the city for the aggregate amount of the calendar 399.17 year 1999 deficits in the tax increment financing districts 399.18 within the city, as determined under the laws cited in this 399.19 section using the accrual method of accounting. The amount 399.20 authorized to be paid under this section for the calendar year 399.21 1999 tax increment financing deficits may not also be paid under 399.22 any other provision of law. The commissioner shall pay the 399.23 amount authorized under this section to the city by warrant 399.24 issued on or before 60 days after the enactment of this 399.25 section. The warrant must be drawn on the state treasury from 399.26 the appropriations made in Laws 1997, chapter 231, article 1, 399.27 section 19, and Laws 1999, chapter 243, article 10, section 27. 399.28 [EFFECTIVE DATE.] This section is effective the day 399.29 following final enactment without local approval. 399.30 Sec. 42. [CITY OF PARK RAPIDS; EXTENSION OF TIME FOR 399.31 ACTIVITY IN A TAX INCREMENT FINANCING DISTRICT.] 399.32 The requirement in Minnesota Statutes, section 469.1763, 399.33 subdivision 3, that activities must be undertaken within a 399.34 five-year period from the date of certification of a tax 399.35 increment financing district must be considered to be met in the 399.36 case of redevelopment district No. 4 in the city of Park Rapids 400.1 if the activities are undertaken within six years from the date 400.2 of certification of the district. 400.3 [EFFECTIVE DATE.] This section is effective upon approval 400.4 by the governing body of the city of Park Rapids and compliance 400.5 with Minnesota Statutes, section 645.021, subdivision 3. 400.6 Sec. 43. [ROBBINSDALE; TAX INCREMENT FINANCING DISTRICT.] 400.7 Notwithstanding the provisions of Minnesota Statutes, 400.8 section 469.176, subdivision 1c, tax increment may be expended 400.9 until June 30, 2001, for project costs other than bonds 400.10 outstanding on April 1, 1990, for the tax increment financing 400.11 district designated as Project 4 in the city of Robbinsdale. 400.12 [EFFECTIVE DATE.] This section is effective the day 400.13 following final enactment, and after approval by the governing 400.14 body of the city of Robbinsdale and compliance with Minnesota 400.15 Statutes, section 645.021, subdivision 3. 400.16 Sec. 44. [CITY OF LUVERNE; BORDER CITY DEVELOPMENT ZONES.] 400.17 Subdivision 1. [AUTHORIZATION.] The governing body of the 400.18 city of Luverne may designate between one and six areas of the 400.19 city as border city development zones. The total area of the 400.20 zones may not exceed 100 acres. 400.21 Subd. 2. [APPLICATION OF GENERAL LAW.] (a) The provisions 400.22 of Minnesota Statutes, sections 469.1731 to 469.1735, apply to 400.23 the border city development zones designated under this 400.24 section. The governing body of the city may exercise the powers 400.25 granted under Minnesota Statutes, sections 469.1731 to 469.1735, 400.26 including powers that apply outside of the zones. 400.27 (b) The allocation under subdivision 3 for purposes of 400.28 Minnesota Statutes, section 469.1735, subdivision 2, and the 400.29 necessary amount of the allocation is appropriated to the 400.30 commissioner of revenue. 400.31 Subd. 3. [ALLOCATION OF STATE TAX REDUCTIONS.] (a) The 400.32 cumulative total amount of tax reductions for all years of the 400.33 program under Minnesota Statutes, sections 469.1731 to 469.1735, 400.34 is limited to $183,000. 400.35 (b) This allocation may be used for tax reductions provided 400.36 in Minnesota Statutes, section 469.1732 or 469.1734, or for 401.1 reimbursements under Minnesota Statutes, section 469.1735, 401.2 subdivision 3, but only if the governing body of the city of 401.3 Luverne determines that the tax reduction or offset is necessary 401.4 to enable a business to expand within a city or to attract a 401.5 business to the city. 401.6 (c) The commissioner of revenue may waive the limit under 401.7 this subdivision using the same rules and standards provided in 401.8 Minnesota Statutes, section 469.169, subdivision 12, paragraph 401.9 (b). 401.10 [EFFECTIVE DATE.] This section is effective upon compliance 401.11 by the governing body of the city of Luverne with the 401.12 requirements of Minnesota Statutes, section 645.021. 401.13 Sec. 45. [REPEALER.] 401.14 Minnesota Statutes 2000, sections 273.1399, and 469.1782, 401.15 subdivision 1, are repealed. 401.16 [EFFECTIVE DATE.] This section is effective January 1, 2002. 401.17 ARTICLE 13 401.18 STREAMLINED SALES TAX 401.19 Section 1. [295.60] [SPECIAL FUR CLOTHING TAX.] 401.20 Subdivision 1. [IMPOSITION.] If clothing made of fur is 401.21 not subject to the sales tax under chapter 297A, a tax is 401.22 imposed on each furrier equal to 6.5 percent of gross revenues 401.23 from the sale of clothing made from fur made in Minnesota during 401.24 the calendar year. 401.25 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 401.26 the following terms have the meanings given. 401.27 (b) "Commissioner" means the commissioner of revenue. 401.28 (c) "Furrier" means a retailer that sells clothing made of 401.29 fur. 401.30 (d) "Clothing made of fur" means articles of clothing made 401.31 of fur on the hide or pelt, and articles of clothing of which 401.32 such fur is the component material of chief value, but only if 401.33 such value is more than three times the value of the next most 401.34 valuable material. 401.35 Subd. 3. [PAYMENT.] (a) Each furrier shall make estimated 401.36 payments of the taxes for the calendar year in quarterly 402.1 installments to the commissioner by April 15, July 15, October 402.2 15, and January 15 of the following calendar year. 402.3 (b) Estimated tax payments are not required if: 402.4 (1) the tax for the current calendar year is less than 402.5 $500; or 402.6 (2) the tax for the previous calendar year is less than 402.7 $500, if the taxpayer had a tax liability and was doing business 402.8 the entire year. 402.9 (c) Underpayment of estimated installments bear interest at 402.10 the rate specified in section 270.75, from the due date of the 402.11 payment until paid or until the due date of the annual return, 402.12 whichever comes first. An underpayment of an estimated 402.13 installment is the difference between the amount paid and the 402.14 lesser of (1) 90 percent of one-quarter of the tax for the 402.15 calendar year or (2) one-quarter of the total tax for the 402.16 previous calendar year if the taxpayer had a tax liability and 402.17 was doing business the entire year. 402.18 Subd. 4. [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 402.19 with an aggregate tax liability of $120,000 or more during a 402.20 fiscal year ending June 30 must remit all liabilities by means 402.21 of a funds transfer as defined in section 336.4A-104, paragraph 402.22 (a), in the subsequent calendar year. The funds transfer 402.23 payment date, as defined in section 336.4A-401, is on or before 402.24 the date the tax is due. If the date the tax is due is not a 402.25 funds-transfer business day, as defined in section 336.4A-105, 402.26 paragraph (a), clause (4), the payment date is on or before the 402.27 first funds-transfer business day after the date the tax is due. 402.28 Subd. 5. [ANNUAL RETURN.] The taxpayer must file an annual 402.29 return reconciling the estimated payments by March 15 of the 402.30 following calendar year. 402.31 Subd. 6. [FORM OF RETURNS.] The estimated payments and 402.32 annual return must contain the information and be in the form 402.33 prescribed by the commissioner. 402.34 Subd. 7. [APPLICATION OF OTHER CHAPTERS.] Unless 402.35 specifically provided otherwise by this section, the 402.36 enforcement, interest, and penalty provisions under chapter 294, 403.1 appeal provisions in sections 289A.43 and 289A.65, criminal 403.2 penalties in section 289A.63, refunds provisions in section 403.3 289A.50, and collection and rulemaking provisions under chapter 403.4 270, apply to a liability for the taxes imposed under this 403.5 section. 403.6 Subd. 8. [INTEREST ON OVERPAYMENTS.] Interest must be paid 403.7 on an overpayment refunded or credited to the taxpayer from the 403.8 date of payment of the tax until the date the refund is paid or 403.9 credited. For purposes of this subdivision, the date of payment 403.10 is the due date of the return or the date of actual payment of 403.11 the tax, whichever is later. 403.12 Subd. 9. [DEPOSIT OF REVENUES.] The commissioner shall 403.13 deposit all revenues, including penalties and interest, derived 403.14 from the tax imposed by this section in the general fund. 403.15 [EFFECTIVE DATE.] This section is effective for sales made 403.16 after December 31, 2001. 403.17 Sec. 2. Minnesota Statutes 2000, section 297A.61, 403.18 subdivision 3, is amended to read: 403.19 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 403.20 include, but are not limited to, each of the transactions listed 403.21 in this subdivision. 403.22 (b) Sale and purchase include any transfer of title or 403.23 possession, or both, of tangible personal property, whether 403.24 absolutely or conditionally, and the leasing of or the granting 403.25 of a license to use or consume, for a consideration, tangible 403.26 personal property, other than a manufactured home used for 403.27 residential purposes for a continuous period of 30 days or more. 403.28 (c) Sale and purchase include the production, fabrication, 403.29 printing, or processing of tangible personal property for a 403.30 consideration for consumers who furnish either directly or 403.31 indirectly the materials used in the production, fabrication, 403.32 printing, or processing. 403.33 (d) Sale and purchase include thefurnishing,preparing, or403.34servingfor a consideration of foodor drinks. Notwithstanding 403.35 section 297A.67, subdivision 2, taxable foodor drinks403.36includeincludes, butareis not limited to, the following: 404.1 (1) prepared foodor drinkssold by the retailerfor404.2immediate consumption on the retailer's premises. Food and404.3drinks sold within a building or grounds that require an404.4admission charge for entrance are presumed to be sold for404.5consumption on the premises; 404.6(2) food or drinks prepared by the retailer for immediate404.7consumption either on or off the retailer's premises. For404.8purposes of this subdivision, "food or drinks prepared for404.9immediate consumption" means any food product upon which an act404.10of preparation including, but not limited to, cooking, mixing,404.11sandwich making, blending, heating, or pouring has been404.12performed by the retailer so the food product may be immediately404.13consumed by the purchaser;404.14(3) ice cream, ice milk, frozen yogurt products, or frozen404.15novelties sold in single or individual servings including, but404.16not limited to, cones, sundaes, and snow cones;404.17(4)(2) soft drinksand other beverages, including all404.18carbonated and noncarbonated beverages or drinks sold in liquid404.19form, but not including beverages or drinks which contain milk404.20or milk products, beverages or drinks containing 15 or more404.21percent fruit juice, and noncarbonated and noneffervescent404.22bottled water sold in individual containers of one-half gallon404.23or more in size; 404.24(5) gum,(3) candy, and candy products; and 404.25(6) ice;404.26(7)(4) all food soldfromthrough vending machines;. 404.27(8) all food for immediate consumption sold from concession404.28stands and vehicles;404.29(9) party trays;404.30(10) all meals and single servings of packaged snack food404.31sold in restaurants and bars; and404.32(11) bakery products that are:404.33(i) prepared by the retailer for consumption on the404.34retailer's premises;404.35(ii) sold at a place that charges admission;404.36(iii) sold from vending machines; or405.1(iv) sold in single or individual servings from concession405.2stands, vehicles, bars, and restaurants.405.3For purposes of this paragraph, "single or individual405.4servings" does not include products when sold in bulk containers405.5or bulk packaging.405.6For purposes of this paragraph, "premises" means the total405.7space and facilities, including buildings, grounds, and parking405.8lots that are made available or that are available for use by405.9the retailer or customer for the purpose of sale or consumption405.10of prepared food and drinks. The premises of a caterer is the405.11place where the catered food or drinks are served.405.12 (e) A sale and a purchase includes the furnishing for a 405.13 consideration of electricity, gas, water, or steam for use or 405.14 consumption within this state or local exchange telephone 405.15 service, intrastate toll service, and interstate toll service, 405.16 if that service originates from and is charged to a telephone 405.17 located in this state. Telephone service includes (1) paging 405.18 services, and (2) private communication service, as defined in 405.19 United States Code, title 26, section 4252(d), except for 405.20 private communication service purchased by an agent acting on 405.21 behalf of the state lottery. Telephone service does not include 405.22 services purchased with a prepaid telephone calling card. The 405.23 furnishing for a consideration of access to telephone services 405.24 by a hotel to its guests is a sale. The furnishing for a 405.25 consideration of items listed in this paragraph by a municipal 405.26 corporation is a sale. 405.27 (f) A sale and a purchase includes the transfer for a 405.28 consideration of computer software. 405.29 (g) A sale and a purchase includes the furnishing for a 405.30 consideration of taxable services as defined in subdivision 16. 405.31 (h) A sale and a purchase includes the furnishing for a 405.32 consideration of tangible personal property or taxable services 405.33 by the United States or any of its agencies or 405.34 instrumentalities, or the state of Minnesota, its agencies, 405.35 instrumentalities, or political subdivisions. 405.36 [EFFECTIVE DATE.] This section is effective for sales and 406.1 purchases occurring after December 31, 2001. 406.2 Sec. 3. Minnesota Statutes 2000, section 297A.61, 406.3 subdivision 4, is amended to read: 406.4 Subd. 4. [RETAIL SALE.] (a) A "retail sale" meansaany 406.5 sale, lease, or rental for any purpose other than resalein the406.6regular course of business, sublease, or subrent. 406.7 (b) A sale of property used by the owner only by leasing it 406.8 to others or by holding it in an effort to lease it, and put to 406.9 no use by the owner other than resale after the lease or effort 406.10 to lease, is a sale of property for resale. 406.11 (c) A sale of master computer software that is purchased 406.12 and used to make copies for sale or lease is a sale of property 406.13 for resale. 406.14 (d) A sale of building materials, supplies, and equipment 406.15 to owners, contractors, subcontractors, or builders for the 406.16 erection of buildings or the alteration, repair, or improvement 406.17 of real property is a retail sale in whatever quantity sold, 406.18 whether the sale is for purposes of resale in the form of real 406.19 property or otherwise. 406.20 (e) A sale of carpeting, linoleum, or similar floor 406.21 covering to a person who provides for installation of the floor 406.22 covering is a retail sale and not a sale for resale since a sale 406.23 of floor covering which includes installation is a contract for 406.24 the improvement of real property. 406.25 (f) A sale of shrubbery, plants, sod, trees, and similar 406.26 items to a person who provides for installation of the items is 406.27 a retail sale and not a sale for resale since a sale of 406.28 shrubbery, plants, sod, trees, and similar items that includes 406.29 installation is a contract for the improvement of real property. 406.30 (g) A sale of tangible personal property that is awarded as 406.31 prizes is a retail sale and is not considered a sale of property 406.32 for resale. 406.33 (h) A sale of tangible personal property utilized or 406.34 employed in the furnishing or providing of services under 406.35 subdivision 16, paragraph (b), including, but not limited to, 406.36 property given as promotional items, is a retail sale and is not 407.1 considered a sale of property for resale. 407.2 (i) A sale of tangible personal property used in conducting 407.3 lawful gambling under chapter 349 or the state lottery under 407.4 chapter 349A, including, but not limited to, property given as 407.5 promotional items, is a retail sale and is not considered a sale 407.6 of property for resale. 407.7 (j) A sale of machines, equipment, or devices that are used 407.8 to furnish, provide, or dispense goods or services, including, 407.9 but not limited to, coin-operated devices, is a retail sale and 407.10 is not considered a sale of property for resale. 407.11 (k) In the case of a lease, a retail sale occurs when an 407.12 obligation to make a lease payment becomes due under the terms 407.13 of the agreement or the trade practices of the lessor. 407.14 (l) In the case of a conditional sales contract, a retail 407.15 sale occurs upon the transfer of title or possession of the 407.16 tangible personal property. 407.17 [EFFECTIVE DATE.] This section is effective January 1, 2002. 407.18 Sec. 4. Minnesota Statutes 2000, section 297A.61, 407.19 subdivision 7, is amended to read: 407.20 Subd. 7. [SALES PRICE.] (a) "Sales price" meansthe total407.21consideration for a retail sale, valued in money, whether paid407.22in money or by barter or exchange.the measure subject to sales 407.23 tax, and means the total amount of consideration, including 407.24 cash, credit, property, and services, for which personal 407.25 property or services are sold, leased, or rented, valued in 407.26 money, whether received in money or otherwise, without any 407.27 deduction for the following: 407.28 (1) the seller's cost of the property sold; 407.29 (2) the cost of materials used, labor or service cost, 407.30 interest, losses, all costs of transportation to the seller, all 407.31 taxes imposed on the seller, and any other expenses of the 407.32 seller; 407.33 (3) charges by the seller for any services necessary to 407.34 complete the sale, other than delivery and installation charges; 407.35 and 407.36 (4) the value of exempt property given to the purchaser 408.1 when taxable and exempt personal property have been bundled 408.2 together and sold by the seller as a single product or piece of 408.3 merchandise. 408.4(b) Sales price includes:408.5(1) the cost of the property sold, cost of materials used,408.6labor or service cost, interest, or discount allowed after the408.7sale is consummated;408.8(2) the cost of transportation incurred prior to the time408.9of sale;408.10(3) any amount for which credit is given by the seller to408.11the purchaser;408.12(4) charges for services that are part of a sale; or408.13(5) any other expense whatsoever.408.14(c)(b) Sales price does not includethe following: 408.15 (1)an amount allowed as credit for tangible personal408.16property taken in trade for resalediscounts, including cash, 408.17 terms, or coupons that are not reimbursed by a third party and 408.18 that are allowed by the seller and taken by a purchaser on a 408.19 sale; 408.20 (2)charges of up to 15 percent in lieu of tips if the408.21charges are separately statedinterest, financing, and carrying 408.22 charges from credit extended on the sale of personal property or 408.23 services, if the amount is separately stated on the invoice, 408.24 bill of sale, or similar document given to the purchaser; 408.25 (3)interest, financing, or carrying charges if the charges408.26are separately statedany taxes legally imposed directly on the 408.27 consumer that are separately stated on the invoice, bill of 408.28 sale, or similar document given to the purchaser; 408.29 (4) charges for labor or services used in installing or 408.30 applying the property sold if the charges are separately stated; 408.31 and 408.32 (5)transportation charges if the transportation occurs408.33after the retail sale of the propertydelivery charges if the 408.34 charges are separately stated;408.35(6) cash discounts allowed and taken on sales or the amount408.36refunded either in cash or in credit for property returned by409.1purchasers;409.2(7) the rental motor vehicle tax imposed under section409.3297A.64; or409.4(8) the amount of any tax imposed by the United States on409.5communications services under United States Code, title 26,409.6section 4251(a).409.7(d) Notwithstanding paragraph (c), "sales price," for409.8purposes of sales of ready-mixed concrete sold from a409.9ready-mixed concrete truck, includes any transportation,409.10delivery, or other service charges, and no deduction is allowed409.11for those charges, whether or not the charges are separately409.12stated. 409.13 [EFFECTIVE DATE.] This section is effective January 1, 2002. 409.14 Sec. 5. Minnesota Statutes 2000, section 297A.61, 409.15 subdivision 9, is amended to read: 409.16 Subd. 9. [RETAILER AND SELLER.] "Retailer" and "seller" 409.17 meanseveryany personengaged inmakingretailsales, leases, 409.18 or rentals of personal property or services. 409.19 [EFFECTIVE DATE.] This section is effective January 1, 2002. 409.20 Sec. 6. Minnesota Statutes 2000, section 297A.61, is 409.21 amended by adding a subdivision to read: 409.22 Subd. 24. [PURCHASE PRICE.] "Purchase price" means the 409.23 measure subject to the use tax and has the same meaning as 409.24 "sales price." 409.25 [EFFECTIVE DATE.] This section is effective January 1, 2002. 409.26 Sec. 7. Minnesota Statutes 2000, section 297A.61, is 409.27 amended by adding a subdivision to read: 409.28 Subd. 25. [STATE.] Unless specifically provided otherwise, 409.29 "state" means any state of the United States and the District of 409.30 Columbia. 409.31 [EFFECTIVE DATE.] This section is effective January 1, 2002. 409.32 Sec. 8. Minnesota Statutes 2000, section 297A.61, is 409.33 amended by adding a subdivision to read: 409.34 Subd. 26. [DELIVERY CHARGES.] "Delivery charges" means 409.35 charges by the seller for preparation and delivery to a location 409.36 designated by the purchaser of personal property or services 410.1 including, but not limited to, transportation, shipping, 410.2 postage, handling, crating, and packing. 410.3 [EFFECTIVE DATE.] This section is effective January 1, 2002. 410.4 Sec. 9. Minnesota Statutes 2000, section 297A.61, is 410.5 amended by adding a subdivision to read: 410.6 Subd. 27. [PREPARED FOOD.] "Prepared food" means (i) food 410.7 sold in a heated state or heated by the seller; (ii) two or more 410.8 food ingredients mixed or combined by the seller for sale as a 410.9 single item; or (iii) food sold with eating utensils provided by 410.10 the seller, including plates, knives, forks, spoons, glasses, 410.11 cups, napkins, or straws. Prepared food does not include food 410.12 that is sliced, repackaged, or pasteurized by the seller. 410.13 [EFFECTIVE DATE.] This section is effective January 1, 2002. 410.14 Sec. 10. Minnesota Statutes 2000, section 297A.61, is 410.15 amended by adding a subdivision to read: 410.16 Subd. 28. [SOFT DRINKS.] "Soft drinks" means nonalcoholic 410.17 beverages that contain natural or artificial sweeteners. Soft 410.18 drinks do not include beverages that contain milk or milk 410.19 products; soy, rice, or similar milk substitutes; or greater 410.20 than 50 percent vegetable or fruit juice by volume. 410.21 [EFFECTIVE DATE.] This section is effective January 1, 2002. 410.22 Sec. 11. Minnesota Statutes 2000, section 297A.61, is 410.23 amended by adding a subdivision to read: 410.24 Subd. 29. [CANDY.] "Candy" means a preparation of sugar, 410.25 honey, or other natural or artificial sweeteners in combination 410.26 with chocolate, fruits, nuts, or other ingredients or flavorings 410.27 in the form of bars, drops, or pieces. Candy does not include 410.28 any preparation containing flour and must require no 410.29 refrigeration. 410.30 [EFFECTIVE DATE.] This section is effective January 1, 2002. 410.31 Sec. 12. Minnesota Statutes 2000, section 297A.61, is 410.32 amended by adding a subdivision to read: 410.33 Subd. 30. [FOOD SOLD THROUGH VENDING MACHINES.] "Food sold 410.34 through vending machines" means food dispensed from a machine or 410.35 other mechanical device that accepts payment. 410.36 [EFFECTIVE DATE.] This section is effective January 1, 2002. 411.1 Sec. 13. Minnesota Statutes 2000, section 297A.64, 411.2 subdivision 3, is amended to read: 411.3 Subd. 3. [ADMINISTRATION.]The retailer shall report and411.4pay the tax imposed in subdivision 1 to the commissioner of411.5revenue with the taxes imposed in this chapter.Thetax imposed411.6in subdivision 1 and thefee imposed in subdivision 2areis 411.7 subject to the same interest, penalty, and other provisions 411.8 provided for sales and use taxes under chapter 289A and this 411.9 chapter. The commissioner has the same powers to assess and 411.10 collect thetax andfee that are given the commissioner in 411.11 chapters 270 and 289A and this chapter to assess and collect 411.12 sales and use tax. 411.13 [EFFECTIVE DATE.] This section is effective for leases 411.14 entered into after December 31, 2005. 411.15 Sec. 14. Minnesota Statutes 2000, section 297A.64, 411.16 subdivision 4, is amended to read: 411.17 Subd. 4. [EXEMPTIONS.] (a) Thetax and thefee imposed by 411.18 this sectiondodoes not apply to a lease or rental of (1) a 411.19 vehicle to be used by the lessee to provide a licensed taxi 411.20 service; (2) a hearse or limousine used in connection with a 411.21 burial or funeral service; or (3) a van designed or adapted 411.22 primarily for transporting property rather than passengers. 411.23 (b) The lessor may elect not to charge the fee imposed in 411.24 subdivision 2 if in the previous calendar year the lessor had no 411.25 more than 20 vehicles available for lease that would have been 411.26 subject to tax under this section, or no more than $50,000 in 411.27 gross receipts that would have been subject to tax under this 411.28 section. 411.29 [EFFECTIVE DATE.] This section is effective for leases 411.30 entered into after December 31, 2005. 411.31 Sec. 15. [297A.668] [SOURCING OF SALE; SITUS IN THIS 411.32 STATE.] 411.33 Subdivision 1. [SOURCING RULES.] (a) The following 411.34 provisions apply regardless of the characterization of a product 411.35 as tangible personal property, a digital good, or a service; but 411.36 do not apply to telecommunications services, or the sales of 412.1 motor vehicles, watercraft, aircraft, modular homes, 412.2 manufactured homes, or mobile homes. These provisions only 412.3 apply to determine a seller's obligation to pay or collect and 412.4 remit a sales or use tax with respect to the seller's sale of a 412.5 product. These provisions do not affect the obligation of a 412.6 seller as purchaser to remit tax on the use of the product. 412.7 (b) When the product is received by the purchaser at a 412.8 business location of the seller, the sale is sourced to that 412.9 business location. 412.10 (c) When the product is not received by the purchaser at a 412.11 business location of the seller, the sale is sourced to the 412.12 location where receipt by the purchaser or the donee designated 412.13 by the purchaser occurs, including the location indicated by 412.14 instructions for delivery to the purchasers or the purchaser's 412.15 donee, known to the seller. 412.16 (d) When paragraphs (b) and (c) do not apply, the sale is 412.17 sourced to the location indicated by an address for the 412.18 purchaser that is available from the business records of the 412.19 seller that are maintained in the ordinary course of the 412.20 seller's business, when use of this address does not constitute 412.21 bad faith. 412.22 (e) When paragraphs (b), (c), and (d) do not apply, the 412.23 sale is sourced to the location indicated by an address for the 412.24 purchaser obtained during the consummation of the sale, 412.25 including the address of a purchaser's payment instrument if no 412.26 other address is available, when use of this address does not 412.27 constitute bad faith. 412.28 (f) When paragraphs (b), (c), (d), and (e) do not apply, 412.29 including the circumstance where the seller is without 412.30 sufficient information to apply the previous paragraphs, then 412.31 the location is determined by the address from which tangible 412.32 personal property was shipped, from which the digital good was 412.33 first available for transmission by the seller, or from which 412.34 the service was provided. 412.35 Subd. 2. [MULTIPLE POINTS OF USE.] (a) Notwithstanding the 412.36 provisions of subdivision 1, a business purchaser that is not a 413.1 holder of a direct pay permit that knows at the time of its 413.2 purchase of a digital good or service that the digital good or 413.3 service will be concurrently available for use in more than one 413.4 taxing jurisdiction shall deliver to the seller in conjunction 413.5 with its purchase a multiple points of use exemption certificate 413.6 disclosing this fact. 413.7 (b) Upon receipt of the multiple points of use exemption 413.8 certificate, the seller is relieved of the obligation to 413.9 collect, pay, or remit the applicable tax and the purchaser is 413.10 obligated to collect, pay, or remit the applicable tax on a 413.11 direct pay basis. 413.12 (c) A purchaser delivering the multiple points of use 413.13 exemption certificate may use any reasonable, but consistent and 413.14 uniform, method of apportionment that is supported by the 413.15 purchaser's business records as they exist at the time of the 413.16 consummation of the sale. 413.17 (d) The multiple points of use exemption certificate 413.18 remains in effect for all future sales by the seller to the 413.19 purchaser until it is revoked in writing. 413.20 (e) A holder of a direct pay permit is not required to 413.21 deliver a multiple points or use exemption certificate to the 413.22 seller. A direct pay permit holder shall follow the provisions 413.23 of paragraph (c) in apportioning the tax due on a digital good 413.24 or a service that will be concurrently available for use in more 413.25 than one taxing jurisdiction. 413.26 Subd. 3. [DEFINITION OF TERMS.] For purposes of this 413.27 section, the terms "receive" and "receipt" mean taking 413.28 possession of tangible personal property, making first use of 413.29 services, or taking possession of making first use of digital 413.30 goods, whichever occurs first. The terms receive and receipt do 413.31 not include possession by a carrier for hire on behalf of the 413.32 purchaser. 413.33 [EFFECTIVE DATE.] This section is effective for sales and 413.34 purchases occurring after December 31, 2001. 413.35 Sec. 16. Minnesota Statutes 2000, section 297A.67, 413.36 subdivision 2, is amended to read: 414.1 Subd. 2. [FOODPRODUCTSAND FOOD INGREDIENTS.] 414.2 Foodproducts including, but not limited to, cereal and cereal414.3products, butter, cheese, milk and milk products, oleomargarine,414.4meat and meat products, fish and fish products, eggs and egg414.5products, vegetables and vegetable products, fruit and fruit414.6products, spices and salt, sugar and sugar products, coffee and414.7coffee substitutes, tea, and cocoa and cocoa productsand food 414.8 ingredients are exempt. For purposes of this subdivision, 414.9 "food" and "food ingredients" mean substances, whether in 414.10 liquid, concentrated, solid, frozen, dried, or dehydrated form, 414.11 that are sold for ingestion or chewing by humans and are 414.12 consumed for their taste or nutritional value. Food and food 414.13 ingredients do not include candy, soft drinks, food sold through 414.14 vending machines, and prepared foods. Food and food ingredients 414.15 do not include alcoholic beverages, dietary supplements, and 414.16 tobacco. For purposes of this subdivision, "alcoholic 414.17 beverages" means beverages that are suitable for human 414.18 consumption and contain one-half of one percent or more of 414.19 alcohol by volume. For purposes of this subdivision, "tobacco" 414.20 means cigarettes, cigars, chewing or pipe tobacco, or any other 414.21 item that contains tobacco. For purposes of this subdivision, 414.22 "dietary supplements" means any product, other than tobacco, 414.23 intended to supplement the diet that: 414.24 (1) contains one or more of the following dietary 414.25 ingredients: 414.26 (i) a vitamin; 414.27 (ii) a mineral; 414.28 (iii) an herb or other botanical; 414.29 (iv) an amino acid; 414.30 (v) a dietary substance for use by humans to supplement the 414.31 diet by increasing the total dietary intake; and 414.32 (vi) a concentrate, metabolite, constituent, extract, or 414.33 combination of any ingredient described in items (i) to (v); 414.34 (2) is intended for ingestion in tablet, capsule, powder, 414.35 softgel, gelcap, or liquid form, or if not intended for 414.36 ingestion in such form, is not represented as conventional food 415.1 and is not represented for use as a sole item of a meal or of 415.2 the diet; and 415.3 (3) is required to be labeled as a dietary supplement, 415.4 identifiable by the supplement facts box found on the label and 415.5 as required pursuant to Code of Federal Regulations, title 21, 415.6 section 101.36. 415.7 [EFFECTIVE DATE.] This section is effective for sales and 415.8 purchases occurring after December 31, 2001. 415.9 Sec. 17. Minnesota Statutes 2000, section 297A.67, 415.10 subdivision 8, is amended to read: 415.11 Subd. 8. [CLOTHING.] (a) Clothingand wearing apparel,415.12including sewing materials to be directly incorporated into415.13wearing apparel, areis exempt. For purposes of this 415.14 subdivision,clothing and wearing apparel do not include the415.15following:415.16(1) articles designed primarily for use while engaging in a415.17specific sport or recreational activity that are not also worn415.18for general use;415.19(2) articles designed primarily to provide safety or415.20protection against injury while the user is engaged in415.21industrial or general job activities;415.22(3) all articles commonly or commercially known as jewelry415.23including, but not limited to, watches;415.24(4) nonprescription optical glasses of any sort;415.25(5) articles made entirely of fur on the hide or pelt, or415.26partially of such fur if the value of the fur is more than three415.27times the value of the next most valuable component material;415.28(6) perfume, lotions, creams, dyes, or other substances415.29that are applied to the skin or the hair; and415.30(7) luggage, bags, purses, wallets, or cases of any415.31sort."clothing" means all human wearing apparel suitable for 415.32 general use. 415.33 (b) Clothing includes, but is not limited to, aprons, 415.34 household and shop; athletic supporters; baby receiving 415.35 blankets; bathing suits and caps; beach capes and coats; belts 415.36 and suspenders; boots; coats and jackets; costumes; children and 416.1 adult diapers, including disposable; ear muffs; footlets; formal 416.2 wear; garters and garter belts; girdles; gloves and mittens for 416.3 general use; hats and caps; hosiery; insoles for shoes; lab 416.4 coats; neckties; overshoes; pantyhose; rainwear; rubber pants; 416.5 sandals; scarves; shoes and shoe laces; slippers; sneakers; 416.6 socks and stockings; steel-toed boots; underwear; uniforms, 416.7 athletic and nonathletic; and wedding apparel. 416.8 (c) Clothing does not include the following: 416.9 (1) belt buckles sold separately; 416.10 (2) costume masks sold separately; 416.11 (3) patches and emblems sold separately; 416.12 (4) sewing equipment and supplies, including but not 416.13 limited to, knitting needles, patterns, pins, scissors, sewing 416.14 machines, sewing needles, tape measures, and thimbles; 416.15 (5) sewing materials that become part of clothing, 416.16 including but not limited to, buttons, fabric, lace, thread, 416.17 yarn, and zippers; 416.18 (6) clothing accessories or equipment; 416.19 (7) sports or recreational equipment; and 416.20 (8) protective equipment. 416.21 Clothing also does not include apparel made from fur if a 416.22 uniform definition of "apparel made from fur" is developed by 416.23 the member states of the Streamlined Sales and Use Tax Agreement. 416.24 For purposes of this subdivision, "clothing accessories or 416.25 equipment" means incidental items worn on the person or in 416.26 conjunction with clothing. Clothing accessories include, but 416.27 are not limited to, briefcases; cosmetics; hair notions, 416.28 including barrettes, hair bows, and hairnets; handbags; 416.29 handkerchiefs; jewelry; nonprescription sunglasses; umbrellas; 416.30 wallets; watches; and wigs and hairpieces. "Sports or 416.31 recreational equipment" means items designed for human use and 416.32 worn in conjunction with an athletic or recreational activity 416.33 that are not suitable for general use. Sports and recreational 416.34 equipment includes, but is not limited to, ballet and tap shoes; 416.35 cleated or spiked athletic shoes; baseball, bowling, boxing, 416.36 hockey, and golf gloves; goggles; hand and elbow guards; life 417.1 preservers and vests; mouth guards; roller and ice skates; shin 417.2 guards; shoulder pads; ski boots; waders; and wetsuits and 417.3 fins. "Protective equipment" means items for human wear and 417.4 designed as protection of the wearer against injury or disease 417.5 or as protection against damage or injury of other persons or 417.6 property but not suitable for general use. Protective equipment 417.7 includes, but is not limited to, breathing masks; clean room 417.8 apparel and equipment; ear and hearing protectors; face shields; 417.9 finger guards; hard hats; helmets; paint or dust respirators; 417.10 protective gloves; safety glasses and goggles; safety belts; 417.11 tool belts; and welders gloves and masks. 417.12 [EFFECTIVE DATE.] This section is effective for sales and 417.13 purchases occurring after December 31, 2001. 417.14 Sec. 18. Minnesota Statutes 2000, section 297A.67, is 417.15 amended by adding a subdivision to read: 417.16 Subd. 26. [TRADE ALLOWANCE.] The amount allowed as a 417.17 credit against the sales price for tangible personal property 417.18 taken in trade for resale is exempt. 417.19 [EFFECTIVE DATE.] This section is effective for sales and 417.20 purchases occurring after December 31, 2001. 417.21 Sec. 19. Minnesota Statutes 2000, section 297A.67, is 417.22 amended by adding a subdivision to read: 417.23 Subd. 27. [SEWING MATERIALS.] Sewing materials are exempt. 417.24 For purposes of this subdivision "sewing materials" mean fabric, 417.25 thread, zippers, interfacing, buttons, trim, and other items 417.26 that are usually directly incorporated into the construction of 417.27 clothing, regardless of whether it is actually used for making 417.28 clothing. It does not include batting, foam, or fabric 417.29 specifically manufactured for arts and craft projects, or other 417.30 materials for craft projects. 417.31 [EFFECTIVE DATE.] This section is effective for sales and 417.32 purchases made after December 31, 2001. 417.33 Sec. 20. Minnesota Statutes 2000, section 297A.72, 417.34 subdivision 1, is amended to read: 417.35 Subdivision 1. [DUTY OF RETAILER.]AnA fully completed 417.36 exemption certificate conclusively relieves the retailer from 418.1 collecting and remitting the taxonlyif takenin good faith418.2 from the purchaser at the time of sale. 418.3 [EFFECTIVE DATE.] This section is effective for sales and 418.4 purchases occurring after December 31, 2001. 418.5 Sec. 21. Minnesota Statutes 2000, section 297A.99, 418.6 subdivision 9, is amended to read: 418.7 Subd. 9. [ENFORCEMENT; COLLECTION; AND ADMINISTRATION.] 418.8 (a) The commissioner of revenue shall collect the taxes subject 418.9 to this section. The commissioner may collect the tax with the 418.10 state sales and use tax. All taxes under this section are 418.11 subject to the same penalties, interest, and enforcement 418.12 provisions as apply to the state sales and use tax. 418.13 (b) A request for a refund of state sales tax paid in 418.14 excess of the amount of tax legally due includes a request for a 418.15 refund of the political subdivision taxes paid on the goods or 418.16 services. The commissioner shall refund to the taxpayer the 418.17 full amount of the political subdivision taxes paid on exempt 418.18 sales or use. 418.19(c) A political subdivision that is collecting and418.20administering its own sales and use tax before January 1, 1998,418.21may elect to be exempt from this subdivision and subdivision 11.418.22 [EFFECTIVE DATE.] This section is effective January 1, 2002. 418.23 Sec. 22. Minnesota Statutes 2000, section 297A.99, 418.24 subdivision 11, is amended to read: 418.25 Subd. 11. [REVENUES; COST OF COLLECTION.] The commissioner 418.26 shall remit the proceeds of the tax, less refunds and a 418.27 proportionate share of the cost of collection, at least 418.28 quarterly, to the political subdivision. The commissioner shall 418.29 deduct from the proceeds remitted an amount that equals 418.30 (1) the direct and indirect costs of the department to 418.31 administer, audit, and collect the political subdivision's tax, 418.32 plus 418.33 (2) the political subdivision's proportionate share of the 418.34 indirect cost of administering all taxes under this section, 418.35 plus 418.36 (3) the cost of constructing and maintaining a zip code or 419.1 geo-code data base necessary for local sales tax collections 419.2 under the Streamlined Sales and Use Tax Agreement in section 419.3 297A.995. 419.4 The initial cost of constructing a data base under clause 419.5 (3) shall be distributed among the cities with a local sales tax 419.6 based on each city's population. The commissioner shall develop 419.7 a method for distributing the cost of maintaining the data base 419.8 among the cities with a local sales tax based on the number of 419.9 boundary changes for each city. 419.10 [EFFECTIVE DATE.] This section is effective for payments to 419.11 the counties after June 30, 2001, for costs incurred after June 419.12 30, 2001. 419.13 Sec. 23. [297A.995] [UNIFORM SALES AND USE TAX 419.14 ADMINISTRATION ACT.] 419.15 Subdivision 1. [TITLE.] This section may be cited as the 419.16 Uniform Sales and Use Tax Administration Act. 419.17 Subd. 2. [DEFINITIONS.] As used in this section: 419.18 (a) "Agreement" means the Streamlined Sales and Use Tax 419.19 Agreement. 419.20 (b) "Certified automated system" means software certified 419.21 jointly by the states that are signatories to the agreement to 419.22 calculate the tax imposed by each jurisdiction on a transaction, 419.23 determine the amount of tax to remit to the appropriate state, 419.24 and maintain a record of the transaction. 419.25 (c) "Certified service provider" means an agent certified 419.26 jointly by the states that are signatories to the agreement to 419.27 perform all of the seller's sales tax functions. 419.28 Subd. 3. [LEGISLATIVE FINDING.] The legislature finds that 419.29 this state should enter into an agreement with one or more 419.30 states to simplify and modernize sales and use tax 419.31 administration in order to substantially reduce the burden of 419.32 tax compliance for all sellers and for all types of commerce. 419.33 Subd. 4. [AUTHORITY TO ENTER AGREEMENT.] The commissioner 419.34 of revenue is authorized and directed to enter into the 419.35 agreement with one or more states to simplify and modernize 419.36 sales and use tax administration in order to substantially 420.1 reduce the burden of tax compliance for all sellers and for all 420.2 types of commerce. In furtherance of the agreement, the 420.3 commissioner is authorized to act jointly with other states that 420.4 are members of the agreement to establish standards for 420.5 certification of a certified service provider and certified 420.6 automated system and establish performance standards for 420.7 multistate sellers. 420.8 The commissioner is further authorized to take other 420.9 actions reasonably required to implement the provisions set 420.10 forth in this article. Other actions authorized by this section 420.11 include, but are not limited to, the adoption of rules and 420.12 regulations and the joint procurement, with other member states, 420.13 of goods and services in furtherance of the cooperative 420.14 agreement. 420.15 The commissioner or the commissioner's designee is 420.16 authorized to represent this state before the other states that 420.17 are signatories to the agreement. 420.18 Subd. 5. [RELATIONSHIP TO STATE LAW.] No provision of the 420.19 agreement authorized by this bill in whole or part invalidates 420.20 or amends any provision of the law of this state. Adoption of 420.21 the agreement by this state does not amend or modify any law of 420.22 this state. Implementation of any condition of the agreement in 420.23 this state, whether adopted before, at, or after membership of 420.24 this state in the agreement, must be by the action of this state. 420.25 Subd. 6. [AGREEMENT REQUIREMENTS.] The commissioner of 420.26 revenue shall not enter into the agreement unless the agreement 420.27 requires each state to abide by the following requirements: 420.28 (a) [UNIFORM STATE RATE.] The agreement must set 420.29 restrictions to achieve more uniform state rates through the 420.30 following: 420.31 (1) limiting the number of state rates; 420.32 (2) eliminating maximums on the amount of state tax that is 420.33 due on a transaction; and 420.34 (3) eliminating thresholds on the application of state tax. 420.35 (b) [UNIFORM STANDARDS.] The agreement must establish 420.36 uniform standards for the following: 421.1 (1) the sourcing of transactions to taxing jurisdictions; 421.2 (2) the administration of exempt sales; 421.3 (3) the allowances a seller can take for bad debts; and 421.4 (4) sales and use tax returns and remittances. 421.5 (c) [UNIFORM DEFINITIONS.] The agreement must require 421.6 states to develop and adopt uniform definitions of sales and use 421.7 tax terms. The definitions must enable a state to preserve its 421.8 ability to make policy choices not inconsistent with the uniform 421.9 definitions. 421.10 (d) [CENTRAL REGISTRATION.] The agreement must provide a 421.11 central, electronic registration system that allows a seller to 421.12 register to collect and remit sales and use taxes for all 421.13 signatory states. 421.14 (e) [NO NEXUS ATTRIBUTION.] The agreement must provide that 421.15 registration with the central registration system and the 421.16 collection of sales and use taxes in the signatory states will 421.17 not be used as a factor in determining whether the seller has 421.18 nexus with a state for any tax. 421.19 (f) [LOCAL SALES AND USE TAXES.] The agreement must provide 421.20 for reduction of the burdens of complying with local sales and 421.21 use taxes through the following: 421.22 (1) restricting and eliminating variances between the state 421.23 and local tax bases; 421.24 (2) requiring states to administer any sales and use taxes 421.25 levied by local jurisdictions within the state so that sellers 421.26 collecting and remitting these taxes will not have to register 421.27 or file returns with, remit funds to, or be subject to 421.28 independent audits from local taxing jurisdictions; 421.29 (3) restricting the frequency of changes in the local sales 421.30 and use tax rates and setting effective dates for the 421.31 application of local jurisdictional boundary changes to local 421.32 sales and use taxes; and 421.33 (4) providing notice of changes in local sales and use tax 421.34 rates and of changes in the boundaries of local taxing 421.35 jurisdictions. 421.36 (g) [MONETARY ALLOWANCES.] The agreement must outline any 422.1 monetary allowances that are to be provided by the states to 422.2 sellers or certified service providers. 422.3 (h) [STATE COMPLIANCE.] The agreement must require each 422.4 state to certify compliance with the terms of the agreement 422.5 prior to joining and to maintain compliance, under the laws of 422.6 the member state, with all provisions of the agreement while a 422.7 member. 422.8 (i) [CONSUMER PRIVACY.] The agreement must require each 422.9 state to adopt a uniform policy for certified service providers 422.10 that protects the privacy of consumers and maintains the 422.11 confidentiality of tax information. 422.12 (j) [ADVISORY COUNCILS.] The agreement must provide for the 422.13 appointment of an advisory council of private sector 422.14 representatives and an advisory council of nonmember state 422.15 representatives to consult with in the administration of the 422.16 agreement. 422.17 Subd. 7. [COOPERATING SOVEREIGNS.] The agreement 422.18 authorized by this bill is an accord among individual 422.19 cooperating sovereigns in furtherance of their governmental 422.20 functions. The agreement provides a mechanism among the member 422.21 states to establish and maintain a cooperative, simplified 422.22 system for the application and administration of sales and use 422.23 taxes under the duly adopted law of each member state. 422.24 Subd. 8. [LIMITED BINDING AND BENEFICIAL EFFECT.] (a) The 422.25 agreement authorized by this bill binds and inures only to the 422.26 benefit of this state and the other member states. No person, 422.27 other than a member state, is an intended beneficiary of the 422.28 agreement. Any benefit to a person other than a state is 422.29 established by the law of this state and the other member states 422.30 and not by the terms of the agreement. 422.31 (b) Consistent with paragraph (a), no person shall have any 422.32 cause of action or defense under the agreement or by virtue of 422.33 this state's approval of the agreement. No person may 422.34 challenge, in any action brought under any provision of law, any 422.35 action or inaction by any department, agency, or other 422.36 instrumentality of this state, or any political subdivision of 423.1 this state, on the ground that the action or inaction is 423.2 inconsistent with the agreement. 423.3 (c) No law of this state, or its application, may be 423.4 declared invalid as to any person or circumstance on the ground 423.5 that the provision or application is inconsistent with the 423.6 agreement. 423.7 Subd. 9. [SELLER AND THIRD-PARTY LIABILITY.] (a) A 423.8 certified service provider is the agent of a seller, with whom 423.9 the certified service provider has contracted, for the 423.10 collection and remittance of sales and use taxes. As the 423.11 seller's agent, the certified service provider is liable for 423.12 sales and use tax due each member state on all sales 423.13 transactions it processes for the seller except as set out in 423.14 this section. 423.15 A seller that contracts with a certified service provider 423.16 is not liable to the state for sales or use tax due on 423.17 transactions processed by the certified service provider unless 423.18 the seller misrepresented the type of items it sells or 423.19 committed fraud. In the absence of probable cause to believe 423.20 that the seller has committed fraud or made a material 423.21 misrepresentation, the seller is not subject to audit on the 423.22 transactions processed by the certified service provider. A 423.23 seller is subject to audit for transactions not processed by the 423.24 certified service provider. The member states acting jointly 423.25 may perform a system check of the seller and review the seller's 423.26 procedures to determine if the certified service provider's 423.27 system is functioning properly and the extent to which the 423.28 seller's transactions are being processed by the certified 423.29 service provider. 423.30 (b) A person that provides a certified automated system is 423.31 responsible for the proper functioning of that system and is 423.32 liable to the state for underpayments of tax attributable to 423.33 errors in the functioning of the certified automated system. A 423.34 seller that uses a certified automated system remains 423.35 responsible and is liable to the state for reporting and 423.36 remitting tax. 424.1 (c) A seller that has a proprietary system for determining 424.2 the amount of tax due on transactions and has signed an 424.3 agreement establishing a performance standard for that system is 424.4 liable for the failure of the system to meet the performance 424.5 standard. 424.6 [EFFECTIVE DATE.] This section is effective the day 424.7 following final enactment. 424.8 Sec. 24. [PLAN FOR REPLACEMENT OF REVENUES RAISED BY 424.9 CURRENT TAXES ON ALCOHOL.] 424.10 The commissioner of revenue, in consultation with 424.11 interested parties from the alcohol beverage industry, shall 424.12 prepare a plan to replace the current higher sales tax on liquor 424.13 and beer under Minnesota Statutes, section 297A.62, subdivision 424.14 2, and the liquor tax under Minnesota Statutes, chapter 297G, 424.15 with a single tax on liquor. The commissioner shall report the 424.16 plan to the legislature by January 1, 2003. The plan should 424.17 include recommendations for tax rates, tax base, and tax 424.18 administration, and should be structured so that the revenue 424.19 raised is equivalent to the revenue lost from the repeal of the 424.20 current taxes. The plan should also, to the extent practical, 424.21 mirror the current incidence of the tax as it relates to 424.22 different types of liquor, and whether the liquor is consumed 424.23 on-site or off-site. 424.24 [EFFECTIVE DATE.] This section is effective the day after 424.25 final enactment. 424.26 Sec. 25. [PLAN FOR REPLACEMENT OF REVENUES RAISED BY TAXES 424.27 ON SHORT-TERM MOTOR VEHICLE RENTAL.] 424.28 The commissioner of revenue, in consultation with 424.29 interested parties from the industry, shall prepare a plan to 424.30 replace the current sales tax on short-term motor vehicle 424.31 rentals under Minnesota Statutes, section 297A.64, with a single 424.32 tax or fee on motor vehicle rentals. The commissioner shall 424.33 report the plan to the legislature by January 1, 2003. The plan 424.34 should include recommendations for tax rates, tax base, and tax 424.35 administration, and should be structured so that the state 424.36 revenue raised is equivalent to the state revenue lost from the 425.1 repeal of the current taxes. 425.2 [EFFECTIVE DATE.] This section is effective the day after 425.3 final enactment. 425.4 Sec. 26. [DIRECTIONS TO COMMISSIONER OF REVENUE.] 425.5 The commissioner of revenue shall request that the member 425.6 states of the Streamlined Sales and Use Tax Agreement adopt at 425.7 their earliest convenience a uniform definition of clothing made 425.8 from fur. 425.9 [EFFECTIVE DATE.] This section is effective the day after 425.10 final enactment. 425.11 Sec. 27. [REPEALER.] 425.12 Minnesota Statutes 2000, sections 297A.62, subdivision 2 425.13 and 297A.64, subdivision 1, are repealed. 425.14 [EFFECTIVE DATE.] This section is effective for sales and 425.15 purchases made after December 31, 2005. 425.16 ARTICLE 14 425.17 SALES TAX RECODIFICATION TECHNICAL 425.18 Section 1. Minnesota Statutes 2000, section 289A.31, 425.19 subdivision 7, is amended to read: 425.20 Subd. 7. [SALES AND USE TAX.] (a) The sales and use tax 425.21 required to be collected by the retailer under chapter 297A 425.22 constitutes a debt owed by the retailer to Minnesota, and the 425.23 sums collected must be held as a special fund in trust for the 425.24 state of Minnesota. 425.25 A retailer who does not maintain a place of business within 425.26 this state as defined by section 297A.21, subdivision 1, shall 425.27 not be indebted to Minnesota for amounts of tax that it was 425.28 required to collect but did not collect unless the retailer knew 425.29 or had been advised by the commissioner of its obligation to 425.30 collect the tax. 425.31 (b) The use tax required to be paid by a purchaser is a 425.32 debt owed by the purchaser to Minnesota. 425.33 (c) The tax imposed by chapter 297A, and interest and 425.34 penalties, is a personal debt of the individual required to file 425.35 a return from the time the liability arises, irrespective of 425.36 when the time for payment of that liability occurs. The debt 426.1 is, in the case of the executor or administrator of the estate 426.2 of a decedent and in the case of a fiduciary, that of the 426.3 individual in an official or fiduciary capacity unless the 426.4 individual has voluntarily distributed the assets held in that 426.5 capacity without reserving sufficient assets to pay the tax, 426.6 interest, and penalties, in which case the individual is 426.7 personally liable for the deficiency. 426.8 (d) Liability for payment of sales and use taxes includes 426.9 any responsible person or entity described in the personal 426.10 liability provisions of section 270.101. 426.11 (e) Any amounts collected, even if erroneously or illegally 426.12 collected, from a purchaser under a representation that they are 426.13 taxes imposed under chapter 297A are state funds from the time 426.14 of collection and must be reported on a return filed with the 426.15 commissioner.The amounts collected are not subject to refund426.16unless the seller submits written evidence to the commissioner426.17that the tax and any interest earned on the tax has been or will426.18be refunded or credited to the purchaser by the seller.426.19 (f) The tax imposed under chapter 297A on sales of tickets 426.20 to the premises of or events sponsored by the state agricultural 426.21 society and conducted on the state fairgrounds during the period 426.22 of the annual state fair may be retained by the state 426.23 agricultural society if the funds are used and matched as 426.24 required under section 37.13, subdivision 2. 426.25 Sec. 2. Minnesota Statutes 2000, section 289A.50, 426.26 subdivision 2, is amended to read: 426.27 Subd. 2. [REFUND OF SALES TAX TO VENDORS; LIMITATION.] If 426.28 a vendor has collected from a purchaser and remitted to the 426.29 state a tax on a transaction that is not subject to the tax 426.30 imposed by chapter 297A, the tax is refundable to the vendor 426.31 only if and to the extent thatitthe tax and any interest 426.32 earned on the tax is credited to amounts due to the vendor by 426.33 the purchaser or returned to the purchaser by the vendor. In 426.34 addition to the requirements of subdivision 1, a claim for 426.35 refund under this subdivision must state in writing that the tax 426.36 and interest earned on the tax has been or will be refunded or 427.1 credited to the purchaser by the vendor. 427.2 Sec. 3. Minnesota Statutes 2000, section 297A.61, 427.3 subdivision 2, is amended to read: 427.4 Subd. 2. [PERSON.] (a) "Person" includes any individual,427.5and anyor grouporand any combination of individuals, 427.6 groups, or individuals and groups acting as a unit, and the427.7plural as well as the singular number. 427.8 (b) Person includes a firm, partnership, joint venture, 427.9 limited liability company, association, cooperative, social 427.10 club, fraternal organization, municipal or private corporation 427.11 whether or not organized for profit,estates, trusts, business427.12trustsestate, trust, business trust, receiver, trustee, 427.13 syndicate, the United States, and a state and its political 427.14 subdivisions. 427.15 (c) Person includes, but is not limited to, directors and 427.16 officers of corporations, governors and managers of a limited 427.17 liability company, or members of partnerships who, either 427.18 individually or jointly with others, have the control, 427.19 supervision, or responsibility of filing returns and making 427.20 payment of the amount of tax imposed by this chapter. 427.21 (d) Personalsoincludes any agent or consignee of any 427.22 individual or organizationenumeratedlisted in this subdivision. 427.23 Sec. 4. Minnesota Statutes 2000, section 297A.61, 427.24 subdivision 3, is amended to read: 427.25 Subd. 3. [SALE AND PURCHASE.] (a) "Sale" and "purchase" 427.26 include, but are not limited to, each of the transactions listed 427.27 in this subdivision. 427.28 (b) Sale and purchase include: 427.29 (1) any transfer of title or possession, or both, of 427.30 tangible personal property, whether absolutely or conditionally, 427.31 for a consideration in money or by exchange or barter; and 427.32 (2) the leasing of or the granting of a license to use or 427.33 consume, for a consideration in money or by exchange or barter, 427.34 tangible personal property, other than a manufactured home used 427.35 for residential purposes for a continuous period of 30 days or 427.36 more. 428.1 (c) Sale and purchase include the production, fabrication, 428.2 printing, or processing of tangible personal property for a 428.3 consideration for consumers who furnish either directly or 428.4 indirectly the materials used in the production, fabrication, 428.5 printing, or processing. 428.6 (d) Sale and purchase include the furnishing, preparing, or 428.7 serving for a consideration of food or drinks. Notwithstanding 428.8 section 297A.67, subdivision 2, taxable food or drinks include, 428.9 but are not limited to, the following: 428.10 (1) food or drinks sold by the retailer for immediate 428.11 consumption on the retailer's premises. Food and drinks sold 428.12 within a building or grounds that require an admission charge 428.13 for entrance are presumed to be sold for consumption on the 428.14 premises; 428.15 (2) food or drinks prepared by the retailer for immediate 428.16 consumption either on or off the retailer's premises. For 428.17 purposes of this subdivision, "food or drinks prepared for 428.18 immediate consumption" means any food product upon which an act 428.19 of preparation including, but not limited to, cooking, mixing, 428.20 sandwich making, blending, heating, or pouring has been 428.21 performed by the retailer so the food product may be immediately 428.22 consumed by the purchaser; 428.23 (3) ice cream, ice milk, frozen yogurt products, or frozen 428.24 novelties sold in single or individual servings including, but 428.25 not limited to, cones, sundaes, and snow cones; 428.26 (4) soft drinks and other beverages, including all 428.27 carbonated and noncarbonated beverages or drinks sold in liquid 428.28 form, but not including beverages or drinks which contain milk 428.29 or milk products, beverages or drinks containing 15 or more 428.30 percent fruit juice, and noncarbonated and noneffervescent 428.31 bottled water sold in individual containers of one-half gallon 428.32 or more in size; 428.33 (5) gum, candy, and candy products; 428.34 (6) ice; 428.35 (7) all food sold from vending machines; 428.36 (8) all food for immediate consumption sold from concession 429.1 stands and vehicles; 429.2 (9) party trays; 429.3 (10) all meals and single servings of packaged snack food 429.4 sold in restaurants and bars; and 429.5 (11) bakery products that are: 429.6 (i) prepared by the retailer for consumption on the 429.7 retailer's premises; 429.8 (ii) sold at a place that charges admission; 429.9 (iii) sold from vending machines; or 429.10 (iv) sold in single or individual servings from concession 429.11 stands, vehicles, bars, and restaurants. 429.12 For purposes of this paragraph, "single or individual 429.13 servings" does not include products when sold in bulk containers 429.14 or bulk packaging. 429.15 For purposes of this paragraph, "premises" means the total 429.16 space and facilities, including buildings, grounds, and parking 429.17 lots that are made available or that are available for use by 429.18 the retailer or customer for the purpose of sale or consumption 429.19 of prepared food and drinks. The premises of a caterer is the 429.20 place where the catered food or drinks are served. 429.21 (e) A sale and a purchase includes the furnishing for a 429.22 consideration of electricity, gas, water, or steam for use or 429.23 consumption within this state or local exchange telephone 429.24 service, intrastate toll service, and interstate toll service, 429.25 if that service originates from and is charged to a telephone 429.26 located in this state. Telephone service includes (1) paging 429.27 services, and (2) private communication service, as defined in 429.28 United States Code, title 26, section 4252(d), except for 429.29 private communication service purchased by an agent acting on 429.30 behalf of the state lottery. Telephone service does not include 429.31 services purchased with a prepaid telephone calling card. The 429.32 furnishing for a consideration of access to telephone services 429.33 by a hotel to its guests is a sale. The furnishing for a 429.34 consideration of items listed in this paragraph by a municipal 429.35 corporation is a sale. 429.36 (f) A sale and a purchase includes the transfer for a 430.1 consideration of computer software. 430.2 (g) A sale and a purchase includes the furnishing for a 430.3 consideration oftaxable services as defined in subdivision430.416.the following services: 430.5 (1) the privilege of admission to places of amusement, 430.6 recreational areas, or athletic events, and the making available 430.7 of amusement devices, tanning facilities, reducing salons, steam 430.8 baths, turkish baths, health clubs, and spas or athletic 430.9 facilities; 430.10 (2) lodging and related services by a hotel, rooming house, 430.11 resort, campground, motel, or trailer camp and the granting of 430.12 any similar license to use real property other than the renting 430.13 or leasing of it for a continuous period of 30 days or more; 430.14 (3) cable television services or similar television 430.15 services, including, but not limited to, charges for basic, 430.16 premium, pay-per-view, and any other similar service; 430.17 (4) parking services, whether on a contractual, hourly, or 430.18 other periodic basis, except for parking at a meter; 430.19 (5) the granting of membership in a club, association, or 430.20 other organization if: 430.21 (i) the club, association, or other organization makes 430.22 available for the use of its members sports and athletic 430.23 facilities, without regard to whether a separate charge is 430.24 assessed for use of the facilities; and 430.25 (ii) use of the sports and athletic facility is not made 430.26 available to the general public on the same basis as it is made 430.27 available to members. 430.28 Granting of membership means both one-time initiation fees and 430.29 periodic membership dues. Sports and athletic facilities 430.30 include golf courses; tennis, racquetball, handball, and squash 430.31 courts; basketball and volleyball facilities; running tracks; 430.32 exercise equipment; swimming pools; and other similar athletic 430.33 or sports facilities; and 430.34 (6) services as provided in this clause: 430.35 (i) laundry and dry cleaning services including cleaning, 430.36 pressing, repairing, altering, and storing clothes, linen 431.1 services and supply, cleaning and blocking hats, and carpet, 431.2 drapery, upholstery, and industrial cleaning. Laundry and dry 431.3 cleaning services do not include services provided by coin 431.4 operated facilities operated by the customer; 431.5 (ii) motor vehicle washing, waxing, and cleaning services, 431.6 including services provided by coin operated facilities operated 431.7 by the customer, and rustproofing, undercoating, and towing of 431.8 motor vehicles; 431.9 (iii) building and residential cleaning, maintenance, and 431.10 disinfecting and exterminating services; 431.11 (iv) detective, security, burglar, fire alarm, and armored 431.12 car services; but not including services performed within the 431.13 jurisdiction they serve by off-duty licensed peace officers as 431.14 defined in section 626.84, subdivision 1, or services provided 431.15 by a nonprofit organization for monitoring and electronic 431.16 surveillance of persons placed on in-home detention pursuant to 431.17 court order or under the direction of the Minnesota department 431.18 of corrections; 431.19 (v) pet grooming services; 431.20 (vi) lawn care, fertilizing, mowing, spraying and sprigging 431.21 services; garden planting and maintenance; tree, bush, and shrub 431.22 pruning, bracing, spraying, and surgery; indoor plant care; 431.23 tree, bush, shrub, and stump removal; and tree trimming for 431.24 public utility lines. Services performed under a construction 431.25 contract for the installation of shrubbery, plants, sod, trees, 431.26 bushes, and similar items are not taxable; 431.27 (vii) massages, except when provided by a licensed health 431.28 care facility or professional or upon written referral from a 431.29 licensed health care facility or professional for treatment of 431.30 illness, injury, or disease; and 431.31 (viii) the furnishing of lodging, board, and care services 431.32 for animals in kennels and other similar arrangements, but 431.33 excluding veterinary and horse boarding services. 431.34 The services listed in this clause (6) are taxable under 431.35 section 297A.62 if the service is performed wholly within 431.36 Minnesota or if the service is performed partly within and 432.1 partly outside Minnesota and the greater proportion of the 432.2 service is performed in Minnesota, based on the cost of 432.3 performance. In applying the provisions of this chapter, the 432.4 terms "tangible personal property" and "sales at retail" include 432.5 taxable services and the provision of taxable services, unless 432.6 specifically provided otherwise. Services performed by an 432.7 employee for an employer are not taxable. Services performed by 432.8 a partnership or association for another partnership or 432.9 association are not taxable if one of the entities owns or 432.10 controls more than 80 percent of the voting power of the equity 432.11 interest in the other entity. Services performed between 432.12 members of an affiliated group of corporations are not taxable. 432.13 For purposes of this section, "affiliated group of corporations" 432.14 includes those entities that would be classified as members of 432.15 an affiliated group under United States Code, title 26, section 432.16 1504, and that are eligible to file a consolidated tax return 432.17 for federal income tax purposes. 432.18 (h) A sale and a purchase includes the furnishing for a 432.19 consideration of tangible personal property or taxable services 432.20 by the United States or any of its agencies or 432.21 instrumentalities, or the state of Minnesota, its agencies, 432.22 instrumentalities, or political subdivisions. 432.23 Sec. 5. Minnesota Statutes 2000, section 297A.61, 432.24 subdivision 4, is amended to read: 432.25 Subd. 4. [RETAIL SALE.] (a) A "retail sale" means a sale 432.26 for any purpose other than resale in the regular course of 432.27 business. 432.28 (b) A sale of property used by the owner only by leasing it 432.29 to others or by holding it in an effort to lease it, and put to 432.30 no use by the owner other than resale after the lease or effort 432.31 to lease, is a sale of property for resale. 432.32 (c) A sale of master computer software that is purchased 432.33 and used to make copies for sale or lease is a sale of property 432.34 for resale. 432.35 (d) A sale of building materials, supplies, and equipment 432.36 to owners, contractors, subcontractors, or builders for the 433.1 erection of buildings or the alteration, repair, or improvement 433.2 of real property is a retail sale in whatever quantity sold, 433.3 whether the sale is for purposes of resale in the form of real 433.4 property or otherwise. 433.5 (e) A sale of carpeting, linoleum, or similar floor 433.6 covering to a person who provides for installation of the floor 433.7 covering is a retail sale and not a sale for resale since a sale 433.8 of floor covering which includes installation is a contract for 433.9 the improvement of real property. 433.10 (f) A sale of shrubbery, plants, sod, trees, and similar 433.11 items to a person who provides for installation of the items is 433.12 a retail sale and not a sale for resale since a sale of 433.13 shrubbery, plants, sod, trees, and similar items that includes 433.14 installation is a contract for the improvement of real property. 433.15 (g) A sale of tangible personal property that is awarded as 433.16 prizes is a retail sale and is not considered a sale of property 433.17 for resale. 433.18 (h) A sale of tangible personal property utilized or 433.19 employed in the furnishing or providing of services under 433.20 subdivision163, paragraph(b)(g), clause (1), including, but 433.21 not limited to, property given as promotional items, is a retail 433.22 sale and is not considered a sale of property for resale. 433.23 (i) A sale of tangible personal property used in conducting 433.24 lawful gambling under chapter 349 or the state lottery under 433.25 chapter 349A, including, but not limited to, property given as 433.26 promotional items, is a retail sale and is not considered a sale 433.27 of property for resale. 433.28 (j) A sale of machines, equipment, or devices that are used 433.29 to furnish, provide, or dispense goods or services, including, 433.30 but not limited to, coin-operated devices, is a retail sale and 433.31 is not considered a sale of property for resale. 433.32 (k) In the case of a lease, a retail sale occurs when an 433.33 obligation to make a lease payment becomes due under the terms 433.34 of the agreement or the trade practices of the lessor. 433.35 (l) In the case of a conditional sales contract, a retail 433.36 sale occurs upon the transfer of title or possession of the 434.1 tangible personal property. 434.2 Sec. 6. Minnesota Statutes 2000, section 297A.61, 434.3 subdivision 6, is amended to read: 434.4 Subd. 6. [USE.] (a) "Use" includes the exercise of a right 434.5 or power incident to the ownership of any interest in tangible 434.6 personal property, ortaxableservices, purchased from a 434.7 retailer, other than the sale of that property in the regular 434.8 course of business. 434.9 (b) Use includes the consumption of printed materials in 434.10 the creation of nontaxable advertising that is distributed, 434.11 either directly or indirectly, within Minnesota. 434.12 Sec. 7. Minnesota Statutes 2000, section 297A.61, 434.13 subdivision 10, is amended to read: 434.14 Subd. 10. [TANGIBLE PERSONAL PROPERTY.] (a) "Tangible 434.15 personal property" means corporeal personal property of any 434.16 kind, including property that is to become real property as a 434.17 result of incorporation, attachment, or installation following 434.18 its acquisition. 434.19 (b) Tangible personal property includes, but is not limited 434.20 to: 434.21 (1) computer software, whether contained on tape, discs, 434.22 cards, or other devices; and 434.23 (2) prepaid telephone calling cards. 434.24 (c) Tangible personal property does not include: 434.25 (1) large ponderous machinery and equipment used in a 434.26 business or production activity which at common law would be 434.27 considered to be real property; 434.28 (2) property which is subject to an ad valorem property 434.29 tax; 434.30 (3) property described in section 272.02, subdivision 9, 434.31 clauses (a) to (d); and 434.32 (4) property described in section 272.03, subdivision 2, 434.33 clauses (3) and (5). 434.34 Sec. 8. Minnesota Statutes 2000, section 297A.61, 434.35 subdivision 14, is amended to read: 434.36 Subd. 14. [LEASING; LEASE.] "Leasing" includes all 435.1 transfers of possession or the use of tangible personal property 435.2 by the lessee for a consideration, if title remains with the 435.3 lessor at the end of the lease.For purposes of this chapter,A 435.4 lease of tangible personal property is a series of sales 435.5 transactions that impose upon the lessee multiple payment 435.6 obligations. "Leasing" does not include a transaction defined 435.7 under subdivision 15. 435.8 Sec. 9. Minnesota Statutes 2000, section 297A.61, 435.9 subdivision 17, is amended to read: 435.10 Subd. 17. [COMPUTER SOFTWARE.] "Computer software" means a 435.11 computer program, either in the form of written procedures orin435.12the form of storage media on which, or in which, the program is435.13recordedcontained on tapes, discs, cards, or another device, or 435.14 any required documentation or manuals designed to facilitate the 435.15 use of the computer program. For purposes of this subdivision: 435.16 (1)"Storage media" includes punched cards, tapes, discs,435.17diskettes, or drums on which computer programs may be embodied435.18or stored;435.19(2)"Computer" does not include tape-controlled automatic 435.20 drilling, milling, or other manufacturing machinery or 435.21 equipment; and 435.22(3)(2) "Computer program" means information and directions 435.23 that dictate the function performed by data processing 435.24 equipment. It includes the complete plan for the solution of a 435.25 problem, such as the complete sequence of automatic data 435.26 processing equipment instructions necessary to solve a problem 435.27 and includes both systems and application programs and 435.28 subdivisions, such as assemblers, compilers, routines, 435.29 generators, and utility programs. Computer program includes a 435.30 "canned" or prewritten computer program that is held or existing 435.31 for general or repeated sale or lease, even if the prewritten or 435.32 "canned" program was initially developed on a custom basis or 435.33 for in-house use. 435.34 Sec. 10. Minnesota Statutes 2000, section 297A.61, 435.35 subdivision 19, is amended to read: 435.36 Subd. 19. [COMMONFOR-HIRE CARRIER.] "CommonFor-hire 436.1 carrier" means a person engaged in transportation for hire of 436.2 tangible personal propertyby motor vehicle, if the person:. 436.3(1) has a certificate or permit or has completed a436.4registration process that authorizes for-hire transportation of436.5property from the United States Department of Transportation,436.6the transportation regulation board, or the department of436.7transportation;436.8(2) is transporting commodities defined as "exempt" in436.9for-hire transportation; or436.10(3) transports tangible personal property pursuant to a436.11contract with a person described in clause (1) or (2).436.12 Sec. 11. Minnesota Statutes 2000, section 297A.61, 436.13 subdivision 22, is amended to read: 436.14 Subd. 22. [INTERNAL REVENUE CODE.] Unless specifically 436.15 provided otherwise, "Internal Revenue Code" means the Internal 436.16 Revenue Code of 1986, as amended through December 31,19992000. 436.17 Sec. 12. Minnesota Statutes 2000, section 297A.61, 436.18 subdivision 23, is amended to read: 436.19 Subd. 23. [UNITED STATES CODE.] Unless specifically 436.20 provided otherwise, "United States Code" means the United States 436.21 Code as amended through December 31,19992000. 436.22 Sec. 13. Minnesota Statutes 2000, section 297A.66, 436.23 subdivision 1, is amended to read: 436.24 Subdivision 1. [DEFINITIONS.] (a) "Retailer maintaining a 436.25 place of business in this state," or a similar term, means a 436.26 retailer: 436.27 (1) having or maintaining within this state, directly or by 436.28 a subsidiary, an office, place of distribution, sales or sample 436.29 room or place, warehouse, or other place of business; or 436.30 (2) having a representative, agent, salesperson, canvasser, 436.31 or solicitor operating in this state under the authority of the 436.32 retailer or its subsidiary, for any purpose, including the 436.33 repairing, selling, delivering, installing, or soliciting of 436.34 orders for the retailer's goods or services, or the leasing of 436.35 tangible personal property located in this state, whether the 436.36 place of business or agent, representative, salesperson, 437.1 canvasser, or solicitor is located in the state permanently or 437.2 temporarily, or whether or not the retailer or subsidiary is 437.3 authorized to do business in this state. 437.4 (b) "Destination of a sale" means the location to which the 437.5 retailer makes delivery of the property sold, or causes the 437.6 property to be delivered, to the purchaser of the property, or 437.7 to the agent or designee of the purchaser. The delivery may be 437.8 made by any means, including the United States Postal Service, a437.9common carrier,or acontractfor-hire carrier. 437.10 Sec. 14. Minnesota Statutes 2000, section 297A.66, 437.11 subdivision 3, is amended to read: 437.12 Subd. 3. [RETAILER NOT MAINTAINING A PLACE OF BUSINESS IN 437.13 THIS STATE.] (a) To the extent allowed by the United States 437.14 Constitution and the laws of the United States, a retailer 437.15 making retail sales from outside this state to a destination 437.16 within this state and not maintaining a place of business in 437.17 this state shall collect sales and use taxes and remit them to 437.18 the commissioner under section 297A.77, if the retailer engages 437.19 in the regular or systematic soliciting of sales from potential 437.20 customers in this state by: 437.21 (1) distribution, by mail or otherwise, of catalogs, 437.22 periodicals, advertising flyers, or other written solicitations 437.23 of business to customers in this state; 437.24 (2) display of advertisements on billboards or other 437.25 outdoor advertising in this state; 437.26 (3) advertisements in newspapers published in this state; 437.27 (4) advertisements in trade journals or other periodicals 437.28 the circulation of which is primarily within this state; 437.29 (5) advertisements in a Minnesota edition of a national or 437.30 regional publication or a limited regional edition in which this 437.31 state is included as part of a broader regional or national 437.32 publication which are not placed in other geographically defined 437.33 editions of the same issue of the same publication; 437.34 (6) advertisements in regional or national publications in 437.35 an edition which is not by its contents geographically targeted 437.36 to Minnesota but which is sold over the counter in Minnesota or 438.1 by subscription to Minnesota residents; 438.2 (7) advertisements broadcast on a radio or television 438.3 station located in Minnesota; or 438.4 (8) any other solicitation by telegraphy, telephone, 438.5 computer database, cable, optic, microwave, or other 438.6 communication system. 438.7 This paragraph (a) must be construed without regard to the 438.8 state from which distribution of the materials originated or in 438.9 which they were prepared. 438.10 (b) The location within or without this state of 438.11 independent vendorsindependent of the retailerthat provide 438.12 products or services to the retailer in connection with its 438.13 solicitation of customers within this state, including such 438.14 products and services as creation of copy, printing, 438.15 distribution, and recording, is not considered in determining 438.16 whether the retailer is required to collect tax. 438.17 (c) A retailer not maintaining a place of business in this 438.18 state is presumed, subject to rebuttal, to be engaged in regular 438.19 solicitation within this state if it engages in any of the 438.20 activities in paragraph (a) and: 438.21 (1) makes 100 or more retail sales from outside this state 438.22 to destinations in this state during a period of 12 consecutive 438.23 months; or 438.24 (2) makes ten or more retail sales totaling more than 438.25 $100,000 from outside this state to destinations in this state 438.26 during a period of 12 consecutive months. 438.27 Sec. 15. Minnesota Statutes 2000, section 297A.67, 438.28 subdivision 8, is amended to read: 438.29 Subd. 8. [CLOTHING.] Clothing and wearing apparel, 438.30 including sewing materials to be directly incorporated into 438.31 wearing apparel, are exempt. For purposes of this subdivision, 438.32 clothing and wearing apparel do not include the following: 438.33 (1) articles designed primarily for use while engaging in a 438.34 specific sport or recreational activity that are not also worn 438.35 for general use; 438.36 (2) articles designed primarily to provide safety or 439.1 protection against injury while the user is engaged in 439.2 industrial or general job activities; 439.3 (3) all articles commonly or commercially known as jewelry 439.4 including, but not limited to, watches; 439.5 (4) nonprescription optical glasses of any sort; 439.6 (5) articles made entirely of fur on the hide or pelt, or 439.7 partially of such fur if the value of the fur is more than three 439.8 times the value of the next most valuable component material; 439.9 (6) perfume, lotions, creams, dyes, or other substances 439.10 that are applied to the skin, nails, orthehair; and 439.11 (7) luggage, bags, purses, wallets, or cases of any sort. 439.12 Sec. 16. Minnesota Statutes 2000, section 297A.67, 439.13 subdivision 23, is amended to read: 439.14 Subd. 23. [OCCASIONAL SALES.] Isolated and occasional 439.15 sales in Minnesota not made in the normal course of business,439.16andof selling that kind of property or service are exempt. The 439.17 storage, use, or consumption of property or servicesresulting439.18from such sales, areacquired as a result of such a sale is 439.19 exempt. This exemption does not apply to sales of tangible 439.20 personal property primarily used in a trade or business. 439.21 Sec. 17. Minnesota Statutes 2000, section 297A.67, 439.22 subdivision 24, is amended to read: 439.23 Subd. 24. [CONSTITUTIONAL PROHIBITIONS.]The gross439.24receipts fromThe sale of and the storage, use, orother439.25 consumption in Minnesota of tangible personal property,tickets,439.26or admissions, electricity, gas, or local exchange telephone439.27serviceor services, that the state of Minnesota is prohibited 439.28 from taxing under the Constitution or laws of the United States 439.29 or under the Constitution of Minnesota, are exempt. 439.30 Sec. 18. Minnesota Statutes 2000, section 297A.67, 439.31 subdivision 25, is amended to read: 439.32 Subd. 25. [MAINTENANCE OF CEMETERY GROUNDS.] Lawn care and 439.33 related services used in the maintenance of cemetery grounds are 439.34 exempt. For purposes of this subdivision, "lawn care and 439.35 related services" means the services listed in section 297A.61, 439.36 subdivision163, paragraph (g), clause (6), item (vi), and 440.1 "cemetery" means a cemetery for human burial. 440.2 Sec. 19. Minnesota Statutes 2000, section 297A.68, 440.3 subdivision 2, is amended to read: 440.4 Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.] 440.5 (a) Materials stored, used, or consumed in industrial production 440.6 of personal property intended to be sold ultimately at retail 440.7 are exempt, whether or not the item so used becomes an 440.8 ingredient or constituent part of the property produced. 440.9 Materials that qualify for this exemption include, but are not 440.10 limited to, the following: 440.11 (1) chemicals, including chemicals used for cleaning food 440.12 processing machinery and equipment; 440.13 (2) materials, including chemicals, fuels, and electricity 440.14 purchased by persons engaged in industrial production to treat 440.15 waste generated as a result of the production process; 440.16 (3) fuels, electricity, gas, and steam used or consumed in 440.17 the production process, except that electricity, gas, or steam 440.18 used for space heating, cooling, or lighting is exemptonlyif 440.19 (i) it is in excess of the average climate control or lighting 440.20 for the production area, and (ii) it is necessary to produce 440.21 that particularindustrialproduct; 440.22 (4) petroleum products and lubricants; 440.23 (5) packaging materials, including returnable containers 440.24 used in packaging food and beverage products; 440.25 (6) accessory tools, equipment, and other items that are 440.26 separate detachable units with an ordinary useful life of less 440.27 than 12 months used in producing a direct effect upon the 440.28 product; and 440.29 (7) the following materials, tools, and equipment used in 440.30 metalcasting: crucibles, thermocouple protection sheaths and 440.31 tubes, stalk tubes, refractory materials, molten metal filters 440.32 and filter boxes, degassing lances, and base blocks. 440.33 (b) This exemption does not include: 440.34 (1) machinery, equipment, implements, tools, accessories, 440.35 appliances, contrivances and furniture and fixtures, except 440.36 those listed in paragraph (a), clause (6); and 441.1 (2) petroleum and special fuels used in producing or 441.2 generating power for propelling ready-mixed concrete trucks on 441.3 the public highways of this state. 441.4 (c) Industrial production includes, but is not limited to, 441.5 research, development, design or production of any tangible 441.6 personal property, manufacturing, processing (other than by 441.7 restaurants and consumers) of agricultural products (whether 441.8 vegetable or animal), commercial fishing, refining, smelting, 441.9 reducing, brewing, distilling, printing, mining, quarrying, 441.10 lumbering, generating electricity and the production of road 441.11 building materials. Industrial production does not include 441.12 painting, cleaning, repairing or similar processing of property 441.13 except as part of the original manufacturing process. 441.14 Sec. 20. Minnesota Statutes 2000, section 297A.68, 441.15 subdivision 3, is amended to read: 441.16 Subd. 3. [MATERIALS USED IN PROVIDING CERTAIN TAXABLE 441.17 SERVICES.] (a) Materials stored, used, or consumed in providing 441.18 a taxable service listed in section 297A.61, subdivision163, 441.19 paragraph (g), clause (6), intended to be sold ultimately at 441.20 retail are exempt. 441.21 (b) This exemption includes, but is not limited to: 441.22 (1) chemicals, lubricants, packaging materials, seeds, 441.23 trees, fertilizers, and herbicides, if these items are used or 441.24 consumed in providing the taxable service; 441.25 (2) chemicals used to treat waste generated as a result of 441.26 providing the taxable service; 441.27 (3) accessory tools, equipment, and other items that are 441.28 separate detachable units used in providing the service and that 441.29 have an ordinary useful life of less than 12 months; and 441.30 (4) fuel, electricity, gas, and steam used or consumed in 441.31 the production process, except that electricity, gas, or steam 441.32 used for space heating, cooling, or lighting is exemptonlyif 441.33 (i) it is in excess of average climate control or lighting, and 441.34 (ii) it is necessary to produce that particulartaxableservice. 441.35 (c) This exemption does not include machinery, equipment, 441.36 implements, tools, accessories, appliances, contrivances, 442.1 furniture, and fixtures used in providing the taxable service. 442.2 Sec. 21. Minnesota Statutes 2000, section 297A.68, 442.3 subdivision 5, is amended to read: 442.4 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is 442.5 exempt. The tax must be imposed and collected as if the rate 442.6 under section 297A.62, subdivision 1, applied, and then refunded 442.7 in the manner provided in section 297A.75. 442.8 "Capital equipment" means machinery and equipment purchased 442.9 or leased, and used in this state by the purchaser or lessee 442.10 primarily for manufacturing, fabricating, mining, or refining 442.11 tangible personal property to be sold ultimately at retail.442.12Capital equipment meansif the machinery and equipment is 442.13 essential to the integrated production process of manufacturing, 442.14 fabricating, mining, or refining. Capital equipment also 442.15 includes machinery and equipment used to electronically transmit 442.16 results retrieved by a customer of an online computerized data 442.17 retrieval system. 442.18 (b) Capital equipment includes, but is not limited to: 442.19 (1) machinery and equipment used to operate, control, or 442.20 regulate the production equipment; 442.21 (2) machinery and equipment used for research and 442.22 development, design, quality control, and testing activities; 442.23 (3) environmental control devices that are used to maintain 442.24 conditions such as temperature, humidity, light, or air pressure 442.25 when those conditions are essential to and are part of the 442.26 production process; 442.27 (4) materials and supplies used to construct and install 442.28 machinery or equipment; 442.29 (5) repair and replacement parts, including accessories, 442.30 whether purchased as spare parts, repair parts, or as upgrades 442.31 or modifications to machinery or equipment; 442.32 (6) materials used for foundations that support machinery 442.33 or equipment; 442.34 (7) materials used to construct and install special purpose 442.35 buildings used in the production process; and 442.36 (8) ready-mixed concrete trucks in which the ready-mixed 443.1 concrete is mixed as part of the delivery process. 443.2 (c) Capital equipment does not include the following: 443.3 (1) motor vehicles taxed under chapter 297B; 443.4 (2) machinery or equipment used to receive or store raw 443.5 materials; 443.6 (3) building materials, except for materials included in 443.7 paragraph (b), clauses (6) and (7); 443.8 (4) machinery or equipment used for nonproduction purposes, 443.9 including, but not limited to, the following: plant security, 443.10 fire prevention, first aid, and hospital stations; support 443.11 operations or administration; pollution control; and plant 443.12 cleaning, disposal of scrap and waste, plant communications, 443.13 space heating, cooling, lighting, or safety; 443.14 (5) farm machinery and aquaculture production equipment as 443.15 defined by section 297A.61, subdivisions 12 and 13; 443.16 (6) machinery or equipment purchased and installed by a 443.17 contractor as part of an improvement to real property; or 443.18 (7) any other item that is not essential to the integrated 443.19 process of manufacturing, fabricating, mining, or refining. 443.20 (d) For purposes of this subdivision: 443.21 (1) "Machinery" means mechanical, electronic, or electrical 443.22 devices, including computers and computer software, that are 443.23 purchased or constructed to be used for the activities set forth 443.24 in paragraph (a), beginning with the removal of raw materials 443.25 from inventory through completion of the product, including 443.26 packaging of the product. 443.27 (2) "Equipment" means independent devices or tools separate 443.28 from machinery but essential to an integrated production 443.29 process, including computers and computer software, used in 443.30 operating, controlling, or regulating machinery and equipment; 443.31 and any subunit or assembly comprising a component of any 443.32 machinery or accessory or attachment parts of machinery, such as 443.33 tools, dies, jigs, patterns, and molds. 443.34 (3) "Primarily" means machinery and equipment used 50 443.35 percent or more of the time in an activity described in 443.36 paragraph (a). 444.1 (4) "Manufacturing" means an operation or series of 444.2 operations where raw materials are changed in form, composition, 444.3 or condition by machinery and equipment and which results in the 444.4 production of a new article of tangible personal property. For 444.5 purposes of this subdivision, "manufacturing" includes the 444.6 generation of electricity or steam to be sold at retail. 444.7 (5) "Fabricating" means to make, build, create, produce, or 444.8 assemble components or property to work in a new or different 444.9 manner. 444.10 (6) "Mining" means the extraction of minerals, ores, stone, 444.11 or peat. 444.12 (7) "Refining" means the process of converting a natural 444.13 resource to a product, including the treatment of water to be 444.14 sold at retail. 444.15 (8)"Integrated production process" means a process444.16beginning with the removal of raw materials from inventory444.17through the completion of the product, including packaging of444.18the product.444.19(9)"Online data retrieval system" means a system whose 444.20 cumulation of information is equally available and accessible to 444.21 all its customers. 444.22(10)(9) "Machinery and equipment used for pollution 444.23 control" means machinery and equipment used solely to eliminate, 444.24 prevent, or reduce pollution resulting from an activity 444.25 described in paragraph (a). 444.26 Sec. 22. Minnesota Statutes 2000, section 297A.68, 444.27 subdivision 11, is amended to read: 444.28 Subd. 11. [ADVERTISING MATERIALS.]MaterialMaterials 444.29 designed to advertise and promote the sale of merchandise or 444.30 servicesisare exempt ifthe material is purchased and stored444.31for the purpose of subsequently shipping or otherwise444.32transferring outside the state by the purchaser for laterthese 444.33 materials are mailed or transferred to a person outside the 444.34 state for use solely outside the stateof Minnesota. Mailing 444.35 and reply envelopes and cards used exclusively in connection 444.36 with these advertising and promotional materials are included in 445.1 this exemption. The exemption applies regardless of where the 445.2 mailing occurs. The storage of these materials in the state for 445.3 the purpose of subsequently shipping or otherwise transferring 445.4 the material out of state is also exempt if the other conditions 445.5 in this subdivision are met. 445.6 Sec. 23. Minnesota Statutes 2000, section 297A.68, 445.7 subdivision 13, is amended to read: 445.8 Subd. 13. [OUTSTATE TRANSPORT OR DELIVERY.] (a) Tangible 445.9 personal property is exempt ifthe property, without445.10intermediate use, isall of the following conditions are met: 445.11 (1) the property, without intermediate use, is shipped or 445.12 transported outside Minnesota by the purchaser or is stored, 445.13 processed, fabricated or manufactured into, attached to or 445.14 incorporated into other tangible personal property that is 445.15 transported or shipped outside Minnesota; and 445.16 (2) the property is used in a trade or business outside 445.17 Minnesota after being shipped or transported outside of 445.18 Minnesota, and is not returned to Minnesota, except in the 445.19 course of interstate commerce; and 445.20 (3) the property is either (i) not subject to tax in the 445.21 state or country to which it is transported for storage or use, 445.22 or (ii) to be used in other states or countries as part of a 445.23 maintenance contract. 445.24 (b) For purposes of this subdivision, storage or 445.25 processing, fabricating, manufacturing, attaching to, or 445.26 incorporating into other property is not intermediate use. 445.27 Sec. 24. Minnesota Statutes 2000, section 297A.68, 445.28 subdivision 14, is amended to read: 445.29 Subd. 14. [TEMPORARY STORAGEPROPERTY IN TRANSIT.] 445.30 Tangible personal property is exempt if all of the following 445.31 conditions are met: 445.32 (1) it is shipped or brought into Minnesota by acommon445.33 for-hire carrier; 445.34 (2) withoutintermediateuse, it is kept in a public 445.35 warehouse; 445.36 (3) it is kept for the purpose of being later transported 446.1 outside Minnesota; and 446.2 (4) after storage, it is used solely outside Minnesota, 446.3 except in the course of interstate commerce. 446.4 Sec. 25. Minnesota Statutes 2000, section 297A.68, 446.5 subdivision 18, is amended to read: 446.6 Subd. 18. [CUSTOM COMPUTER SOFTWARE.] The design, 446.7 development, writing, translation, fabrication, lease, or 446.8 transfer for a consideration of title or possession of a custom 446.9 computer program is exempt. "Custom computer program" means a 446.10 computer program prepared to the special order of the customer, 446.11 either in the form of written procedures orin the form of446.12storage media on which, or in which, the program is446.13recordedcontained on tapes, discs, cards, or another device, or 446.14 any required documentation or manuals designed to facilitate the 446.15 use of the custom computer program transferred. It includes 446.16 those services represented by separately stated charges for 446.17 modifications to an existing prewritten program that are 446.18 prepared to the special order of the customer. It does not 446.19 include a "canned" or prewritten computer program that is held 446.20 or existing for general or repeated sale or lease, even if the 446.21 prewritten or "canned" program was initially developed on a 446.22 custom basis or for in-house use. Modification to an existing 446.23 prewritten program to meet the customer's needs is custom 446.24 computer programming only to the extent of the modification. 446.25 Sec. 26. Minnesota Statutes 2000, section 297A.68, 446.26 subdivision 25, is amended to read: 446.27 Subd. 25. [OCCASIONAL SALESSALE OF PROPERTY USED IN A 446.28 TRADE OR BUSINESS.] (a)Isolated or occasional sales ofThe sale 446.29 of tangible personal propertyin Minnesotaprimarily used in a 446.30 trade or business is exempt if the sale is not made in the 446.31 normal course of business of selling that kind of propertyare446.32exempt. The storage, use, or consumption of property acquired446.33as a result of such a sale is exempt.446.34(b) This exemption applies to a sale of tangible personal446.35property primarily used in a trade or business onlyand if one 446.36 of the following conditions is satisfied: 447.1 (1) the sale occurs in a transaction subject to or 447.2 described in section 118, 331, 332, 336, 337, 338, 351, 355, 447.3 368, 721, 731, 1031, or 1033 of the Internal Revenue Code; 447.4 (2) the sale is between members of a controlled group as 447.5 defined in section 1563(a) of the Internal Revenue Code; 447.6 (3) the sale is a sale of farm machinery; 447.7 (4) the sale is a farm auction sale; 447.8 (5) the sale is a sale of substantially all of the assets 447.9 of a trade or business; or 447.10 (6) the total amount of gross receipts from the sale of 447.11 trade or business property made during the calendar month of the 447.12 sale and the preceding 11 calendar months does not exceed $1,000. 447.13 The use, storage, distribution, or consumption of tangible 447.14 personal property acquired as a result of a sale exempt under 447.15 this subdivision is also exempt. 447.16(c)(b) For purposes of this subdivision, the following 447.17 terms have the meanings given. 447.18 (1) A "farm auction" is a public auction conducted by a 447.19 licensed auctioneer if substantially all of the property sold 447.20 consists of property used in the trade or business of farming 447.21 and property not used primarily in a trade or business. 447.22 (2) "Trade or business" includes the assets of a separate 447.23 division, branch, or identifiable segment of a trade or business 447.24 if, before the sale, the income and expenses attributable to the 447.25 separate division, branch, or identifiable segment could be 447.26 separately ascertained from the books of account or record (the 447.27 lease or rental of an identifiable segment does not qualify for 447.28 the exemption). 447.29 (3) A "sale of substantially all of the assets of a trade 447.30 or business" must occur as a single transaction or a series of 447.31 related transactions within the 12-month period beginning on the 447.32 date of the first sale of assets intended to qualify for the 447.33 exemption provided in paragraph(b)(a), clause (5). 447.34 Sec. 27. Minnesota Statutes 2000, section 297A.69, 447.35 subdivision 2, is amended to read: 447.36 Subd. 2. [MATERIALS CONSUMED IN AGRICULTURAL PRODUCTION.] 448.1 (a) Materials stored, used, or consumed in agricultural 448.2 production of personal property intended to be sold ultimately 448.3 at retail are exempt, whether or not the item becomes an 448.4 ingredient or constituent part of the property produced. 448.5 Materials that qualify for this exemption include, but are not 448.6 limited to, the following: 448.7 (1) feeds, seeds, trees, fertilizers, and herbicides, 448.8 including when purchased for use by farmers in a federal or 448.9 state farm or conservation program; 448.10 (2) materials sold to a veterinarian to be used or consumed 448.11 in the care, medication, and treatment of agricultural 448.12 production animals and horses; 448.13 (3) chemicals, including chemicals used for cleaning food 448.14 processing machinery and equipment; 448.15 (4) materials, including chemicals, fuels, and electricity 448.16 purchased by persons engaged in agricultural production to treat 448.17 waste generated as a result of the production process; 448.18 (5) fuels, electricity, gas, and steam used or consumed in 448.19 the production process, except that electricity, gas, or steam 448.20 used for space heating, cooling, or lighting is exemptonlyif 448.21 (i) it is in excess of the average climate control or lighting 448.22 for the production area, and (ii) it is necessary to produce 448.23 that particularagriculturalproduct; 448.24 (6) petroleum products and lubricants; 448.25 (7) packaging materials, including returnable containers 448.26 used in packaging food and beverage products; and 448.27 (8) accessory tools and equipment that are separate 448.28 detachable units with an ordinary useful life of less than 12 448.29 months used in producing a direct effect upon the product. 448.30 Machinery, equipment, implements, tools, accessories, 448.31 appliances, contrivances, and furniture and fixtures, except 448.32 those listed in this clause are not included within this 448.33 exemption. 448.34 (b) For purposes of this subdivision, "agricultural 448.35 production" includes, but is not limited to, horticulture, 448.36 floriculture, maple syrup harvesting, and the raising of pets, 449.1 fur-bearing animals, research animals, horses, farmed cervidae 449.2 as defined in section 17.451, subdivision 2, llamas as defined 449.3 in section 17.455, subdivision 2, and ratitae as defined in 449.4 section 17.453, subdivision 3. 449.5 Sec. 28. Minnesota Statutes 2000, section 297A.70, 449.6 subdivision 1, is amended to read: 449.7 Subdivision 1. [SCOPE.] (a) To the extent provided in this 449.8 section, the gross receipts from sales of items to or by, and 449.9 storage, distribution, use, or consumption of items by the 449.10 organizations listed in this section are specifically exempted 449.11 from the taxes imposed by this chapter. 449.12 (b) Notwithstanding any law to the contrary enacted before 449.13 1992, only sales to governments and political subdivisions 449.14 listed in this section are exempt from the taxes imposed by this 449.15 chapter. 449.16 (c) "Sales" includes purchases under an installment 449.17 contract or lease purchase agreement under section 465.71. 449.18 Sec. 29. Minnesota Statutes 2000, section 297A.70, 449.19 subdivision 2, is amended to read: 449.20 Subd. 2. [SALES TO GOVERNMENT.] (a) All sales, except 449.21 those listed in paragraph (b), to the following governments and 449.22 political subdivisions, or to the listed agencies or 449.23 instrumentalities of governments and political subdivisions, are 449.24 exempt: 449.25 (1) the United States and its agencies and 449.26 instrumentalities; 449.27 (2) school districts, the University of Minnesota, state 449.28 universities, community colleges, technical colleges, state 449.29 academies, the Perpich Minnesota center for arts education, and 449.30 an instrumentality of a political subdivision that is accredited 449.31 as an optional/special function school by the North Central 449.32 Association of Colleges and Schools; 449.33 (3) hospitals and nursing homes owned and operated by 449.34 political subdivisions of the state; 449.35 (4) other states or political subdivisions of other states, 449.36 if the sale would be exempt from taxation if it occurred in that 450.1 state; and 450.2 (5) sales to public libraries, public library systems, 450.3 multicounty, multitype library systems as defined in section 450.4 134.001, county law libraries under chapter 134A, state agency 450.5 libraries, the state library under section 480.09, and the 450.6 legislative reference library. 450.7 (b) This exemption does not apply to the sales of the 450.8 following products and services: 450.9 (1) building, construction, or reconstruction materials 450.10 purchased by a contractor or a subcontractor as a part of a 450.11 lump-sum contract or similar type of contract with a guaranteed 450.12 maximum price covering both labor and materials for use in the 450.13 construction, alteration, or repair of a building or facility; 450.14 (2) construction materials purchased by tax exempt entities 450.15 or their contractors to be used in constructing buildings or 450.16 facilities which will not be used principally by the tax exempt 450.17 entities; 450.18 (3) the leasing of a motor vehicle as defined in section 450.19 297B.01, subdivision 5, except for leases entered into by the 450.20 United States or its agencies or instrumentalities; or 450.21 (4) meals and lodging as defined under section 297A.61, 450.22subdivisionssubdivision 3,paragraphparagraphs (d),and16450.23 (g),paragraph (c)clause (2), except for meals and lodging 450.24 purchased directly by the United States or its agencies or 450.25 instrumentalities. 450.26 (c) As used in this subdivision, "school districts" means 450.27 public school entities and districts of every kind and nature 450.28 organized under the laws of the state of Minnesota, and any 450.29 instrumentality of a school district, as defined in section 450.30 471.59. 450.31 Sec. 30. Minnesota Statutes 2000, section 297A.70, 450.32 subdivision 4, is amended to read: 450.33 Subd. 4. [SALES TO NONPROFIT GROUPS.] (a) All sales, 450.34 except those listed in paragraph (b), to the following 450.35 "nonprofit organizations" are exempt: 450.36 (1)an entitya corporation, society, association, 451.1 foundation, or institution organized and operated exclusively 451.2 for charitable, religious, or educational purposes if the item 451.3 purchased is used in the performance of charitable, religious, 451.4 or educational functions; and 451.5 (2) any senior citizen group or association of groups that: 451.6 (i) in general limits membership to persons who are either 451.7 age 55 or older, or physically disabled; and 451.8 (ii) is organized and operated exclusively for pleasure, 451.9 recreation, and other nonprofit purposes, no part of the net 451.10 earnings of which inures to the benefit of any private 451.11 shareholders; and. 451.12(3) an entity organized and operated exclusively to451.13maintain451.14 For purposes of this subdivision, charitable purpose includes 451.15 the maintenance of a cemetery owned by a religious organization. 451.16 (b) This exemption does not apply to the following sales: 451.17 (1) building, construction, or reconstruction materials 451.18 purchased by a contractor or a subcontractor as a part of a 451.19 lump-sum contract or similar type of contract with a guaranteed 451.20 maximum price covering both labor and materials for use in the 451.21 construction, alteration, or repair of a building or facility; 451.22 (2) construction materials purchased by tax-exempt entities 451.23 or their contractors to be used in constructing buildings or 451.24 facilities that will not be used principally by the tax-exempt 451.25 entities; and 451.26 (3) meals and lodging as defined under section 297A.61, 451.27subdivisionssubdivision 3,paragraphparagraphs (d),and 451.2816(g),paragraph (c)clause (2); and 451.29 (4) leasing of a motor vehicle as defined in section 451.30 297B.01, subdivision 5, except as provided in paragraph (c). 451.31 (c) This exemption applies to the leasing of a motor 451.32 vehicle as defined in section 297B.01, subdivision 5, only if 451.33 the vehicle is: 451.34 (1) a truck, as defined in section 168.011, a bus, as 451.35 defined in section 168.011, or a passenger automobile, as 451.36 defined in section 168.011, if the automobile is designed and 452.1 used for carrying more than nine persons including the driver; 452.2 and 452.3 (2) intended to be used primarily to transport tangible 452.4 personal property or individuals, other than employees, to whom 452.5 the organization provides service in performing its charitable, 452.6 religious, or educational purpose. 452.7 Sec. 31. Minnesota Statutes 2000, section 297A.70, 452.8 subdivision 7, is amended to read: 452.9 Subd. 7. [HOSPITALS AND OUTPATIENT SURGICAL CENTERS.] (a) 452.10 Sales, except for those listed in paragraph (c), to a hospital 452.11 are exempt, if the items purchased are used in providing 452.12 hospital services. For purposes of this subdivision, "hospital" 452.13 means a hospital organized and operated for charitable purposes 452.14 within the meaning of section 501(c)(3) of the Internal Revenue 452.15 Code, and licensed under chapter 144 or by any other 452.16 jurisdiction, and "hospital services" are services authorized or 452.17 required to be performed by a "hospital" under chapter 144. 452.18 (b) Sales, except for those listed in paragraph (c), to an 452.19 outpatient surgical center are exempt, if the items purchased 452.20 are used in providing outpatient surgical services. For 452.21 purposes of this subdivision, "outpatient surgical center" means 452.22 an outpatient surgical center organized and operated for 452.23 charitable purposes within the meaning of section 501(c)(3) of 452.24 the Internal Revenue Code, and licensed under chapter 144 or by 452.25 any other jurisdiction. For the purposes of this subdivision, 452.26 "outpatient surgical services" means: (1) services authorized 452.27 or required to be performed by an outpatient surgical center 452.28 under chapter 144or under the applicable licensure law of any452.29other jurisdiction; and (2) urgent care. For purposes of this 452.30 subdivision, "urgent care" means health services furnished to a 452.31 person whose medical condition is sufficiently acute to require 452.32 treatment unavailable through, or inappropriate to be provided 452.33 by, a clinic or physician's office, but not so acute as to 452.34 require treatment in a hospital emergency room. 452.35 (c) This exemption does not apply to the following products 452.36 and services: 453.1 (1) purchases made by a clinic, physician's office, or any 453.2 other medical facility not operating as a hospital or outpatient 453.3 surgical center, even though the clinic, office, or facility may 453.4 be owned and operated by a hospital or outpatient surgical 453.5 center; 453.6 (2) sales under section 297A.61, subdivisions 3, paragraph 453.7 (d), and 16, paragraph (c); 453.8 (3) building and construction materials used in 453.9 constructing buildings or facilities that will not be used 453.10 principally by the hospital or outpatient surgical center; 453.11 (4) building, construction, or reconstruction materials 453.12 purchased by a contractor or a subcontractor as a part of a 453.13 lump-sum contract or similar type of contract with a guaranteed 453.14 maximum price covering both labor and materials for use in the 453.15 construction, alteration, or repair of a hospital or outpatient 453.16 surgical center; or 453.17 (5) the leasing of a motor vehicle as defined in section 453.18 297B.01, subdivision 5. 453.19 Sec. 32. Minnesota Statutes 2000, section 297A.70, 453.20 subdivision 8, is amended to read: 453.21 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION 453.22 SYSTEM; PRODUCTS AND SERVICES.] Products and services including, 453.23 but not limited to, end user equipment used for construction, 453.24 ownership, operation, maintenance, and enhancement of the 453.25 backbone system of the regionwide public safety radio 453.26 communication system established under sections 473.891 to 453.27 473.905, are exempt. For purposes of this subdivision, backbone 453.28 system is defined in section 473.891, subdivision 9. This 453.29 subdivision is effective for purchases, sales, storage, use, or 453.30 consumption occurring before August 1, 2003, in the counties of 453.31 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 453.32 Sec. 33. Minnesota Statutes 2000, section 297A.70, 453.33 subdivision 10, is amended to read: 453.34 Subd. 10. [NONPROFIT TICKETS OR ADMISSIONS.] Tickets or 453.35 admissions to the premises of or events sponsored by an 453.36 organization that provides an opportunity for citizens of the 454.1 state to participate in the creation, performance, or 454.2 appreciation of the arts are exempt if the organization is 454.3 either: 454.4 (1)a tax-exempt organization within the meaning of454.5Minnesota Statutes 1980, section 290.05, subdivision 1, clause454.6(i),a corporation, fund, foundation, trust, or association if 454.7 (i) it is organized for exclusively scientific, literary, 454.8 religious, charitable, educational, or artistic purposes, or for 454.9 the purpose of making contributions to or for the use of the 454.10 United States of America, the state of Minnesota or any of its 454.11 political subdivisions for exclusively public purposes, or for 454.12 any combination of the purposes listed in this clause, and (ii) 454.13 no part of the net income of the corporation, fund, foundation, 454.14 trust, or association inures to the benefit of any private 454.15 member, stockholder, or individual; or 454.16 (2) a municipal board that promotes cultural and arts 454.17 activities. 454.18 The exemption providedwith respectto a municipal board applies 454.19 only to tickets and admissions to events sponsored by the board. 454.20 Sec. 34. Minnesota Statutes 2000, section 297A.70, 454.21 subdivision 13, is amended to read: 454.22 Subd. 13. [FUNDRAISING SALES BY OR FOR NONPROFIT GROUPS.] 454.23 (a) The following sales by the specified organizations for 454.24 fundraising purposes are exempt, subject to the limitations 454.25 listed in paragraph (b): 454.26 (1) all sales made by an organization that exists solely 454.27 for the purpose of providing educational or social activities 454.28 for young people primarily age 18 and under; 454.29 (2) all sales made by an organization that is a senior 454.30 citizen group or association of groups if (i) in general it 454.31 limits membership to persons age 55 or older; (ii) it is 454.32 organized and operated exclusively for pleasure, recreation, and 454.33 other nonprofit purposes; and (iii) no part of its net earnings 454.34 inures to the benefit of any private shareholders; 454.35 (3) the sale or use of tickets or admissions to a golf 454.36 tournament held in Minnesota if the beneficiary of the 455.1 tournament's net proceeds qualifies as a tax-exempt organization 455.2 under section 501(c)(3) of the Internal Revenue Code; and 455.3 (4) sales of gum, candy, and candy products sold for 455.4 fundraising purposes by a nonprofit organization that provides 455.5 educational and social activities primarily for young people age 455.6 18years of ageand under. 455.7 (b) The exemptions listed in paragraph (a) are limited in 455.8 the following manner: 455.9 (1) the exemption under paragraph (a), clauses (1) and (2), 455.10 applies only if the gross annual receipts of the organization 455.11 from fundraising do not exceed $10,000; and 455.12 (2) the exemption under paragraph (a), clause (1), does not 455.13 apply if the sales are derived from admission charges or from 455.14 activities for which the money must be deposited with the school 455.15 district treasurer under section 123B.49, subdivision 2, or be 455.16 recorded in the same manner as other revenues or expenditures of 455.17 the school district under section 123B.49, subdivision 4. 455.18 (c) For purposes of this subdivision, a club, association, 455.19 or other organization of elementary or secondary school students 455.20 organized for the purpose of carrying on sports, educational, or 455.21 other extracurricular activities is a separate organization from 455.22 the school district or school for purposes of applying the 455.23 $10,000 limit. 455.24 Sec. 35. Minnesota Statutes 2000, section 297A.70, 455.25 subdivision 14, is amended to read: 455.26 Subd. 14. [FUNDRAISING EVENTS SPONSORED BY NONPROFIT 455.27 GROUPS.] (a) Sales of tangible personal property at, and 455.28 admission charges for fundraising events sponsored by, a 455.29 nonprofit organization are exempt if the entire proceeds, less 455.30 the necessary expenses for the event, will be used solely and 455.31 exclusively for charitable, religious, or educational purposes. 455.32 Exempt sales include the sale of food, meals, and drinks, and455.33taxable servicesat the fundraising event. 455.34 (b) This exemption is limited in the following manner: 455.35 (1) it does not apply to admission charges for events 455.36 involving bingo or other gambling activities or to charges for 456.1 use of amusement devices involving bingo or other gambling 456.2 activities; 456.3 (2) all gross receipts are taxable if the profits are not 456.4 used solely and exclusively for charitable, religious, or 456.5 educational purposes; 456.6 (3) it does not apply unless the organization keeps a 456.7 separate accounting record, including receipts and disbursements 456.8 from each fundraising event that documents all deductions from 456.9 gross receipts with receipts and other records; 456.10 (4) it does not apply to any sale made by or in the name of 456.11 a nonprofit corporation as the active or passive agent of a 456.12 person that is not a nonprofit corporation; 456.13 (5) all gross receipts are taxable if fundraising events 456.14 exceed 24 days per year; and 456.15 (6) it does not apply to fundraising events conducted on 456.16 premises leased for more than five days but less than 30 days. 456.17 (c) For purposes of this subdivision, a "nonprofit 456.18 organization" means any unit of government, corporation, 456.19 society, association, foundation, or institution organized and 456.20 operated for charitable, religious, educational, civic, 456.21 fraternal, and senior citizens' or veterans' purposes, no part 456.22 of the net earnings of which inures to the benefit of a private 456.23 individual. 456.24 Sec. 36. Minnesota Statutes 2000, section 297A.75, is 456.25 amended to read: 456.26 297A.75 [REFUND; APPROPRIATION.] 456.27 Subdivision 1. [TAX COLLECTED.] The tax on the gross 456.28 receipts from the sale of the following exempt items must be 456.29 imposed and collected as if the sale were taxable and the rate 456.30 under section 297A.62, subdivision 1, applied. The exempt items 456.31 include: 456.32 (1) capital equipment exempt under section 297A.68, 456.33 subdivision 5; 456.34 (2) building materials for an agricultural processing 456.35 facility exempt under section 297A.71, subdivision 13; 456.36 (3) building materials for mineral production facilities 457.1 exempt under section 297A.71, subdivision 14; 457.2 (4) building materials for correctional facilities under 457.3 section 297A.71, subdivision 3; 457.4 (5) building materials used in a residence for disabled 457.5 veterans exempt under section 297A.71, subdivision 11;and457.6 (6) chair lifts, ramps, elevators, and associated building 457.7 materials exempt under section 297A.71, subdivision 12; and 457.8 (7) building materials for the Long Lake Conservation 457.9 Center exempt under section 297A.71, subdivision 17. 457.10 Subd. 2. [REFUND; ELIGIBLE PERSONS.] Upon application on 457.11 forms prescribed by the commissioner, a refund equal to the tax 457.12 paid on the gross receipts of the exempt items must be paid to 457.13 the applicant. Only the following persons may apply for the 457.14 refund: 457.15 (1) for subdivision 1, clauses (1) to (3), the applicant 457.16 must be the purchaser; 457.17 (2) for subdivision 1,clauseclauses (4) and (7), the 457.18 applicant must be the governmental subdivision; 457.19 (3) for subdivision 1, clause (5), the applicant must be 457.20 the recipient of the benefits provided in United States Code, 457.21 title 38, chapter 21; and 457.22 (4) for subdivision 1, clause (6), the applicant must be 457.23 the owner of the homestead property. 457.24 Subd. 3. [APPLICATION.] (a) The application must include 457.25 sufficient information to permit the commissioner to verify the 457.26 tax paid. If the tax was paid by a contractor, subcontractor, 457.27 or builder, under subdivision 1, clause (4), (5),or(6), or 457.28 (7), the contractor, subcontractor, or builder must furnish to 457.29 the refund applicant a statement including the cost of the 457.30 exempt items and the taxes paid on the items unless otherwise 457.31 specifically provided by this subdivision. The provisions of 457.32 sections 289A.40 and 289A.50 apply to refunds under this section. 457.33 (b) An applicant may not file more than two applications 457.34 per calendar year for refunds for taxes paid on capital 457.35 equipment exempt under section 297A.68, subdivision 5. 457.36 Subd. 4. [INTEREST.] Interest must be paid on the refund 458.1 at the rate in section 270.76 from the date the refund claim is 458.2 filed for taxes paid under subdivision 1, clauses (1) to (3), 458.3 and (5), and from 60 days after the date the refund claim is 458.4 filed with the commissioner for claims filed under subdivision 458.5 1, clauses (4)and, (6), and (7). 458.6 Subd. 5. [APPROPRIATION.] The amount required to make the 458.7 refunds is annually appropriated to the commissioner. 458.8 Sec. 37. Minnesota Statutes 2000, section 297A.77, 458.9 subdivision 1, is amended to read: 458.10 Subdivision 1. [COLLECTION OF TAX AT TIME OF SALE.] The 458.11 tax must be stated and charged separately from the sales 458.12 priceor charge for serviceinsofar as practicable and must be 458.13 collected by the seller from the purchaser. 458.14 Sec. 38. Minnesota Statutes 2000, section 297A.80, is 458.15 amended to read: 458.16 297A.80 [TAXES IN OTHER STATES;OFFSET AGAINSTUSE 458.17 TAX CREDIT.] 458.18 Subdivision 1. [MULTISTATE TAX COMPACT STATES.] If an 458.19 article of tangible personal property or an item listed in 458.20 section 297A.63 has already been taxed for its sale, 458.21 distribution, storage, use, or other consumption by another 458.22 state, or a subdivision of another state, that is a member of 458.23 the multistate tax compact, a tax credit is allowed to the 458.24 person who paid the tax in the other state or subdivision of the 458.25 other state under the provisions of section 290.171, article V. 458.26 Subd. 2. [OTHER STATES; GENERALLY.] If an article of 458.27 tangible personal property or an item listed in section 297A.63 458.28 has already been taxedby another statefor its sale, 458.29 distribution, storage, use, or other consumptionin an amount458.30less than the tax imposed by this chapter, then as to the person458.31who paid the tax in the other state, section 297A.63 applies458.32only at a rate measured by the difference between the rate458.33imposed under section 297A.62 and the rate by which the previous458.34tax was computedby another state not included in subdivision 1, 458.35 a tax credit is allowed against the tax imposed in section 458.36 297A.63 to the person who paid the tax in the amount of tax paid 459.1 to the other state.If the tax imposed in the other state is459.2equal to or greater thanThe credit cannot exceed the tax 459.3 imposed in this state, then no tax is due from that personunder 459.4 section 297A.63. 459.5 Sec. 39. Minnesota Statutes 2000, section 297A.82, 459.6 subdivision 3, is amended to read: 459.7 Subd. 3. [PAYMENT OF TAX TO COMMISSIONER.] Ifthean 459.8 aircraft is purchased from a person who is not the holder of a 459.9 valid sales and use tax permit under this chapter, the purchaser 459.10 shall pay the tax to the commissioner of revenue prior to 459.11 registering or licensing the aircraft in this state. The 459.12 commissioner of revenue shall issue a certificate stating that 459.13 the sales and use tax in respect to the transaction has been 459.14 paid. 459.15 Sec. 40. Minnesota Statutes 2000, section 297A.89, 459.16 subdivision 1, is amended to read: 459.17 Subdivision 1. [COMMISSIONER MAY PERMIT.] The commissioner 459.18 may permit purchasers to pay taxes imposed by this chapter 459.19 directly to the commissioner. Any taxes paid by purchasers 459.20 under this section are considered use taxes, except for local459.21sales taxes when no corresponding local use tax is imposed. 459.22 Sec. 41. Minnesota Statutes 2000, section 297A.90, 459.23 subdivision 1, is amended to read: 459.24 Subdivision 1. [REGISTRATION; RECORDS.] (a) A person who 459.25 is engaged in interstate for-hire transportation of tangible 459.26 personal property or passengers by motor vehicle may, under 459.27 rules prescribed by the commissioner, register as a retailer and 459.28 pay the taxes imposed by this chapter in accordance with this 459.29 section. Any taxes paid under this section are use taxes,459.30except local sales taxes when no corresponding local use tax is459.31imposed. 459.32 (b) As used in this section, "person" means: 459.33 (1) one who possesses a certificate or permit or has 459.34 completed a registration process that authorizes for-hire 459.35 transportation of property or passengers from the United States 459.36 Department of Transportation, the transportation regulation 460.1 board, or the department of transportation; 460.2 (2) one who transports commodities defined as "exempt" in 460.3 for-hire transportation in interstate commerce; or 460.4 (3) one who transports tangible personal property in 460.5 interstate commerce, pursuant to contracts with persons 460.6 described in clause (1) or (2). 460.7 Persons qualifying under clause (2) or (3) must maintain on a 460.8 current basis the same type of mileage records that are required 460.9 by persons specified in clause (1) by the United States 460.10 Department of Transportation. 460.11 (c) Persons who in the course of their business are 460.12 transporting solely their own goods in interstate commerce may 460.13 also register as retailers under rules prescribed by the 460.14 commissioner and pay the taxes imposed by this chapter in 460.15 accordance with this section. 460.16 Sec. 42. Minnesota Statutes 2000, section 297A.91, 460.17 subdivision 1, is amended to read: 460.18 Subdivision 1. [SEIZURE OF PROPERTY USED IN ILLEGAL 460.19 TRANSPORT.] (a) If the retailer does not have a sales or use tax 460.20 permit and has been engaging in transporting personal property 460.21 into the state without payment of the tax, the commissioner of 460.22 revenue or the commissioner's agents may seize in the name of 460.23 the state any truck, automobile, or means of transportation not 460.24 owned or operated by acommonfor-hire carrier, used in the 460.25 illegal importation and transportation of any tangible personal 460.26 property by a retailer or the retailer's agent or employee. The 460.27 commissioner may demand the forfeiture and sale of the truck, 460.28 automobile, or other means of transportation together with the 460.29 property being transported illegally, unless the owner 460.30 establishes to the satisfaction of the commissioner or the court 460.31 that the owner had no notice or knowledge or reason to believe 460.32 that the vehicle was used or intended to be used in any such 460.33 violation. 460.34 (b) Within two days after the seizure, the person making 460.35 the seizure shall deliver an inventory of the vehicle and 460.36 property seized to the person from whom the seizure was made, if 461.1 known, and to any person known or believed to have any right, 461.2 title, interest, or lien on the vehicle or property. The person 461.3 making the seizure shall also file a copy of the inventory with 461.4 the commissioner. 461.5 Sec. 43. Minnesota Statutes 2000, section 297A.92, 461.6 subdivision 2, is amended to read: 461.7 Subd. 2. [AUCTIONS OF SECURITY.] The commissioner may sell 461.8 property deposited as security at public auction if necessary to 461.9 recover the amount required to be collected, including any 461.10 interest and penalties. Notice of the sale must be served upon 461.11 the person who deposited the security. It must be served 461.12 personally, or by mail as prescribed forthe service of a notice461.13of a deficiencyan order of assessment under section 289A.37, 461.14 subdivision 5. After a sale any surplus above the amount due 461.15 not required as security under this section must be returned to 461.16 the person who deposited the security. 461.17 Sec. 44. Minnesota Statutes 2000, section 297A.94, is 461.18 amended to read: 461.19 297A.94 [DEPOSIT OF REVENUES.] 461.20 (a) Except as provided in this section, the commissioner 461.21 shall deposit the revenues, including interest and penalties, 461.22 derived from the taxes imposed by this chapter in the state 461.23 treasury and credit them to the general fund. 461.24 (b) The commissioner shall deposit taxes in the Minnesota 461.25 agricultural and economic account in the special revenue fund if: 461.26 (1) the taxes are derived from sales and use of property 461.27 and services purchased for the construction and operation of an 461.28 agricultural resource project; and 461.29 (2) the purchase was made on or after the date on which a 461.30 conditional commitment was made for a loan guaranty for the 461.31 project under section 41A.04, subdivision 3. 461.32 The commissioner of finance shall certify to the commissioner 461.33 the date on which the project received the conditional 461.34 commitment. The amount deposited in the loan guaranty account 461.35 must be reduced by any refunds and by the costs incurred by the 461.36 department of revenue to administer and enforce the assessment 462.1 and collection of the taxes. 462.2 (c) The commissioner shall deposit the revenues, including 462.3 interest and penalties, derived from the taxes imposed on sales 462.4 and purchases included in section 297A.61, subdivision16,462.5paragraphs (b) and (f)3, paragraph (g), clauses (1) and (5), in 462.6 the state treasury, and credit them as follows: 462.7 (1) first to the general obligation special tax bond debt 462.8 service account in each fiscal year the amount required by 462.9 section 16A.661, subdivision 3, paragraph (b); and 462.10 (2) after the requirements of clause (1) have been met, the 462.11 balance to the general fund. 462.12 (d) The commissioner shall deposit the revenues, including 462.13 interest and penalties, collected under section 297A.64, 462.14 subdivision 5, in the state treasury and credit them to the 462.15 general fund. By July 15 of each year the commissioner shall 462.16 transfer to the highway user tax distribution fund an amount 462.17 equal to the excess fees collected under section 297A.64, 462.18 subdivision 5, for the previous calendar year. 462.19 (e) For fiscal year 2001, 97 percent, and for fiscal year 462.20 2002 and thereafter, 87 percent of the revenues, including 462.21 interest and penalties, transmitted to the commissioner under 462.22 section 297A.65, must be deposited by the commissioner in the 462.23 state treasury as follows: 462.24 (1) 50 percent of the receipts must be deposited in the 462.25 heritage enhancement account in the game and fish fund, and may 462.26 be spent only on activities that improve, enhance, or protect 462.27 fish and wildlife resources, including conservation, 462.28 restoration, and enhancement of land, water, and other natural 462.29 resources of the state; 462.30 (2) 22.5 percent of the receipts must be deposited in the 462.31 natural resources fund, and may be spent only for state parks 462.32 and trails; 462.33 (3) 22.5 percent of the receipts must be deposited in the 462.34 natural resources fund, and may be spent only on metropolitan 462.35 park and trail grants; 462.36 (4) three percent of the receipts must be deposited in the 463.1 natural resources fund, and may be spent only on local trail 463.2 grants; and 463.3 (5) two percent of the receipts must be deposited in the 463.4 natural resources fund, and may be spent only for the Minnesota 463.5 zoological garden, the Como park zoo and conservatory, and the 463.6 Duluth zoo. 463.7 (f) The revenue dedicated under paragraph (e) may not be 463.8 used as a substitute for traditional sources of funding for the 463.9 purposes specified, but the dedicated revenue shall supplement 463.10 traditional sources of funding for those purposes. Land 463.11 acquired with money deposited in the game and fish fund under 463.12 paragraph (e) must be open to public hunting and fishing during 463.13 the open season. At least 87 percent of the money deposited in 463.14 the game and fish fund for improvement, enhancement, or 463.15 protection of fish and wildlife resources under paragraph (e) 463.16 must be allocated for field operations. 463.17 Sec. 45. Minnesota Statutes 2000, section 297A.99, 463.18 subdivision 7, is amended to read: 463.19 Subd. 7. [EXEMPTIONS.] (a) All goods or services that are 463.20 otherwise exempt from taxation under this chapter are exempt 463.21 from a political subdivision's tax. 463.22 (b) The gross receipts from the sale of tangible personal 463.23 property that meets the requirement of section 297A.68, 463.24 subdivision13 or 1415, are exempt, except the qualification 463.25 test applies based on the boundaries of the political 463.26 subdivision instead of the state of Minnesota. 463.27 (c) All mobile transportation equipment, and parts and 463.28 accessories attached to or to be attached to the equipment are 463.29 exempt, if purchased by a holder of a motor carrier direct pay 463.30 permit under section 297A.90. 463.31 Sec. 46. [INSTRUCTIONS TO REVISOR.] 463.32 (a) In the next edition of Minnesota Statutes, the revisor 463.33 of statutes shall put the definitions in section 297A.68, 463.34 subdivision 5, paragraph (d), in alphabetical order and correct 463.35 any references to the reordered definitions. 463.36 (b) In the next edition of Minnesota Statutes, the revisor 464.1 of statutes shall renumber section 297A.68, subdivision 27, as 464.2 297A.67, subdivision 25, and correct any references to the 464.3 renumbered section. 464.4 Sec. 47. [REPEALER.] 464.5 Minnesota Statutes 2000, sections 297A.61, subdivision 16; 464.6 297A.68, subdivision 21; and 297A.71, subdivision 21, are 464.7 repealed. 464.8 Sec. 48. [EFFECTIVE DATE.] 464.9 Each section of this act takes effect at the time the 464.10 section it amends is effective under Laws 2000, chapter 418, 464.11 article 1, section 46. 464.12 ARTICLE 15 464.13 SPECIAL TAXES 464.14 Section 1. Minnesota Statutes 2000, section 69.021, 464.15 subdivision 5, is amended to read: 464.16 Subd. 5. [CALCULATION OF STATE AID.] (a) The amount of 464.17 fire state aid available for apportionment, before the addition 464.18 of the minimum fire state aid allocation amount under 464.19 subdivision 7, is equal to 107 percent of the amount of premium 464.20 taxes paid to the state upon the fire, lightning, sprinkler 464.21 leakage, and extended coverage premiums reported to the 464.22 commissioner by insurers on the Minnesota Firetown Premium 464.23 Report. This amount shall be reduced by the amount required to 464.24 pay the state auditor's costs and expenses of the audits or 464.25 exams of the firefighters relief associations. 464.26 The total amount for apportionment in respect to fire state 464.27 aid must not be less than two percent of the premiums reported 464.28 to the commissioner by insurers on the Minnesota Firetown 464.29 Premium Report after subtracting the following amounts: 464.30 (1) the amount required to pay the state auditor's costs 464.31 and expenses of the audits or exams of the firefighters relief 464.32 associations; and 464.33 (2) one percent of the premiums reported by town and 464.34 farmers' mutual insurance companies and mutual property and 464.35 casualty companies with total assets of $5,000,000 or less. 464.36 (b) The total amount for apportionment as police state aid 465.1 is equal to 104 percent of the amount of premium taxes paid to 465.2 the state on the premiums reported to the commissioner by 465.3 insurers on the Minnesota Aid to Police Premium Report, plus the 465.4 payment amounts received under section 60A.152 since the last 465.5 aid apportionment, and reduced by the amount required to pay the 465.6 costs and expenses of the state auditor for audits or exams of 465.7 police relief associations. The total amount for apportionment 465.8 in respect to the police state aid program must not be less than 465.9 two percent of the amount of premiums reported to the 465.10 commissioner by insurers on the Minnesota Aid to Police Premium 465.11 Report after subtracting the amount required to pay the state 465.12 auditor's cost and expenses of the audits or exams of the police 465.13 relief associations. 465.14 (c) The commissioner shall calculate the percentage of 465.15 increase or decrease reflected in the apportionment over or 465.16 under the previous year's available state aid using the same 465.17 premiums as a basis for comparison. 465.18 (d) The amount for apportionment in respect to peace 465.19 officer state aid under paragraph (b) must be further reduced by 465.20 $1,779,000 in fiscal year 1999, $2,077,000 in fiscal year 2000, 465.21 and $2,404,000 in fiscal year 2001. These reductions in this 465.22 paragraph cancel to the general fund. 465.23 (e) The amount for apportionment of police state aid under 465.24 paragraph (b) is annually increased by an amount equal to the 465.25 revenues under the tax on automobile risk self-insurance under 465.26 Minnesota Statutes 2000, section 297I.05, subdivision 8, that 465.27 were collected in fiscal year 2001. An amount sufficient to pay 465.28 this increase is annually appropriated from the general fund. 465.29 [EFFECTIVE DATE.] This section is effective beginning with 465.30 fiscal year 2002. 465.31 Sec. 2. Minnesota Statutes 2000, section 168.013, 465.32 subdivision 1a, is amended to read: 465.33 Subd. 1a. [PASSENGER AUTOMOBILE; HEARSE.] (a) On passenger 465.34 automobiles as defined in section 168.011, subdivision 7, and 465.35 hearses, except as otherwise provided, the tax shall be $10 plus 465.36 an additional tax equal to 1.25 percent of the base value. 466.1 (b) Subject to the classification provisions herein, "base 466.2 value" means the manufacturer's suggested retail price of the 466.3 vehicle including destination charge using list price 466.4 information published by the manufacturer or determined by the 466.5 registrar if no suggested retail price exists, and shall not 466.6 include the cost of each accessory or item of optional equipment 466.7 separately added to the vehicle and the suggested retail price. 466.8 (c) If the manufacturer's list price information contains a 466.9 single vehicle identification number followed by various 466.10 descriptions and suggested retail prices, the registrar shall 466.11 select from those listings only the lowest price for determining 466.12 base value. 466.13 (d) If unable to determine the base value because the 466.14 vehicle is specially constructed, or for any other reason, the 466.15 registrar may establish such value upon the cost price to the 466.16 purchaser or owner as evidenced by a certificate of cost but not 466.17 including Minnesota sales or use tax or any local sales or other 466.18 local tax. 466.19 (e) The registrar shall classify every vehicle in its 466.20 proper base value class as follows: 466.21 FROM TO 466.22 $ 0 $199.99 466.23 200 399.99 466.24 and thereafter a series of classes successively set in brackets 466.25 having a spread of $200 consisting of such number of classes as 466.26 will permit classification of all vehicles. 466.27 (f) The base value for purposes of this section shall be 466.28 the middle point between the extremes of its class. 466.29 (g) The registrar shall establish the base value, when new, 466.30 of every passenger automobile and hearse registered prior to the 466.31 effective date of Extra Session Laws 1971, chapter 31, using 466.32 list price information published by the manufacturer or any 466.33 nationally recognized firm or association compiling such data 466.34 for the automotive industry. If unable to ascertain the base 466.35 value of any registered vehicle in the foregoing manner, the 466.36 registrar may use any other available source or method. The tax 467.1 on all previously registered vehicles shall be computed upon the 467.2 base value thus determined taking into account the depreciation 467.3 provisions of paragraph (h). 467.4 (h)Except as provided in paragraph (i),The annual 467.5 additional tax computed upon the base value as provided herein, 467.6 during the first and second years of vehicle life shall be 467.7 computed upon 100 percent of the base value; for the third and 467.8 fourth years, 90 percent of such value; for the fifth and sixth 467.9 years, 75 percent of such value; for the seventh year, 60 467.10 percent of such value; for the eighth year, 40 percent of such 467.11 value; for the ninth year, 30 percent of such value; for the 467.12 tenth year, ten percent of such value; for the 11th and each 467.13 succeeding year, the sum of $25. 467.14 In no event shall the annual additional tax be less than $25. 467.15 The total tax under this subdivision shall not exceed $189 for 467.16 the first renewal period and shall not exceed $99 for subsequent 467.17 renewal periods. The total tax under this subdivision on any 467.18 vehicle filing its initial registration in Minnesota in the 467.19 second year of vehicle life shall not exceed $189 and shall not 467.20 exceed $99 for subsequent renewal periods. The total tax under 467.21 this subdivision on any vehicle filing its initial registration 467.22 in Minnesota in the third or subsequent year of vehicle life 467.23 shall not exceed $99 and shall not exceed $99 in any subsequent 467.24 renewal period. 467.25 (i)The annual additional tax under paragraph (h) on a467.26motor vehicle on which the first annual tax was paid before467.27January 1, 1990, must not exceed the tax that was paid on that467.28vehicle the year before.The total tax due for the first 467.29 renewal period on any vehicle whose initial registration in 467.30 Minnesota was for a period of less than 12 months under section 467.31 168.017, subdivision 3, paragraph (a), clause (2), shall be the 467.32 ad valorem rate for the remainder of the initial 12-month period 467.33 plus $16 per month on each remaining month. The total tax due 467.34 on the second renewal period shall be $16 per month for the 467.35 remainder of the first 12-month renewal period and $8 per month 467.36 thereafter for a total of 12 months. 468.1 [EFFECTIVE DATE.] This section is effective June 1, 2001, 468.2 for taxes payable on and after that date. 468.3 Sec. 3. Minnesota Statutes 2000, section 239.101, 468.4 subdivision 3, is amended to read: 468.5 Subd. 3. [PETROLEUM INSPECTION FEE.]A person who owns468.6petroleum products held in storage at a pipeline terminal, river468.7terminal, or refinery shall pay a petroleum inspection fee of 85468.8cents for every 1,000 gallons sold or withdrawn from the468.9terminal or refinery storageAn inspection fee is imposed on 468.10 petroleum products when received by the first licensed 468.11 distributor, and on petroleum products received and held for 468.12 sale or use by any person when the petroleum products have not 468.13 previously been received by a licensed distributor. The 468.14 petroleum inspection fee is 85 cents for every 1,000 gallons 468.15 received. The commissioner of revenue shall collect the fee. 468.16 The revenue from the fee must first be applied to cover the 468.17 amounts appropriated for petroleum product quality inspection 468.18 expenses, for the inspection and testing of petroleum product 468.19 measuring equipment, and for petroleum supply monitoring under 468.20 chapter 216C. 468.21 The commissioner of revenue shall credit a person for 468.22 inspection fees previously paid in error or for any material 468.23 exported or sold for export from the state upon filing of a 468.24 report as prescribed by the commissioner of revenue. The 468.25 commissioner of revenue may collect the inspection fee along 468.26 with any taxes due under chapter 296A. 468.27 [EFFECTIVE DATE.] This section is effective for petroleum 468.28 products received on or after July 1, 2001. 468.29 Sec. 4. Minnesota Statutes 2000, section 287.035, is 468.30 amended to read: 468.31 287.035 [IMPOSITION OF TAX.] 468.32 A taxof 23 cents is imposed upon each $100, or fraction468.33thereof,is imposed on the privilege of recording a mortgage. 468.34 The tax rate is .0023 of the debt or portion of a debt that is 468.35 secured by any recorded mortgage of real property located in 468.36 this state. The person liable for the tax is themortgagee469.1 mortgagor. The tax is not imposed on the lawful interest 469.2 amounts that may accrue with respect to a debt. 469.3 [EFFECTIVE DATE.] This section is effective for mortgages 469.4 acknowledged and recorded after June 30, 2001. 469.5 Sec. 5. Minnesota Statutes 2000, section 287.04, is 469.6 amended to read: 469.7 287.04 [EXEMPTIONS.] 469.8 The tax imposed by section 287.035 does not apply to: 469.9 (a) A decree of marriage dissolution or an instrument made 469.10 pursuant to it. 469.11 (b) A mortgage given to correct a misdescription of the 469.12 mortgaged property. 469.13 (c) A mortgage or other instrument that adds additional 469.14 security for the same debt for which mortgage registry tax has 469.15 been paid. 469.16 (d) A contract for the conveyance of any interest in real 469.17 property, including a contract for deed. 469.18 (e) A mortgage secured by real property subject to the 469.19 minerals production tax of sections 298.24 to 298.28. 469.20 (f) The principal amount ofbonds or other obligations469.21issued by the St. Paul port authority under its common revenue469.22bond fund if each of the following conditions are met.469.23(1) The bonds or other obligations are secured by a469.24mortgage on property, title to which is held by the political469.25subdivision.469.26(2) The mortgage is recorded after May 19, 1993.469.27(3) The bonds or other obligations are either (i)469.28outstanding on May 19, 1993, or (ii) issued in exchange for or469.29to otherwise refund bonds or other obligations the original469.30series of which were issued before May 19, 1993a mortgage loan 469.31 made under a low and moderate income or other affordable housing 469.32 program, if the mortgagee is a federal, state, or local 469.33 government agency. 469.34 (g) Mortgagestaken in good faith by persons orgranted 469.35corporations whose property is expressly exempted from taxation469.36by section 272.02, subdivisions 2 to 8, or mortgagees that are470.1 by fraternal benefit societies subject to section 64B.24. 470.2 (h) A mortgage amendment or extension, as defined in 470.3 section 287.01. 470.4 [EFFECTIVE DATE.] This section is effective for mortgages 470.5 acknowledged and recorded after June 30, 2001. 470.6 Sec. 6. Minnesota Statutes 2000, section 287.08, is 470.7 amended to read: 470.8 287.08 [TAX, HOW PAYABLE; RECEIPTS.] 470.9 (a) The tax imposed by sections 287.01 to 287.12 must be 470.10 paid to the treasurer of any county in this state in which the 470.11 real property or some part is located at or before the time of 470.12 filing the mortgage for record. The treasurer shall endorse 470.13 receipt on the mortgage and the receipt is conclusive proof that 470.14 the tax has been paid in the amount stated and authorizes any 470.15 county recorder or registrar of titles to record the mortgage. 470.16 Its form, in substance, shall be "registration tax hereon of 470.17 ..................... dollars paid." If the mortgage is exempt 470.18 from taxation the endorsement shall, in substance, be "exempt 470.19 from registration tax." In either case the receipt must be 470.20 signed by the treasurer. In case the treasurer is unable to 470.21 determine whether a claim of exemption should be allowed, the 470.22 tax must be paid as in the case of a taxable mortgage. 470.23 (b)Upon written application of the taxpayer,The county 470.24 treasurer may refund in whole or in part any mortgage registry 470.25 taxthat has been erroneously paid, or a person having paid a470.26mortgage registry tax amount may seek a refund of the tax, or470.27other appropriate relief,overpayment if a written application 470.28 by the taxpayer is submitted to the county treasurer within 470.29 three and one-half years from the date of the overpayment. If 470.30 the county has not issued a denial of the application, the 470.31 taxpayer may bring an action in tax court in the county in which 470.32 the tax was paid at any time after the expiration of six months 470.33 from the time that the application was submitted. A denial of 470.34 refund may be appealed within 60 days from the date of the 470.35 denial by bringing an action in tax court in the county in which 470.36 the tax was paid, within 60 days of the payment. The action is 471.1 commenced by the serving of a petition for relief on the county 471.2 treasurer, and by filing a copy with the court. The county 471.3 attorney shall defend the action. The county treasurer shall 471.4 notify the treasurer of each county that has or would receive a 471.5 portion of the tax as paid. 471.6 (c) If the county treasurer determines a refund should be 471.7 paid, or if a refund is ordered by the court, the county 471.8 treasurer of each county that actually received a portion of the 471.9 tax shall immediately pay a proportionate share of three percent 471.10 of the refund using any available county funds. The county 471.11 treasurer of each county that received, or would have received, 471.12 a portion of the tax shall also pay their county's proportionate 471.13 share of the remaining 97 percent of the court-ordered refund on 471.14 or before the 20th day of the following month using solely the 471.15 mortgage registry tax funds that would be paid to the 471.16 commissioner of revenue on that date under section 287.12. If 471.17 the funds on hand under this procedure are insufficient to fully 471.18 fund 97 percent of the court-ordered refund, the county 471.19 treasurer of the county in which the action was brought shall 471.20 file a claim with the commissioner of revenue under section 471.21 16A.48 for the remaining portion of 97 percent of the refund, 471.22 and shall pay over the remaining portion upon receipt of a 471.23 warrant from the state issued pursuant to the claim. 471.24 (d) When any mortgage covers real property located in more 471.25 than one county in this state the total tax must be paid to the 471.26 treasurer of the county where the mortgage is first presented 471.27 for recording, and the payment must be receipted as provided in 471.28 paragraph (a). If the principal debt or obligation secured by 471.29 such a multiple county mortgage exceeds $1,000,000, the nonstate 471.30 portion of the tax must be divided and paid over by the county 471.31 treasurer receiving it, on or before the 20th day of each month 471.32 after receipt, to the county or counties entitled in the ratio 471.33 that the market value of the real property covered by the 471.34 mortgage in each county bears to the market value of all the 471.35 real property in this state described in the mortgage. In 471.36 making the division and payment the county treasurer shall send 472.1 a statement giving the description of the real property 472.2 described in the mortgage and the market value of the part 472.3 located in each county. For this purpose, the treasurer of any 472.4 county may require the treasurer of any other county to certify 472.5 to the former the market valuation of any tract of real property 472.6 in any mortgage. 472.7 (e) The mortgagor must pay the tax imposed by sections 472.8 287.01 to 287.12. The mortgagee may undertake to collect and 472.9 remit the tax on behalf of the mortgagor. If the mortgagee 472.10 collects money from the mortgagor to remit the tax on behalf of 472.11 the mortgagor, the mortgagee has a fiduciary duty to remit the 472.12 tax on behalf of the mortgagor as to the amount of the tax 472.13 collected for that purpose and the mortgagor is relieved of any 472.14 further obligation to pay the tax as to the amount collected by 472.15 the mortgagee for this purpose. 472.16 [EFFECTIVE DATE.] This section is effective for 472.17 overpayments occurring after June 30, 2001, and for documents 472.18 acknowledged and recorded after June 30, 2001. 472.19 Sec. 7. Minnesota Statutes 2000, section 287.13, is 472.20 amended by adding a subdivision to read: 472.21 Subd. 3. [PAYMENT TO MORTGAGEE.] If a mortgagee undertakes 472.22 to collect from the mortgagor the amount of the tax due under 472.23 sections 287.01 to 287.12 as provided in section 287.08, 472.24 paragraph (e), the mortgagor is not subject to the penalties 472.25 under this section and the mortgagee is subject to the 472.26 provisions of this section. 472.27 [EFFECTIVE DATE.] This section is effective for documents 472.28 acknowledged and recorded after June 30, 2001. 472.29 Sec. 8. Minnesota Statutes 2000, section 287.20, 472.30 subdivision 2, is amended to read: 472.31 Subd. 2. [CONSIDERATION.] (a) "Consideration" means 472.32 generally the total monetary value that is given in return for a 472.33 conveyance of real property in this state and includes all 472.34 lump-sum payments, all prior or future installment payments that 472.35 are required under the agreement between the parties, and the 472.36 fair market value of any property taken, or to be taken, in 473.1 exchange. 473.2 (b) Consideration does not include the reasonable and 473.3 lawful amounts of interest paid for the privilege of paying the 473.4 purchase price in installments and the fair market value of any 473.5 items of intangible personal property that are conveyed by the 473.6 taxable instrument. 473.7 (c) Consideration does not include the amount paid for the 473.8 personal property located on the real property being conveyed 473.9 and transferred as a part of the total consideration, except 473.10 that the amount paid for the personal property located on the 473.11 real property being conveyed must be included if the real 473.12 property being conveyed is a one-, two-, or three-unit 473.13 residential structure. 473.14 (d) When a conveyance of real property is made pursuant to 473.15 a contract for deed, the consideration is the price for the real 473.16 property reflected in the contract; except that, subject to the 473.17 limitations under section 287.221,when the conveyance is made473.18by a person engaged in the business of land sales or473.19construction of buildings and other improvements, or by an473.20affiliated personif the contract for deed, or other agreement 473.21 entered into as a condition to the seller executing the 473.22 contract, requires the property to be improved during the term 473.23 of the contract and the price of the real property as reflected 473.24 in the contract does not include the consideration for the 473.25 required improvements, then the consideration is theamount paid473.26for the landprice for the real property as reflected in the 473.27 contract and the consideration for the required improvements 473.28 added during the term of the contract.By January 1, 2001, the473.29commissioner shall adopt rules that define the phrases "engaged473.30in the business of land sales or construction of buildings and473.31other improvements" and "affiliated person" as those phrases are473.32used in this paragraph.473.33 (e) "Total consideration" has the same meaning as 473.34 consideration. 473.35 (f) "Consideration, exclusive of the value of any lien or 473.36 encumbrance remaining at the time of sale" or "net 474.1 consideration" means the amount of consideration as reduced by 474.2 the amount outstanding under any lien that attached to the real 474.3 property prior to the time of sale and that is not released or 474.4 satisfied as a result of the sale. 474.5 [EFFECTIVE DATE.] This section is effective for deeds 474.6 acknowledged and recorded after June 30, 2001. 474.7 Sec. 9. Minnesota Statutes 2000, section 287.20, 474.8 subdivision 9, is amended to read: 474.9 Subd. 9. [REORGANIZATION.] "Reorganization" means the 474.10 transfer of substantially all of the assets of a corporation, a 474.11 limited liability company, or a partnership not in the usual or 474.12 regular course of business if at the time of the transfer the 474.13 transfer qualifies as: (i) a corporate reorganization under 474.14 section 368(a) of the Internal Revenue Code of 1986, as amended 474.15 through December 31, 2000; or (ii) a transfer pursuant to the 474.16 continuation of an existing partnership under section 708 of the 474.17 Internal Revenue Code of 1986, as amended through December 31, 474.18 2000. 474.19 [EFFECTIVE DATE.] This section is effective for taxable 474.20 deeds acknowledged and recorded after June 30, 2001. 474.21 Sec. 10. Minnesota Statutes 2000, section 287.21, 474.22 subdivision 1, is amended to read: 474.23 Subdivision 1. [DETERMINATION OF TAX.] (a) A tax is 474.24 imposed on each deed or instrument by which any real property in 474.25 this state is granted, assigned, transferred, or otherwise 474.26 conveyed. The tax applies against the net consideration. 474.27 (b) The tax is determined in the following manner: (1) 474.28 when transfers are made by instruments pursuant to mergers, 474.29 consolidations, sales, or transfers of substantially all of the 474.30 assets of the entities as defined in section 287.20, subdivision 474.31 9, pursuant to plans of reorganization, the tax is $1.65; (2) 474.32 when there is no consideration or when the consideration, 474.33 exclusive of the value of any lien or encumbrance remaining 474.34 thereon at the time of sale, is $500 or less, the tax is $1.65; 474.35 or (3) when the consideration, exclusive of the value of any 474.36 lien or encumbrance remaining at the time of sale, exceeds $500, 475.1 the tax is$1.65 plus $1.65 for each additional $500 or fraction475.2of that amount.0033 of the net consideration. 475.3 (c) The tax is due at the time a taxable deed or instrument 475.4 is presented for recording. 475.5 [EFFECTIVE DATE.] This section is effective for documents 475.6 acknowledged and recorded after June 30, 2001. 475.7 Sec. 11. Minnesota Statutes 2000, section 287.28, is 475.8 amended to read: 475.9 287.28 [REFUNDS OR REDEMPTION.] 475.10 (a) The county treasurer mayrefund in whole or in part any475.11tax which has been erroneously paid and may allow for orredeem 475.12such of thestamps,issued under the authority of sections 475.13 287.20 to 287.31as maythat have been spoiled, destroyed, or 475.14 rendered useless or unfit for the purpose intended or for which 475.15 the owner may have no use or which through mistake may have been 475.16 improperly or unnecessarily used.Such orderRedemption shall 475.17 be made only upon written application of the taxpayer. 475.18 (b)A person having paid a deed tax amount may seek a475.19refund of the tax, or other appropriate relief,The county 475.20 treasurer may refund any deed tax overpayment if a written 475.21 application by the taxpayer is submitted to the county treasurer 475.22 within three and one-half years from the date of the 475.23 overpayment. If the county has not issued a denial of the 475.24 application, the taxpayer may bring an action in tax court in 475.25 the county in which the tax was paid at any time after the 475.26 expiration of six months from the time that the application was 475.27 submitted. A denial of refund may be appealed within 60 days 475.28 from the date of the denial by commencing an action in tax court 475.29 in the county where the tax was paid, within 60 days of the475.30payment. The action is commenced by serving a petition for 475.31 relief on the county treasurer, and filing a copy with the 475.32 court. The county attorney shall defend the action. The county 475.33 treasurer shall notify the treasurer of each county that has, or 475.34 would receive a portion of the tax as paid. Any refund of deed 475.35 tax which the county treasurer determines should be made, and 475.36 any court ordered refund of deed tax, shall be accomplished 476.1 using the refund procedures in section 287.08. 476.2 [EFFECTIVE DATE.] This section is effective for 476.3 overpayments occurring after June 30, 2001. 476.4 Sec. 12. Minnesota Statutes 2000, section 296A.15, 476.5 subdivision 1, is amended to read: 476.6 Subdivision 1. [MONTHLY GASOLINE REPORT; SHRINKAGE 476.7 ALLOWANCE.] (a) Except as provided in paragraph (e), on or 476.8 before the 23rd day of each month, every person who is required 476.9 to pay a gasoline tax shall file with the commissioner a report, 476.10 in the form and manner prescribed by the commissioner, showing 476.11 the number of gallons of petroleum products received by the 476.12 reporter during the preceding calendar month, and other 476.13 information the commissioner may require. A written report is 476.14 deemed to have been filed as required in this subdivision if 476.15 postmarked on or before the 23rd day of the month in which the 476.16 tax is payable. 476.17 (b) The number of gallons of gasoline must be reported in 476.18 United States standard liquid gallons, 231 cubic inches, except 476.19 that the commissioner may upon written application and for cause 476.20 shown permit the distributor to report the number of gallons of 476.21 gasoline as corrected to a temperature of 60-degrees 476.22 Fahrenheit. If the application is granted, all gasoline covered 476.23 in the application and allowed by the commissioner must continue 476.24 to be reported by the distributor on the adjusted basis for a 476.25 period of one year from the date of the granting of the 476.26 application. The number of gallons of petroleum products other 476.27 than gasoline must be reported as originally invoiced. Each 476.28 report must show separately the number of gallons of aviation 476.29 gasoline received by the reporter during each calendar month. 476.30 (c) Each report must also include the amount of gasoline 476.31 tax on gasoline received by the reporter during the preceding 476.32 month. In computing the tax a deduction ofthree2.5 percent of 476.33 the quantity of gasoline received by a distributor shall be made 476.34 for evaporation and loss. At the time of reporting, the 476.35 reporter shall submit satisfactory evidence that one-third of 476.36 thethree2.5 percent deduction has been credited or paid to 477.1 dealers on quantities sold to them. 477.2 (d) Each report shall contain a confession of judgment for 477.3 the amount of the tax shown due to the extent not timely paid. 477.4 (e) Under certain circumstances and with the approval of 477.5 the commissioner, taxpayers may be allowed to file reports 477.6 annually. 477.7 [EFFECTIVE DATE.] This section is effective for reports due 477.8 on or after July 1, 2001. 477.9 Sec. 13. Minnesota Statutes 2000, section 296A.16, 477.10 subdivision 2, is amended to read: 477.11 Subd. 2. [FUEL USED IN OTHER VEHICLE; CLAIM FOR REFUND.] 477.12 Any person whoshall buybuys anduseuses gasoline for a 477.13 qualifying purpose other than use in motor vehicles, snowmobiles 477.14 except as provided in clause (2), or motorboats, or special fuel 477.15 for a qualifying purpose other than use in licensed motor 477.16 vehicles, and whoshall havepaid the tax directly or indirectly 477.17 through the amount of the tax being included in the price of the 477.18 gasoline or special fuel, or otherwise, shall be reimbursed and 477.19 repaid the amount of the tax paid upon filing with the 477.20 commissioner a claim for refund in the form and manner 477.21 prescribed by the commissioner, and containing the information 477.22 the commissioner shall require. By signing any such claim which 477.23 is false or fraudulent, the applicant shall be subject to the 477.24 penalties provided in this chapter for knowingly making a false 477.25 claim. The claim shall set forth the total amount of the 477.26 gasoline so purchased and used by the applicant other than in 477.27 motor vehicles, or special fuel purchased and used by the 477.28 applicant other than in licensed motor vehicles, and shall state 477.29 when and for what purpose it was used. When a claim contains an 477.30 error in computation or preparation, the commissioner is 477.31 authorized to adjust the claim in accordance with the evidence 477.32 shown on the claim or other information available to the 477.33 commissioner. The commissioner, on being satisfied that the 477.34 claimant is entitled to the payments, shall approve the claim 477.35 and transmit it to the commissioner of finance. The words 477.36 "gasoline" or "special fuel" as used in this subdivision do not 478.1 include aviation gasoline or special fuel for aircraft. 478.2 Gasoline or special fuel bought and used for a "qualifying 478.3 purpose" means: 478.4 (1) Gasoline or special fuel used in carrying on a trade or 478.5 business, used on a farm situated in Minnesota, and used for a 478.6 farming purpose. "Farm" and "farming purpose" have the meanings 478.7 given them in section 6420(c)(2), (3), and (4) of the Internal 478.8 Revenue Code of 1986, as amended through December 31, 1997. 478.9 (2) Gasoline or special fuel used for off-highway business 478.10 use. "Off-highway business use" means any use off the public 478.11 highway by a person in that person's trade, business, or 478.12 activity for the production of income. Off-highway business use 478.13 includes: 478.14 (i) use of a passenger snowmobile off the public highways 478.15 as part of the operations of a resort as defined in section 478.16 157.15, subdivision 11; and 478.17 (ii) use of gasoline or special fuel to operate a power 478.18 takeoff unit on a vehicle, but not including fuel consumed 478.19 during idling time. 478.20 Off-highway business use does not include: 478.21 (i) use as a fuel in a motor vehicle which, at the time of 478.22 use, is registered or is required to be registered for highway 478.23 use under the laws of any state or foreign country; or 478.24 (ii) use of a licensed motor vehicle fuel tank in lieu of a 478.25 separate storage tank for storing fuel to be used for a 478.26 qualifying purpose, as defined in this section. Fuel purchased 478.27 to be used for a qualifying purpose cannot be placed in the fuel 478.28 tank of a licensed motor vehicle and must be stored in a 478.29 separate supply tank. 478.30 (3) Gasoline or special fuel placed in the fuel tanks of 478.31 new motor vehicles, manufactured in Minnesota, and shipped by 478.32 interstate carrier to destinations in other states or foreign 478.33 countries. 478.34By July 1, 1998, the commissioner shall adopt rules that478.35determine the rates and percentages necessary to develop478.36formulas for calculating the refund under clause (2), item (ii).479.1 [EFFECTIVE DATE.] This section is effective the day 479.2 following final enactment. 479.3 Sec. 14. [296A.201] [ASSESSMENTS.] 479.4 Subdivision 1. [GENERAL RULE.] The commissioner may make 479.5 determinations, corrections, and assessments with respect to any 479.6 tax or fee under this chapter, including interest, additions to 479.7 taxes and fees, and assessable penalties. 479.8 Subd. 2. [COMMISSIONER FILED RETURNS.] If a taxpayer fails 479.9 to file a required return, the commissioner, from information in 479.10 the commissioner's possession or obtainable by the commissioner, 479.11 may make a return for the taxpayer. The return is prima facie 479.12 correct and valid. The commissioner may use statistical or 479.13 other sampling techniques consistent with generally accepted 479.14 auditing standards in examining returns or records and making 479.15 assessments. 479.16 Subd. 3. [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 479.17 TAXPAYER.] (a) If a return has been filed and the commissioner 479.18 determines that the tax or fee disclosed by the return is 479.19 different than the tax or fee determined by the examination, the 479.20 commissioner shall send an order of assessment to the taxpayer. 479.21 If no return has been filed, the commissioner may make a return 479.22 for the taxpayer under subdivision 2 or may send an order of 479.23 assessment under this subdivision. The order must explain the 479.24 basis for the assessment and must explain the taxpayer's appeal 479.25 rights. An order of assessment is final when made but may be 479.26 reconsidered by the commissioner under section 296A.25. 479.27 (b) Penalties under this chapter are not imposed and no 479.28 collection action can be taken, including the filing of liens 479.29 under section 270.69, if the amount shown on the order is paid 479.30 to the commissioner: 479.31 (1) within 60 days after notice of the amount and demand 479.32 for its payment have been mailed to the taxpayer by the 479.33 commissioner; or 479.34 (2) if an administrative appeal is filed under this 479.35 chapter, or a tax court appeal is filed under chapter 271, 479.36 within 60 days following final determination of the appeal if 480.1 the appeal is based upon a constitutional challenge to the tax 480.2 or fee, and if not, when the decision of the tax court is made. 480.3 Subd. 4. [ERRONEOUS REFUNDS.] An erroneous refund is 480.4 considered an underpayment of tax or fee on the date made. An 480.5 assessment of a deficiency arising out of an erroneous refund 480.6 may be made at any time within two years from the making of the 480.7 refund. If part of the refund was induced by fraud or 480.8 misrepresentation of a material fact, the assessment may be made 480.9 at any time. 480.10 Subd. 5. [ASSESSMENT PRESUMED VALID.] A return or 480.11 assessment of tax or fee made by the commissioner is prima facie 480.12 correct and valid. The taxpayer has the burden of establishing 480.13 its incorrectness or invalidity in any related action or 480.14 proceeding. 480.15 Subd. 6. [AGGREGATE REFUND OR ASSESSMENT.] The 480.16 commissioner, on examining returns of a taxpayer for more than 480.17 one year or period, may issue one order covering the period 480.18 under examination that reflects the aggregate refund or 480.19 additional tax or fee due. 480.20 Subd. 7. [SUFFICIENCY OF NOTICE.] An order of assessment, 480.21 sent postage prepaid by United States mail to the taxpayer at 480.22 the taxpayer's last known address, is sufficient even if the 480.23 taxpayer is deceased or is under a legal disability, or, in the 480.24 case of a corporation, even if the corporation has terminated 480.25 its existence, unless the department has been provided with a 480.26 new address by a party authorized to receive notices of 480.27 assessment. 480.28 [EFFECTIVE DATE.] This section is effective the day 480.29 following final enactment. 480.30 Sec. 15. Minnesota Statutes 2000, section 296A.21, 480.31 subdivision 1, is amended to read: 480.32 Subdivision 1. [GENERALRULERULES.] (a) The commissioner 480.33 shall make determinations, corrections,andassessments, and 480.34 refunds with respect to taxes and fees under this chapter, 480.35 including interest, additions to taxes, and assessable 480.36 penalties. Except as otherwise provided in this section, the 481.1 amount of taxes assessable must be assessed within 3-1/2 years 481.2 after the date the return is filed. 481.3 (b) A claim for a refund of an overpayment of state tax or 481.4 fees must be filed within 3-1/2 years from the date prescribed 481.5 for filing the return, plus any extension of time granted for 481.6 filing the return, but only if filed within the extended time; 481.7 or the claim must be filed within one year from the date of an 481.8 order assessing tax or fees, or from the date of a return filed 481.9 by the commissioner, upon payment in full of the tax, fees, 481.10 penalties, and interest shown on the order or return, whichever 481.11 period expires later. 481.12 [EFFECTIVE DATE.] This section is effective the day 481.13 following final enactment. 481.14 Sec. 16. Minnesota Statutes 2000, section 296A.21, 481.15 subdivision 4, is amended to read: 481.16 Subd. 4. [TIME LIMIT FORREPAYMENTCERTAIN REFUNDS.]No481.17repaymentNotwithstanding subdivision 1, paragraph (b), no 481.18 refund under section 296A.16, subdivision 2, shall be made 481.19 unless the claim for refund and invoiceshall beare filed with 481.20 the commissioner within one year from the date of purchase.The481.21postmark on the envelope in which a written claim is mailed481.22shall determine its date of filing.481.23 [EFFECTIVE DATE.] This section is effective the day 481.24 following final enactment. 481.25 Sec. 17. Minnesota Statutes 2000, section 297E.02, 481.26 subdivision 1, is amended to read: 481.27 Subdivision 1. [IMPOSITION.] A tax is imposed on all 481.28 lawful gambling other than (1) pull-tab deals or games; (2) 481.29 tipboard deals or games; and (3) items listed in section 481.30 297E.01, subdivision 8, clauses (4) and (5), at the rate of8.5481.31 7.5 percent on the gross receipts as defined in section 297E.01, 481.32 subdivision 8, less prizes actually paid. The tax imposed by 481.33 this subdivision is in lieu of the tax imposed by section 481.34 297A.02 and all local taxes and license fees except a fee 481.35 authorized under section 349.16, subdivision 8, or a tax 481.36 authorized under subdivision 5. 482.1 The tax imposed under this subdivision is payable by the 482.2 organization or party conducting, directly or indirectly, the 482.3 gambling. 482.4 [EFFECTIVE DATE.] This section is effective July 1, 2001. 482.5 Sec. 18. Minnesota Statutes 2000, section 297E.02, 482.6 subdivision 4, is amended to read: 482.7 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 482.8 on the sale of each deal of pull-tabs and tipboards sold by a 482.9 distributor. The rate of the tax is1.71.5 percent of the 482.10 ideal gross of the pull-tab or tipboard deal. The sales tax 482.11 imposed by chapter 297A on the sale of the pull-tabs and 482.12 tipboards by the distributor is imposed on the retail sales 482.13 price less the tax imposed by this subdivision. The retail sale 482.14 of pull-tabs or tipboards by the organization is exempt from 482.15 taxes imposed by chapter 297A and is exempt from all local taxes 482.16 and license fees except a fee authorized under section 349.16, 482.17 subdivision 8. 482.18 (b) The liability for the tax imposed by this section is 482.19 incurred when the pull-tabs and tipboards are delivered by the 482.20 distributor to the customer or to a common or contract carrier 482.21 for delivery to the customer, or when received by the customer's 482.22 authorized representative at the distributor's place of 482.23 business, regardless of the distributor's method of accounting 482.24 or the terms of the sale. 482.25 The tax imposed by this subdivision is imposed on all sales 482.26 of pull-tabs and tipboards, except the following: 482.27 (1) sales to the governing body of an Indian tribal 482.28 organization for use on an Indian reservation; 482.29 (2) sales to distributors licensed under the laws of 482.30 another state or of a province of Canada, as long as all 482.31 statutory and regulatory requirements are met in the other state 482.32 or province; 482.33 (3) sales of promotional tickets as defined in section 482.34 349.12; and 482.35 (4) pull-tabs and tipboards sold to an organization that 482.36 sells pull-tabs and tipboards under the exemption from licensing 483.1 in section 349.166, subdivision 2. A distributor shall require 483.2 an organization conducting exempt gambling to show proof of its 483.3 exempt status before making a tax-exempt sale of pull-tabs or 483.4 tipboards to the organization. A distributor shall identify, on 483.5 all reports submitted to the commissioner, all sales of 483.6 pull-tabs and tipboards that are exempt from tax under this 483.7 subdivision. 483.8 (c) A distributor having a liability of $120,000 or more 483.9 during a fiscal year ending June 30 must remit all liabilities 483.10 in the subsequent calendar year by a funds transfer as defined 483.11 in section 336.4A-104, paragraph (a). The funds transfer 483.12 payment date, as defined in section 336.4A-401, must be on or 483.13 before the date the tax is due. If the date the tax is due is 483.14 not a funds transfer business day, as defined in section 483.15 336.4A-105, paragraph (a), clause (4), the payment date must be 483.16 on or before the funds transfer business day next following the 483.17 date the tax is due. 483.18 (d) Any customer who purchases deals of pull-tabs or 483.19 tipboards from a distributor may file an annual claim for a 483.20 refund or credit of taxes paid pursuant to this subdivision for 483.21 unsold pull-tab and tipboard tickets. The claim must be filed 483.22 with the commissioner on a form prescribed by the commissioner 483.23 by March 20 of the year following the calendar year for which 483.24 the refund is claimed. The refund must be filed as part of the 483.25 customer's February monthly return. The refund or credit is 483.26 equal to1.71.5 percent of the face value of the unsold 483.27 pull-tab or tipboard tickets, provided that the refund or credit 483.28 will be1.751.6 percent of the face value of the unsold 483.29 pull-tab or tipboard tickets for claims for a refund or credit 483.30 of taxes filed on the February20012002 monthly return. The 483.31 refund claimed will be applied as a credit against tax owing 483.32 under this chapter on the February monthly return. If the 483.33 refund claimed exceeds the tax owing on the February monthly 483.34 return, that amount will be refunded. The amount refunded will 483.35 bear interest pursuant to section 270.76 from 90 days after the 483.36 claim is filed. 484.1 [EFFECTIVE DATE.] This section is effective July 1, 2001. 484.2 Sec. 19. Minnesota Statutes 2000, section 297E.02, 484.3 subdivision 6, is amended to read: 484.4 Subd. 6. [COMBINED RECEIPTS TAX.] In addition to the taxes 484.5 imposed under subdivisions 1 and 4, a tax is imposed on the 484.6 combined receipts of the organization. As used in this section, 484.7 "combined receipts" is the sum of the organization's gross 484.8 receipts from lawful gambling less gross receipts directly 484.9 derived from the conduct of bingo, raffles, and paddlewheels, as 484.10 defined in section 297E.01, subdivision 8, for the fiscal year. 484.11 The combined receipts of an organization are subject to a tax 484.12 computed according to the following schedule: 484.13 If the combined receipts for the The tax is: 484.14 fiscal year are: 484.15 Not over $500,000 zero 484.16 Over $500,000, but not over 484.17 $700,0001.71.5 percent of the 484.18 amount over $500,000, but 484.19 not over $700,000 484.20 Over $700,000, but not over 484.21 $900,000$3,400$3,000 plus3.43.0 484.22 percent of the amount 484.23 over $700,000, but 484.24 not over $900,000 484.25 Over $900,000$10,200$9,000 plus5.1484.26 4.5 percent of the amount 484.27 over $900,000 484.28 [EFFECTIVE DATE.] This section is effective July 1, 2001. 484.29 Sec. 20. Minnesota Statutes 2000, section 297F.16, 484.30 subdivision 4, is amended to read: 484.31 Subd. 4. [ERRONEOUS REFUNDSOR CREDITS.] An erroneous 484.32 refundor creditis considered an underpayment of tax on the 484.33 date made. An assessment of a deficiency arising out of an 484.34 erroneous refundor creditmust be made within3-1/2 years from484.35the date prescribed for filing the return, plus any extension of484.36time granted for filing the return, but only if filed within the485.1extended time, or two years from the time the tax is paid in485.2full, whichever period expires latertwo years from the making 485.3 of the refund. If part of the refund was induced by fraud or 485.4 misrepresentation of a material fact, the assessment may be made 485.5 at any time. 485.6 [EFFECTIVE DATE.] This section is effective the day 485.7 following final enactment. 485.8 Sec. 21. Minnesota Statutes 2000, section 297F.20, 485.9 subdivision 3, is amended to read: 485.10 Subd. 3. [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 485.11 person who files with the commissioner a return, report, or 485.12 other document, or who maintains or provides invoices subject to 485.13 review by the commissioner under this chapter, known by the 485.14 person to be fraudulent or false concerning a material matter, 485.15 is guilty of a felony. 485.16 (b) A person who knowingly aids or assists in, or advises 485.17 in the preparation or presentation of a return, report, invoice, 485.18 or other document that is fraudulent or false concerning a 485.19 material matter, whether or not the falsity or fraud is 485.20 committed with the knowledge or consent of the person authorized 485.21 or required to present the return, report, invoice, or other 485.22 document, is guilty of a felony. 485.23 [EFFECTIVE DATE.] This section is effective for crimes 485.24 occurring on or after July 1, 2001. 485.25 Sec. 22. Minnesota Statutes 2000, section 297G.15, 485.26 subdivision 4, is amended to read: 485.27 Subd. 4. [ERRONEOUS REFUNDSOR CREDITS.] An erroneous 485.28 refundor creditis considered an underpayment of tax on the 485.29 date made. An assessment of a deficiency arising out of an 485.30 erroneous refundor creditmust be made within3-1/2 years from485.31the date prescribed for filing the return, plus any extension of485.32time granted for filing the return, but only if filed within the485.33extended time, or two years from the time the tax is paid in485.34full, whichever period expires latertwo years from the making 485.35 of the refund. If part of the refund was induced by fraud or 485.36 misrepresentation of a material fact, the assessment may be made 486.1 at any time. 486.2 [EFFECTIVE DATE.] This section is effective the day 486.3 following final enactment. 486.4 Sec. 23. Minnesota Statutes 2000, section 297G.16, 486.5 subdivision 5, is amended to read: 486.6 Subd. 5. [TIME LIMIT FOR REFUNDS.] Unless otherwise 486.7 provided in this chapter, a claim for a refund of an overpayment 486.8 of tax must be filed within 3-1/2 years from the date prescribed 486.9 for filing the return, plus any extension of time granted for 486.10 filing the return, but only if filed within the extended time, 486.11or two years from the time the tax is paid in full, whichever486.12period expires later. Claimants under this section are subject486.13to the notice requirements of section 289A.38, subdivision 7or 486.14 within one year from the date of an order assessing tax or from 486.15 the date of a return filed by the commissioner, upon payment in 486.16 full of the tax, penalties, and interest shown on the order or 486.17 return made by the commissioner, whichever period expires later. 486.18 [EFFECTIVE DATE.] This section is effective for returns 486.19 becoming due or orders assessing tax issued on or after the day 486.20 following final enactment. 486.21 Sec. 24. Minnesota Statutes 2000, section 297G.16, 486.22 subdivision 7, is amended to read: 486.23 Subd. 7. [TIME LIMIT FOR A BAD DEBT DEDUCTION.] Claims for 486.24 refund must be filed with the commissioner within one year of 486.25 the filing of the taxpayer's income tax return containing the 486.26 bad debt deduction that is being claimed. Claimants under this 486.27 subdivision are subject to the notice requirements of section 486.28 289A.38, subdivision 7. 486.29 [EFFECTIVE DATE.] This section is effective the day 486.30 following final enactment. 486.31 Sec. 25. Minnesota Statutes 2000, section 297H.02, 486.32 subdivision 2, is amended to read: 486.33 Subd. 2. [RATES.] The rate of tax under this section 486.34 is9.758.8 percent. 486.35 [EFFECTIVE DATE.] This section is effective January 1, 486.36 2002, and thereafter. 487.1 Sec. 26. Minnesota Statutes 2000, section 297H.03, 487.2 subdivision 2, is amended to read: 487.3 Subd. 2. [RATE.] The rate of the tax under this section is 487.41715.4 percent. 487.5 [EFFECTIVE DATE.] This section is effective January 1, 487.6 2002, and thereafter. 487.7 Sec. 27. Minnesota Statutes 2000, section 297H.04, 487.8 subdivision 2, is amended to read: 487.9 Subd. 2. [RATE.] (a) Commercial generators that generate 487.10 non-mixed-municipal solid waste shall pay a solid waste 487.11 management tax of6054 cents per noncompacted cubic yard of 487.12 periodic waste collection capacity purchased by the generator, 487.13 based on the size of the container for the non-mixed-municipal 487.14 solid waste, the actual volume, or the weight-to-volume 487.15 conversion schedule in paragraph (c). However, the tax must be 487.16 calculated by the waste management service provider using the 487.17 same method for calculating the waste management service fee so 487.18 that both are calculated according to container capacity, actual 487.19 volume, or weight. 487.20 (b) Notwithstanding section 297H.02, a residential 487.21 generator that generates non-mixed-municipal solid waste shall 487.22 pay a solid waste management tax in the same manner as provided 487.23 in paragraph (a). 487.24 (c) The weight-to-volume conversion schedule for: 487.25 (1) construction debris as defined in section 115A.03, 487.26 subdivision 7, is one ton equals 3.33 cubic yards, or$2$1.80 487.27 per ton; 487.28 (2) industrial waste as defined in section 115A.03, 487.29 subdivision 13a, is equal to6054 cents per cubic yard. The 487.30 commissioner of revenue after consultation with the commissioner 487.31 of the pollution control agency, shall determine, and may 487.32 publish by notice, a conversion schedule for various industrial 487.33 wastes; and 487.34 (3) infectious waste as defined in section 116.76, 487.35 subdivision 12, and pathological waste as defined in section 487.36 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 488.16054 cents per 150 pounds. 488.2 [EFFECTIVE DATE.] This section is effective January 1, 488.3 2002, and thereafter. 488.4 Sec. 28. Minnesota Statutes 2000, section 297H.04, is 488.5 amended by adding a subdivision to read: 488.6 Subd. 4. [DISPOSAL WITH MIXED WASTE; RATE.] Nonmixed 488.7 municipal solid waste that is separately collected or processed, 488.8 but is disposed of within the permitted boundaries of a land 488.9 disposal facility that is also actively accepting and disposing 488.10 of mixed municipal solid waste, shall be taxed at the rate for 488.11 mixed municipal solid waste, unless the facility owner and 488.12 operator can demonstrate a physical separation between the mixed 488.13 municipal solid waste disposal area and nonmixed municipal solid 488.14 waste disposal area, such that any air or liquid emissions being 488.15 collected from the disposal areas are collected separately. 488.16 [EFFECTIVE DATE.] This section is effective for waste 488.17 disposed of after June 30, 2001. 488.18 Sec. 29. Minnesota Statutes 2000, section 297H.05, is 488.19 amended to read: 488.20 297H.05 [SELF-HAULERS.] 488.21 (a) A self-hauler of mixed municipal solid waste shall pay 488.22 the tax to the operator of the waste management facility to 488.23 which the waste is delivered at the rate imposed under section 488.24 297H.03, based on the sales price of the waste management 488.25 services. 488.26 (b) A self-hauler of non-mixed-municipal solid waste shall 488.27 pay the tax to the operator of the waste management facility to 488.28 which the waste is delivered at the rate imposed under section 488.29 297H.04. 488.30 (c) The tax imposed on the self-hauler of 488.31 non-mixed-municipal solid waste may be based either on the 488.32 capacity of the container, the actual volume, or the 488.33 weight-to-volume conversion schedule in paragraph (d). However, 488.34 the tax must be calculated by the operator using the same method 488.35 for calculating the tipping fee so that both are calculated 488.36 according to container capacity, actual volume, or weight. 489.1 (d) The weight-to-volume conversion schedule for: 489.2 (1) construction debris as defined in section 115A.03, 489.3 subdivision 7, is one ton equals 3.33 cubic yards, or$2$1.80 489.4 per ton; 489.5 (2) industrial waste as defined in section 115A.03, 489.6 subdivision 13a, is equal to6054 cents per cubic yard. The 489.7 commissioner of revenue, after consultation with the 489.8 commissioner of the pollution control agency, shall determine, 489.9 and may publish by notice, a conversion schedule for various 489.10 industrial wastes; and 489.11 (3) infectious waste as defined in section 116.76, 489.12 subdivision 12, and pathological waste as defined in section 489.13 116.76, subdivision 14, is 150 pounds equals one cubic yard, or 489.146054 cents per 150 pounds. 489.15 (e) For mixed municipal solid waste the tax is imposed upon 489.16 the difference between the market price and the tip fee at a 489.17 processing or disposal facility if the tip fee is less than the 489.18 market price and the political subdivision subsidizes the cost 489.19 of service at the facility. The political subdivision is liable 489.20 for the tax. 489.21 [EFFECTIVE DATE.] This section is effective January 1, 489.22 2002, and thereafter. 489.23 Sec. 30. Minnesota Statutes 2000, section 297H.13, is 489.24 amended by adding a subdivision to read: 489.25 Subd. 6. [NOTICE OF RATE CHANGE.] Waste management service 489.26 providers shall provide notice to each customer of the rate 489.27 decreases provided in this section no later than 90 days after 489.28 the rate decreases take effect. 489.29 [EFFECTIVE DATE.] This section is effective January 1, 489.30 2002, and thereafter. 489.31 Sec. 31. Minnesota Statutes 2000, section 297H.06, is 489.32 amended by adding a subdivision to read: 489.33 Subd. 3. [CONSTRUCTION DEBRIS IN A DISASTER AREA.] The tax 489.34 is not imposed on construction debris generated from repair and 489.35 demolition activities caused by a disaster occurring in a 489.36 presidentially declared disaster area, provided that the 490.1 construction debris is disposed of in a waste management 490.2 facility designated by the commissioner of the pollution control 490.3 agency. To be exempt, the debris must be disposed of within 18 490.4 months following the presidential declaration. 490.5 [EFFECTIVE DATE.] This section is effective for disaster 490.6 areas declarations made after April 15, 2001. 490.7 Sec. 32. Minnesota Statutes 2000, section 297I.05, is 490.8 amended by adding a subdivision to read: 490.9 Subd. 14. [LIFE INSURANCE.] A tax is imposed on every 490.10 domestic and foreign insurance company equal to 1.75 percent of 490.11 gross premiums less return premiums on all direct business 490.12 received by the insurer or agents of the insurer in Minnesota 490.13 for life insurance, in cash or otherwise, during the year. 490.14 [EFFECTIVE DATE.] This section is effective for premiums 490.15 received after June 30, 2001. 490.16 Sec. 33. Minnesota Statutes 2000, section 297I.40, 490.17 subdivision 1, is amended to read: 490.18 Subdivision 1. [REQUIREMENT TO PAY.] On or beforeApril 1490.19 March 15, June115, September 15, and December1 of each year490.20 15 of the current year, every taxpayer subject to tax under 490.21 section 297I.05, subdivisions 1 to 6, and 12, paragraphs (a), 490.22 clauses (1) to (5), (b), and (e), must pay to the commissioner 490.23 an installment equal toone-thirdone-fourth of the insurer's 490.24 total estimated tax for the current year. 490.25 [EFFECTIVE DATE.] This section is effective for payments 490.26 required to be made after December 31, 2001. 490.27 Sec. 34. Minnesota Statutes 2000, section 297I.40, 490.28 subdivision 2, is amended to read: 490.29 Subd. 2. [AMOUNT OF REQUIRED INSTALLMENT.] The amount of 490.30 any required installment isone-thirdone-fourth of the lesser 490.31 of 490.32 (1) 80 percent of the tax imposed for the current year, or 490.33 (2) 100 percent of the tax paid for the previous year. 490.34 [EFFECTIVE DATE.] This section is effective for payments 490.35 required to be made after December 31, 2001. 490.36 Sec. 35. Minnesota Statutes 2000, section 297I.40, 491.1 subdivision 7, is amended to read: 491.2 Subd. 7. [APRILMARCH ESTIMATED PAYMENT.] A taxpayer who 491.3 claims a refund of an overpayment on an original return may 491.4 elect to have all or any portion of the overpayment applied as a 491.5 credit to theApril 1March 15 estimated tax payment for the 491.6 year following the year of the return. The credit is considered 491.7 applied onApril 1March 15. Notwithstanding section 297I.80, 491.8 the amount credited does not bear interest. 491.9 [EFFECTIVE DATE.] This section is effective for payments 491.10 required to be made after December 31, 2001. 491.11 Sec. 36. Minnesota Statutes 2000, section 349.19, 491.12 subdivision 2a, is amended to read: 491.13 Subd. 2a. [TAX REFUND OR CREDIT.] (a) Each organization 491.14 that receives a refund or credit under section 297E.02, 491.15 subdivision 4, paragraph (d), must within four business days of 491.16 receiving a refund under that paragraph deposit the refund in 491.17 the organization's gambling account. 491.18 (b)In addition, each organization must annually calculate491.195.26 percent of the sum of the amount of tax it paid under:491.20(1) section 297E.02, subdivision 1, on gross receipts, less491.21prizes paid, after August 1, 1998; and491.22(2) section 297E.02, subdivision 6, on combined receipts491.23received after August 1, 1998.491.24(c) The calculated amount must be reported to the board on491.25a form prescribed by the board by March 20 of the year after the491.26calendar year for which the calculated amount is made. The491.27calculated amount must be filed as part of the organization's491.28report of expenditure of profits from lawful gambling required491.29under section 349.19, subdivision 5.491.30(d)The organization may expend the tax refund or credit 491.31 issued under section 297E.02, subdivision 4, paragraph (d),plus491.32the amount calculated under paragraph (b),only for lawful 491.33 purposes, other than lawful purposes described in section 491.34 349.12, subdivision 25, paragraph (a), clauses (8), (9), and 491.35 (12). Amounts subject to this paragraph must be spent for 491.36 qualifying lawful purposes no later than one year after the 492.1 refund or credit is receivedor the tax savings calculated under492.2paragraph (b). 492.3 Sec. 37. Minnesota Statutes 2000, section 461.12, is 492.4 amended by adding a subdivision to read: 492.5 Subd. 8. [NOTICE TO COMMISSIONER.] The licensing authority 492.6 under this section shall, within 30 days of the issuance of a 492.7 license, inform the commissioner of revenue of the licensee's 492.8 name, address, trade name, and the effective and expiration 492.9 dates of the license. The commissioner of revenue must also be 492.10 informed of a license renewal, transfer, cancellation, 492.11 suspension, or revocation during the license period. 492.12 [EFFECTIVE DATE.] This section is effective for licenses 492.13 issued, renewed, transferred, canceled, suspended, or revoked on 492.14 or after January 1, 2002. 492.15 Sec. 38. [REPEALER.] 492.16 (a) Minnesota Statutes 2000, section 296A.16, subdivision 492.17 6, is repealed effective the day following final enactment. 492.18 (b) Minnesota Statutes 2000, sections 297I.05, subdivision 492.19 8; and 297I.30, subdivision 3, are repealed effective for 492.20 calendar years beginning after December 31, 1999. 492.21 (c) Minnesota Rules, parts 8120.0200; 8120.0500; 8120.0700; 492.22 8120.0900; 8120.1300; 8120.1600; 8120.2000; 8120.2100; 492.23 8120.2200; 8120.2300; 8120.2500; 8120.2700; 8120.2800; 492.24 8120.3000; 8120.3200; 8120.4300; 8120.4400; 8120.4500; 492.25 8120.4600; 8120.4900; 8120.5000; 8120.5100; and 8120.5300, are 492.26 repealed effective the day following final enactment. 492.27 ARTICLE 16 492.28 MINERALS TAXES 492.29 Section 1. Minnesota Statutes 2000, section 273.1104, 492.30 subdivision 2, is amended to read: 492.31 Subd. 2. [NOTICE OF MARKET VALUE.] On or before May 1 in 492.32 each year, the commissioner shall send to each person subject to 492.33 the tax on unmined iron ores and to each taxing district 492.34 affected, a notice of the market value of the unmined ores as 492.35 determined by the commissionerprior to adjustment under492.36subdivision 1. Said notice shall be sent by mail directed to 493.1 such person at the address given in the report filed and the 493.2 assessor of such taxing district, but the validity of the tax 493.3 shall not be affected by the failure of the commissioner of 493.4 revenue to mail such notice or the failure of the person subject 493.5 to the tax to receive it. 493.6 On the first secular day following May 20, the commissioner 493.7 of revenue shall hold a hearing which may be adjourned from day 493.8 to day. All relevant and material evidence having probative 493.9 value with respect to the issues shall be submitted at the 493.10 hearing and such hearing shall not be a "contested case" within 493.11 the meaning of section 14.02, subdivision 3. Every person 493.12 subject to such tax may at such hearing present evidence and 493.13 argument on any matter bearing upon the validity or correctness 493.14 of the tax determined to be due, and the commissioner of revenue 493.15 shall review the determination of such tax. 493.16 [EFFECTIVE DATE.] This section is effective the day 493.17 following final enactment. 493.18 Sec. 2. Minnesota Statutes 2000, section 298.01, 493.19 subdivision 3, is amended to read: 493.20 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person 493.21 engaged in the business of mining or producing ores in this 493.22 state, except iron ore or taconite concentrates, shall pay an 493.23 occupation tax to the state of Minnesota as provided in this 493.24 subdivision. The tax is determined in the same manner as the 493.25 tax imposed by section 290.02, except that sections 290.05, 493.26 subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 493.27 do not apply, and except that the tax rate is 1.25 percent of a 493.28 person's taxable income. The tax is in addition to all other 493.29 taxes. 493.30 [EFFECTIVE DATE.] This section is effective for taxes 493.31 payable May 1, 2002, and thereafter. 493.32 Sec. 3. Minnesota Statutes 2000, section 298.01, 493.33 subdivision 3a, is amended to read: 493.34 Subd. 3a. [GROSS INCOME.] (a) For purposes of determining 493.35 a person's taxable income under subdivision 3, gross income is 493.36 determined by the amount of gross proceeds from mining in this 494.1 state under section 298.016 and includes any gain or loss 494.2 recognized from the sale or disposition of assets used in the 494.3 business in this state. 494.4 (b) In applying section 290.191, subdivision 5, all 494.5 transfers of ores are deemed to be salesoutsideinside this 494.6 stateif the ores are transported out of this state after the494.7ores have been converted to a marketable quality. 494.8 [EFFECTIVE DATE.] This section is effective for taxes 494.9 payable May 1, 2002, and thereafter. 494.10 Sec. 4. Minnesota Statutes 2000, section 298.01, 494.11 subdivision 4, is amended to read: 494.12 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE 494.13 CONCENTRATES.] A person engaged in the business of mining or 494.14 producing of iron ore, taconite concentrates or direct reduced 494.15 ore in this state shall pay an occupation tax to the state of 494.16 Minnesota. The tax is determined in the same manner as the tax 494.17 imposed by section 290.02, except that sections 290.05, 494.18 subdivision 1, clause (a), 290.0921, and 290.17, subdivision 4, 494.19 do not apply, and except that the tax rate is 1.25 percent of a 494.20 person's taxable income. The tax is in addition to all other 494.21 taxes. 494.22 [EFFECTIVE DATE.] This section is effective for taxes 494.23 payable May 1, 2002, and thereafter. 494.24 Sec. 5. Minnesota Statutes 2000, section 298.01, 494.25 subdivision 4a, is amended to read: 494.26 Subd. 4a. [GROSS INCOME.] (a) For purposes of determining 494.27 a person's taxable income under subdivision 4, gross income is 494.28 determined by the mine value of the ore mined in Minnesota and 494.29 includes any gain or loss recognized from the sale or 494.30 disposition of assets used in the business in this state. 494.31 (b) Mine value is the value, or selling price, of iron ore 494.32 or taconite concentrates, f.o.b. mine. The mine value is 494.33 calculated by multiplying the iron unit price for the period, as 494.34 determined by the commissioner, by the tons produced and the 494.35 weighted average analysis. 494.36 (c) In applying section 290.191, subdivision 5, all 495.1 transfers of iron ore and taconite concentrates are deemed to be 495.2 salesoutsideinside this stateif the iron ore or taconite495.3concentrates are transported out of this state after the raw495.4iron ore and taconite concentrates have been converted to a495.5marketable quality. 495.6 [EFFECTIVE DATE.] This section is effective for taxes 495.7 payable May 1, 2002, and thereafter. 495.8 Sec. 6. Minnesota Statutes 2000, section 298.22, 495.9 subdivision 2, is amended to read: 495.10 Subd. 2. [IRON RANGE RESOURCES AND REHABILITATION BOARD.] 495.11 There is hereby created the iron range resources and 495.12 rehabilitation board, consisting of 13 members, five of whom are 495.13 state senators appointed by the subcommittee on committees of 495.14 the rules committee of the senate, and five of whom are 495.15 representatives, appointed by the speaker of the house of 495.16 representatives. The remaining members shall be appointed one 495.17 each by the senate majority leader, the speaker of the house of 495.18 representatives, and the governor and must be nonlegislators who 495.19 reside in a tax relief area as defined in section 273.134. The 495.20 members shall be appointed in January of every odd-numbered 495.21 year, except that the initial nonlegislator members shall be 495.22 appointed by July 1, 1999, and shall serve until January of the 495.23 next odd-numbered year. Vacancies on the board shall be filled 495.24 in the same manner as the original members were chosen. At 495.25 least a majority of the legislative members of the board shall 495.26 be elected from state senatorial or legislative districts in 495.27 which over 50 percent of the residents reside within a tax 495.28 relief area as defined in section 273.134. All expenditures and 495.29 projects made by the commissioner of iron range resources and 495.30 rehabilitation shall be consistent with the priorities 495.31 established in subdivision 8 and shall first be submitted to the 495.32 iron range resources and rehabilitation board for approval by a 495.33 majority of the board of expenditures and projects for 495.34 rehabilitation purposes as provided by this section, and the 495.35 method, manner, and time of payment of all funds proposed to be 495.36 disbursed shall be first approved or disapproved by the board. 496.1 The board shall biennially make its report to the governor and 496.2 the legislature on or before November 15 of each even-numbered 496.3 year. The expenses of the board shall be paid by the state from 496.4 the funds raised pursuant to this section. 496.5 [EFFECTIVE DATE.] This section is effective the day 496.6 following final enactment. 496.7 Sec. 7. Minnesota Statutes 2000, section 298.22, is 496.8 amended by adding a subdivision to read: 496.9 Subd. 8. [SPENDING PRIORITY.] In making or approving any 496.10 expenditures on programs or projects, the commissioner and the 496.11 board shall give the highest priority to programs and projects 496.12 that target relief to those areas of the taconite tax relief 496.13 area defined in section 273.134 that have the largest 496.14 percentages of job losses and population losses directly 496.15 attributable to the economic downturn in the taconite industry 496.16 since the 1980's. The commissioner and the board shall compare 496.17 the 1980 population and employment figures with the 2000 496.18 population and employment figures, and shall specifically 496.19 consider the job losses in 2000 and 2001 resulting from the 496.20 closure of LTV Steel Mining Company, in making or approving 496.21 expenditures consistent with this subdivision, as well as the 496.22 areas of residence of persons who suffered job loss for which 496.23 relief is to be targeted under this subdivision. This 496.24 subdivision supersedes any other conflicting provisions of law. 496.25 [EFFECTIVE DATE.] This section is effective the day 496.26 following final enactment. 496.27 Sec. 8. Minnesota Statutes 2000, section 298.225, 496.28 subdivision 1, is amended to read: 496.29 Subdivision 1. (a) The distribution of the taconite 496.30 production tax as provided in section 298.28, subdivisions23 496.31 to 5, 6, paragraph (b), 7, and 8, shall equal the lesser of the 496.32 following amounts: 496.33 (1) the amount distributed pursuant to this section and 496.34 section 298.28, with respect to 1983 production if the 496.35 production for the year prior to the distribution year is no 496.36 less than 42,000,000 taxable tons. If the production is less 497.1 than 42,000,000 taxable tons, the amount of the distributions 497.2 shall be reduced proportionately at the rate of two percent for 497.3 each 1,000,000 tons, or part of 1,000,000 tons by which the 497.4 production is less than 42,000,000 tons; or 497.5 (2)(i) for the distributions made pursuant to section 497.6 298.28, subdivisions 4, paragraphs (b) and (c), and 6, paragraph 497.7 (c), 40.5 percent of the amount distributed pursuant to this 497.8 section and section 298.28, with respect to 1983 production; 497.9 (ii) for the distributions made pursuant to section 298.28, 497.10 subdivision 5, paragraphs (b) and (d), 75 percent of the amount 497.11 distributed pursuant to this section and section 298.28, with 497.12 respect to 1983 production. 497.13 (b) The distribution of the taconite production tax as 497.14 provided in section 298.28, subdivision 2, shall equal the 497.15 following amount: 497.16 (1) if the production for the year prior to the 497.17 distribution year is at least 42,000,000 taxable tons, the 497.18 amount distributed pursuant to this section and section 298.28, 497.19 with respect to 1999 production; or 497.20 (2) if the production for the year prior to the 497.21 distribution year is less than 42,000,000 taxable tons, the 497.22 amount distributed pursuant to this section and section 298.28 497.23 with respect to 1999 production, reduced proportionately at the 497.24 rate of two percent for each 1,000,000 tons or part of 1,000,000 497.25 tons by which the production is less than 42,000,000 tons. 497.26 [EFFECTIVE DATE; RETROACTIVE APPLICATION.] This section is 497.27 effective for distributions in 2001 and thereafter. For the 497.28 distribution paid in February 2001 only, as soon as practicable 497.29 after the date of final enactment of this act, the commissioner 497.30 of Iron Range Resources and Rehabilitation shall pay two-thirds 497.31 of any additional amounts required under this section from the 497.32 taconite environmental protection fund and one-third of any 497.33 additional amounts required under this section from the 497.34 northeast Minnesota economic protection trust fund, as directed 497.35 by the commissioner of revenue. 497.36 Sec. 9. Minnesota Statutes 2000, section 298.24, 498.1 subdivision 1, is amended to read: 498.2 Subdivision 1. (a) For concentrate produced in19992001, 498.3 2002, and 2003, there is imposed upon taconite and iron 498.4 sulphides, and upon the mining and quarrying thereof, and upon 498.5 the production of iron ore concentrate therefrom, and upon the 498.6 concentrate so produced, a tax of$2.141$2.013 per gross ton of 498.7 merchantable iron ore concentrate produced therefrom. 498.8 (b) For concentrates produced in20002004 and subsequent 498.9 years, the tax rate shall be equal to the preceding year's tax 498.10 rate plus an amount equal to the preceding year's tax rate 498.11 multiplied by the percentage increase in the implicit price 498.12 deflator from the fourth quarter of the second preceding year to 498.13 the fourth quarter of the preceding year. "Implicit price 498.14 deflator" means the implicit price deflator for the gross 498.15 domestic product prepared by the bureau of economic analysis of 498.16 the United States Department of Commerce. 498.17(c)On concentrates produced in 1997 and thereafter, an 498.18 additional tax is imposed equal to three cents per gross ton of 498.19 merchantable iron ore concentrate for each one percent that the 498.20 iron content of the product exceeds 72 percent, when dried at 498.21 212 degrees Fahrenheit. 498.22(d)(c) The tax shall be imposed on the average of the 498.23 production for the current year and the previous two years. The 498.24 rate of the tax imposed will be the current year's tax rate. 498.25 This clause shall not apply in the case of the closing of a 498.26 taconite facility if the property taxes on the facility would be 498.27 higher if this clause and section 298.25 were not applicable. 498.28(e)(d) If the tax or any part of the tax imposed by this 498.29 subdivision is held to be unconstitutional, a tax 498.30 of$2.141$2.013 per gross ton of merchantable iron ore 498.31 concentrate produced shall be imposed. 498.32(f)(e) Consistent with the intent of this subdivision to 498.33 impose a tax based upon the weight of merchantable iron ore 498.34 concentrate, the commissioner of revenue may indirectly 498.35 determine the weight of merchantable iron ore concentrate 498.36 included in fluxed pellets by subtracting the weight of the 499.1 limestone, dolomite, or olivine derivatives or other basic flux 499.2 additives included in the pellets from the weight of the 499.3 pellets. For purposes of this paragraph, "fluxed pellets" are 499.4 pellets produced in a process in which limestone, dolomite, 499.5 olivine, or other basic flux additives are combined with 499.6 merchantable iron ore concentrate. No subtraction from the 499.7 weight of the pellets shall be allowed for binders, mineral and 499.8 chemical additives other than basic flux additives, or moisture. 499.9(g)(f)(1) Notwithstanding any other provision of this 499.10 subdivision, for the first two years of a plant's production of 499.11 direct reduced ore, no tax is imposed under this section. As 499.12 used in this paragraph, "direct reduced ore" is ore that results 499.13 in a product that has an iron content of at least 75 percent. 499.14 For the third year of a plant's production of direct reduced 499.15 ore, the rate to be applied to direct reduced ore is 25 percent 499.16 of the rate otherwise determined under this subdivision. For 499.17 the fourth such production year, the rate is 50 percent of the 499.18 rate otherwise determined under this subdivision; for the fifth 499.19 such production year, the rate is 75 percent of the rate 499.20 otherwise determined under this subdivision; and for all 499.21 subsequent production years, the full rate is imposed. 499.22 (2) Subject to clause (1), production of direct reduced ore 499.23 in this state is subject to the tax imposed by this section, but 499.24 if that production is not produced by a producer of taconite or 499.25 iron sulfides, the production of taconite or iron sulfides 499.26 consumed in the production of direct reduced iron in this state 499.27 is not subject to the tax imposed by this section on taconite or 499.28 iron sulfides. 499.29 Sec. 10. Minnesota Statutes 2000, section 298.27, is 499.30 amended to read: 499.31 298.27 [COLLECTION AND PAYMENT OF TAX.] 499.32 The taxes provided by section 298.24 shall be paid directly 499.33 to each eligible county and the iron range resources and 499.34 rehabilitation board. The commissioner of revenue shall notify 499.35 each producer of the amount to be paid each recipient prior to 499.36 February 15. Every person subject to taxes imposed by section 500.1 298.24 shall file a correct report covering the preceding year. 500.2 The report must contain the information required by the 500.3 commissioner. The report shall be filed on or before February 500.4 1. A remittance equal to10050 percent of the total tax 500.5 required to be paid hereunder shall be paid on or before 500.6 February 24 and June 15.On or before February 25,The county 500.7 auditor shall make distribution of the payment received by the 500.8 countyin the manner provided by section 298.28on March 1 and 500.9 June 24. Reports shall be made and hearings held upon the 500.10 determination of the tax in accordance with procedures 500.11 established by the commissioner of revenue. The commissioner of 500.12 revenue shall have authority to make reasonable rules as to the 500.13 form and manner of filing reports necessary for the 500.14 determination of the tax hereunder, and by such rules may 500.15 require the production of such information as may be reasonably 500.16 necessary or convenient for the determination and apportionment 500.17 of the tax. All the provisions of the occupation tax law with 500.18 reference to the assessment and determination of the occupation 500.19 tax, including all provisions for appeals from or review of the 500.20 orders of the commissioner of revenue relative thereto, but not 500.21 including provisions for refunds, are applicable to the taxes 500.22 imposed by section 298.24 except in so far as inconsistent 500.23 herewith. If any person subject to section 298.24 shall fail to 500.24 make the report provided for in this section at the time and in 500.25 the manner herein provided, the commissioner of revenue shall in 500.26 such case, upon information possessed or obtained, ascertain the 500.27 kind and amount of ore mined or produced and thereon find and 500.28 determine the amount of the tax due from such person. There 500.29 shall be added to the amount of tax due a penalty for failure to 500.30 report on or before February 1, which penalty shall equal ten 500.31 percent of the tax imposed and be treated as a part thereof. 500.32 If any person responsible for making a tax payment at the 500.33 time and in the manner herein provided fails to do so, there 500.34 shall be imposed a penalty equal to ten percent of the amount so 500.35 due, which penalty shall be treated as part of the tax due. 500.36 In the case of any underpayment of the tax payment required 501.1 herein, there may be added and be treated as part of the tax due 501.2 a penalty equal to ten percent of the amount so underpaid. 501.3 A person having a liability of $120,000 or more during a 501.4 calendar year must remit all liabilities by means of a funds 501.5 transfer as defined in section 336.4A-104, paragraph (a). The 501.6 funds transfer payment date, as defined in section 336.4A-401, 501.7 must be on or before the date the tax is due. If the date the 501.8 tax is due is not a funds transfer business day, as defined in 501.9 section 336.4A-105, paragraph (a), clause (4), the payment date 501.10 must be on or before the funds transfer business day next 501.11 following the date the tax is due. 501.12 [EFFECTIVE DATE.] This section is effective for the 2001 501.13 production year and thereafter. 501.14 Sec. 11. Minnesota Statutes 2000, section 298.28, 501.15 subdivision 6, is amended to read: 501.16 Subd. 6. [PROPERTY TAX RELIEF.] (a) In19992001, 2002, 501.17 and 2003,38.8122.81 cents per taxable ton, and in 2004 and 501.18 thereafter, 38.81 cents per taxable ton, less any amount 501.19 required to be distributed under paragraphs (b) and (c), and 501.20 less any amount required to be deducted under paragraph (d), 501.21 must be allocated to St. Louis county acting as the counties' 501.22 fiscal agent, to be distributed as provided in sections 273.134 501.23 to 273.136. 501.24 (b) If an electric power plant owned by and providing the 501.25 primary source of power for a taxpayer mining and concentrating 501.26 taconite is located in a county other than the county in which 501.27 the mining and the concentrating processes are conducted, .1875 501.28 cent per taxable ton of the tax imposed and collected from such 501.29 taxpayer shall be paid to the county. 501.30 (c) If an electric power plant owned by and providing the 501.31 primary source of power for a taxpayer mining and concentrating 501.32 taconite is located in a school district other than a school 501.33 district in which the mining and concentrating processes are 501.34 conducted, .7282 cent per taxable ton of the tax imposed and 501.35 collected from the taxpayer shall be paid to the school district. 501.36 (d) Two cents per taxable ton must be deducted from the 502.1 amount allocated to the St. Louis county auditor under paragraph 502.2 (a). 502.3 Sec. 12. Minnesota Statutes 2000, section 298.28, 502.4 subdivision 9a, is amended to read: 502.5 Subd. 9a. [TACONITE ECONOMIC DEVELOPMENT FUND.] (a) 502.615.431.4 cents per ton for distributions in1999, 2000, 2001,502.7and2002, 2003, and 2004, and 15.4 cents per ton for 502.8 distributions in 2005 and thereafter must be paid to the 502.9 taconite economic development fund. No distribution shall be 502.10 made under this paragraph in any year in which total industry 502.11 production falls below 30 million tons. 502.12 (b) An amount equal to 50 percent of the tax under section 502.13 298.24 for concentrate sold in the form of pellet chips and 502.14 fines not exceeding 5/16 inch in size and not including crushed 502.15 pellets shall be paid to the taconite economic development 502.16 fund. The amount paid shall not exceed $700,000 annually for 502.17 all companies. If the initial amount to be paid to the fund 502.18 exceeds this amount, each company's payment shall be prorated so 502.19 the total does not exceed $700,000. 502.20 Sec. 13. Minnesota Statutes 2000, section 298.2961, 502.21 subdivision 2, is amended to read: 502.22 Subd. 2. [PROJECTS; APPROVAL.] (a) Projects funded must be 502.23 for: 502.24 (1) environmentally unique reclamation projects;or502.25 (2) pit or plant expansions or modernizations other than 502.26 for a value added iron products plant that extend the life of 502.27 the plant; or 502.28 (3) haulage trucks and equipment and mining shovels. 502.29 (b) To be proposed by the board, a project must be approved 502.30 by at least eight iron range resources and rehabilitation board 502.31 members. The money for a project may be spent only upon 502.32 approval of the project by the governor. The board may submit 502.33 supplemental projects for approval at any time. 502.34 (c) The board may require that it receive an equity 502.35 percentage in any project to which it contributes under this 502.36 section. 503.1 Sec. 14. Minnesota Statutes 2000, section 298.75, 503.2 subdivision 1, is amended to read: 503.3 Subdivision 1. [DEFINITIONS.] Except as may otherwise be 503.4 provided, the following words, when used in this section, shall 503.5 have the meanings herein ascribed to them. 503.6 (1) "Aggregate material" shall mean nonmetallic natural 503.7 mineral aggregate including, but not limited to sand, silica 503.8 sand, gravel, building stone, crushed rock, limestone, and 503.9 granite. Aggregate material shall not include dimension stone 503.10 and dimension granite. Aggregate material must be measured or 503.11 weighed after it has been extracted from the pit, quarry, or 503.12 deposit. 503.13 (2) "Person" shall mean any individual, firm, partnership, 503.14 corporation, organization, trustee, association, or other entity. 503.15 (3) "Operator" shall mean any person engaged in the 503.16 business of removing aggregate material from the surface or 503.17 subsurface of the soil, for the purpose of sale, either directly 503.18 or indirectly, through the use of the aggregate material in a 503.19 marketable product or service. 503.20 (4) "Extraction site" shall mean a pit, quarry, or deposit 503.21 containing aggregate material and any contiguous property to the 503.22 pit, quarry, or deposit which is used by the operator for 503.23 stockpiling the aggregate material. 503.24 (5) "Importer" shall mean any person who buys aggregate 503.25 material produced from a county not listed in paragraph (6) or 503.26 another state and causes the aggregate material to be imported 503.27 into a county in this state which imposes a tax on aggregate 503.28 material. 503.29 (6)(a) "County" shall mean the counties of Pope, Stearns, 503.30 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson, 503.31 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay, 503.32 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone, 503.33 Sibley, Hennepin, Washington, Chisago, and Ramsey. 503.34 (b) "County" also means any other county whose board has 503.35 voted after a public hearing to impose the tax under this 503.36 section, has notified the commissioner of the imposition of the 504.1 tax, and either (1) no reverse referendum under subdivision 9 504.2 has been requested, or (2) a referendum has been held and the 504.3 majority of the votes cast are in the affirmative. 504.4 [EFFECTIVE DATE.] This section is effective the day 504.5 following final enactment. 504.6 Sec. 15. Minnesota Statutes 2000, section 298.75, 504.7 subdivision 2, is amended to read: 504.8 Subd. 2. A county shall impose upon every importer and 504.9 operator a production taxequalup to ten cents per cubic yard 504.10 or up to seven cents per ton of aggregate material removed 504.11 except that the county board may decide not to impose this tax 504.12 if it determines that in the previous year operators removed 504.13 less than 20,000 tons or 14,000 cubic yards of aggregate 504.14 material from that county. The tax shall be imposed on 504.15 aggregate material produced in the county when the aggregate 504.16 material is transported from the extraction site or sold. When 504.17 aggregate material is stored in a stockpile within the state of 504.18 Minnesota and a public highway, road or street is not used for 504.19 transporting the aggregate material, the tax shall be imposed 504.20 either when the aggregate material is sold, or when it is 504.21 transported from the stockpile site, or when it is used from the 504.22 stockpile, whichever occurs first. The tax shall be imposed on 504.23 an importer when the aggregate material is imported into the 504.24 county that imposes the tax. 504.25 If the aggregate material is transported directly from the 504.26 extraction site to a waterway, railway, or another mode of 504.27 transportation other than a highway, road or street, the tax 504.28 imposed by this section shall be apportioned equally between the 504.29 county where the aggregate material is extracted and the county 504.30 to which the aggregate material is originally transported. If 504.31 that destination is not located in Minnesota, then the county 504.32 where the aggregate material was extracted shall receive all of 504.33 the proceeds of the tax. 504.34 [EFFECTIVE DATE.] This section is effective for aggregate 504.35 material sold, imported, transported, or used from a stockpile 504.36 after June 30, 2001. 505.1 Sec. 16. Minnesota Statutes 2000, section 298.75, is 505.2 amended by adding a subdivision to read: 505.3 Subd. 9. [REVERSE REFERENDUM.] The reverse referendum 505.4 procedure in this subdivision applies only if a county has 505.5 adopted an aggregate material removal production tax under 505.6 subdivision 1, paragraph (6)(b). 505.7 If, within 21 days after the public hearing and adoption of 505.8 the tax under subdivision 1, a petition signed by voters equal 505.9 in number to five percent of the votes cast in the county in the 505.10 last general election requesting a referendum on the imposition 505.11 of the tax is filed with the county auditor, the tax is not 505.12 effective until it has been submitted to the voters at a special 505.13 election and a majority of votes cast on the question of 505.14 approving the imposition of the tax are in the affirmative. The 505.15 commissioner of revenue shall prepare the form of the question 505.16 to be presented at the referendum. 505.17 The county shall notify the county auditor of the results 505.18 of the referendum. If the majority of the votes cast on the 505.19 question are in the affirmative, the tax imposed under 505.20 subdivision 1 takes effect. If the majority of the votes cast 505.21 on the question are in the negative, the tax does not take 505.22 effect. 505.23 [EFFECTIVE DATE.] This section is effective for aggregate 505.24 material removal production taxes first imposed after the day 505.25 following final enactment. 505.26 Sec. 17. [APPROPRIATION.] 505.27 The commissioner of revenue shall determine a state aid 505.28 amount equal to a tax of 16 cents per taxable ton of iron ore 505.29 concentrates for production years 2001, 2002, and 2003. There 505.30 is appropriated from the general fund to the commissioner an 505.31 amount equal to the state aid determined under this section in 505.32 each of fiscal years 2002, 2003, and 2004 and must be 505.33 distributed in 2002, 2003, and 2004 under Minnesota Statutes, 505.34 section 298.28, as if the aid were production tax revenues. 505.35 Sec. 18. [REPEALER.] 505.36 Minnesota Statutes 2000, section 298.01, subdivisions 3c, 506.1 3d, 4d, and 4e, are repealed. 506.2 [EFFECTIVE DATE.] This section is effective for taxes 506.3 payable May 1, 2002, and thereafter. 506.4 ARTICLE 17 506.5 FEDERAL UPDATE 506.6 Section 1. Minnesota Statutes 2000, section 289A.02, 506.7 subdivision 7, is amended to read: 506.8 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically 506.9 defined otherwise, "Internal Revenue Code" means the Internal 506.10 Revenue Code of 1986, as amended through December 31,19992000. 506.11 [EFFECTIVE DATE.] This section is effective the day 506.12 following final enactment. 506.13 Sec. 2. Minnesota Statutes 2000, section 290.01, 506.14 subdivision 19, is amended to read: 506.15 Subd. 19. [NET INCOME.] The term "net income" means the 506.16 federal taxable income, as defined in section 63 of the Internal 506.17 Revenue Code of 1986, as amended through the date named in this 506.18 subdivision, incorporating any elections made by the taxpayer in 506.19 accordance with the Internal Revenue Code in determining federal 506.20 taxable income for federal income tax purposes, and with the 506.21 modifications provided in subdivisions 19a to 19f. 506.22 In the case of a regulated investment company or a fund 506.23 thereof, as defined in section 851(a) or 851(g) of the Internal 506.24 Revenue Code, federal taxable income means investment company 506.25 taxable income as defined in section 852(b)(2) of the Internal 506.26 Revenue Code, except that: 506.27 (1) the exclusion of net capital gain provided in section 506.28 852(b)(2)(A) of the Internal Revenue Code does not apply; 506.29 (2) the deduction for dividends paid under section 506.30 852(b)(2)(D) of the Internal Revenue Code must be applied by 506.31 allowing a deduction for capital gain dividends and 506.32 exempt-interest dividends as defined in sections 852(b)(3)(C) 506.33 and 852(b)(5) of the Internal Revenue Code; and 506.34 (3) the deduction for dividends paid must also be applied 506.35 in the amount of any undistributed capital gains which the 506.36 regulated investment company elects to have treated as provided 507.1 in section 852(b)(3)(D) of the Internal Revenue Code. 507.2 The net income of a real estate investment trust as defined 507.3 and limited by section 856(a), (b), and (c) of the Internal 507.4 Revenue Code means the real estate investment trust taxable 507.5 income as defined in section 857(b)(2) of the Internal Revenue 507.6 Code. 507.7 The net income of a designated settlement fund as defined 507.8 in section 468B(d) of the Internal Revenue Code means the gross 507.9 income as defined in section 468B(b) of the Internal Revenue 507.10 Code. 507.11 The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 507.12 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 507.13 1616, 1617, 1704(l), and 1704(m) of the Small Business Job 507.14 Protection Act, Public Law Number 104-188, the provisions of 507.15 Public Law Number 104-117, the provisions of sections 313(a) and 507.16 (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 507.17 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 507.18 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) 507.19 and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, 507.20 Public Law Number 105-34, the provisions of section 6010 of the 507.21 Internal Revenue Service Restructuring and Reform Act of 1998, 507.22 Public Law Number 105-206, and the provisions of section 4003 of 507.23 the Omnibus Consolidated and Emergency Supplemental 507.24 Appropriations Act, 1999, Public Law Number 105-277, and the 507.25 provisions of section 318 of the Consolidated Appropriation Act 507.26 of 2001, Public Law Number 106-554, shall become effective at 507.27 the time they become effective for federal purposes. 507.28 The Internal Revenue Code of 1986, as amended through 507.29 December 31, 1996, shall be in effect for taxable years 507.30 beginning after December 31, 1996. 507.31 The provisions of sections 202(a) and (b), 221(a), 225, 507.32 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 507.33 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 507.34 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 507.35 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 507.36 of the Taxpayer Relief Act of 1997, Public Law Number 105-34, 508.1 the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 508.2 7002, and 7003 of the Internal Revenue Service Restructuring and 508.3 Reform Act of 1998, Public Law Number 105-206, the provisions of 508.4 section 3001 of the Omnibus Consolidated and Emergency 508.5 Supplemental Appropriations Act, 1999, Public Law Number 508.6 105-277, and the provisions of section 3001 of the Miscellaneous 508.7 Trade and Technical Corrections Act of 1999, Public Law Number 508.8 106-36, and the provisions of section 316 of the Consolidated 508.9 Appropriation Act of 2001, Public Law Number 106-554, shall 508.10 become effective at the time they become effective for federal 508.11 purposes. 508.12 The Internal Revenue Code of 1986, as amended through 508.13 December 31, 1997, shall be in effect for taxable years 508.14 beginning after December 31, 1997. 508.15 The provisions of sections 5002, 6009, 6011, and 7001 of 508.16 the Internal Revenue Service Restructuring and Reform Act of 508.17 1998, Public Law Number 105-206, the provisions of section 9010 508.18 of the Transportation Equity Act for the 21st Century, Public 508.19 Law Number 105-178, the provisions of sections 1004, 4002, and 508.20 5301 of the Omnibus Consolidation and Emergency Supplemental 508.21 Appropriations Act, 1999, Public Law Number 105-277, the 508.22 provision of section 303 of the Ricky Ray Hemophilia Relief Fund 508.23 Act of 1998, Public Law Number 105-369,andthe provisions of 508.24 sections 532, 534, 536, 537, and 538 of the Ticket to Work and 508.25 Work Incentives Improvement Act of 1999, Public Law Number 508.26 106-170, the provisions of the Installment Tax Correction Act of 508.27 2000, Public Law Number 106-573, and the provisions of section 508.28 309 of the Consolidated Appropriation Act of 2001, Public Law 508.29 Number 106-554, shall become effective at the time they become 508.30 effective for federal purposes. 508.31 The Internal Revenue Code of 1986, as amended through 508.32 December 31, 1998, shall be in effect for taxable years 508.33 beginning after December 31, 1998. 508.34 The provisions of the FSC Repeal and Extraterritorial 508.35 Income Exclusion Act of 2000, Public Law Number 106-519, shall 508.36 become effective at the time it became effective for federal 509.1 purposes. 509.2 The Internal Revenue Code of 1986, as amended through 509.3 December 31, 1999, shall be in effect for taxable years 509.4 beginning after December 31, 1999. The provisions of sections 509.5 306 and 401 of the Consolidated Appropriation Act of 2001, 509.6 Public Law Number 106-554, shall become effective at the same 509.7 time it became effective for federal purposes. 509.8 The Internal Revenue Code of 1986, as amended through 509.9 December 31, 2000, shall be in effect for taxable years 509.10 beginning after December 31, 2000. 509.11 Except as otherwise provided, references to the Internal 509.12 Revenue Code in subdivisions 19a to 19g mean the code in effect 509.13 for purposes of determining net income for the applicable year. 509.14 [EFFECTIVE DATE.] This section is effective the day 509.15 following final enactment. 509.16 Sec. 3. Minnesota Statutes 2000, section 290.01, 509.17 subdivision 31, is amended to read: 509.18 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically 509.19 defined otherwise, "Internal Revenue Code" means the Internal 509.20 Revenue Code of 1986, as amended through December 31,19992000. 509.21 [EFFECTIVE DATE.] This section is effective at the same 509.22 time and in the same manner as the federal changes made by the 509.23 FSC Repeal and Extraterritorial Income Exclusion Act of 2000, 509.24 Public Law Number 106-519, and the Consolidated Appropriation 509.25 Act of 2001, Public Law Number 106-554, becomes effective. 509.26 Sec. 4. Minnesota Statutes 2000, section 290A.03, 509.27 subdivision 15, is amended to read: 509.28 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code" 509.29 means the Internal Revenue Code of 1986, as amended through 509.30 December 31,19992000. 509.31 [EFFECTIVE DATE.] This section is effective the day 509.32 following final enactment. 509.33 Sec. 5. Minnesota Statutes 2000, section 291.005, 509.34 subdivision 1, is amended to read: 509.35 Subdivision 1. Unless the context otherwise clearly 509.36 requires, the following terms used in this chapter shall have 510.1 the following meanings: 510.2 (1) "Federal gross estate" means the gross estate of a 510.3 decedent as valued and otherwise determined for federal estate 510.4 tax purposes by federal taxing authorities pursuant to the 510.5 provisions of the Internal Revenue Code. 510.6 (2) "Minnesota gross estate" means the federal gross estate 510.7 of a decedent after (a) excluding therefrom any property 510.8 included therein which has its situs outside Minnesota and (b) 510.9 including therein any property omitted from the federal gross 510.10 estate which is includable therein, has its situs in Minnesota, 510.11 and was not disclosed to federal taxing authorities. 510.12 (3) "Personal representative" means the executor, 510.13 administrator or other person appointed by the court to 510.14 administer and dispose of the property of the decedent. If 510.15 there is no executor, administrator or other person appointed, 510.16 qualified, and acting within this state, then any person in 510.17 actual or constructive possession of any property having a situs 510.18 in this state which is included in the federal gross estate of 510.19 the decedent shall be deemed to be a personal representative to 510.20 the extent of the property and the Minnesota estate tax due with 510.21 respect to the property. 510.22 (4) "Resident decedent" means an individual whose domicile 510.23 at the time of death was in Minnesota. 510.24 (5) "Nonresident decedent" means an individual whose 510.25 domicile at the time of death was not in Minnesota. 510.26 (6) "Situs of property" means, with respect to real 510.27 property, the state or country in which it is located; with 510.28 respect to tangible personal property, the state or country in 510.29 which it was normally kept or located at the time of the 510.30 decedent's death; and with respect to intangible personal 510.31 property, the state or country in which the decedent was 510.32 domiciled at death. 510.33 (7) "Commissioner" means the commissioner of revenue or any 510.34 person to whom the commissioner has delegated functions under 510.35 this chapter. 510.36 (8) "Internal Revenue Code" means the United States 511.1 Internal Revenue Code of 1986, as amended through December 31, 511.219992000. 511.3 [EFFECTIVE DATE.] This section is effective the day 511.4 following final enactment. 511.5 ARTICLE 18 511.6 SEIZURES OF CONTRABAND 511.7 Section 1. Minnesota Statutes 2000, section 296A.24, 511.8 subdivision 1, is amended to read: 511.9 Subdivision 1. [SEIZURE.] The commissioner or authorized 511.10 agents may seize gasoline or special fuel being transported for 511.11 delivery in violation of section 296A.03, subdivision 1, and any 511.12 vehicle or other method of conveyance used for transporting the 511.13 gasoline or special fuel. Any untaxed motor vehicle fuel that 511.14 is received by a person other than a licensee is subject to 511.15 seizure along with the vehicle or other means of transportation 511.16 used to transport the motor vehicle fuel. Any motor vehicle 511.17 fuel, along with the transporting vehicle, brought into the 511.18 state of Minnesota by a transporter for use, distribution, 511.19 storage, or sale that is not supported by a manifest, bill of 511.20 lading, or invoice, reflecting the licensed distributor 511.21 responsible for the tax and/or fees is subject to seizure by the 511.22 Minnesota department of revenue. Property seized under this 511.23 subdivision is subject to forfeiture as provided insubdivisions511.24 subdivision 2and 3. 511.25 [EFFECTIVE DATE.] This section is effective for seizures 511.26 made on or after July 1, 2001. 511.27 Sec. 2. Minnesota Statutes 2000, section 296A.24, 511.28 subdivision 2, is amended to read: 511.29 Subd. 2. [DISPOSITION OF SEIZED PROPERTY.] (a) Within ten 511.30 days after the seizureof gasoline or special fuel, the person 511.31 making the seizure shalldeliverserve by certified mail an 511.32 inventory of the vehicle or property seizedtoon the person 511.33 from whom the seizure was made, if known, and on any person 511.34 known or believed to have any right, title, interest, or lien on 511.35 the vehicle or property, at the last known address, and file a 511.36 copy withthe office ofthe commissioner. The notice must 512.1 include an explanation of the right to demand a judicial 512.2 forfeiture determination. 512.3 (b) Withinten60 days after the date of service of the 512.4 inventory, which is the date of mailing, the person from whom 512.5 the vehicle or property was seized or any person claiming an 512.6 interest inthe propertyit may filewith the commissionera 512.7 demand for a judicial determination of whether the vehicle or 512.8 property was lawfully subject to seizure and forfeiture.The512.9commissioner, within 60 days of demand for a judicial512.10determination, shall begin an action in the district court of512.11the county where the seizure was made to determine the issue of512.12forfeiture.512.13(b) The action must be brought in the name of the state and512.14prosecuted by the county attorney or by the attorney512.15general.The demand must be in the form of a civil complaint 512.16 and must be filed with the court administrator in the county in 512.17 which the seizure occurred, together with proof of service of a 512.18 copy of the complaint on the commissioner of revenue, and the 512.19 standard filing fee for civil actions unless the petitioner has 512.20 the right to sue in forma pauperis under section 563.01. If the 512.21 value of the seized property or vehicle is $7,500 or less, the 512.22 claimant may file an action in conciliation court for its 512.23 recovery. If the value of the seized property or vehicle is 512.24 less than $500, the claimant does not have to pay the 512.25 conciliation court filing fee. 512.26 (c) The complaint must be captioned in the name of the 512.27 claimant as plaintiff and the seized property or vehicle as 512.28 defendant, and must state with specificity the grounds on which 512.29 the claimant alleges the property or vehicle was improperly 512.30 seized and the plaintiff's interest in the property or vehicle 512.31 seized. No responsive pleading is required of the commissioner 512.32 and no court fees may be charged for the commissioner's 512.33 appearance in the matter. The proceedings are governed by the 512.34 Rules of Civil Procedure. Notwithstanding any law to the 512.35 contrary, an action for the return of property or a vehicle 512.36 seized under this section may not be maintained by or on behalf 513.1 of any person who has been served with an inventory unless the 513.2 person has complied with this subdivision. The court shall hear 513.3 the action without a jury and shall try and determine the issues 513.4 of fact and law involved. 513.5(c)(d) When a judgment of forfeiture is entered, the 513.6 commissioner may, unless the judgment is stayed pending an 513.7 appeal, either: 513.8 (1) cause the forfeitedpropertygasoline or special fuel 513.9 to be destroyed; or 513.10 (2) causeitthe forfeited property in clause (1) or 513.11 vehicle to be sold at public auction as provided by 513.12 law.Proceeds of a sale, after deducting the expense of keeping513.13the gasoline or special fuel and costs of the sale, must be paid513.14into the state treasury. The commissioner shall reimburse513.15designees for costs incurred.After deducting the expense of 513.16 keeping the property and vehicle and the costs of the sale, the 513.17 commissioner shall pay from the funds collected all liens 513.18 according to their priority, which are established as being bona 513.19 fide and as existing without the lienor having any notice or 513.20 knowledge that the property or vehicle was being used or was 513.21 intended to be used for or in connection with any violation, and 513.22 shall pay the balance of the proceeds into the general fund. 513.23(d) If a demand for judicial determination is made and no513.24action is commenced as provided in this subdivision, the513.25property must be released by the commissioner and redelivered to513.26the person entitled to it.(e) If no demand for judicial 513.27 determination is made, the property or vehicle seized must be 513.28 considered forfeited to the state by operation of law and may be 513.29 disposed of by the commissioner as provided where there has been 513.30 a judgment of forfeiture.When the commissioner is satisfied513.31that a person from whom property is seized under this chapter513.32was acting in good faith and without intent to evade the tax,513.33the commissioner shall release the property seized, without513.34further legal proceedings.513.35 [EFFECTIVE DATE.] This section is effective for seizures 513.36 made on or after July 1, 2001. 514.1 Sec. 3. Minnesota Statutes 2000, section 297A.91, is 514.2 amended to read: 514.3 297A.91 [SEIZURE; COURT REVIEW.] 514.4 Subdivision 1. [SEIZURE OF PROPERTY USED IN ILLEGAL 514.5 TRANSPORT.] (a) If the retailer does not have a sales or use tax 514.6 permit and has been engaging in transporting personal property 514.7 into the state without payment of the tax, the commissioner of 514.8 revenue or the commissioner's agents may seize in the name of 514.9 the state any truck, automobile, or means of transportation not 514.10 owned or operated by a common carrier, used in the illegal 514.11 importation and transportation of any tangible personal property 514.12 by a retailer or the retailer's agent or employee. The 514.13 commissioner may demand the forfeiture and sale of the truck, 514.14 automobile, or other means of transportation together with the 514.15 property being transported illegally, unless the owner 514.16 establishes to the satisfaction of the commissioner or the court 514.17 that the owner had no notice or knowledge or reason to believe 514.18 that the vehicle was used or intended to be used in any such 514.19 violation. 514.20 (b) Withintwoten days after the seizure, the person 514.21 making the seizure shalldeliverserve by certified mail an 514.22 inventory of the vehicle and property seizedtoon the person 514.23 from whom the seizure was made, if known, andtoon any person 514.24 known or believed to have any right, title, interest, or lien on 514.25 the vehicle or property, at the last known address. The person 514.26 making the seizure shall also file a copy of the inventory with 514.27 the commissioner. The notice must include an explanation of the 514.28 right to demand a judicial forfeiture determination. 514.29 Subd. 2. [COURT REVIEW OF FORFEITURE.] (a) Withinten60 514.30 days after the date of service of the inventory, which is the 514.31 date of mailing, the person from whom the vehicle and property 514.32 were seized or any person claiming an interest in the vehicle or 514.33 property may filewith the commissionera demand for a judicial 514.34 determination of the question of whether the vehicle or property 514.35 was lawfully subject to seizure and forfeiture.The514.36commissioner, within 30 days, shall institute an action in the515.1district court of the county where the seizure was made to515.2determine the issue of forfeiture.515.3 (b)The action must be brought in the name of the state and515.4prosecuted by the county attorney or the attorney general.The 515.5 demand must be in the form of a civil complaint and must be 515.6 filed with the court administrator in the county in which the 515.7 seizure occurred, together with proof of service or a copy of 515.8 the complaint on the commissioner of revenue, and the standard 515.9 filing fee for civil actions unless the petitioner has the right 515.10 to sue in forma pauperis under section 563.01. If the value of 515.11 the seized property or vehicle is $7,500 or less, the claimant 515.12 may file an action in conciliation court for its recovery. If 515.13 the value of the seized property or vehicle is less than $500, 515.14 the claimant does not have to pay the conciliation court filing 515.15 fee. 515.16 (c) The complaint must be captioned in the name of the 515.17 claimant as plaintiff and the seized property or vehicle as 515.18 defendant, and must state with specificity the grounds on which 515.19 the claimant alleges the property or vehicle was improperly 515.20 seized and the plaintiff's interest in the property or vehicle 515.21 seized. No responsive pleading is required of the commissioner, 515.22 and no court fees may be charged for the commissioner's 515.23 appearance in the matter. The proceedings are governed by the 515.24 Rules of Civil Procedure. Notwithstanding any law to the 515.25 contrary, an action for the return of property or a vehicle 515.26 seized under this subdivision may not be maintained by or on 515.27 behalf of any person who has been served with an inventory 515.28 unless the person has complied with this subdivision. The court 515.29 shall hear the action without a jury and shall determine the 515.30 issues of fact and law involved. If a judgment of forfeiture is 515.31 entered and is not stayed pending an appeal, the commissioner 515.32 may have the forfeited vehicle and property sold at public 515.33 auction as provided by law. 515.34 Subd. 3. [TREATMENT OF SEIZED PROPERTY.]If a demand for515.35judicial determination is made and no action is commenced as515.36provided in this subdivision, the vehicle and property must be516.1released by the commissioner and redelivered to the person516.2entitled to it.If no demand for judicial determination is 516.3 made, the vehicle and property seized are considered forfeited 516.4 to the state by operation of law and may be disposed of by the 516.5 commissioner as if there were a judgment of forfeiture. The 516.6 forfeiture and sale of the automobile, truck, or other means of 516.7 transportation, and of the property being transported illegally 516.8 in it, are a penalty for the violation of this chapter. After 516.9 deducting the expense of keeping the vehicle and property, the 516.10 fee for seizure, and the costs of the sale, the commissioner 516.11 shall pay liens from the funds collected. The commissioner 516.12 shall pay all liens, according to their priority, that are 516.13 establishedat the hearingas being bona fide and as existing 516.14 without the lienor having any notice or knowledge that the 516.15 vehicle or property was being used or was intended to be used 516.16 for or in connection with any such violationas specified in the516.17order of the court. The commissioner shall pay the balance of 516.18 the proceeds into the state treasury to be credited to the 516.19 general fund. The state is not liable for any liens in excess 516.20 of the proceeds from the sale after allowable deductions. A 516.21 sale under this section frees the vehicle and property sold from 516.22 all liens.The order of the district court may be appealed as516.23in other civil cases.516.24 [EFFECTIVE DATE.] This section is effective for seizures 516.25 made on or after July 1, 2001. 516.26 Sec. 4. Minnesota Statutes 2000, section 297E.16, 516.27 subdivision 1, is amended to read: 516.28 Subdivision 1. [SEIZURE.] Contraband may be seized by the 516.29 commissioner or by any sheriff or other police officer, 516.30 hereinafter referred to as the "seizing authority," with or 516.31 without process, and is subject to forfeiture as provided in 516.32subdivisionssubdivision 2and 3. 516.33 [EFFECTIVE DATE.] This section is effective for seizures 516.34 made on or after July 1, 2001. 516.35 Sec. 5. Minnesota Statutes 2000, section 297E.16, 516.36 subdivision 2, is amended to read: 517.1 Subd. 2. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 517.2 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 517.3 seizure of alleged contraband described in section 349.2125, 517.4 subdivision 1, the person making the seizure shallmake517.5availableserve by certified mail an inventory of the property 517.6 seizedtoon the person from whom the property was seized, if 517.7 known, and on any person known or believed to have any right, 517.8 title, interest, or lien in the property, at the last known 517.9 address, and file a copy with the commissioner or the director 517.10 of alcohol and gambling enforcement. The notice must include an 517.11 explanation of the right to demand a judicial forfeiture 517.12 determination. 517.13 (b) Withinten60 days after the date of service of the 517.14 inventory, which is the date of mailing, the person from whom 517.15 the property was seized or any person claiming an interest in 517.16 the property may filewith the seizing authoritya demand for 517.17 judicial determination of whether the property was lawfully 517.18 subject to seizure and forfeiture.Within 60 days after the517.19date of filing of the demand, the seizing authority must bring517.20an action in the district court of the county where seizure was517.21made to determine the issue of forfeiture. The action must be517.22brought in the name of the state and be prosecuted by the county517.23attorney or by the attorney general.The demand must be in the 517.24 form of a civil complaint and must be filed with the court 517.25 administrator in the county in which the seizure occurred, 517.26 together with proof of service of a copy of the complaint on the 517.27 commissioner of revenue or the director of alcohol and gambling 517.28 enforcement, and the standard filing fee for civil actions 517.29 unless the petitioner has the right to sue in forma pauperis 517.30 under section 563.01. If the value of the seized property is 517.31 $7,500 or less, the claimant may file an action in conciliation 517.32 court for recovery of the property. If the value of the seized 517.33 property is less than $500, the claimant does not have to pay 517.34 the conciliation court filing fee. 517.35 (c) The complaint must be captioned in the name of the 517.36 claimant as plaintiff and the seized property as defendant, and 518.1 must state with specificity the grounds on which the claimant 518.2 alleges the property was improperly seized and the plaintiff's 518.3 interest in the property seized. No responsive pleading is 518.4 required of the commissioner or director, and no court fees may 518.5 be charged for the commissioner's or director's appearance in 518.6 the matter. The proceedings are governed by the Rules of Civil 518.7 Procedure. Notwithstanding any law to the contrary, an action 518.8 for the return of property seized under this section may not be 518.9 maintained by or on behalf of any person who has been served 518.10 with an inventory unless the person has complied with this 518.11 subdivision. The court shall hear the action without a jury and 518.12 determine the issues of fact and law involved. 518.13 (d) If a judgment of forfeiture is entered, the seizing 518.14 authority may, unless the judgment is stayed pending an appeal, 518.15 either (1) cause the forfeited property, other than a vehicle, 518.16 to be destroyed; or (2) cause it to be sold at a public auction 518.17 as provided by law. The person making a sale, after deducting 518.18 the expense of keeping the property, the fee for seizure, and 518.19 the costs of the sale, shall pay all liens according to their 518.20 priority, which are established as being bona fide and as 518.21 existing without the lienor having any notice or knowledge that 518.22 the property was being used or was intended to be used for or in 518.23 connection with the violation. The balance of the proceeds must 518.24 be paid 70 percent to the seizing authority for deposit as a 518.25 supplement to its operating fund or similar fund for official 518.26 use, and 20 percent to the county attorney or other prosecuting 518.27 agency that handled the court proceeding, if there is one, for 518.28 deposit as a supplement to its operating fund or similar fund 518.29 for prosecutorial purposes. The remaining ten percent of the 518.30 proceeds must be forwarded within 60 days after resolution of 518.31 the forfeiture to the department of human services to fund 518.32 programs for the treatment of compulsive gamblers. If there is 518.33 no prosecuting authority involved in the forfeiture, the 20 518.34 percent of the proceeds otherwise designated for the prosecuting 518.35 authority must be deposited into the general fund. 518.36If demand for judicial determination is made and no action519.1is commenced by the seizing authority as provided in this519.2subdivision, the property must be released by the seizing519.3authority and delivered to the person entitled to it.(e) If no 519.4 demand for judicial determination is made, the property seized 519.5 is considered forfeited to the seizing authority by operation of 519.6 law and may be disposed of by the seizing authority as provided 519.7 where there has been a judgment of forfeiture.When the seizing519.8authority is satisfied that a person from whom property is519.9seized was acting in good faith and without intent to evade the519.10tax imposed by section 297E.02, the seizing authority shall519.11release the property seized without further legal proceedings. 519.12 [EFFECTIVE DATE.] This section is effective for seizures 519.13 made on or after July 1, 2001. 519.14 Sec. 6. Minnesota Statutes 2000, section 297F.21, 519.15 subdivision 1, is amended to read: 519.16 Subdivision 1. [CONTRABAND DEFINED.] The following are 519.17 declared to be contraband and therefore subject to civil and 519.18 criminal penalties under this chapter: 519.19 (a) Cigarette packages which do not have stamps affixed to 519.20 them as provided in this chapter, including but not limited to 519.21 (i) packages with illegible stamps and packages with stamps that 519.22 are not complete or whole even if the stamps are legible, and 519.23 (ii) all devices for the vending of cigarettes in which packages 519.24 as defined in item (i) are found, including all contents 519.25 contained within the devices. 519.26 (b) A device for the vending of cigarettes and all packages 519.27 of cigarettes, where the device does not afford at least partial 519.28 visibility of contents. Where any package exposed to view does 519.29 not carry the stamp required by this chapter, it shall be 519.30 presumed that all packages contained in the device are unstamped 519.31 and contraband. 519.32 (c) A device for the vending of cigarettes to which the 519.33 commissioner or authorized agents have been denied access for 519.34 the inspection of contents. In lieu of seizure, the 519.35 commissioner or an agent may seal the device to prevent its use 519.36 until inspection of contents is permitted. 520.1 (d) A device for the vending of cigarettes which does not 520.2 carry the name and address of the owner, plainly marked and 520.3 visible from the front of the machine. 520.4 (e) A device including, but not limited to, motor vehicles, 520.5 trailers, snowmobiles, airplanes, and boats used with the 520.6 knowledge of the owner or of a person operating with the consent 520.7 of the owner for the storage or transportation of more than 520.8 5,000 cigarettes which are contraband under this subdivision. 520.9 When cigarettes are being transported in the course of 520.10 interstate commerce, or are in movement from either a public 520.11 warehouse to a distributor upon orders from a manufacturer or 520.12 distributor, or from one distributor to another, the cigarettes 520.13 are not contraband, notwithstanding the provisions of clause (a). 520.14 (f) A device including, but not limited to, motor vehicles, 520.15 trailers, snowmobiles, airplanes, and boats used with the 520.16 knowledge of the owner, or of a person operating with the 520.17 consent of the owner, for the storage or transportation of 520.18 untaxed tobacco products intended for sale in Minnesota other 520.19 than those in the possession of a licensed distributor on or 520.20 before the due date for payment of the tax under section 520.21 297F.09, subdivision 2. 520.22 (g) Cigarette packages or tobacco products obtained from an 520.23 unlicensed seller. 520.24(g)(h) Cigarette packages offered for sale or held as 520.25 inventory in violation of section 297F.20, subdivision 7. 520.26(h)(i) Tobacco products on which the tax has not been paid 520.27 by a licensed distributor. 520.28(i)(j) Any cigarette packages or tobacco products offered 520.29 for sale or held as inventory for which there is not an invoice 520.30 from a licensed seller as required under section 297F.13, 520.31 subdivision 4. 520.32(j)(k) Cigarette packages which have been imported into 520.33 the United States in violation of United States Code, title 26, 520.34 section 5754. All cigarettes held in violation of that section 520.35 shall be presumed to have entered the United States after 520.36 December 31, 1999, in the absence of proof to the contrary. 521.1 [EFFECTIVE DATE.] This section is effective for seizures 521.2 made on or after July 1, 2001. 521.3 Sec. 7. Minnesota Statutes 2000, section 297F.21, 521.4 subdivision 2, is amended to read: 521.5 Subd. 2. [SEIZURE.] Cigarettes, tobacco products, or other 521.6 property made contraband by subdivision 1 may be seized by the 521.7 commissioner or authorized agents or by any sheriff or other 521.8 police officer, with or without process, and are subject to 521.9 forfeiture as provided insubdivisionssubdivision 3and 4. 521.10 [EFFECTIVE DATE.] This section is effective for seizures 521.11 made on or after July 1, 2001. 521.12 Sec. 8. Minnesota Statutes 2000, section 297F.21, 521.13 subdivision 3, is amended to read: 521.14 Subd. 3. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 521.15 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 521.16 seizure of any alleged contraband, the person making the seizure 521.17 shallmake availableserve by certified mail an inventory of the 521.18 property seizedtoon the person from whom the seizure was made, 521.19 if known, and on any person known or believed to have any right, 521.20 title, interest, or lien in the property, at the last known 521.21 address, and file a copy with the commissioner. The notice must 521.22 include an explanation of the right to demand a judicial 521.23 forfeiture determination. 521.24 (b) Withinten60 days after the date of service of the 521.25 inventory, which is the date of mailing, the person from whom 521.26 the property was seized or any person claiming an interest in 521.27 the property may filewith the commissionera demand for a 521.28 judicial determination of the question as to whether the 521.29 property was lawfully subject to seizure and forfeiture.The521.30commissioner, within 60 days, shall institute an action in the521.31district court of the county where the seizure was made to521.32determine the issue of forfeiture.The demand must be in the 521.33 form of a civil complaint and must be filed with the court 521.34 administrator in the county in which the seizure occurred, 521.35 together with proof of service of a copy of the complaint on the 521.36 commissioner of revenue, and the standard filing fee for civil 522.1 actions unless the petitioner has the right to sue in forma 522.2 pauperis under section 563.01. If the value of the seized 522.3 property is $7,500 or less, the claimant may file an action in 522.4 conciliation court for recovery of the property. If the value 522.5 of the seized property is less than $500, the claimant does not 522.6 have to pay the conciliation court filing fee. 522.7 (c) The complaint must be captioned in the name of the 522.8 claimant as plaintiff and the seized property as defendant, and 522.9 must state with specificity the grounds on which the claimant 522.10 alleges the property was improperly seized and the plaintiff's 522.11 interest in the property seized. No responsive pleading is 522.12 required of the commissioner, and no court fees may be charged 522.13 for the commissioner's appearance in the matter. The 522.14 proceedings are governed by the Rules of Civil Procedure. 522.15 Notwithstanding any law to the contrary, an action for the 522.16 return of property seized under this section may not be 522.17 maintained by or on behalf of any person who has been served 522.18 with an inventory unless the person has complied with this 522.19 subdivision. The court shall decide whether the alleged 522.20 contraband is contraband, as defined in subdivision 1. 522.21(b) The action must be brought in the name of the state and522.22must be prosecuted by the county attorney or by the attorney522.23general.The court shall hear the action without a jury and 522.24 shall try and determine the issues of fact and law involved. 522.25(c)(d) When a judgment of forfeiture is entered, the 522.26 commissioner may, unless the judgment is stayed pending an 522.27 appeal, either: 522.28 (1) deliver the forfeitedpropertycigarette packages or 522.29 tobacco products to the commissioner of human services for use 522.30 by patients in state institutions; 522.31 (2) causeitthe property in clause (1) to be destroyed; or 522.32 (3) causeitthe forfeited property to be sold at public 522.33 auction as provided by law. 522.34 The person making a sale, after deducting the expense of keeping 522.35 the property, the fee for seizure, and the costs of the sale, 522.36 shall pay all liens according to their priority, which are 523.1 established as being bona fide and as existing without the 523.2 lienor having any notice or knowledge that the property was 523.3 being used or was intended to be used for or in connection with 523.4 the violation. The balance of the proceeds must be paid 75 523.5 percent to the department of revenue for deposit as a supplement 523.6 to its operating fund or similar fund for official use, and 25 523.7 percent to the county attorney or other prosecuting agency that 523.8 handled the court proceeding, if there is one, for deposit as a 523.9 supplement to its operating fund or similar fund for 523.10 prosecutorial purposes. If there is no prosecuting authority 523.11 involved in the forfeiture, the 25 percent of the proceeds 523.12 otherwise designated for the prosecuting authority must be 523.13 deposited into the general fund. 523.14(d) If a demand for judicial determination is made and no523.15action commenced as provided in this subdivision, the property523.16must be released by the commissioner and returned to the person523.17entitled to it.(e) If no demand for judicial determination is 523.18 made, the property seized is considered forfeited to the state 523.19 by operation of law and may be disposed of by the commissioner 523.20 as provided in the case of a judgment of forfeiture. 523.21 [EFFECTIVE DATE.] This section is effective for seizures 523.22 made on or after July 1, 2001. 523.23 Sec. 9. Minnesota Statutes 2000, section 297G.20, 523.24 subdivision 3, is amended to read: 523.25 Subd. 3. [SEIZURE.] Distilled spirits, wine, fermented 523.26 malt beverages, or other property made contraband by subdivision 523.27 1 may be seized by the commissioner of revenue or public safety 523.28 and their authorized agents or by any sheriff or other police 523.29 officer, with or without process, and are subject to forfeiture 523.30 as provided insubdivisionssubdivision 4and 5. 523.31 [EFFECTIVE DATE.] This section is effective for seizures 523.32 made on or after July 1, 2001. 523.33 Sec. 10. Minnesota Statutes 2000, section 297G.20, 523.34 subdivision 4, is amended to read: 523.35 Subd. 4. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 523.36 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 524.1 seizure of alleged contraband, the person making the seizure 524.2 shallmake availableserve by certified mail an inventory of the 524.3 property seizedtoon the person from whom the property was 524.4 seized, if known, and on any person known or believed to have 524.5 any right, title, interest, or lien in the property, at the last 524.6 known address, and file a copy with both the commissioners of 524.7 revenue and public safety. The notice must include an 524.8 explanation of the right to demand a judicial forfeiture 524.9 determination. 524.10 (b) Withinten60 days after the date of service of the 524.11 inventory, which is the date of mailing, the person from whom 524.12 the property was seized or any person claiming an interest in 524.13 the property may filewith the seizing authoritya demand for 524.14 judicial determination of whether the property was lawfully 524.15 subject to seizure and forfeiture.Within 60 days after the524.16date of the filing of the demand, the seizing authority must524.17bring an action in the district court of the county where524.18seizure was made to determine the issue of forfeiture.The 524.19 demand must be in the form of a civil complaint and must be 524.20 filed with the court administrator in the county in which the 524.21 seizure occurred, together with proof of service of a copy of 524.22 the complaint on the commissioner of revenue or public safety, 524.23 and the standard filing fee for civil actions unless the 524.24 petitioner has the right to sue in forma pauperis under section 524.25 563.01. If the value of the seized property or vehicle is 524.26 $7,500 or less, the claimant may file an action in conciliation 524.27 court for recovery of the property. If the value of the seized 524.28 property is less than $500, the claimant does not have to pay 524.29 the conciliation court filing fee. 524.30 (c) The complaint must be captioned in the name of the 524.31 claimant as plaintiff and the seized property as defendant, and 524.32 must state with specificity the grounds on which the claimant 524.33 alleges the property was improperly seized and the plaintiff's 524.34 interest in the property seized. No responsive pleading is 524.35 required of the commissioner of revenue or public safety and no 524.36 court fees may be charged for either commissioner's appearance 525.1 in the matter. The proceedings are governed by the Rules of 525.2 Civil Procedure. Notwithstanding any law to the contrary, an 525.3 action for the return of property seized under this section may 525.4 not be maintained by or on behalf of any person who has been 525.5 served with an inventory unless the person has complied with 525.6 this subdivision. 525.7(b) The action must be brought in the name of the state and525.8must be prosecuted by the county attorney or by the attorney525.9general.The court shall hear the action without a jury and 525.10 determine the issues of fact and law involved. 525.11(c)(d) If a judgment of forfeiture is entered, the seizing 525.12 authority may, unless the judgment is stayed pending an appeal, 525.13 either: 525.14 (1) cause the forfeited property, other than a vehicle, to 525.15 be destroyed; or 525.16 (2) cause it to be sold at a public auction as provided by 525.17 law. 525.18 The person making a sale, after deducting the expense of 525.19 keeping the property, the fee for seizure, and the costs of the 525.20 sale, shall pay all liens according to their priority, which are 525.21 established as being bona fide and as existing without the 525.22 lienor having any notice or knowledge that the property was 525.23 being used or was intended to be used for or in connection with 525.24 the violation. The balance of the proceeds must be paid 75 525.25 percent to the seizing authority for deposit as a supplement to 525.26 its operating fund or similar fund for official use, and 25 525.27 percent to the county attorney or other prosecuting agency that 525.28 handled the court proceeding, if there is one, for deposit as a 525.29 supplement to its operating fund or similar fund for 525.30 prosecutorial purposes. If there is no prosecuting authority 525.31 involved in the forfeiture, the 25 percent of the proceeds 525.32 otherwise designated for the prosecuting authority must be 525.33 deposited into the general fund. 525.34(d) If demand for judicial determination is made and no525.35action is commenced by the seizing authority as provided in this525.36subdivision, the property must be released by the seizing526.1authority and delivered to the person entitled to it.(e) If no 526.2 demand is made, the property seized is considered forfeited to 526.3 the seizing authority by operation of law and may be disposed of 526.4 by the seizing authority as provided for a judgment of 526.5 forfeiture.When the seizing authority is satisfied that a526.6person from whom property is seized was acting in good faith and526.7without intent to evade the tax imposed by this chapter, the526.8seizing authority shall release the property seized without526.9further legal proceedings.526.10 [EFFECTIVE DATE.] This section is effective for seizures 526.11 made on or after July 1, 2001. 526.12 Sec. 11. [REPEALER.] 526.13 Minnesota Statutes 2000, sections 296A.24, subdivision 3; 526.14 297E.16, subdivision 3; 297F.21, subdivision 4; and 297G.20, 526.15 subdivision 5, are repealed. 526.16 [EFFECTIVE DATE.] This section is effective for seizures 526.17 made on or after July 1, 2001. 526.18 ARTICLE 19 526.19 ELECTRONIC FILING AND PAYMENT 526.20 Section 1. Minnesota Statutes 2000, section 115B.24, 526.21 subdivision 2, is amended to read: 526.22 Subd. 2. [DECLARATIONS OF ESTIMATED TAX.]For 1983, every526.23generator of hazardous waste required to pay a tax pursuant to526.24section 115B.22 shall make a declaration of estimated hazardous526.25waste generated for the last six months of calendar year 1983 if526.26the tax can reasonably be estimated to exceed $500. The526.27declaration of the estimated tax shall be filed by October 15,526.281983. The amount of estimated tax with respect to which a526.29declaration is required shall be paid in two equal installments526.30by October 15, 1983 and January 15, 1984.For 1984 and 526.31 subsequent years, every generator of hazardous waste required to 526.32 pay a tax pursuant to section 115B.22 shall make a declaration 526.33 of estimated hazardous waste generated for the calendar year if 526.34 the tax can reasonably be expected to be in excess of $1,000. 526.35 The declaration of estimated tax shall be filed by March 15. 526.36 The amount of estimated tax with respect to which a declaration 527.1 is required shall be paid in four equal installments on or 527.2 before the 15th day of March, June, September, and December. 527.3 An amendment of a declaration may be filed in any interval 527.4 between installment dates prescribed above but only one 527.5 amendment may be filed in each interval. If an amendment of a 527.6 declaration is filed, the amount of each remaining installment 527.7 shall be the amount which would have been payable if the new 527.8 estimate had been made when the first estimate for the calendar 527.9 year was made, increased or decreased, as the case may be, by 527.10 the amount computed by dividing 527.11 (1) the difference between (A) the amount of estimated tax 527.12 required to be paid before the date on which the amendment was 527.13 made, and (B) the amount of estimated tax which would have been 527.14 required to be paid before that date if the new estimate had 527.15 been made when the first estimate was made, by 527.16 (2) the number of installments remaining to be paid on or 527.17 after the date on which the amendment is made. 527.18 The commissioner of revenue may grant a reasonable 527.19 extension of time for filing any declaration but the extension 527.20 shall not be for more than six months. 527.21 If the aggregate amount of estimated tax payments made 527.22 during a fiscal year ending June 30 is equal to or exceeds 527.23 $80,000, all estimated tax payments in the subsequent calendar 527.24 year must be paid by electronic meansof a funds transfer as527.25defined in section 336.4A-104, paragraph (a). The funds527.26transfer payment date, as defined in section 336.4A-401, must be527.27on or before the date the estimated tax payment is due. If the527.28date the estimated tax payment is due is not a funds transfer527.29business day, as defined in section 336.4A-105, paragraph (a),527.30clause (4), the payment date must be on or before the funds527.31transfer business day next following the date the estimated tax527.32payment is due. 527.33 [EFFECTIVE DATE.] This section is effective the day 527.34 following final enactment. 527.35 Sec. 2. Minnesota Statutes 2000, section 270.271, 527.36 subdivision 1, is amended to read: 528.1 Subdivision 1. [DATE OF DELIVERY.] When a document, 528.2 including a return, claim, or statement, is required to be 528.3 filed, or a payment is required to be made to the commissioner 528.4 within a prescribed period, or on or before a prescribed date, 528.5 and if the document or payment is delivered by electronic means 528.6 or by United States mail after the period or the date to the 528.7 place prescribed for filing or payment, then the date of 528.8 delivery or of payment is the date of the confirmation 528.9 time-and-date stamp of the transaction, if delivered by 528.10 electronic means, or the date of the United States postmark 528.11 stamped on the cover in which the document or payment is mailed, 528.12 if delivered by United States mailshall be considered the date528.13of delivery or of payment, as the case may be. 528.14 [EFFECTIVE DATE.] This section is effective for returns and 528.15 payments due on or after July 1, 2001. 528.16 Sec. 3. Minnesota Statutes 2000, section 270.271, 528.17 subdivision 3, is amended to read: 528.18 Subd. 3. [CONFIRMATION OF ELECTRONIC FILING AND PAYMENT 528.19 AND UNITED STATES POSTAL SERVICE POSTMARK.] The confirmation 528.20 numbers and confirmation time-and-date stamps received by the 528.21 taxpayer following electronic payment or filing is proof of the 528.22 payment authorization and filing dates. Only the postmark of 528.23 the United States Postal Service, rather than those of private 528.24 postage meters, qualifies as proof of timely mailing under this 528.25 section. If the document or payment is sent by United States 528.26 registered mail, the date of registration shall be treated as 528.27 the postmark date. If the document or payment is sent by United 528.28 States certified mail and the sender's receipt is postmarked by 528.29 the postal employee to whom the envelope containing such 528.30 document or payment is presented, the date of the United States 528.31 postmark on the receipt shall be treated as the postmark date of 528.32 the document or payment. 528.33 [EFFECTIVE DATE.] This section is effective for returns and 528.34 payments due on or after July 1, 2001. 528.35 Sec. 4. Minnesota Statutes 2000, section 270.771, is 528.36 amended to read: 529.1 270.771 [PAYMENTS REQUIRED TO BE MADEBY ELECTRONIC FUNDS529.2TRANSFERELECTRONICALLY.] 529.3 (a) If a taxpayer is required to make payment of a tax to 529.4 the commissioner by electronic meansof electronic funds529.5transfer as defined in section 336.4A-104, paragraph (a), the 529.6 taxpayer shall make all payments of all taxes and fees paid to 529.7 the commissioner by electronic meansof electronic funds529.8transfer. 529.9 (b) Paragraph (a) does not apply to payments required to be 529.10 made for individual income taxes under section 289A.20, 529.11 subdivision 1, paragraph (a), or 289A.25. 529.12 [EFFECTIVE DATE.] This section is effective the day 529.13 following final enactment. 529.14 Sec. 5. Minnesota Statutes 2000, section 270.78, is 529.15 amended to read: 529.16 270.78 [PENALTY FOR FAILURE TOMAKE PAYMENT BY ELECTRONIC529.17FUNDS TRANSFERPAY ELECTRONICALLY.] 529.18 In addition to other applicable penalties imposed by law, 529.19 after notification from the commissioner of revenue to the 529.20 taxpayer that payments for a tax administered by the 529.21 commissioner are required to be made by electronic meansof529.22electronic funds transfer, and the payments are remitted by some 529.23 other means, there is a penalty in the amount of five percent of 529.24 each payment that should have been remitted electronically. 529.25 After the commissioner's initial notification to the taxpayer 529.26 that payments are required to be made by electronic means, the 529.27 commissioner is not required to notify the taxpayer in 529.28 subsequent periods if the initial notification specified the 529.29 amount of tax liability at which a taxpayer is required to remit 529.30 payments by electronic means. The penalty can be abated under 529.31 the abatement procedures prescribed in section 270.07, 529.32 subdivision 6, if the failure to remit the payment 529.33 electronically is due to reasonable cause. The penalty bears 529.34 interest at the rate specified in section 270.75 from the due 529.35 date of the payment of the tax to the date of payment of the 529.36 penalty. 530.1 [EFFECTIVE DATE.] This section is effective the day 530.2 following final enactment. 530.3 Sec. 6. Minnesota Statutes 2000, section 287.12, is 530.4 amended to read: 530.5 287.12 [TAXES, HOW APPORTIONED.] 530.6 (a) All taxes paid to the county treasurer under the 530.7 provisions of sections 287.01 to 287.12 must be apportioned, 97 530.8 percent to the general fund of the state, and three percent to 530.9 the county revenue fund. 530.10 (b) On or before the 20th day of each month the county 530.11 treasurer shall determine and pay to the commissioner of revenue 530.12 for deposit in the state treasury and credit to the general fund 530.13 the state's portion of the receipts from the mortgage registry 530.14 tax during the preceding month subject to the electronicfunds530.15transferpayment requirements of section 270.771. The county 530.16 treasurer shall provide any related reports requested by the 530.17 commissioner of revenue. 530.18 [EFFECTIVE DATE.] This section is effective the day 530.19 following final enactment. 530.20 Sec. 7. Minnesota Statutes 2000, section 289A.02, is 530.21 amended by adding a subdivision to read: 530.22 Subd. 8. [ELECTRONIC MEANS.] "Electronic means" refers to 530.23 a method that is electronic, as defined in section 325L.02, 530.24 paragraph (e), and that is prescribed by the commissioner. 530.25 [EFFECTIVE DATE.] This section is effective the day 530.26 following final enactment. 530.27 Sec. 8. Minnesota Statutes 2000, section 289A.08, 530.28 subdivision 16, is amended to read: 530.29 Subd. 16. [TAX REFUND OR RETURN PREPARERS.] (a) A "tax 530.30 refund or return preparer," as defined in section 289A.60, 530.31 subdivision 13, paragraph (g), who prepared more than 500 530.32 Minnesota individual income tax returns for the prior calendar 530.33 year must file all Minnesota individual income tax returns 530.34 prepared for the current calendar year by electronic means. 530.35 (b)For tax returns prepared for the tax year beginning in530.362001, the "500" in paragraph (a) is reduced to 250.531.1(c) For tax returns prepared for tax years beginning after531.2December 31, 2001, the "500" in paragraph (a) is reduced to 100.531.3(d)Paragraph (a) does not apply to a return if the 531.4 taxpayer has indicated on the return that the taxpayer did not 531.5 want the return filed by electronic means. 531.6 [EFFECTIVE DATE.] This section is effective for taxable 531.7 years beginning with December 31, 2000. 531.8 Sec. 9. Minnesota Statutes 2000, section 289A.20, 531.9 subdivision 1, is amended to read: 531.10 Subdivision 1. [INDIVIDUAL INCOME, FIDUCIARY INCOME, 531.11 MINING COMPANY, CORPORATE FRANCHISE, AND ENTERTAINMENT TAXES.] 531.12 (a) Individual income, fiduciary, mining company, and corporate 531.13 franchise taxes must be paid to the commissioner on or before 531.14 the date the return must be filed under section 289A.18, 531.15 subdivision 1, or the extended due date as provided in section 531.16 289A.19, unless an earlier date for payment is provided. 531.17 Notwithstanding any other law, a taxpayer whose unpaid 531.18 liability for income or corporate franchise taxes, as reflected 531.19 upon the return, is $1 or less need not pay the tax. 531.20 (b) Entertainment taxes must be paid on or before the date 531.21 the return must be filed under section 289A.18, subdivision 1. 531.22 (c) If a fiduciary administers 100 or more trusts, 531.23 fiduciary income taxes for all trusts administered by the 531.24 fiduciary must be paid byfunds transfer as defined in section531.25336.4A-104, paragraph (a). The funds transfer payment date, as531.26defined in section 336.4A-401, must be on or before the date the531.27tax payment is due. If the date the payment is due is not a531.28funds transfer business day, as defined in section 336.4A-105,531.29paragraph (a), clause (4), the payment date must be on or before531.30the funds transfer business day next following the date the531.31payment is dueelectronic means. 531.32 [EFFECTIVE DATE.] This section is effective the day 531.33 following final enactment. 531.34 Sec. 10. Minnesota Statutes 2000, section 289A.20, 531.35 subdivision 2, is amended to read: 531.36 Subd. 2. [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 532.1 WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 532.2 WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 532.3 (a) A tax required to be deducted and withheld during the 532.4 quarterly period must be paid on or before the last day of the 532.5 month following the close of the quarterly period, unless an 532.6 earlier time for payment is provided. A tax required to be 532.7 deducted and withheld from compensation of an entertainer and 532.8 from a payment to an out-of-state contractor must be paid on or 532.9 before the date the return for such tax must be filed under 532.10 section 289A.18, subdivision 2. Taxes required to be deducted 532.11 and withheld by partnerships and S corporations must be paid on 532.12 or before the date the return must be filed under section 532.13 289A.18, subdivision 2. 532.14 (b) An employer who, during the previous quarter, withheld 532.15 more than $1,500 of tax under section 290.92, subdivision 2a or 532.16 3, or 290.923, subdivision 2, must deposit tax withheld under 532.17 those sections with the commissioner within the time allowed to 532.18 deposit the employer's federal withheld employment taxes under 532.19 Treasury Regulation, section 31.6302-1, without regard to the 532.20 safe harbor or de minimis rules in subparagraph (f) or the 532.21 one-day rule in subsection (c), clause (3). Taxpayers must 532.22 submit a copy of their federal notice of deposit status to the 532.23 commissioner upon request by the commissioner. 532.24 (c) The commissioner may prescribe by rule other return 532.25 periods or deposit requirements. In prescribing the reporting 532.26 period, the commissioner may classify payors according to the 532.27 amount of their tax liability and may adopt an appropriate 532.28 reporting period for the class that the commissioner judges to 532.29 be consistent with efficient tax collection. In no event will 532.30 the duration of the reporting period be more than one year. 532.31 (d) If less than the correct amount of tax is paid to the 532.32 commissioner, proper adjustments with respect to both the tax 532.33 and the amount to be deducted must be made, without interest, in 532.34 the manner and at the times the commissioner prescribes. If the 532.35 underpayment cannot be adjusted, the amount of the underpayment 532.36 will be assessed and collected in the manner and at the times 533.1 the commissioner prescribes. 533.2 (e) If the aggregate amount of the tax withheld during a 533.3 fiscal year ending June 30 under section 290.92, subdivision 2a 533.4 or 3, is equal to or exceeds the amounts established for 533.5 remitting federal withheld taxes pursuant to the regulations 533.6 promulgated under section 6302(h) of the Internal Revenue Code, 533.7 the employer must remit each required deposit for wages paid in 533.8 the subsequent calendar year by electronic meansof a funds533.9transfer as defined in section 336.4A-104, paragraph (a). The533.10funds transfer payment date, as defined in section 336.4A-401,533.11must be on or before the date the deposit is due. If the date533.12the deposit is due is not a funds transfer business day, as533.13defined in section 336.4A-105, paragraph (a), clause (4), the533.14payment date must be on or before the funds transfer business533.15day next following the date the deposit is due. 533.16 (f) A third-party bulk filer as defined in section 290.92, 533.17 subdivision 30, paragraph (a), clause (2), who remits 533.18 withholding deposits must remit all deposits by electronic means 533.19of a funds transferas provided in paragraph (e), regardless of 533.20 the aggregate amount of tax withheld during a fiscal year for 533.21 all of the employers. 533.22 [EFFECTIVE DATE.] This section is effective the day 533.23 following final enactment. 533.24 Sec. 11. Minnesota Statutes 2000, section 289A.20, 533.25 subdivision 4, is amended to read: 533.26 Subd. 4. [SALES AND USE TAX.] (a) The taxes imposed by 533.27 chapter 297A are due and payable to the commissioner monthly on 533.28 or before the 20th day of the month following the month in which 533.29 the taxable event occurred, or following another reporting 533.30 period as the commissioner prescribes or as allowed under 533.31 section 289A.18, subdivision 4, paragraph (f), except that use 533.32 taxes due on an annual use tax return as provided under section 533.33 289A.11, subdivision 1, are payable by April 15 following the 533.34 close of the calendar year. 533.35 (b) A vendor having a liability of $120,000 or more during 533.36 a fiscal year ending June 30 must remit the June liability for 534.1 the next year in the following manner: 534.2 (1) Two business days before June 30 of the year, the 534.3 vendor must remit 62 percent of the estimated June liability to 534.4 the commissioner. 534.5 (2) On or before August 14 of the year, the vendor must pay 534.6 any additional amount of tax not remitted in June. 534.7 (c) A vendor having a liability of $120,000 or more during 534.8 a fiscal year ending June 30 must remit all liabilities on 534.9 returns due for periods beginning in the subsequent calendar 534.10 year by electronic meansof a funds transfer as defined in534.11section 336.4A-104, paragraph (a). The funds transfer payment534.12date, as defined in section 336.4A-401, must beon or before the 534.1314th20th day of the month following the month in which the 534.14 taxable event occurred, or on or before the14th20th day of the 534.15 month following the month in which the sale is reported under 534.16 section 289A.18, subdivision 4, except for 62 percent of the 534.17 estimated June liability, which is due two business days before 534.18 June 30. The remaining amount of the June liability is due on 534.19 August 14.If the date the tax is due is not a funds transfer534.20business day, as defined in section 336.4A-105, paragraph (a),534.21clause (4), the payment date must be on or before the funds534.22transfer business day next following the date the tax is due.534.23(d) If the vendor required to remit by electronic funds534.24transfer as provided in paragraph (c) is unable due to534.25reasonable cause to determine the actual sales and use tax due534.26on or before the due date for payment, the vendor may remit an534.27estimate of the tax owed using one of the following options:534.28(1) 100 percent of the tax reported on the previous month's534.29sales and use tax return;534.30(2) 100 percent of the tax reported on the sales and use534.31tax return for the same month in the previous calendar year; or534.32(3) 95 percent of the actual tax due.534.33Any additional amount of tax that is not remitted on or534.34before the due date for payment, must be remitted with the534.35return. If a vendor fails to remit the actual liability or does534.36not remit using one of the estimate options by the due date for535.1payment, the vendor must remit actual liability as provided in535.2paragraph (c) in all subsequent periods. This paragraph does535.3not apply to the June sales and use tax liability.535.4 [EFFECTIVE DATE.] This section is effective for payments 535.5 due on or after July 1, 2001. 535.6 Sec. 12. Minnesota Statutes 2000, section 289A.26, 535.7 subdivision 2a, is amended to read: 535.8 Subd. 2a. [ELECTRONICFUNDS TRANSFERPAYMENTS.] If the 535.9 aggregate amount of estimated tax payments made during a 535.10 calendar year is equal to or exceeds $20,000, all estimated tax 535.11 payments in the subsequent calendar year must be paid 535.12 by electronic meansof a funds transfer as defined in section535.13336.4A-104, paragraph (a). The funds transfer payment date, as535.14defined in section 336.4A-401, must be on or before the date the535.15estimated tax payment is due. If the date the estimated tax535.16payment is due is not a funds transfer business day, as defined535.17in section 336.4A-105, paragraph (a), clause (4), the payment535.18date must be on or before the funds transfer business day next535.19following the date the estimated tax payment is due. 535.20 [EFFECTIVE DATE.] This section is effective the day 535.21 following final enactment. 535.22 Sec. 13. Minnesota Statutes 2000, section 289A.60, 535.23 subdivision 21, is amended to read: 535.24 Subd. 21. [PENALTY FOR FAILURE TO MAKE PAYMENT BY 535.25 ELECTRONICFUNDS TRANSFERMEANS.] In addition to other 535.26 applicable penalties imposed by this section, after notification 535.27 from the commissioner to the taxpayer that payments are required 535.28 to be made by electronic meansof electronic funds transfer535.29 under section 289A.20, subdivision 2, paragraph (e), or 4, 535.30 paragraph(d)(c), or 289A.26, subdivision 2a, and the payments 535.31 are remitted by some other means, there is a penalty in the 535.32 amount of five percent of each payment that should have been 535.33 remitted electronically. After the commissioner's initial 535.34 notification to the taxpayer that payments are required to be 535.35 made by electronic means, the commissioner is not required to 535.36 notify the taxpayer in subsequent periods if the initial 536.1 notification specified the amount of tax liability at which a 536.2 taxpayer is required to remit payments by electronic means. The 536.3 penalty can be abated under the abatement procedures prescribed 536.4 in section 270.07, subdivision 6, if the failure to remit the 536.5 payment electronically is due to reasonable cause. 536.6 [EFFECTIVE DATE.] This section is effective the day 536.7 following final enactment. 536.8 Sec. 14. Minnesota Statutes 2000, section 295.55, 536.9 subdivision 4, is amended to read: 536.10 Subd. 4. [ELECTRONICFUNDS TRANSFERPAYMENTS.] A taxpayer 536.11 with an aggregate tax liability of $120,000 or more during a 536.12 fiscal year ending June 30,must remit all liabilities by 536.13 electronic meansof a funds transfer as defined in section536.14336.4A-104, paragraph (a),in the subsequent calendar year.The536.15funds transfer payment date, as defined in section 336.4A-401,536.16is on or before the date the tax is due. If the date the tax is536.17due is not a funds-transfer business day, as defined in section536.18336.4A-105, paragraph (a), clause (4), the payment date is on or536.19before the first funds-transfer business day after the date the536.20tax is due.536.21 [EFFECTIVE DATE.] This section is effective the day 536.22 following final enactment. 536.23 Sec. 15. Minnesota Statutes 2000, section 296A.15, 536.24 subdivision 7, is amended to read: 536.25 Subd. 7. [ELECTRONICFUNDS TRANSFERPAYMENT REQUIRED.] All 536.26 remittances must be made by electronic meansof electronic funds536.27transfer as defined in section 336.4A-104, paragraph (a). The536.28funds transfer payment date, as defined in section 336.4A-401,536.29must be on or before the date the remittance is due. If the536.30date the remittance is due is not a funds transfer business day,536.31as defined in section 336.4A-105, paragraph (a), clause (4), the536.32payment date must be on or before the funds transfer business536.33day next following the date the remittance is due. 536.34 [EFFECTIVE DATE.] This section is effective the day 536.35 following final enactment. 536.36 Sec. 16. Minnesota Statutes 2000, section 297E.02, 537.1 subdivision 4, is amended to read: 537.2 Subd. 4. [PULL-TAB AND TIPBOARD TAX.] (a) A tax is imposed 537.3 on the sale of each deal of pull-tabs and tipboards sold by a 537.4 distributor. The rate of the tax is 1.7 percent of the ideal 537.5 gross of the pull-tab or tipboard deal. The sales tax imposed 537.6 by chapter 297A on the sale of the pull-tabs and tipboards by 537.7 the distributor is imposed on the retail sales price less the 537.8 tax imposed by this subdivision. The retail sale of pull-tabs 537.9 or tipboards by the organization is exempt from taxes imposed by 537.10 chapter 297A and is exempt from all local taxes and license fees 537.11 except a fee authorized under section 349.16, subdivision 8. 537.12 (b) The liability for the tax imposed by this section is 537.13 incurred when the pull-tabs and tipboards are delivered by the 537.14 distributor to the customer or to a common or contract carrier 537.15 for delivery to the customer, or when received by the customer's 537.16 authorized representative at the distributor's place of 537.17 business, regardless of the distributor's method of accounting 537.18 or the terms of the sale. 537.19 The tax imposed by this subdivision is imposed on all sales 537.20 of pull-tabs and tipboards, except the following: 537.21 (1) sales to the governing body of an Indian tribal 537.22 organization for use on an Indian reservation; 537.23 (2) sales to distributors licensed under the laws of 537.24 another state or of a province of Canada, as long as all 537.25 statutory and regulatory requirements are met in the other state 537.26 or province; 537.27 (3) sales of promotional tickets as defined in section 537.28 349.12; and 537.29 (4) pull-tabs and tipboards sold to an organization that 537.30 sells pull-tabs and tipboards under the exemption from licensing 537.31 in section 349.166, subdivision 2. A distributor shall require 537.32 an organization conducting exempt gambling to show proof of its 537.33 exempt status before making a tax-exempt sale of pull-tabs or 537.34 tipboards to the organization. A distributor shall identify, on 537.35 all reports submitted to the commissioner, all sales of 537.36 pull-tabs and tipboards that are exempt from tax under this 538.1 subdivision. 538.2 (c) A distributor having a liability of $120,000 or more 538.3 during a fiscal year ending June 30 must remit all liabilities 538.4 in the subsequent calendar year bya funds transfer as defined538.5in section 336.4A-104, paragraph (a). The funds transfer538.6payment date, as defined in section 336.4A-401, must be on or538.7before the date the tax is due. If the date the tax is due is538.8not a funds transfer business day, as defined in section538.9336.4A-105, paragraph (a), clause (4), the payment date must be538.10on or before the funds transfer business day next following the538.11date the tax is dueelectronic means. 538.12 (d) Any customer who purchases deals of pull-tabs or 538.13 tipboards from a distributor may file an annual claim for a 538.14 refund or credit of taxes paid pursuant to this subdivision for 538.15 unsold pull-tab and tipboard tickets. The claim must be filed 538.16 with the commissioner on a form prescribed by the commissioner 538.17 by March 20 of the year following the calendar year for which 538.18 the refund is claimed. The refund must be filed as part of the 538.19 customer's February monthly return. The refund or credit is 538.20 equal to 1.7 percent of the face value of the unsold pull-tab or 538.21 tipboard tickets, provided that the refund or credit will be 538.22 1.75 percent of the face value of the unsold pull-tab or 538.23 tipboard tickets for claims for a refund or credit of taxes 538.24 filed on the February 2001 monthly return. The refund claimed 538.25 will be applied as a credit against tax owing under this chapter 538.26 on the February monthly return. If the refund claimed exceeds 538.27 the tax owing on the February monthly return, that amount will 538.28 be refunded. The amount refunded will bear interest pursuant to 538.29 section 270.76 from 90 days after the claim is filed. 538.30 [EFFECTIVE DATE.] This section is effective the day 538.31 following final enactment. 538.32 Sec. 17. Minnesota Statutes 2000, section 297F.09, 538.33 subdivision 7, is amended to read: 538.34 Subd. 7. [ELECTRONICFUNDS TRANSFERPAYMENT.] A cigarette 538.35 or tobacco products distributor having a liability of $120,000 538.36 or more during a fiscal year ending June 30 must remit all 539.1 liabilities in the subsequent calendar year by electronic means 539.2of a fund transfer as defined in section 336.4A-104, paragraph539.3(a). The funds transfer payment date, as defined in section539.4336.4A-401, must be on or before the date the tax is due. If539.5the date the tax is due is not a funds transfer business day, as539.6defined in section 336.4A-105, paragraph (a), clause (4), the539.7payment date must be on or before the funds transfer day539.8immediately following the date the tax is due. 539.9 [EFFECTIVE DATE.] This section is effective the day 539.10 following final enactment. 539.11 Sec. 18. Minnesota Statutes 2000, section 297G.09, 539.12 subdivision 6, is amended to read: 539.13 Subd. 6. [ELECTRONICFUNDS TRANSFERPAYMENTS.] A licensed 539.14 brewer, importer, or wholesaler having an excise tax liability 539.15 of $120,000 or more during a fiscal year ending June 30 must 539.16 remit all excise tax liabilities in the subsequent calendar year 539.17 by electronic meansof a funds transfer as defined in section539.18336.4A-104, paragraph (a). The funds transfer payment date, as539.19defined in section 336.4A-401, must be on or before the date the539.20excise tax is due. If the date the excise tax is due is not a539.21funds transfer business day, as defined in section 336.4A-105,539.22paragraph (a), clause (4), the payment date must be on or before539.23the funds transfer business day next following the date the539.24excise tax is due. 539.25 [EFFECTIVE DATE.] This section is effective the day 539.26 following final enactment. 539.27 Sec. 19. Minnesota Statutes 2000, section 297I.35, 539.28 subdivision 2, is amended to read: 539.29 Subd. 2. [ELECTRONICFUNDS TRANSFERPAYMENTS.] If the 539.30 aggregate amount of tax and surcharges due under this chapter 539.31 during a calendar year is equal to or exceeds $120,000, or if 539.32 the taxpayer is required to make payment of any other tax to the 539.33 commissioner by electronic meansof electronic funds transfer as539.34defined in section 336.4A-104, paragraph (a), then all tax and 539.35 surcharge payments in the subsequent calendar year must be paid 539.36 by electronic meansof a funds transfer as defined in section540.1336.4A-104, paragraph (a). The funds transfer payment date, as540.2defined in section 336.4A-104, must be on or before the date the540.3payment is due. If the date the payment is due is not a funds540.4transfer business day, as defined in section 336.4A-105,540.5paragraph (a), clause (4), the payment date must be on or before540.6the funds transfer business day next following the date the540.7payment is due. 540.8 [EFFECTIVE DATE.] This section is effective the day 540.9 following final enactment. 540.10 Sec. 20. Minnesota Statutes 2000, section 297I.85, 540.11 subdivision 7, is amended to read: 540.12 Subd. 7. [PENALTY FOR FAILURE TOMAKE PAYMENT BY540.13ELECTRONIC FUNDS TRANSFERPAY ELECTRONICALLY.] In addition to 540.14 other applicable penalties imposed by this section, if the 540.15 commissioner notifies the taxpayer that payments are required to 540.16 be made by electronic meansof electronic funds transfer, and 540.17 the payments are made by some other means, a penalty is 540.18 imposed. The amount of the penalty is equal to five percent of 540.19 each payment that should have been paid electronically. After 540.20 the commissioner's initial notification to the taxpayer that 540.21 payments are required to be made by electronic means, the 540.22 commissioner is not required to notify the taxpayer in 540.23 subsequent periods if the initial notification specified the 540.24 amount of tax liability at which a taxpayer is required to remit 540.25 payments by electronic means. The penalty may be abated under 540.26 the abatement procedures prescribed in section 270.07, 540.27 subdivision 6, if the failure to pay electronically is due to 540.28 reasonable cause. 540.29 [EFFECTIVE DATE.] This section is effective the day 540.30 following final enactment. 540.31 Sec. 21. Minnesota Statutes 2000, section 473.843, 540.32 subdivision 3, is amended to read: 540.33 Subd. 3. [PAYMENT OF FEE.] On or before the 20th day of 540.34 each month each operator shall pay the fee due under this 540.35 section for the previous month, using a form provided by the 540.36 commissioner of revenue. 541.1 An operator having a fee of $120,000 or more during a 541.2 fiscal year ending June 30 must pay all fees in the subsequent 541.3 calendar year by electronic meansof a funds transfer as defined541.4in section 336.4A-104, paragraph (a). The funds transfer541.5payment date, as defined in section 336.4A-401, must be on or541.6before the date the fee is due. If the date the fee is due is541.7not a funds transfer business day, as defined in section541.8336.4A-105, paragraph (a), clause (4), the payment date must be541.9on or before the funds transfer business day next following the541.10date the fee is due. 541.11 [EFFECTIVE DATE.] This section is effective the day 541.12 following final enactment. 541.13 ARTICLE 20 541.14 MISCELLANEOUS 541.15 Section 1. [12.38] [STATE AGENCIES; TEMPORARY WAIVER OF 541.16 FEES.] 541.17 Notwithstanding any law to the contrary, a state agency as 541.18 defined in section 16B.01, subdivision 2, with the approval of 541.19 the governor, may waive fees that would otherwise be charged for 541.20 agency services. The waiver of fees must be confined to 541.21 geographic areas within a disaster or emergency area as defined 541.22 in section 273.123, subdivision 1, and to the minimum periods of 541.23 time necessary to deal with the emergency situation. The 541.24 requirements of section 14.05, subdivision 4, do not apply to a 541.25 waiver made under this section. The agency must promptly report 541.26 the reasons for and the impact of any suspended fees to the 541.27 chairs of the legislative committees that oversee the policy and 541.28 budgetary affairs of the agency. 541.29 [EFFECTIVE DATE.] This section is effective the day 541.30 following final enactment and applies to disasters or 541.31 emergencies as defined in Minnesota Statutes, section 273.123, 541.32 subdivision 1, that occur after March 30, 2001. 541.33 Sec. 2. Minnesota Statutes 2000, section 16D.08, 541.34 subdivision 2, is amended to read: 541.35 Subd. 2. [POWERS.] (a) In addition to the collection 541.36 remedies available to private collection agencies in this state, 542.1 the commissioner, with legal assistance from the attorney 542.2 general, may utilize any statutory authority granted to a 542.3 referring agency for purposes of collecting debt owed to that 542.4 referring agency. The commissioner may also delegate to the 542.5 enterprise the tax collection remedies in sections 270.06, 542.6 clauses (7) and (17), excluding the power to subpoena witnesses; 542.7 270.66; 270.69, excluding subdivisions 7 and 13; 270.70, 542.8 excluding subdivision 14; 270.7001 to 270.72; and 290.92, 542.9 subdivision 23, except that a continuous wage levy under section 542.10 290.92, subdivision 23, is only effective for 70 days, unless no 542.11 competing wage garnishments, executions, or levies are served 542.12 within the 70-day period, in which case a wage levy is 542.13 continuous until a competing garnishment, execution, or levy is 542.14 served in the second or a succeeding 70-day period, in which 542.15 case a continuous wage levy is effective for the remainder of 542.16 that period. A debtor who qualifies for cancellation of 542.17 collection costs under section 16D.11, subdivision 3, clause 542.18 (1), can apply to the commissioner for reduction or release of a 542.19 continuous wage levy, if the debtor establishes that the debtor 542.20 needs all or a portion of the wages being levied upon to pay for 542.21 essential living expenses, such as food, clothing, shelter, 542.22 medical care, or expenses necessary for maintaining employment. 542.23 The commissioner's determination not to reduce or release a 542.24 continuous wage levy is appealable to district court. The word 542.25 "tax" or "taxes" when used in the tax collection statutes listed 542.26 in this subdivision also means debts referred under this chapter. 542.27 (b) For debts other than state taxesor, child support, or 542.28 student loans, before any of the tax collection remedies listed 542.29 in this subdivision can be used, except for the remedies in 542.30 section 270.06, clauses (7) and (17), if the referring agency 542.31 has not already obtained a judgment or filed a lien, the 542.32 commissioner must first obtain a judgment against the debtor. 542.33 For student loans when the referring agency has not obtained a 542.34 judgment or filed a lien, before using the tax collection 542.35 remedies listed in this subdivision, except for the remedies in 542.36 section 270.06, clauses (7) and (17), the commissioner shall 543.1 give the debtor 30 days' notice in writing, which may be served 543.2 in any manner permitted in section 270.68 for service of a 543.3 summons and complaint. The notice must advise the debtor of the 543.4 debtor's right to request that the commissioner commence a court 543.5 action, and that if no such request is made within 30 days after 543.6 service of the notice, the commissioner may use these tax 543.7 collection remedies. If a timely request is made, the 543.8 commissioner shall obtain a judgment before using these tax 543.9 collection remedies. 543.10 [EFFECTIVE DATE.] This section is effective for student 543.11 loans referred to the commissioner for collection on or after 543.12 July 1, 2001. 543.13 Sec. 3. Minnesota Statutes 2000, section 144.3831, 543.14 subdivision 2, is amended to read: 543.15 Subd. 2. [COLLECTION AND PAYMENT OF FEE.] The public water 543.16 supply described in subdivision 1 shall: 543.17 (1) collect the fees assessed on its service connections; 543.18 (2) pay the department ofrevenuehealth an amount 543.19 equivalent to the fees based on the total number of service 543.20 connections. The service connections for each public water 543.21 supply described in subdivision 1 shall be verified every four 543.22 years by the department of health; and 543.23 (3) pay one-fourth of the total yearly fee to the 543.24 department ofrevenuehealth each calendar quarter. The first 543.25 quarterly payment is due on or before September 30, 1992. In 543.26 lieu of quarterly payments, a public water supply described in 543.27 subdivision 1 with fewer than 50 service connections may make a 543.28 single annual payment by June 30 each year, starting in 1993. 543.29 The fees payable to the department ofrevenuehealth shall be 543.30 deposited in the state treasury as nondedicated state government 543.31 special revenue fund revenues. 543.32 [EFFECTIVE DATE.] This section is effective the day 543.33 following final enactment. 543.34 Sec. 4. Minnesota Statutes 2000, section 270.06, is 543.35 amended to read: 543.36 270.06 [POWERS AND DUTIES.] 544.1 The commissioner of revenue shall: 544.2 (1) have and exercise general supervision over the 544.3 administration of the assessment and taxation laws of the state, 544.4 over assessors, town, county, and city boards of review and 544.5 equalization, and all other assessing officers in the 544.6 performance of their duties, to the end that all assessments of 544.7 property be made relatively just and equal in compliance with 544.8 the laws of the state; 544.9 (2) confer with, advise, and give the necessary 544.10 instructions and directions to local assessors and local boards 544.11 of review throughout the state as to their duties under the laws 544.12 of the state; 544.13 (3) direct proceedings, actions, and prosecutions to be 544.14 instituted to enforce the laws relating to the liability and 544.15 punishment of public officers and officers and agents of 544.16 corporations for failure or negligence to comply with the 544.17 provisions of the laws of this state governing returns of 544.18 assessment and taxation of property, and cause complaints to be 544.19 made against local assessors, members of boards of equalization, 544.20 members of boards of review, or any other assessing or taxing 544.21 officer, to the proper authority, for their removal from office 544.22 for misconduct or negligence of duty; 544.23 (4) require county attorneys to assist in the commencement 544.24 of prosecutions in actions or proceedings for removal, 544.25 forfeiture and punishment for violation of the laws of this 544.26 state in respect to the assessment and taxation of property in 544.27 their respective districts or counties; 544.28 (5) require town, city, county, and other public officers 544.29 to report information as to the assessment of property, 544.30 collection of taxes received from licenses and other sources, 544.31 and such other information as may be needful in the work of the 544.32 department of revenue, in such form and upon such blanks as the 544.33 commissioner may prescribe; 544.34 (6) require individuals, copartnerships, companies, 544.35 associations, and corporations to furnish information concerning 544.36 their capital, funded or other debt, current assets and 545.1 liabilities, earnings, operating expenses, taxes, as well as all 545.2 other statements now required by law for taxation purposes; 545.3 (7) subpoena witnesses, at a time and place reasonable 545.4 under the circumstances, to appear and give testimony, and to 545.5 produce books, records, papers and documents for inspection and 545.6 copying relating to any matter which the commissioner may have 545.7 authority to investigate or determine; 545.8 (8) issue a subpoena which does not identify the person or 545.9 persons with respect to whose liability the subpoena is issued, 545.10 but only if (a) the subpoena relates to the investigation of a 545.11 particular person or ascertainable group or class of persons, 545.12 (b) there is a reasonable basis for believing that such person 545.13 or group or class of persons may fail or may have failed to 545.14 comply with any law administered by the commissioner, (c) the 545.15 information sought to be obtained from the examination of the 545.16 records (and the identity of the person or persons with respect 545.17 to whose liability the subpoena is issued) is not readily 545.18 available from other sources, (d) the subpoena is clear and 545.19 specific as to the information sought to be obtained, and (e) 545.20 the information sought to be obtained is limited solely to the 545.21 scope of the investigation. Provided further that the party 545.22 served with a subpoena which does not identify the person or 545.23 persons with respect to whose tax liability the subpoena is 545.24 issued shall have the right, within 20 days after service of the 545.25 subpoena, to petition the district court for the judicial 545.26 district in which lies the county in which that party is located 545.27 for a determination as to whether the commissioner of revenue 545.28 has complied with all the requirements in (a) to (e), and thus, 545.29 whether the subpoena is enforceable. If no such petition is 545.30 made by the party served within the time prescribed, the 545.31 subpoena shall have the force and effect of a court order; 545.32 (9) cause the deposition of witnesses residing within or 545.33 without the state, or absent therefrom, to be taken, upon notice 545.34 to the interested party, if any, in like manner that depositions 545.35 of witnesses are taken in civil actions in the district court, 545.36 in any matter which the commissioner may have authority to 546.1 investigate or determine; 546.2 (10) investigate the tax laws of other states and countries 546.3 and to formulate and submit to the legislature such legislation 546.4 as the commissioner may deem expedient to prevent evasions of 546.5 assessment and taxing laws, and secure just and equal taxation 546.6 and improvement in the system of assessment and taxation in this 546.7 state; 546.8 (11) consult and confer with the governor upon the subject 546.9 of taxation, the administration of the laws in regard thereto, 546.10 and the progress of the work of the department of revenue, and 546.11 furnish the governor, from time to time, such assistance and 546.12 information as the governor may require relating to tax matters; 546.13 (12) transmit to the governor, on or before the third 546.14 Monday in December of each even-numbered year, and to each 546.15 member of the legislature, on or before November 15 of each 546.16 even-numbered year, the report of the department of revenue for 546.17 the preceding years, showing all the taxable property in the 546.18 state and the value of the same, in tabulated form; 546.19 (13) inquire into the methods of assessment and taxation 546.20 and ascertain whether the assessors faithfully discharge their 546.21 duties, particularly as to their compliance with the laws 546.22 requiring the assessment of all property not exempt from 546.23 taxation; 546.24 (14) administer and enforce the assessment and collection 546.25 of state taxes and fees, including the use of any remedy 546.26 available to nongovernmental creditors, and, from time to time, 546.27 make, publish, and distribute rules for the administration and 546.28 enforcement of assessments and fees administered by the 546.29 commissioner and state tax laws. The rules have the force of 546.30 law; 546.31 (15) prepare blank forms for the returns required by state 546.32 tax law and distribute them throughout the state, furnishing 546.33 them subject to charge on application; 546.34 (16) prescribe rules governing the qualification and 546.35 practice of agents, attorneys, or other persons representing 546.36 taxpayers before the commissioner. The rules may require that 547.1 those persons, agents, and attorneys show that they are of good 547.2 character and in good repute, have the necessary qualifications 547.3 to give taxpayers valuable services, and are otherwise competent 547.4 to advise and assist taxpayers in the presentation of their case 547.5 before being recognized as representatives of taxpayers. After 547.6 due notice and opportunity for hearing, the commissioner may 547.7 suspend anddisbarbar from further practice before the 547.8 commissioner any person, agent, or attorney who is shown to be 547.9 incompetent or disreputable, who refuses to comply with the 547.10 rules, or who with intent to defraud, willfully or knowingly 547.11 deceives, misleads, or threatens a taxpayer or prospective 547.12 taxpayer, by words, circular, letter, or by advertisement. This 547.13 clause does not curtail the rights of individuals to appear in 547.14 their own behalf or partners or corporations' officers to appear 547.15 in behalf of their respective partnerships or corporations; 547.16 (17) appoint agents as the commissioner considers necessary 547.17 to make examinations and determinations. The agents have the 547.18 rights and powers conferred on the commissioner to subpoena, 547.19 examine, and copy books, records, papers, or memoranda, subpoena 547.20 witnesses, administer oaths and affirmations, and take 547.21 testimony. In addition to administrative subpoenas of the 547.22 commissioner and the agents, upon demand of the commissioner or 547.23 an agent, the court administrator of any district court shall 547.24 issue a subpoena for the attendance of a witness or the 547.25 production of books, papers, records, or memoranda before the 547.26 agent for inspection and copying. Disobedience of a court 547.27 administrator's subpoena shall be punished by the district court 547.28 of the district in which the subpoena is issued, or in the case 547.29 of a subpoena issued by the commissioner or an agent, by the 547.30 district court of the district in which the party served with 547.31 the subpoena is located, in the same manner as contempt of the 547.32 district court; 547.33 (18) appoint and employ additional help, purchase supplies 547.34 or materials, or incur other expenditures in the enforcement of 547.35 state tax laws as considered necessary. The salaries of all 547.36 agents and employees provided for in this chapter shall be fixed 548.1 by the appointing authority, subject to the approval of the 548.2 commissioner of administration; 548.3 (19) execute and administer any agreement with the 548.4 secretary of the treasury of the United States or a 548.5 representative of another state regarding the exchange of 548.6 information and administration of the tax laws; 548.7 (20) administer and enforce the provisions of sections 548.8 325D.30 to 325D.42, the Minnesota Unfair Cigarette Sales Act; 548.9 (21) authorize the use of unmarked motor vehicles to 548.10 conduct seizures or criminal investigations pursuant to the 548.11 commissioner's authority; and 548.12 (22) exercise other powers and perform other duties 548.13 required of or imposed upon the commissioner of revenue by law. 548.14 [EFFECTIVE DATE.] This section is effective the day 548.15 following final enactment. 548.16 Sec. 5. Minnesota Statutes 2000, section 270.07, 548.17 subdivision 3, is amended to read: 548.18 Subd. 3. [ADDITIONAL POWERS OF COMMISSIONER.] 548.19 Notwithstanding any other provision of law the commissioner of 548.20 revenue may, 548.21 (a) based upon the administrative costs of processing, 548.22 determine minimum standards for the determination of additional 548.23 tax for which an order shall be issued, and 548.24 (b) based upon collection costs as compared to the amount 548.25 of tax involved, determine minimum standards of collection, and 548.26 (c) based upon the administrative costs of processing, 548.27 determine the minimum amount of refunds for which an order shall 548.28 be issued and refund made where no claim therefor has been 548.29 filed, and 548.30 (d) cancel any amounts below these minimum standards 548.31 determined under (a) and (b) hereof, and 548.32 (e) based upon the inability of a taxpayer to pay a 548.33 delinquent tax liability, abate the liability if the taxpayer 548.34 agrees to perform uncompensated public service work for a state 548.35 agency, a political subdivision or public corporation of this 548.36 state, or a nonprofit educational, medical, or social service 549.1 agency. The department of corrections shall administer the work 549.2 program. No benefits under chapter 176 or 268 shall be 549.3 available, but a claim authorized under section 3.739 may be 549.4 made by the taxpayer. The state may not enter into any 549.5 agreement that has the purpose of or results in the displacement 549.6 of public employees by a delinquent taxpayer under this 549.7 section. The state must certify to the appropriate bargaining 549.8 agent or employees, as applicable, that the work performed by a 549.9 delinquent taxpayer will not result in the displacement of 549.10 currently employed workers or layoff from a substantially 549.11 equivalent position, including partial displacement such as 549.12 reduction in hours of nonovertime work, wages, or other 549.13 employment benefits, and 549.14 (f) based on a showing of reasonable cause: (1) reissue an 549.15 uncashed rebate warrant or check that has lapsed under any 549.16 provision of law relating to rebates; or (2) reissue an uncashed 549.17 tax refund warrant or check that has not lapsed by law, but has 549.18 been reported to the commissioner of commerce as abandoned 549.19 property under the Uniform Disposition of Unclaimed Property Act 549.20 in sections 345.31 to 345.60. The authority to reissue warrants 549.21 or checks under this paragraph is limited to five years after 549.22 the date of issuance of the original warrant or check. 549.23 [EFFECTIVE DATE.] This section is effective the day 549.24 following final enactment. 549.25 Sec. 6. [270.277] [NOTICES TO HOLDERS OF POWERS OF 549.26 ATTORNEY.] 549.27 If a taxpayer has executed a written power of attorney, in 549.28 a form prescribed by the commissioner, the commissioner shall 549.29 allow the taxpayer to elect, in writing, that all notices and 549.30 correspondence between the department of revenue and the 549.31 taxpayer will be sent to the holder of the power of attorney. 549.32 Sec. 7. Minnesota Statutes 2000, section 270.60, 549.33 subdivision 4, is amended to read: 549.34 Subd. 4. [PAYMENTS TO COUNTIES.] (a) The commissioner 549.35 shall pay to a county in which an Indian gaming casino is 549.36 located ten percent of the state share of all taxes generated 550.1 from activities on reservations and collected under a tax 550.2 agreement under this section with the tribal government for the 550.3 reservation located in the county. If the tribe has casinos 550.4 located in more than one county, the payment must be divided 550.5 equally among the counties in which the casinos are located. 550.6 (b)A county is a qualified county under this subdivision550.7if one of the following conditions is met:550.8(1) the county's per capita income is less than 80 percent550.9of the state per capita personal income, based on the most550.10recent estimates made by the United States Bureau of Economic550.11Analysis; or550.12(2) 30 percent or more of the total market value of real550.13property in the county is exempt from ad valorem taxation.550.14(c)The commissioner shall make the payments required under 550.15 this subdivision by February 28 of the year following the year 550.16 the taxes are collected. 550.17(d)(c) An amount sufficient to make the payments 550.18 authorized by this subdivision, not to exceed $1,100,000 in any550.19fiscal year,is annually appropriated from the general fund to 550.20 the commissioner.If the authorized payments exceed the amount550.21of the appropriation, the commissioner shall first550.22proportionately reduce the payments to counties other than550.23qualified counties so that the total amount equals the550.24appropriation. If the authorized payments to qualified counties550.25also exceed the amount of the appropriation, the commissioner550.26shall then proportionately reduce the rate so that the total550.27amount to be paid to qualified counties equals the appropriation.550.28 [EFFECTIVE DATE.] This section is effective for payments 550.29 made after December 31, 2001. 550.30 Sec. 8. Minnesota Statutes 2000, section 270.60, is 550.31 amended by adding a subdivision to read: 550.32 Subd. 5. [FEES; APPROPRIATION.] (a) The commissioner may 550.33 enter into an agreement with the governing body of any federally 550.34 recognized Indian reservation in Minnesota concerning fees 550.35 administered by the commissioner that are paid by the tribe, 550.36 members of the tribe, or persons who conduct business with the 551.1 tribe, or otherwise imposed on on-reservation activities. The 551.2 agreement may provide for the refund or sharing of the fee. The 551.3 commissioner may make any payments required by the agreement 551.4 from the fees collected. 551.5 (b) Each head of an agency, board, or other governmental 551.6 entity that administers a program that is funded by fees 551.7 administered by the commissioner may sign an agreement entered 551.8 into by the commissioner under this subdivision. An agreement 551.9 is not valid until signed by the head of each agency, board, or 551.10 other governmental entity that administers a program funded by 551.11 the particular fee covered in an agreement and by the 551.12 commissioner of revenue. 551.13 (c) There is annually appropriated to the commissioner of 551.14 revenue from the funds for which the fees are collected the 551.15 amounts necessary to make payments as provided in this 551.16 subdivision. 551.17 [EFFECTIVE DATE.] This section is effective the day 551.18 following final enactment and applies to all fees administered 551.19 by the commissioner of revenue for which timely claims for 551.20 refund have been, or can be, filed. 551.21 Sec. 9. [270.691] [PUBLICATION OF NAMES OF DELINQUENT 551.22 TAXPAYERS.] 551.23 Subdivision 1. [COMMISSIONER MAY PUBLISH.] (a) 551.24 Notwithstanding any other law, the commissioner may publish a 551.25 list or lists of taxpayers who owe delinquent taxes or fees 551.26 administered by the commissioner, and who meet the requirements 551.27 of paragraph (b). 551.28 (b) For purposes of this section, a taxpayer may be 551.29 included on a list if: 551.30 (1) the taxes or fees owed remain unpaid at least 180 days 551.31 after the dates they were due; 551.32 (2) the taxpayer's total liability for the taxes and fees, 551.33 including penalties, interest, and other charges, is at least 551.34 $5,000; and 551.35 (3) a tax lien has been filed or a judgment for the 551.36 liability has been entered against the taxpayer before notice is 552.1 given under subdivision 3. 552.2 (c) In the case of listed taxpayers that are business 552.3 entities, the commissioner may also list the names of 552.4 responsible persons assessed pursuant to section 270.101 for 552.5 listed liabilities, who are not protected from publication by 552.6 subdivision 2, and for whom the requirements of paragraph (b) 552.7 are satisfied with regard to the personal assessment. 552.8 Subd. 2. [REQUIRED AND EXCLUDED TAXPAYERS.] (a) The 552.9 commissioner may publish lists of some or all of the taxpayers 552.10 described in subdivision 1. A list must include the taxpayers 552.11 with the largest unpaid liabilities of the kind used to define 552.12 the list, subject to the limitations of paragraphs (b) and (c). 552.13 (b) For the purposes of this section, a tax or fee is not 552.14 delinquent if: 552.15 (1) an administrative or court action contesting the amount 552.16 or validity of the taxpayer's liability has been filed or served 552.17 and is unresolved at the time when notice would be given under 552.18 subdivision 3; 552.19 (2) an appeal period to contest the liability has not 552.20 expired; or 552.21 (3) the liability is subject to a payment agreement and 552.22 there is no delinquency in the payments required under the 552.23 agreement. 552.24 (c) Unpaid liabilities are not subject to publication if: 552.25 (1) the commissioner is in the process of reviewing or 552.26 adjusting the liability; 552.27 (2) the taxpayer is a debtor in a bankruptcy proceeding and 552.28 the automatic stay is in effect; 552.29 (3) the commissioner has been notified that the taxpayer is 552.30 deceased; or 552.31 (4) the time period for collecting the taxes or fees has 552.32 expired. 552.33 Subd. 3. [NOTICE TO TAXPAYER.] (a) At least 30 days before 552.34 publishing the name of a delinquent taxpayer, the commissioner 552.35 shall mail a written notice to the taxpayer, detailing the 552.36 amount and nature of each liability and the intended publication 553.1 of the information listed in subdivision 4 related to the 553.2 liability. The notice must be mailed by first class and 553.3 certified mail addressed to the last known address of the 553.4 taxpayer. The notice must include information regarding the 553.5 exceptions listed in subdivision 2 and must state that the 553.6 taxpayer's information will not be published if the taxpayer 553.7 pays the delinquent obligation, enters into an agreement to pay, 553.8 or provides information establishing that subdivision 2 553.9 prohibits publication of the taxpayer's name. 553.10 (b) After at least 30 days has elapsed since the notice was 553.11 mailed and the delinquent tax or fee has not been paid and the 553.12 taxpayer has not proved to the commissioner that subdivision 2 553.13 prohibits publication, the commissioner may publish in a list of 553.14 delinquent taxpayers the information about the taxpayer that is 553.15 listed in subdivision 4. 553.16 Subd. 4. [FORM OF LIST.] The list may be published by any 553.17 medium or method. The list must contain the name, address, type 553.18 of tax or fee, and period for which payment is due for each 553.19 liability, including penalties, interest, and other charges owed 553.20 by each listed delinquent taxpayer. 553.21 Subd. 5. [REMOVAL FROM LIST.] The commissioner shall 553.22 remove the name of a taxpayer from the list of delinquent 553.23 taxpayers after the commissioner receives written notice of and 553.24 verifies any of the following facts about the liability in 553.25 question: 553.26 (1) the taxpayer has contacted the commissioner and 553.27 arranged resolution of the liability; 553.28 (2) an active bankruptcy proceeding has been initiated for 553.29 the liability; 553.30 (3) a bankruptcy proceeding concerning the liability has 553.31 resulted in discharge of the liability; or 553.32 (4) the commissioner has written off the liability. 553.33 Subd. 6. [NAMES PUBLISHED IN ERROR.] If the commissioner 553.34 publishes a name under subdivision 1 in error, the taxpayer 553.35 whose name was erroneously published has a right to request a 553.36 retraction and apology. If the taxpayer so requests, the 554.1 commissioner shall publish a retraction and apology 554.2 acknowledging that the taxpayer's name was published in error. 554.3 The retraction and apology must appear in the same medium and 554.4 the same format as the original list that contained the name 554.5 listed in error. 554.6 [EFFECTIVE DATE.] This section is effective the day 554.7 following final enactment for all liabilities owing on that date 554.8 for which the statute of limitations for collection has not 554.9 expired, and all liabilities arising after that date. 554.10 Sec. 10. Minnesota Statutes 2000, section 270.70, 554.11 subdivision 13, is amended to read: 554.12 Subd. 13. [LEVY AND SALE BY SHERIFF.] If any tax payable 554.13 to the commissioner of revenue or to the department of revenue 554.14 is not paid as provided in subdivision 2, the commissioner may,554.15within five years after the date of assessment of the554.16tax, within the time periods provided in subdivision 1 for 554.17 collection of taxes, delegate the authority granted by 554.18 subdivision 1, by means of issuing a warrant to the sheriff of 554.19 any county of the state commanding the sheriff, as agent for the 554.20 commissioner, to levy upon and sell the real and personal 554.21 property of the person liable for the payment or collection of 554.22 the tax and to levy upon the rights to property of that person 554.23 within the county, or to levy upon and seize any property within 554.24 the county on which there is a lien provided in section 270.69, 554.25 and to return the warrant to the commissioner and pay to the 554.26 commissioner the money collected by virtue thereof by a time to 554.27 be therein specified not less than 60 days from the date of the 554.28 warrant. The sheriff shall proceed thereunder to levy upon and 554.29 seize any property of the person and to levy upon the rights to 554.30 property of the person within the county (except the person's 554.31 homestead or that property which is exempt from execution 554.32 pursuant to section 550.37), or to levy upon and seize any 554.33 property within the county on which there is a lien provided in 554.34 section 270.69. For purposes of the preceding sentence, the 554.35 term "tax" shall include any penalty, interest and costs 554.36 properly payable. The sheriff shall then sell so much of the 555.1 property levied upon as is required to satisfy the taxes, 555.2 interest, and penalties, together with the sheriff's costs; but 555.3 the sales, and the time and manner of redemption therefrom, 555.4 shall, to the extent not provided in sections 270.701 to 555.5 270.709, be governed by chapter 550. The proceeds of the sales, 555.6 less the sheriff's costs, shall be turned over to the 555.7 commissioner, who shall then apply the proceeds as provided in 555.8 section 270.708. 555.9 [EFFECTIVE DATE.] This section is effective the day 555.10 following final enactment for all taxes for which issuance of a 555.11 warrant under this subdivision has not been barred as of that 555.12 date. 555.13 Sec. 11. Minnesota Statutes 2000, section 270.73, 555.14 subdivision 1, is amended to read: 555.15 Subdivision 1. [POSTING, NOTICE.] Pursuant to the 555.16 authority to disclose under section 270B.12, subdivision 4, the 555.17 commissioner shall, by the 15th of each month, submit to the 555.18 commissioner of public safety a list of all taxpayers who are 555.19 required to pay, withhold, or collect the tax imposed by section 555.20 290.02, 290.0922, 290.92, 290.9727, 290.9728, 290.9729, or 555.21 297A.02, or local sales and use tax payable to the commissioner 555.22 of revenue, or a local option tax administered and collected by 555.23 the commissioner of revenue, and who are ten days or more 555.24 delinquent in either filing a tax return or paying the tax. 555.25 The commissioner of revenue is under no obligation to list 555.26 a taxpayer whose business is inactive. At least ten days before 555.27 notifying the commissioner of public safety, the commissioner of 555.28 revenue shall notify the taxpayer of the intended action. 555.29 The commissioner of public safety shall post the list in 555.30 the same manner as provided in section 340A.318, subdivision 3. 555.31 The list will prominently show the date of posting. If a 555.32 taxpayer previously listed files all returns and pays all taxes 555.33 then due, the commissioner shall notify the commissioner of 555.34 public safety within two business days. 555.35 [EFFECTIVE DATE.] This section is effective for lists 555.36 submitted to the commissioner of public safety on or after the 556.1 day following final enactment. 556.2 Sec. 12. Minnesota Statutes 2000, section 270A.11, is 556.3 amended to read: 556.4 270A.11 [DATA PRIVACY.] 556.5 Private and confidential data on individuals may be 556.6 exchanged among the department, the taxpayer's rights advocate, 556.7 the attorney general, the claimant agency, and the debtor as 556.8 necessary to accomplish and effectuate the intent of sections 556.9 270A.01 to 270A.12, as provided by section 13.05, subdivision 4, 556.10 clause (b). The department may disclose to the claimant agency 556.11 only the debtor's name, address, social security number and the 556.12 amount of the refund, and in the case of a joint return, the 556.13 name of the debtor's spouse. Any person employed by, or 556.14 formerly employed by, a claimant agency who discloses any such 556.15 information for any other purpose, shall be subject to the civil 556.16 and criminal penalties of section 270B.18. Data collected by 556.17 the department from claimant agencies relating to claims filed 556.18 under this chapter are private data on individuals. 556.19 [EFFECTIVE DATE.] This section is effective the day 556.20 following final enactment. 556.21 Sec. 13. Minnesota Statutes 2000, section 270B.02, 556.22 subdivision 2, is amended to read: 556.23 Subd. 2. [PROTECTED NONPUBLIC DATA.] The following are 556.24 protected nonpublic data as defined in section 13.02, 556.25 subdivision 13: 556.26 (1) criteria for determining which computer processed 556.27 returns are selected for audit; 556.28 (2) criteria for determining which returns are selected for 556.29 an in-depth audit;and556.30 (3) criteria for determining which accounts receivable 556.31 balances below a stated amount are written off or canceled; and 556.32 (4) criteria or information used in determining which 556.33 alleged criminal violations of any law administered by the 556.34 commissioner are selected for criminal investigation. 556.35 [EFFECTIVE DATE.] This section is effective the day 556.36 following final enactment. 557.1 Sec. 14. Minnesota Statutes 2000, section 270B.02, 557.2 subdivision 3, is amended to read: 557.3 Subd. 3. [CONFIDENTIAL DATA ON INDIVIDUALS; PROTECTED 557.4 NONPUBLIC DATA.] (a) Except as provided in paragraph (b), the 557.5 name or existence of an informer, informer letters, and other 557.6unsoliciteddata, in whatever form, given to the department of 557.7 revenue by a person, other than the data subject, who informs 557.8 that a specific taxpayer is not or may not be in compliance with 557.9 tax laws, or nontax laws administered by the department of 557.10 revenue, including laws not listed in section 270B.01, 557.11 subdivision 8, are confidential data on individuals or protected 557.12 nonpublic data as defined in section 13.02, subdivisions 3 and 557.13 13. 557.14 (b) Data under paragraph (a) may be disclosed with the 557.15 consent of the informer or upon a written finding by a court 557.16 that the information provided by the informer was false and that 557.17 there is evidence that the information was provided in bad 557.18 faith. This subdivision does not alter disclosure 557.19 responsibilities or obligations under the rules of criminal 557.20 procedure. 557.21 [EFFECTIVE DATE.] This section is effective the day 557.22 following final enactment. 557.23 Sec. 15. Minnesota Statutes 2000, section 270B.03, 557.24 subdivision 6, is amended to read: 557.25 Subd. 6. [INVESTIGATIVE DATA.] For purposes of any law 557.26 administered by the department of revenue, including laws not 557.27 listed in section 270B.01, subdivision 8, investigative data 557.28 collected or created by the department of revenue in order to 557.29 prepare a case against a person, whether known or unknown, for 557.30 the commission of a crime is confidential or protected nonpublic 557.31 during an investigation. When the investigation becomes 557.32 inactive, as defined in section 13.82, subdivision 5, the 557.33classifications otherwise applicable under any other laws become557.34effectivedata is private or nonpublic. 557.35 [EFFECTIVE DATE.] This section is effective the day 557.36 following final enactment. 558.1 Sec. 16. Minnesota Statutes 2000, section 289A.60, 558.2 subdivision 7, is amended to read: 558.3 Subd. 7. [PENALTY FOR FRIVOLOUS RETURN.] Ifan individual558.4 a taxpayer files what purports to be a tax returnrequired by558.5chapter 290or a claim for refund but which does not contain 558.6 information on which the substantial correctness of 558.7 theassessmentpurported return or claim for refund may be 558.8 judged or contains information that on its face shows that the 558.9assessmentpurported return or claim for refund is substantially 558.10 incorrect and the conduct is due to a position that is frivolous 558.11 or a desire that appears on the purported return or claim for 558.12 refund to delay or impede the administration of Minnesota tax 558.13 laws, then the individual shall pay a penalty of $500. In a 558.14 proceeding involving the issue of whether or not a person is 558.15 liable for this penalty, the burden of proof is on the 558.16 commissioner. 558.17 [EFFECTIVE DATE.] This section is effective for returns or 558.18 claims for refunds filed on or after the day following final 558.19 enactment. 558.20 Sec. 17. Minnesota Statutes 2000, section 345.41, is 558.21 amended to read: 558.22 345.41 [REPORT OF ABANDONED PROPERTY.] 558.23 (a) Every person holding funds or other property, tangible 558.24 or intangible, presumed abandoned under sections 345.31 to 558.25 345.60 shall report annually to the commissioner with respect to 558.26 the property as hereinafter provided. 558.27 (b) The report shall be verified and shall include: 558.28 (1) except with respect to traveler's checks and money 558.29 orders, the name, if known, and last known address, if any, of 558.30 each person appearing from the records of the holder to be the 558.31 owner of any property of the value of $100 or more presumed 558.32 abandoned under sections 345.31 to 345.60; 558.33 (2) in case of unclaimed funds of life insurance 558.34 corporations, the full name of the policyholder, insured or 558.35 annuitant and that person's last known address according to the 558.36 life insurance corporation's records; 559.1 (3) the nature and identifying number, if any, or 559.2 description of the property and the amount appearing from the 559.3 records to be due, except that items of value under $100 each 559.4 may be reported in aggregate; 559.5 (4) the date when the property became payable, demandable 559.6 or returnable, and the date of the last transaction with the 559.7 owner with respect to the property; and 559.8 (5) other information which the commissioner prescribes by 559.9 rule as necessary for the administration of sections 345.31 to 559.10 345.60. 559.11 (c) If the person holding property presumed abandoned is a 559.12 successor to other persons who previously held the property for 559.13 the owner, or if the holder has changed a name while holding the 559.14 property, the holder shall file with the report all prior known 559.15 names and addresses of each holder of the property. 559.16 (d) The report shall be filed before November 1 of each 559.17 year as of June 30 next preceding, but the report of life 559.18 insurance corporations shall be filed before October 1 of each 559.19 year as of December 31 next preceding. The commissioner may 559.20 postpone the reporting date upon written request by any person 559.21 required to file a report. 559.22 (e) Not more than 120 days before filing the report 559.23 required by this section, the holder in possession of property 559.24 abandoned and subject to custody as unclaimed property under 559.25 this chapter shall send written notice to the presumed owner at 559.26 that owner's last known address informing the owner that the 559.27 holder is in possession of property subject to this chapter and 559.28 advising the owner of the steps necessary to prevent abandonment 559.29 if: 559.30 (1) the holder has in its records an address for the 559.31 presumed owner that the holder's records do not disclose to be 559.32 inaccurate; 559.33 (2) the claim of the apparent owner is not barred by the 559.34 statute of limitations; and 559.35 (3) the property has a value of $100 or more. 559.36 (f) Verification, if made by a partnership, shall be 560.1 executed by a partner; if made by an unincorporated association 560.2 or private corporation, by an officer, and if made by a public 560.3 corporation, by its chief fiscal officer. 560.4 (g) Holders of property described in section 345.32 shall 560.5 not impose any charges against property which is described in 560.6 section 345.32, clause (a), (b) or (c). 560.7 (h) Any person who has possession of property which the 560.8 person has reason to believe will be reportable in the future as 560.9 unclaimed property may, with the permission of the commissioner, 560.10 report and deliver such property prior to the date required for 560.11 reporting in accordance with this section. 560.12 (i) Before the last day of each calendar year, the 560.13 commissioner of revenue shall report to the commissioner as 560.14 unclaimed property under this section any uncashed checks or 560.15 warrants for overpayments of taxes that were issued more than 560.16 one year before the end of the calendar quarter immediately 560.17 preceding the end of the calendar year. 560.18 [EFFECTIVE DATE.] This section is effective August 1, 2001. 560.19 Sec. 18. Minnesota Statutes 2000, section 345.42, is 560.20 amended by adding a subdivision to read: 560.21 Subd. 5. [UNCASHED TAX REFUNDS.] The commissioner of 560.22 revenue shall notify the commissioner of any checks or warrants 560.23 reported under section 345.41 that the commissioner of revenue 560.24 has reissued under section 270.07, subdivision 3, clause (f). 560.25 The commissioner shall remove the item from any future 560.26 publication of lists or notifications of owners of abandoned 560.27 property. 560.28 [EFFECTIVE DATE.] This section is effective August 1, 2001. 560.29 Sec. 19. [471.699] [EXTENSION OF FINANCIAL REPORT FILING 560.30 TIME LIMITS; DISASTER AREAS.] 560.31 The time limit by which financial reports are required to 560.32 be filed under section 471.697 or 471.698, is extended by 90 560.33 days for any city or town located in whole or in part within a 560.34 disaster or emergency area as defined in section 273.123, 560.35 subdivision 1, if the time period for which the area is so 560.36 designated includes at least one of the 30 days immediately 561.1 preceding the time limit. 561.2 [EFFECTIVE DATE.] This section is effective the day 561.3 following final enactment. 561.4 Sec. 20. Laws 1998, chapter 389, article 16, section 35, 561.5 subdivision 1, is amended to read: 561.6 Subdivision 1. [BAT STUDY.] $100,000 is appropriated from 561.7 the general fund for fiscal year 1999 to the legislative 561.8 coordinating commission to study alternative methods of taxing 561.9 business. The appropriations under this section and under Laws 561.10 1997, chapter 231, article 5, section 18, subdivision 3, are 561.11 available in fiscal years 2000 and 2001. Any portion of this 561.12 appropriation that cancels in 2001 is appropriated in 2002 and 561.13 is available until June 30, 2003. 561.14 Sec. 21. [APPROPRIATION.] 561.15 The following amounts are appropriated to the commissioner 561.16 of revenue from the general fund to administer this act: 561.17 (1) $2,050,000 in fiscal year 2002; and 561.18 (2) $900,000 in fiscal year 2003. 561.19 These are one-time appropriations and are not added to the 561.20 base, except $175,000 for each year for assessment training and 561.21 education (regional representatives) is added to the budget base. 561.22 Sec. 22. [REPEALER.] 561.23 Minnesota Statutes 2000, sections 16A.1521 and 290A.18, 561.24 subdivision 2, are repealed. 561.25 [EFFECTIVE DATE.] This section is effective the day 561.26 following final enactment.