HF 2552

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; making policy and administrative 
  1.3             changes to certain taxes and tax provisions, state 
  1.4             debt collection procedures, sustainable forest 
  1.5             incentive programs, and tax data provisions; amending 
  1.6             Minnesota Statutes 2002, sections 16D.10; 270.02, 
  1.7             subdivision 3; 270.69, subdivision 4; 270B.01, 
  1.8             subdivision 8; 289A.31, subdivision 2; 289A.56, by 
  1.9             adding a subdivision; 290.9705, subdivision 1; 295.50, 
  1.10            subdivision 3; 469.1734, subdivision 6; Minnesota 
  1.11            Statutes 2003 Supplement, sections 270B.12, 
  1.12            subdivision 13; 272.02, subdivision 65; 290.01, 
  1.13            subdivision 19d; 290C.10; 295.53, subdivision 1; 
  1.14            469.310, subdivision 11; 469.330, subdivision 11; 
  1.15            469.337; proposing coding for new law in Minnesota 
  1.16            Statutes, chapter 270; repealing Laws 1975, chapter 
  1.17            287, section 5; Laws 2003, chapter 127, article 9, 
  1.18            section 9, subdivision 4. 
  1.19  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.20                             ARTICLE 1 
  1.21                    WITHHOLDING AND SALES TAXES 
  1.22     Section 1.  Minnesota Statutes 2002, section 289A.56, is 
  1.23  amended by adding a subdivision to read: 
  1.24     Subd. 7.  [BIOTECHNOLOGY AND BORDER CITY ZONE 
  1.25  REFUNDS.] Notwithstanding subdivision 3, for refunds payable 
  1.26  under sections 297A.68, subdivision 38, and 469.1734, 
  1.27  subdivision 6, interest is computed from 90 days after the 
  1.28  refund claim is filed with the commissioner. 
  1.29     [EFFECTIVE DATE.] This section is effective for refund 
  1.30  claims filed on or after July 1, 2004. 
  1.31     Sec. 2.  Minnesota Statutes 2002, section 290.9705, 
  1.32  subdivision 1, is amended to read: 
  2.1      Subdivision 1.  [WITHHOLDING OF PAYMENTS TO OUT-OF-STATE 
  2.2   CONTRACTORS.] (a) In this section, "person" means a person, 
  2.3   corporation, or cooperative, the state of Minnesota and its 
  2.4   political subdivisions, and a city, county, and school district 
  2.5   in Minnesota. 
  2.6      (b) A person who in the regular course of business is 
  2.7   hiring, contracting, or having a contract with a nonresident 
  2.8   person or foreign corporation, as defined in Minnesota Statutes 
  2.9   1986, section 290.01, subdivision 5, to perform construction 
  2.10  work in Minnesota, shall deduct and withhold eight percent of 
  2.11  every payment cumulative calendar year payments to the 
  2.12  contractor if the contract exceeds or can reasonably be expected 
  2.13  to exceed $100,000 which exceed $50,000. 
  2.14     [EFFECTIVE DATE.] This section is effective for payments 
  2.15  made after December 31, 2004. 
  2.16     Sec. 3.  Minnesota Statutes 2002, section 469.1734, 
  2.17  subdivision 6, is amended to read: 
  2.18     Subd. 6.  [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION 
  2.19  MATERIALS.] (a) The gross receipts from the sale of machinery 
  2.20  and equipment and repair parts are exempt from taxation under 
  2.21  chapter 297A, if the machinery and equipment: 
  2.22     (1) are used in connection with a trade or business; 
  2.23     (2) are placed in service in a city that is authorized to 
  2.24  designate a zone under section 469.1731, regardless of whether 
  2.25  the machinery and equipment are used in a zone; and 
  2.26     (3) have a useful life of 12 months or more. 
  2.27     (b) The gross receipts from the sale of construction 
  2.28  materials are exempt, if they are used to construct: 
  2.29     (1) a facility for use in a trade or business located in a 
  2.30  city that is authorized to designate a zone under section 
  2.31  469.1731, regardless of whether the facility is located in a 
  2.32  zone; or 
  2.33     (2) housing that is located in a zone.  
  2.34  The exemptions under this paragraph apply regardless of whether 
  2.35  the purchase is made by the owner, the user, or a contractor. 
  2.36     (c) A purchaser may claim an exemption under this 
  3.1   subdivision for tax on the purchases up to, but not exceeding: 
  3.2      (1) the amount of the tax credit certificates received from 
  3.3   the city, less 
  3.4      (2) any tax credit certificates used under the provisions 
  3.5   of subdivisions 4 and 5, and section 469.1732, subdivision 2. 
  3.6      (d) The tax on sales of items exempted under this 
  3.7   subdivision shall be imposed and collected as if the applicable 
  3.8   rate under section 297A.62 applied.  Upon application by the 
  3.9   purchaser, on forms prescribed by the commissioner, a refund 
  3.10  equal to the tax paid shall be paid to the purchaser.  The 
  3.11  application must include sufficient information to permit the 
  3.12  commissioner to verify the sales tax paid and the eligibility of 
  3.13  the claimant to receive the credit.  No more than two 
  3.14  applications for refunds may be filed under this subdivision in 
  3.15  a calendar year.  The provisions of section 289A.40 apply to the 
  3.16  refunds payable under this subdivision.  There is annually 
  3.17  appropriated to the commissioner of revenue the amount required 
  3.18  to make the refunds, which must be deducted from the amount of 
  3.19  the city's allocation under section 469.169, subdivision 12, 
  3.20  that remains available and its limitation under section 469.1735.
  3.21  The amount to be refunded shall bear interest at the rate in 
  3.22  section 270.76 from 90 days after the date the refund claim is 
  3.23  filed with the commissioner. 
  3.24     [EFFECTIVE DATE.] This section is effective for refund 
  3.25  claims filed on or after July 1, 2004. 
  3.26                             ARTICLE 2 
  3.27                           PROPERTY TAXES 
  3.28     Section 1.  Minnesota Statutes 2002, section 270B.01, 
  3.29  subdivision 8, is amended to read: 
  3.30     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
  3.31  chapter only, unless expressly stated otherwise, "Minnesota tax 
  3.32  laws" means: 
  3.33     (1) the taxes, refunds, and fees administered by or paid to 
  3.34  the commissioner under chapters 115B (except taxes imposed under 
  3.35  sections 115B.21 to 115B.24), 289A (except taxes imposed under 
  3.36  sections 298.01, 298.015, and 298.24), 290, 290A, 291, 295, 
  4.1   297A, and 297H, or any similar Indian tribal tax administered by 
  4.2   the commissioner pursuant to any tax agreement between the state 
  4.3   and the Indian tribal government, and includes any laws for the 
  4.4   assessment, collection, and enforcement of those taxes, refunds, 
  4.5   and fees; and 
  4.6      (2) section 273.1315. 
  4.7      [EFFECTIVE DATE.] This section is effective the day 
  4.8   following final enactment. 
  4.9      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  4.10  270B.12, subdivision 13, is amended to read: 
  4.11     Subd. 13.  [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The 
  4.12  commissioner may disclose to a county assessor, and to the 
  4.13  assessor's designated agents or employees, a listing of parcels 
  4.14  of property qualifying for the class 1b property tax 
  4.15  classification under section 273.13, subdivision 22, and the 
  4.16  names and addresses of qualified applicants. 
  4.17     [EFFECTIVE DATE.] This section is effective the day 
  4.18  following final enactment. 
  4.19     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
  4.20  290C.10, is amended to read: 
  4.21     290C.10 [WITHDRAWAL PROCEDURES.] 
  4.22     An approved claimant under the sustainable forest incentive 
  4.23  program for a minimum of four years may notify the commissioner 
  4.24  of the intent to terminate enrollment.  Within 90 days of 
  4.25  receipt of notice to terminate enrollment, the commissioner 
  4.26  shall inform the claimant in writing, acknowledging receipt of 
  4.27  this notice and indicating the effective date of termination 
  4.28  from the sustainable forest incentive program.  Termination of 
  4.29  enrollment in the sustainable forest incentive program occurs on 
  4.30  January 1 of the fifth calendar year that begins after receipt 
  4.31  by the commissioner of the termination notice.  After the 
  4.32  commissioner issues an effective date of termination, a claimant 
  4.33  wishing to continue the land's enrollment in the sustainable 
  4.34  forest incentive program beyond the termination date must apply 
  4.35  for enrollment as prescribed in section 290C.04.  A claimant who 
  4.36  withdraws a parcel of land from this program may not reenroll 
  5.1   the parcel for a period of three years.  Within 90 days after 
  5.2   the termination date, the commissioner shall execute and 
  5.3   acknowledge a document releasing the land from the covenant 
  5.4   required under this chapter.  The document must be mailed to the 
  5.5   claimant and is entitled to be recorded.  The commissioner may 
  5.6   allow early withdrawal from the Sustainable Forest Incentive Act 
  5.7   without penalty in cases of condemnation when the state of 
  5.8   Minnesota, any local government unit, or any other entity which 
  5.9   has the right of eminent domain acquires title or possession to 
  5.10  the land for a public purpose notwithstanding the provisions of 
  5.11  this section.  In the case of such acquisition, the commissioner 
  5.12  shall execute and acknowledge a document releasing the land 
  5.13  acquired by the state, local government unit, or other entity 
  5.14  from the covenant.  All other enrolled land must remain in the 
  5.15  program. 
  5.16     [EFFECTIVE DATE.] This section is effective the day 
  5.17  following final enactment. 
  5.18     Sec. 4.  [REPEALER.] 
  5.19     Laws 1975, chapter 287, section 5, and Laws 2003, chapter 
  5.20  127, article 9, section 9, subdivision 4, are repealed. 
  5.21     [EFFECTIVE DATE.] This section is effective without local 
  5.22  approval for taxes payable in 2005 and thereafter. 
  5.23                             ARTICLE 3 
  5.24                           MISCELLANEOUS 
  5.25     Section 1.  Minnesota Statutes 2002, section 16D.10, is 
  5.26  amended to read: 
  5.27     16D.10 [CASE REVIEWER.] 
  5.28     Subdivision 1.  [DUTIES.] The commissioner shall make a 
  5.29  case reviewer available to debtors.  The reviewer must be 
  5.30  available to answer a debtor's questions concerning the 
  5.31  collection process and to review the collection activity taken.  
  5.32  If the reviewer reasonably believes that the particular action 
  5.33  being taken is unreasonable or unfair, the reviewer may make 
  5.34  recommendations to the commissioner in regard to the collection 
  5.35  action.  
  5.36     Subd. 2.  [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On 
  6.1   application filed by a debtor with the case reviewer, in the 
  6.2   form, manner, and in the time prescribed by the commissioner, 
  6.3   and after thorough investigation, the case reviewer may issue a 
  6.4   debtor assistance order if, in the determination of the case 
  6.5   reviewer, the manner in which the state debt collection laws are 
  6.6   being administered is creating or will create an unjust and 
  6.7   inequitable result for the debtor.  Debtor assistance orders are 
  6.8   governed by the provisions relating to taxpayer assistance 
  6.9   orders under section 270.273. 
  6.10     Subd. 3.  [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.] 
  6.11  All duties and authority of the case reviewer under subdivisions 
  6.12  1 and 2 are transferred to the taxpayer rights advocate. 
  6.13     [EFFECTIVE DATE.] This section is effective the day 
  6.14  following final enactment. 
  6.15     Sec. 2.  Minnesota Statutes 2002, section 270.02, 
  6.16  subdivision 3, is amended to read: 
  6.17     Subd. 3.  [POWERS, ORGANIZATION, ASSISTANTS.] Subject to 
  6.18  the provisions of this chapter and other applicable laws the 
  6.19  commissioner shall have power to organize the department with 
  6.20  such divisions and other agencies as the commissioner deems 
  6.21  necessary and to appoint one deputy commissioner, a department 
  6.22  secretary, directors of divisions, and such other officers, 
  6.23  employees, and agents as the commissioner may deem necessary to 
  6.24  discharge the functions of the department, define the duties of 
  6.25  such officers, employees, and agents, and delegate to them any 
  6.26  of the commissioner's powers or duties, subject to the 
  6.27  commissioner's control and under such conditions as the 
  6.28  commissioner may prescribe.  Appointments to exercise delegated 
  6.29  power to sign documents which require the signature of the 
  6.30  commissioner or a delegate by law shall be by written order 
  6.31  filed with the secretary of state.  The delegations of authority 
  6.32  granted by the commissioner remain in effect until revoked by 
  6.33  the commissioner or a successor commissioner. 
  6.34     [EFFECTIVE DATE.] This section is effective the day 
  6.35  following final enactment. 
  6.36     Sec. 3.  [270.0611] [SUFFICIENCY OF NOTICE OF DETERMINATION 
  7.1   OR ACTION OF COMMISSIONER OF REVENUE.] 
  7.2      When a method of notification of a written determination or 
  7.3   action of the commissioner is not specifically provided for by 
  7.4   law, notice of the determination or action sent postage prepaid 
  7.5   by United States mail to the taxpayer or other person affected 
  7.6   by the determination or action at the taxpayer's or person's 
  7.7   last known address is sufficient.  If the taxpayer or person 
  7.8   being notified is deceased or is under a legal disability, or if 
  7.9   a corporation being notified has terminated its existence, 
  7.10  notice to the last known address of the taxpayer, person, or 
  7.11  corporation is sufficient, unless the department has been 
  7.12  provided with a new address by a party authorized to receive 
  7.13  notices from the commissioner. 
  7.14     [EFFECTIVE DATE.] This section is effective for notices 
  7.15  sent on or after the day following final enactment. 
  7.16     Sec. 4.  Minnesota Statutes 2002, section 270.69, 
  7.17  subdivision 4, is amended to read: 
  7.18     Subd. 4.  [PERIOD OF LIMITATIONS.] The lien imposed by this 
  7.19  section shall, notwithstanding any other provision of law to the 
  7.20  contrary, be enforceable from the time the lien arises and for 
  7.21  ten years from the date of filing the notice of lien, which must 
  7.22  be filed by the commissioner within five years after the date of 
  7.23  assessment of the tax or final administrative or judicial 
  7.24  determination of the assessment.  A notice of lien filed in one 
  7.25  county may be transcribed to the secretary of state or to any 
  7.26  other county within ten years after the date of its filing, but 
  7.27  the transcription shall not extend the period during which the 
  7.28  lien is enforceable.  A notice of lien may be renewed by the 
  7.29  commissioner before the expiration of the ten-year period for an 
  7.30  additional ten years.  The taxpayer must receive written notice 
  7.31  of the renewal. 
  7.32     [EFFECTIVE DATE.] This section is effective the day 
  7.33  following final enactment. 
  7.34     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
  7.35  272.02, subdivision 65, is amended to read: 
  7.36     Subd. 65.  [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE 
  8.1   PROPERTY.] (a) Improvements to real property, and personal 
  8.2   property, classified under section 273.13, subdivision 24, and 
  8.3   located within a biotechnology and health sciences industry zone 
  8.4   are exempt from ad valorem taxes levied under chapter 275, as 
  8.5   provided in this subdivision. 
  8.6      (b) For property to qualify for exemption under paragraph 
  8.7   (a), the occupant must be a qualified business, as defined in 
  8.8   section 469.330. 
  8.9      (c) The exemption applies beginning for the first 
  8.10  assessment year after designation of the biotechnology and 
  8.11  health sciences industry zone by the commissioner of employment 
  8.12  and economic development.  The exemption applies to each 
  8.13  assessment year that begins during the duration of the 
  8.14  biotechnology and health sciences industry zone and to property 
  8.15  occupied by July 1 of the assessment year by a qualified 
  8.16  business.  This exemption does not apply to: 
  8.17     (1) a levy under section 475.61 or similar levy provisions 
  8.18  under any other law to pay general obligation bonds; or 
  8.19     (2) a levy under section 126C.17, if the levy was approved 
  8.20  by the voters before the designation of the biotechnology and 
  8.21  health sciences industry zone. 
  8.22     (d) The exemption does not apply to taxes imposed by a 
  8.23  city, town, or county, unless the governing body adopts a 
  8.24  resolution granting the exemption.  A city, town, or county may 
  8.25  provide a complete property tax exemption, partial property tax 
  8.26  exemption, or no property tax exemption to qualified businesses 
  8.27  in the biotechnology and health sciences industry zone.  "City" 
  8.28  includes a statutory or home rule charter city. 
  8.29     (e) For property located in a tax increment financing 
  8.30  district, the county shall not adjust the original net tax 
  8.31  capacity of the district under section 469.177, subdivision 1, 
  8.32  paragraph (a), upon the expiration of an exemption under this 
  8.33  subdivision. 
  8.34     [EFFECTIVE DATE.] This section is effective beginning for 
  8.35  property taxes assessed in 2004, payable in 2005. 
  8.36     Sec. 6.  Minnesota Statutes 2002, section 289A.31, 
  9.1   subdivision 2, is amended to read: 
  9.2      Subd. 2.  [JOINT INCOME TAX RETURNS.] (a) If a joint income 
  9.3   tax return is made by a husband and wife, the liability for the 
  9.4   tax is joint and several.  A spouse who qualifies for relief 
  9.5   from a liability attributable to an underpayment under section 
  9.6   6015(b) of the Internal Revenue Code is relieved of the state 
  9.7   income tax liability on the underpayment.  
  9.8      (b) In the case of individuals who were a husband and wife 
  9.9   prior to the dissolution of their marriage or their legal 
  9.10  separation, or prior to the death of one of the individuals, for 
  9.11  tax liabilities reported on a joint or combined return, the 
  9.12  liability of each person is limited to the proportion of the tax 
  9.13  due on the return that equals that person's proportion of the 
  9.14  total tax due if the husband and wife filed separate returns for 
  9.15  the taxable year.  This provision is effective only when the 
  9.16  commissioner receives written notice of the marriage 
  9.17  dissolution, legal separation, or death of a spouse from the 
  9.18  husband or wife.  No refund may be claimed by an ex-spouse, 
  9.19  legally separated or widowed spouse for any taxes paid more than 
  9.20  60 days before receipt by the commissioner of the written notice.
  9.21     (c) A request for calculation of separate liability 
  9.22  pursuant to paragraph (b) for taxes reported on a return must be 
  9.23  made within six years after the due date of the return.  For 
  9.24  calculation of separate liability for taxes assessed by the 
  9.25  commissioner under section 289A.35 or 289A.37, the request must 
  9.26  be made within six years after the date of assessment.  The 
  9.27  commissioner is not required to calculate separate liability if 
  9.28  the remaining unpaid liability for which recalculation is 
  9.29  requested is $100 or less. 
  9.30     [EFFECTIVE DATE.] This section is effective for requests 
  9.31  for relief made on or after the day following final enactment. 
  9.32     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
  9.33  290.01, subdivision 19d, is amended to read: 
  9.34     Subd. 19d.  [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL 
  9.35  TAXABLE INCOME.] For corporations, there shall be subtracted 
  9.36  from federal taxable income after the increases provided in 
 10.1   subdivision 19c:  
 10.2      (1) the amount of foreign dividend gross-up added to gross 
 10.3   income for federal income tax purposes under section 78 of the 
 10.4   Internal Revenue Code; 
 10.5      (2) the amount of salary expense not allowed for federal 
 10.6   income tax purposes due to claiming the federal jobs credit 
 10.7   under section 51 of the Internal Revenue Code; 
 10.8      (3) any dividend (not including any distribution in 
 10.9   liquidation) paid within the taxable year by a national or state 
 10.10  bank to the United States, or to any instrumentality of the 
 10.11  United States exempt from federal income taxes, on the preferred 
 10.12  stock of the bank owned by the United States or the 
 10.13  instrumentality; 
 10.14     (4) amounts disallowed for intangible drilling costs due to 
 10.15  differences between this chapter and the Internal Revenue Code 
 10.16  in taxable years beginning before January 1, 1987, as follows: 
 10.17     (i) to the extent the disallowed costs are represented by 
 10.18  physical property, an amount equal to the allowance for 
 10.19  depreciation under Minnesota Statutes 1986, section 290.09, 
 10.20  subdivision 7, subject to the modifications contained in 
 10.21  subdivision 19e; and 
 10.22     (ii) to the extent the disallowed costs are not 
 10.23  represented by physical property, an amount equal to the 
 10.24  allowance for cost depletion under Minnesota Statutes 1986, 
 10.25  section 290.09, subdivision 8; 
 10.26     (5) the deduction for capital losses pursuant to sections 
 10.27  1211 and 1212 of the Internal Revenue Code, except that: 
 10.28     (i) for capital losses incurred in taxable years beginning 
 10.29  after December 31, 1986, capital loss carrybacks shall not be 
 10.30  allowed; 
 10.31     (ii) for capital losses incurred in taxable years beginning
 10.32  after December 31, 1986, a capital loss carryover to each of the 
 10.33  15 taxable years succeeding the loss year shall be allowed; 
 10.34     (iii) for capital losses incurred in taxable years 
 10.35  beginning before January 1, 1987, a capital loss carryback to 
 10.36  each of the three taxable years preceding the loss year, subject 
 11.1   to the provisions of Minnesota Statutes 1986, section 290.16, 
 11.2   shall be allowed; and 
 11.3      (iv) for capital losses incurred in taxable years beginning
 11.4   before January 1, 1987, a capital loss carryover to each of the 
 11.5   five taxable years succeeding the loss year to the extent such 
 11.6   loss was not used in a prior taxable year and subject to the 
 11.7   provisions of Minnesota Statutes 1986, section 290.16, shall be 
 11.8   allowed; 
 11.9      (6) an amount for interest and expenses relating to income 
 11.10  not taxable for federal income tax purposes, if (i) the income 
 11.11  is taxable under this chapter and (ii) the interest and expenses 
 11.12  were disallowed as deductions under the provisions of section 
 11.13  171(a)(2), 265 or 291 of the Internal Revenue Code in computing 
 11.14  federal taxable income; 
 11.15     (7) in the case of mines, oil and gas wells, other natural 
 11.16  deposits, and timber for which percentage depletion was 
 11.17  disallowed pursuant to subdivision 19c, clause (11), a 
 11.18  reasonable allowance for depletion based on actual cost.  In the 
 11.19  case of leases the deduction must be apportioned between the 
 11.20  lessor and lessee in accordance with rules prescribed by the 
 11.21  commissioner.  In the case of property held in trust, the 
 11.22  allowable deduction must be apportioned between the income 
 11.23  beneficiaries and the trustee in accordance with the pertinent 
 11.24  provisions of the trust, or if there is no provision in the 
 11.25  instrument, on the basis of the trust's income allocable to 
 11.26  each; 
 11.27     (8) for certified pollution control facilities placed in 
 11.28  service in a taxable year beginning before December 31, 1986, 
 11.29  and for which amortization deductions were elected under section 
 11.30  169 of the Internal Revenue Code of 1954, as amended through 
 11.31  December 31, 1985, an amount equal to the allowance for 
 11.32  depreciation under Minnesota Statutes 1986, section 290.09, 
 11.33  subdivision 7; 
 11.34     (9) amounts included in federal taxable income that are due 
 11.35  to refunds of income, excise, or franchise taxes based on net 
 11.36  income or related minimum taxes paid by the corporation to 
 12.1   Minnesota, another state, a political subdivision of another 
 12.2   state, the District of Columbia, or a foreign country or 
 12.3   possession of the United States to the extent that the taxes 
 12.4   were added to federal taxable income under section 290.01, 
 12.5   subdivision 19c, clause (1), in a prior taxable year; 
 12.6      (10) 80 percent of royalties, fees, or other like income 
 12.7   accrued or received from a foreign operating corporation or a 
 12.8   foreign corporation which is part of the same unitary business 
 12.9   as the receiving corporation; 
 12.10     (11) income or gains from the business of mining as defined 
 12.11  in section 290.05, subdivision 1, clause (a), that are not 
 12.12  subject to Minnesota franchise tax; 
 12.13     (12) the amount of handicap access expenditures in the 
 12.14  taxable year which are not allowed to be deducted or capitalized 
 12.15  under section 44(d)(7) of the Internal Revenue Code; 
 12.16     (13) the amount of qualified research expenses not allowed 
 12.17  for federal income tax purposes under section 280C(c) of the 
 12.18  Internal Revenue Code, but only to the extent that the amount 
 12.19  exceeds the amount of the credit allowed under section 
 12.20  290.068 or 469.339; 
 12.21     (14) the amount of salary expenses not allowed for federal 
 12.22  income tax purposes due to claiming the Indian employment credit 
 12.23  under section 45A(a) of the Internal Revenue Code; 
 12.24     (15) the amount of any refund of environmental taxes paid 
 12.25  under section 59A of the Internal Revenue Code; 
 12.26     (16) for taxable years beginning before January 1, 2008, 
 12.27  the amount of the federal small ethanol producer credit allowed 
 12.28  under section 40(a)(3) of the Internal Revenue Code which is 
 12.29  included in gross income under section 87 of the Internal 
 12.30  Revenue Code; 
 12.31     (17) for a corporation whose foreign sales corporation, as 
 12.32  defined in section 922 of the Internal Revenue Code, constituted 
 12.33  a foreign operating corporation during any taxable year ending 
 12.34  before January 1, 1995, and a return was filed by August 15, 
 12.35  1996, claiming the deduction under section 290.21, subdivision 
 12.36  4, for income received from the foreign operating corporation, 
 13.1   an amount equal to 1.23 multiplied by the amount of income 
 13.2   excluded under section 114 of the Internal Revenue Code, 
 13.3   provided the income is not income of a foreign operating 
 13.4   company; 
 13.5      (18) any decrease in subpart F income, as defined in 
 13.6   section 952(a) of the Internal Revenue Code, for the taxable 
 13.7   year when subpart F income is calculated without regard to the 
 13.8   provisions of section 614 of Public Law 107-147; and 
 13.9      (19) in each of the five tax years immediately following 
 13.10  the tax year in which an addition is required under subdivision 
 13.11  19c, clause (16), an amount equal to one-fifth of the delayed 
 13.12  depreciation.  For purposes of this clause, "delayed 
 13.13  depreciation" means the amount of the addition made by the 
 13.14  taxpayer under subdivision 19c, clause (16).  The resulting 
 13.15  delayed depreciation cannot be less than zero. 
 13.16     [EFFECTIVE DATE.] This section is effective for tax years 
 13.17  beginning after December 31, 2003. 
 13.18     Sec. 8.  Minnesota Statutes 2002, section 295.50, 
 13.19  subdivision 3, is amended to read: 
 13.20     Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
 13.21  amounts received in money or otherwise by: 
 13.22     (1) a hospital for patient services; 
 13.23     (2) a surgical center for patient services; 
 13.24     (3) a health care provider, other than a staff model health 
 13.25  carrier, for patient services; 
 13.26     (4) a wholesale drug distributor for sale or distribution 
 13.27  of legend drugs that are delivered in Minnesota by the wholesale 
 13.28  drug distributor, by common carrier, or by mail, unless the 
 13.29  legend drugs are delivered to another wholesale drug distributor 
 13.30  who sells legend drugs exclusively at wholesale.  Legend drugs 
 13.31  do not include nutritional products as defined in Minnesota 
 13.32  Rules, part 9505.0325, and blood and blood components as defined 
 13.33  in Code of Federal Regulations, title 21, section 607.3(B) 
 13.34  (2003); and 
 13.35     (5) a staff model health plan company as gross premiums for 
 13.36  enrollees, co-payments, deductibles, coinsurance, and fees for 
 14.1   patient services. 
 14.2      [EFFECTIVE DATE.] This section is effective for gross 
 14.3   revenues received after December 31, 2002. 
 14.4      Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 14.5   295.53, subdivision 1, is amended to read: 
 14.6      Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
 14.7   are excluded from the gross revenues subject to the hospital, 
 14.8   surgical center, or health care provider taxes under sections 
 14.9   295.50 to 295.59: 
 14.10     (1) payments received for services provided under the 
 14.11  Medicare program, including payments received from the 
 14.12  government, and organizations governed by sections 1833 and 1876 
 14.13  of title XVIII of the federal Social Security Act, United States 
 14.14  Code, title 42, section 1395, and enrollee deductibles, 
 14.15  coinsurance, and co-payments, whether paid by the Medicare 
 14.16  enrollee or by a Medicare supplemental coverage as defined in 
 14.17  section 62A.011, subdivision 3, clause (10).  Payments for 
 14.18  services not covered by Medicare are taxable; 
 14.19     (2) payments received for home health care services; 
 14.20     (3) payments received from hospitals or surgical centers 
 14.21  for goods and services on which liability for tax is imposed 
 14.22  under section 295.52 or the source of funds for the payment is 
 14.23  exempt under clause (1), (7), (10), or (14); 
 14.24     (4) payments received from health care providers for goods 
 14.25  and services on which liability for tax is imposed under this 
 14.26  chapter or the source of funds for the payment is exempt under 
 14.27  clause (1), (7), (10), or (14); 
 14.28     (5) amounts paid for legend drugs, other than nutritional 
 14.29  products and blood and blood components as defined in Code of 
 14.30  Federal Regulations, title 21, section 607.3(B) (2003), to a 
 14.31  wholesale drug distributor who is subject to tax under section 
 14.32  295.52, subdivision 3, reduced by reimbursements received for 
 14.33  legend drugs otherwise exempt under this chapter; 
 14.34     (6) payments received by a health care provider or the 
 14.35  wholly owned subsidiary of a health care provider for care 
 14.36  provided outside Minnesota; 
 15.1      (7) payments received from the chemical dependency fund 
 15.2   under chapter 254B; 
 15.3      (8) payments received in the nature of charitable donations 
 15.4   that are not designated for providing patient services to a 
 15.5   specific individual or group; 
 15.6      (9) payments received for providing patient services 
 15.7   incurred through a formal program of health care research 
 15.8   conducted in conformity with federal regulations governing 
 15.9   research on human subjects.  Payments received from patients or 
 15.10  from other persons paying on behalf of the patients are subject 
 15.11  to tax; 
 15.12     (10) payments received from any governmental agency for 
 15.13  services benefiting the public, not including payments made by 
 15.14  the government in its capacity as an employer or insurer or 
 15.15  payments made by the government for services provided under 
 15.16  medical assistance, general assistance medical care, or the 
 15.17  MinnesotaCare program; 
 15.18     (11) government payments received by a regional treatment 
 15.19  center; 
 15.20     (12) payments received by a health care provider for 
 15.21  hearing aids and related equipment or prescription eyewear 
 15.22  delivered outside of Minnesota; 
 15.23     (13) payments received by an educational institution from 
 15.24  student tuition, student activity fees, health care service 
 15.25  fees, government appropriations, donations, or grants.  Fee for 
 15.26  service payments and payments for extended coverage are taxable; 
 15.27  and 
 15.28     (14) payments received under the federal Employees Health 
 15.29  Benefits Act, United States Code, title 5, section 8909(f), as 
 15.30  amended by the Omnibus Reconciliation Act of 1990. 
 15.31     (b) Payments received by wholesale drug distributors for 
 15.32  legend drugs sold directly to veterinarians or veterinary bulk 
 15.33  purchasing organizations are excluded from the gross revenues 
 15.34  subject to the wholesale drug distributor tax under sections 
 15.35  295.50 to 295.59. 
 15.36     [EFFECTIVE DATE.] This section is effective for gross 
 16.1   revenues received after December 31, 2002. 
 16.2      Sec. 10.  Minnesota Statutes 2003 Supplement, section 
 16.3   469.310, subdivision 11, is amended to read: 
 16.4      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
 16.5   means a person carrying on a trade or business at a place of 
 16.6   business located within a job opportunity building zone.  A 
 16.7   person is a qualified business only on those parcels of land for 
 16.8   which it has entered into a business subsidy agreement, as 
 16.9   required under section 469.313, with the appropriate local 
 16.10  government unit in which the parcels are located. 
 16.11     (b) A person that relocates a trade or business from 
 16.12  outside a job opportunity building zone into a zone is not a 
 16.13  qualified business, unless the business: 
 16.14     (1)(i) increases full-time employment in the first full 
 16.15  year of operation within the job opportunity building zone by at 
 16.16  least 20 percent measured relative to the operations that were 
 16.17  relocated and maintains the required level of employment for 
 16.18  each year the zone designation applies; or 
 16.19     (ii) makes a capital investment in the property located 
 16.20  within a zone equivalent to ten percent of the gross revenues of 
 16.21  operation that were relocated in the immediately preceding 
 16.22  taxable year; and 
 16.23     (2) enters a binding written agreement with the 
 16.24  commissioner that: 
 16.25     (i) pledges the business will meet the requirements of 
 16.26  clause (1); 
 16.27     (ii) provides for repayment of all tax benefits enumerated 
 16.28  under section 469.315 to the business under the procedures in 
 16.29  section 469.319, if the requirements of clause (1) are not met 
 16.30  for the taxable year or for taxes payable during the year in 
 16.31  which the requirements were not met; and 
 16.32     (iii) contains any other terms the commissioner determines 
 16.33  appropriate. 
 16.34     [EFFECTIVE DATE.] This section is effective retroactively 
 16.35  from June 9, 2003. 
 16.36     Sec. 11.  Minnesota Statutes 2003 Supplement, section 
 17.1   469.330, subdivision 11, is amended to read: 
 17.2      Subd. 11.  [QUALIFIED BUSINESS.] (a) "Qualified business" 
 17.3   means a person carrying on a trade or business at a 
 17.4   biotechnology and health sciences industry facility located 
 17.5   within a biotechnology and health sciences industry zone.  A 
 17.6   person is a qualified business only on those parcels of land for 
 17.7   which it has entered into a business subsidy agreement, as 
 17.8   required under section 469.333, with the appropriate local 
 17.9   government unit in which the parcels are located. 
 17.10     (b) A person that relocates a biotechnology and health 
 17.11  sciences industry facility from outside a biotechnology and 
 17.12  health sciences industry zone into a zone is not a qualified 
 17.13  business, unless the business: 
 17.14     (1)(i) increases full-time employment in the first full 
 17.15  year of operation within the biotechnology and health sciences 
 17.16  industry zone by at least 20 percent measured relative to the 
 17.17  operations that were relocated and maintains the required level 
 17.18  of employment for each year the zone designation applies; or 
 17.19     (ii) makes a capital investment in the property located 
 17.20  within a zone equivalent to ten percent of the gross revenues of 
 17.21  operation that were relocated in the immediately preceding 
 17.22  taxable year; and 
 17.23     (2) enters a binding written agreement with the 
 17.24  commissioner that: 
 17.25     (i) pledges the business will meet the requirements of 
 17.26  clause (1); 
 17.27     (ii) provides for repayment of all tax benefits enumerated 
 17.28  under section 469.336 to the business under the procedures in 
 17.29  section 469.340, if the requirements of clause (1) are not met; 
 17.30  and 
 17.31     (iii) contains any other terms the commissioner determines 
 17.32  appropriate. 
 17.33     [EFFECTIVE DATE.] This section is effective retroactively 
 17.34  from June 9, 2003. 
 17.35     Sec. 12.  Minnesota Statutes 2003 Supplement, section 
 17.36  469.337, is amended to read: 
 18.1      469.337 [CORPORATE FRANCHISE TAX EXEMPTION.] 
 18.2      (a) A qualified business is exempt from taxation under 
 18.3   section 290.02, the alternative minimum tax under section 
 18.4   290.0921, and the minimum fee under section 290.0922, on the 
 18.5   portion of its income attributable to operations of a qualified 
 18.6   business within the biotechnology and health sciences industry 
 18.7   zone.  This exemption is determined as follows: 
 18.8      (1) for purposes of the tax imposed under section 290.02, 
 18.9   by multiplying its taxable net income by its zone percentage and 
 18.10  subtracting the result in determining taxable income; 
 18.11     (2) for purposes of the alternative minimum tax under 
 18.12  section 290.0921, by multiplying its alternative minimum taxable 
 18.13  income by its zone percentage and reducing alternative minimum 
 18.14  taxable income by this amount; and 
 18.15     (3) for purposes of the minimum fee under section 290.0922, 
 18.16  by excluding zone property and payroll in the zone from the 
 18.17  computations of the fee.  The qualified business is exempt from 
 18.18  the minimum fee if all of its property is located in the zone 
 18.19  and all of its payroll is zone payroll. 
 18.20     (b) No subtraction is allowed under this section in excess 
 18.21  of 20 percent of the sum of the corporation's biotechnology and 
 18.22  health sciences industry zone payroll and the adjusted basis of 
 18.23  the property at the time that the property is first used in the 
 18.24  biotechnology and health sciences industry zone by the 
 18.25  corporation. 
 18.26     (c) No reduction in tax is allowed in excess of the amount 
 18.27  allocated under section 469.335. 
 18.28     [EFFECTIVE DATE.] This section is effective for tax years 
 18.29  beginning after December 31, 2003.