2nd Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; making technical and 1.3 administrative changes and corrections; amending 1.4 Minnesota Statutes 1996, sections 60A.15, subdivision 1.5 2a; 60E.04, subdivision 4; 69.021, subdivision 2; 1.6 270.07, subdivision 3; 272.02, subdivision 4; 272.04, 1.7 subdivision 1; 273.032; 273.124, subdivisions 1 and 1.8 13; 273.1392; 273.1398, subdivision 1; 275.011, 1.9 subdivision 1; 275.065, subdivision 3; 275.295, 1.10 subdivision 3; 276A.01, subdivision 7; 277.21, 1.11 subdivision 3; 287.22; 289A.01; 289A.08, subdivision 1.12 11; 289A.09, subdivision 2; 289A.10, subdivision 1; 1.13 289A.11, subdivision 1; 289A.18, subdivision 2; 1.14 289A.19, subdivisions 1, 2, 3, and 4; 289A.35; 1.15 289A.38, subdivision 7; 289A.65, subdivision 1; 1.16 290.01, subdivisions 2 and 4a; 290.06, subdivision 22; 1.17 290.17, subdivision 2; 290.92, subdivision 24; 1.18 290A.04, subdivision 6; 295.50, subdivisions 3, 4, 7, 1.19 13, and by adding a subdivision; 295.51, subdivision 1.20 1; 295.52, subdivision 1b; 295.53, subdivisions 1, 3, 1.21 and 5; 295.54, subdivision 1; 295.582; 297A.01, 1.22 subdivision 1; 297A.09; 297A.12; 297A.14, subdivision 1.23 4; 297A.22; 297A.23; 297A.25, subdivisions 1, 2, 3, 6, 1.24 8, 9, 11, 16, 17, 18, 19, 20, 21, 23, 26, 27, 28, 29, 1.25 30, 34, 35, 38, 39, 40, 41, 42, 43, 46, 49, 51, 52, 1.26 53, 57, and 61; 297A.256, subdivision 1; 297A.44, 1.27 subdivision 1; 297B.03; 297B.035, subdivision 3; 1.28 297B.11; 299F.21, subdivision 2; 414.033, subdivisions 1.29 7 and 12; 469.177, subdivision 9; 473.388, subdivision 1.30 7; and 473F.02, subdivision 7. 1.31 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.32 ARTICLE 1 1.33 INCOME AND WITHHOLDING 1.34 Section 1. Minnesota Statutes 1996, section 270.07, 1.35 subdivision 3, is amended to read: 1.36 Subd. 3. [ADDITIONAL POWERS OF COMMISSIONER.] 1.37 Notwithstanding any other provision of law the commissioner of 1.38 revenue may, 2.1 (a) based upon the administrative costs of processing, 2.2 determine minimum standards for the determination of additional 2.3 tax for which an order shall be issued, and 2.4 (b) based upon collection costs as compared to the amount 2.5 of tax involved, determine minimum standards of collection, and 2.6 (c) based upon the administrative costs of processing, 2.7 determine the minimum amount of refunds for which an order shall 2.8 be issued and refund made where no claim therefor has been 2.9 filed, and 2.10 (d) cancel any amounts below these minimum standards 2.11 determined under (a) and (b) hereof, and 2.12 (e) based upon the inability of a taxpayer to pay a 2.13 delinquent tax liability, abate the liability if the taxpayer 2.14 agrees to perform uncompensated public service work for a state 2.15 agency, a political subdivision or public corporation of this 2.16 state, or a nonprofit educational, medical, or social service 2.17 agency. The department of corrections shall administer the work 2.18 program. No benefits under chapter 176 or 268 shall be 2.19 available, but a claim authorized under section 3.739 may be 2.20 made by the taxpayer. The state may not enter into any 2.21 agreement that has the purpose of or results in the displacement 2.22 of public employees by a delinquent taxpayer under this 2.23 section. The state must certify to the appropriate bargaining 2.24 agent or employees, as applicable, that the work performed by a 2.25 delinquent taxpayer will not result in the displacement of 2.26 currently employed workers or layoff from a substantially 2.27 equivalent position, including partial displacement such as 2.28 reduction in hours of nonovertime work, wages, or other 2.29 employment benefits.
The program authorized under this2.30 paragraph terminates June 30, 1998.2.31 Sec. 2. Minnesota Statutes 1996, section 289A.01, is 2.32 amended to read: 2.33 289A.01 [APPLICATION OF CHAPTER.] 2.34 This chapter applies to taxeslaws administered by or paid2.35 tothe commissioner under chapters 290, 290A, 291, and 297A, and 2.36 sections 298.01 and 298.015. 3.1 Sec. 3. Minnesota Statutes 1996, section 289A.08, 3.2 subdivision 11, is amended to read: 3.3 Subd. 11. [INFORMATION INCLUDED IN INCOME TAX RETURN.] The 3.4 return must state the name of the taxpayer, or taxpayers, if the 3.5 return is a joint return, and the address of the taxpayer in the 3.6 same name or names and same address as the taxpayer has used in 3.7 making the taxpayer's income tax return to the United States, 3.8 and must state the social security number of the taxpayer, or 3.9 taxpayers, if a social security number has been issued by the 3.10 United States with respect to the taxpayers, and must state the 3.11 amount of the taxable income of the taxpayer as it appears on 3.12 the federal return for the taxable year to which the Minnesota 3.13 state return applies. The taxpayer must attach to the 3.14 taxpayer's Minnesota state income tax return a copy of the 3.15 federal income tax return that the taxpayer has filed or is 3.16 about to file for the period, unless the taxpayer is eligible to 3.17 telefile the federal return and does file the Minnesota return 3.18 by telefiling. 3.19 Sec. 4. Minnesota Statutes 1996, section 289A.09, 3.20 subdivision 2, is amended to read: 3.21 Subd. 2. [WITHHOLDING STATEMENT TO EMPLOYEE OR PAYEE AND 3.22 TO COMMISSIONER.] (a) A person required to deduct and withhold 3.23 from an employee a tax under section 290.92, subdivision 2a or 3.24 3, or 290.923, subdivision 2, or who would have been required to 3.25 deduct and withhold a tax under section 290.92, subdivision 2a 3.26 or 3, or persons required to withhold tax under section 290.923, 3.27 subdivision 2, determined without regard to section 290.92, 3.28 subdivision 19, if the employee or payee had claimed no more 3.29 than one withholding exemption, or who paid wages or made 3.30 payments not subject to withholding under section 290.92, 3.31 subdivision 2a or 3, or 290.923, subdivision 2, to an employee 3.32 or person receiving royalty payments in excess of $600, or who 3.33 has entered into a voluntary withholding agreement with a payee 3.34 under section 290.92, subdivision 20, must give every employee 3.35 or person receiving royalty payments in respect to the 3.36 remuneration paid by the person to the employee or person 4.1 receiving royalty payments during the calendar year, on or 4.2 before January 31 of the succeeding year, or, if employment is 4.3 terminated before the close of the calendar year, within 30 days 4.4 after the date of receipt of a written request from the employee 4.5 if the 30-day period ends before January 31, a written statement 4.6 showing the following: 4.7 (1) name of the person; 4.8 (2) the name of the employee or payee and the employee's or 4.9 payee's social security account number; 4.10 (3) the total amount of wages as that term is defined in 4.11 section 290.92, subdivision 1, paragraph (1); the total amount 4.12 of remuneration subject to withholding under section 290.92, 4.13 subdivision 20; the amount of sick pay as required under section 4.14 6051(f) of the Internal Revenue Code; and the amount of 4.15 royalties subject to withholding under section 290.923, 4.16 subdivision 2; and 4.17 (4) the total amount deducted and withheld as tax under 4.18 section 290.92, subdivision 2a or 3, or 290.923, subdivision 2. 4.19 (b) The statement required to be furnished by this 4.20 paragraph with respect to any remuneration must be furnished at 4.21 those times, must contain the information required, and must be 4.22 in the form the commissioner prescribes. 4.23 (c) The commissioner may prescribe rules providing for 4.24 reasonable extensions of time, not in excess of 30 days, to 4.25 employers or payers required to give the statements to their 4.26 employees or payees under this subdivision. 4.27 (d) A duplicate of any statement made under this 4.28 subdivision and in accordance with rules prescribed by the 4.29 commissioner, along with a reconciliation in the form the 4.30 commissioner prescribes of the statements for the calendar year, 4.31 including a reconciliation of the quarterly returns required to 4.32 be filed under subdivision 1, must be filed with the 4.33 commissioner on or before February 28 of the year after the 4.34 payments were made. 4.35 (e) If an employer cancels the employer's Minnesota 4.36 withholding account number required by section 290.92, 5.1 subdivision 24, the information required by paragraph (d), must 5.2 be filed with the commissioner within 30 days of the end of the 5.3 quarter in which the employer cancels its account number. 5.4 (f) The employer must submit the statements required to be 5.5 sent to the commissioner on magnetic media, if the magnetic 5.6 media was required to satisfy the federal reporting requirements 5.7 of section 6011(e) of the Internal Revenue Code and the 5.8 regulations issued under it. 5.9 Sec. 5. Minnesota Statutes 1996, section 289A.10, 5.10 subdivision 1, is amended to read: 5.11 Subdivision 1. [RETURN REQUIRED.] In the case of a 5.12 decedent who has an interest in property with a situs in 5.13 Minnesota, the personal representative must submit a Minnesota 5.14 estate tax return to the commissioner, on a form prescribed by 5.15 the commissioner, in instances in which a federal estate tax 5.16 return is required to be filed. 5.17 The return must be accompanied by a federal estate tax5.18 return, a schedule of the assets in the estate at their date of5.19 death values, and mustcontain a computation of the Minnesota 5.20 estate tax due. The return must be signed by the personal 5.21 representative. 5.22 Sec. 6. Minnesota Statutes 1996, section 289A.18, 5.23 subdivision 2, is amended to read: 5.24 Subd. 2. [WITHHOLDING RETURNS, ENTERTAINER WITHHOLDING 5.25 RETURNS, RETURNS FOR WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE 5.26 CONTRACTORS, AND WITHHOLDING RETURNS FROM PARTNERSHIPS AND S 5.27 CORPORATIONS.] Withholding returns for the first, second, and 5.28 third quarters are due on or before the last day of the month 5.29 following the close of the quarterly period. However, if the 5.30 return shows timely deposits in full payment of the taxes due 5.31 for that period, the returns for the first, second, and third 5.32 quarters may be filed on or before the tenth day of the second 5.33 calendar month following the period and. The return for the 5.34 fourth quarter maymust be filed on or before the 28th day of 5.35 the second calendar month following the period. An employer, in 5.36 preparing a quarterly return, may take credit for monthly6.1 deposits previously made for that quarter. Entertainer 6.2 withholding tax returns are due within 30 days after each 6.3 performance. Returns for withholding from payments to 6.4 out-of-state contractors are due within 30 days after the 6.5 payment to the contractor. Returns for withholding by 6.6 partnerships are due on or before the due date specified for 6.7 filing partnership returns. Returns for withholding by S 6.8 corporations are due on or before the due date specified for 6.9 filing corporate franchise tax returns. 6.10 Sec. 7. Minnesota Statutes 1996, section 289A.19, 6.11 subdivision 1, is amended to read: 6.12 Subdivision 1. [FIDUCIARY INCOME, ENTERTAINMENT TAX, AND 6.13 INFORMATION RETURNS.] When, in the commissioner's judgment, good 6.14 cause exists, the commissioner may extend the time for 6.15 filing fiduciary income tax returns,entertainment tax returns ,6.16 and information returnsfor not more than six months. If an 6.17 extension to file the federal fiduciary income tax return or 6.18 information return has been granted under section 6081 of the 6.19 Internal Revenue Code, the time for filing the state return is 6.20 extended for that period. The commissioner may require the 6.21 taxpayer to file a tentative return when the regularly required 6.22 return is due, and to pay a tax on the basis of the tentative 6.23 return at the times required for the payment of taxes on the 6.24 basis of the regularly required return from the taxpayer. 6.25 Sec. 8. Minnesota Statutes 1996, section 289A.19, 6.26 subdivision 2, is amended to read: 6.27 Subd. 2. [CORPORATE FRANCHISE AND MINING COMPANY TAXES.] 6.28 The commissioner may grantCorporations or mining companies 6.29 shall receive an extension of up toseven months for filing the 6.30 return of a corporation subject to tax under chapter 290 or a6.31 mining companyfor filing the return of a mining company subject 6.32 to tax under sections 298.01 and 298.015 if: 6.33 (1) the corporation or mining company files a tentative6.34 return when the regularly required return is due;6.35 (2)the corporation or mining company pays the tax on the6.36 basis of the tentative return andat least 90 percent of the 7.1 amount of tax , determined without regard to any prepayment of7.2 tax, shown on the tentative return, or the amount of tax paidon 7.3 or before the regular due date of the return , is at least 907.4 percent of the amount shown on the corporation's or mining7.5 company's regularly required return; 7.6 (3)(2) the balance due shown on the regularly required 7.7 return is paid on or before the extended due date of the return; 7.8 and 7.9 (4)(3) interest on any balance due is paid at the rate 7.10 specified in section 270.75 from the regular due date of the 7.11 return until the tax is paid. 7.12 Sec. 9. Minnesota Statutes 1996, section 289A.19, 7.13 subdivision 3, is amended to read: 7.14 Subd. 3. [WITHHOLDING RETURNS.] The commissioner shall 7.15 grant an automatic extension of 60 days to file a withholding 7.16 tax return with the commissioner provided all the withholding 7.17 taxes have been paid by the date prescribed by section 289A.20, 7.18 subdivision 2. In any case where good cause exists, the 7.19 commissioner may grant an extension of time of not more than 60 7.20 days for filing a withholding return. 7.21 Sec. 10. Minnesota Statutes 1996, section 289A.19, 7.22 subdivision 4, is amended to read: 7.23 Subd. 4. [ESTATE TAX RETURNS.] Where good cause exists,7.24 the commissioner may extend the time for filing an estate tax7.25 return for not more than six months.When an extension to file 7.26 the federal estate tax return has been granted under section 7.27 6081 of the Internal Revenue Code, the time for filing the 7.28 estate tax return is extended for that period. 7.29 Sec. 11. Minnesota Statutes 1996, section 289A.38, 7.30 subdivision 7, is amended to read: 7.31 Subd. 7. [FEDERAL TAX CHANGES.] If the amount of income, 7.32 items of tax preference, deductions, or credits for any year of 7.33 a taxpayer as reported to the Internal Revenue Service is 7.34 changed or corrected by the commissioner of Internal Revenue or 7.35 other officer of the United States or other competent authority, 7.36 or where a renegotiation of a contract or subcontract with the 8.1 United States results in a change in income, items of tax 8.2 preference, deductions, orcredits, or withholding tax, or, in 8.3 the case of estate tax, where there are adjustments to the 8.4 taxable estate resulting in a change to the credit for state 8.5 death taxes, the taxpayer shall report the change or correction 8.6 or renegotiation results in writing to the commissioner. The 8.7 report must be submitted within 180 days after the final 8.8 determination and must be in the form of either an amended 8.9 Minnesota return conceding the accuracy of the federal 8.10 determination or a letter detailing how the federal 8.11 determination is incorrect or does not change the Minnesota 8.12 tax. A taxpayer filing an amended federal tax return must also 8.13 file a copy of the amended return with the commissioner of 8.14 revenue within 180 days after filing the amended return. 8.15 Sec. 12. Minnesota Statutes 1996, section 289A.65, 8.16 subdivision 1, is amended to read: 8.17 Subdivision 1. [TAXPAYER RIGHT TO RECONSIDERATION.] A 8.18 taxpayer may obtain reconsideration by the commissioner of an 8.19 order assessing tax, a denial of a request for abatement of 8.20 penalty or interest, or a denial of a claim for refund by filing 8.21 an administrative appeal under subdivision 4. A taxpayer cannot 8.22 obtain reconsideration under this section if the action taken by 8.23 the commissioner is the outcome of an administrative appeal. 8.24 Sec. 13. Minnesota Statutes 1996, section 290.01, 8.25 subdivision 2, is amended to read: 8.26 Subd. 2. [PERSON.] The term "person" includes individuals, 8.27 fiduciaries, estates, andtrusts, and partnerships not included8.28 in the definition of corporationsand may, where the context 8.29 requires, include corporations as herein defined. 8.30 Sec. 14. Minnesota Statutes 1996, section 290.01, 8.31 subdivision 4a, is amended to read: 8.32 Subd. 4a. [FINANCIAL INSTITUTION.] (a) "Financial 8.33 institution" means: 8.34 (1) a holding company; 8.35 (2) any regulated financial corporation; or 8.36 (3) any other corporation organized under the laws of the 9.1 United States or organized under the laws of this state or any 9.2 other state or country that is carrying on the business of a 9.3 financial institution. 9.4 (b) "Holding company" means any corporation registered 9.5 under the Federal Bank Holding Company Act of 1956, as amended, 9.6 or registered as a savings and loan holding company under the 9.7 Federal National Housing Act, as amended, or a federal savings 9.8 bank holding company. 9.9 (c) "Regulated financial corporation" means an institution, 9.10 the deposits or accounts of which are insured under the Federal 9.11 Deposit Insurance Act or by the Federal Savings and Loan 9.12 Insurance Corporation, any institution which is a member of a 9.13 Federal Home Loan Bank, any other bank or thrift institution 9.14 incorporated or organized under the laws of any state or any 9.15 foreign country which is engaged in the business of receiving 9.16 deposits, any corporation organized under the provisions of 9.17 United States Code, title 12, sections 611 to 631 (Edge Act 9.18 Corporations), and any agency of a foreign depository as defined 9.19 in United States Code, title 12, section 3101. 9.20 (d) "Business of a financial institution" means: 9.21 (1) the business that any corporation organized under the 9.22 authority of the United States or organized under the laws of 9.23 this state or any other state or country does or has authority 9.24 to do which is substantially similar to the business which a 9.25 corporation may be created to do under chapters 46 to 55 or any 9.26 business which a corporation is authorized to do by those laws; 9.27 or 9.28 (2) the business that any corporation organized under the 9.29 authority of the United States or organized under the laws of 9.30 this state or any other state or country does or has authority 9.31 to do if the corporation derives more than 50 percent of its 9.32 gross income from lending activities (including discounting 9.33 obligations) in substantial competition with the businesses 9.34 described in clause (1). For purposes of this clause, the 9.35 computation of the gross income of a corporation does not 9.36 include income from nonrecurring, extraordinary items. 10.1 Sec. 15. Minnesota Statutes 1996, section 290.06, 10.2 subdivision 22, is amended to read: 10.3 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 10.4 taxpayer who is liable for taxes on or measured by net income to 10.5 another state or province or territory of Canada, as provided in 10.6 paragraphs (b) through (f), upon income allocated or apportioned 10.7 to Minnesota, is entitled to a credit for the tax paid to 10.8 another state or province or territory of Canada if the tax is 10.9 actually paid in the taxable year or a subsequent taxable year. 10.10 A taxpayer who is a resident of this state pursuant to section 10.11 290.01, subdivision 7, clause (2), and who is subject to income 10.12 tax as a resident in the state of the individual's domicile is 10.13 not allowed this credit unless the state of domicile does not 10.14 allow a similar credit. 10.15 (b) For an individual, estate, or trust, the credit is 10.16 determined by multiplying the tax payable under this chapter by 10.17 the ratio derived by dividing the income subject to tax in the 10.18 other state or province or territory of Canada that is also 10.19 subject to tax in Minnesota while a resident of Minnesota by the 10.20 taxpayer's federal adjusted gross income, as defined in section 10.21 62 of the Internal Revenue Code, modified by the addition 10.22 required by section 290.01, subdivision 19a, clause (1), and the 10.23 subtraction allowed by section 290.01, subdivision 19b, clause 10.24 (1), to the extent the income is allocated or assigned to 10.25 Minnesota under sections 290.081 and 290.17. 10.26 (c) If the taxpayer is an athletic team that apportions all 10.27 of its income under section 290.17, subdivision 5, paragraph 10.28 (c), the credit is determined by multiplying the tax payable 10.29 under this chapter by the ratio derived from dividing the total 10.30 net income subject to tax in the other state or province or 10.31 territory of Canada by the taxpayer's Minnesota taxable income. 10.32 (d) The credit determined under paragraph (b) or (c) shall 10.33 not exceed the amount of tax so paid to the other state or 10.34 province or territory of Canada on the gross income earned 10.35 within the other state or province or territory of Canada 10.36 subject to tax under this chapter, nor shall the allowance of 11.1 the credit reduce the taxes paid under this chapter to an amount 11.2 less than what would be assessed if such income amount was 11.3 excluded from taxable net income. 11.4 (e) In the case of the tax assessed on a lump sum 11.5 distribution under section 290.032, the credit allowed under 11.6 paragraph (a) is the tax assessed by the other state or province 11.7 or territory of Canada on the lump sum distribution that is also 11.8 subject to tax under section 290.032, and shall not exceed the 11.9 tax assessed under section 290.032. To the extent the total 11.10 lump sum distribution defined in section 290.032, subdivision 1, 11.11 includes lump sum distributions received in prior years or is 11.12 all or in part an annuity contract, the reduction to the tax on 11.13 the lump sum distribution allowed under section 290.032, 11.14 subdivision 2, includes tax paid to another state that is 11.15 properly apportioned to that distribution. 11.16 (f) If a Minnesota resident reported an item of income to 11.17 Minnesota and is assessed tax in such other state or province or 11.18 territory of Canada on that same income after the Minnesota 11.19 statute of limitations has expired, the taxpayer shall receive a 11.20 credit for that year under paragraph (a), notwithstanding any 11.21 statute of limitations to the contrary. The claim for the 11.22 credit must be submitted within one year from the date the taxes 11.23 were paid to the other state or province or territory of 11.24 Canada. The taxpayer must submit sufficient proof to show 11.25 entitlement to a credit. 11.26 (g) For the purposes of this subdivision, a resident 11.27 shareholder of a corporation having a valid election in effect 11.28 under section 1362 of the Internal Revenue Code must be 11.29 considered to have paid a tax imposed on the shareholder in an 11.30 amount equal to the shareholder's pro rata share of any net 11.31 income tax paid by the S corporation to another state. For the 11.32 purposes of the preceding sentence, the term "net income tax" 11.33 means any tax imposed on or measured by a corporation's net 11.34 income. 11.35 (h) For the purposes of this subdivision, a resident member11.36 partner of a limited liability companyan entity taxed as a 12.1 partnership under the Internal Revenue Code must be considered 12.2 to have paid a tax imposed on the memberpartner in an amount 12.3 equal to the member'spartner's pro rata share of any net income 12.4 tax paid by the limited liability companypartnership to a12.5 another state that does not measure the income of the member of12.6 the limited liability company by reference to the income of the12.7 limited liability company. For purposes of the preceding 12.8 sentence, the term "net income" tax means any tax imposed on or 12.9 measured by a limited liability company'spartnership's net 12.10 income. 12.11 (i) For the purposes of this subdivision, "another state" 12.12 includes the District of Columbia, but does not include Puerto 12.13 Rico or the several territories organized by Congress. 12.14 (j) The limitations on the credit in paragraphs (b), (c), 12.15 and (d), are imposed on a state by state basis. 12.16 Sec. 16. Minnesota Statutes 1996, section 290.17, 12.17 subdivision 2, is amended to read: 12.18 Subd. 2. [INCOME NOT DERIVED FROM CONDUCT OF A TRADE OR 12.19 BUSINESS.] The income of a taxpayer subject to the allocation 12.20 rules that is not derived from the conduct of a trade or 12.21 business must be assigned in accordance with paragraphs (a) to 12.22 (f): 12.23 (a)(1) Subject to paragraphs (a)(2) and (a)(3), income from 12.24 labor or personal or professional services is assigned to this 12.25 state if, and to the extent that, the labor or services are 12.26 performed within it; all other income from such sources is 12.27 treated as income from sources without this state. 12.28 Severance pay shall be considered income from labor or 12.29 personal or professional services. 12.30 (2) In the case of an individual who is a nonresident of 12.31 Minnesota and who is an athlete or entertainer, income from 12.32 compensation for labor or personal services performed within 12.33 this state shall be determined in the following manner: 12.34 (i) The amount of income to be assigned to Minnesota for an 12.35 individual who is a nonresident salaried athletic team employee 12.36 shall be determined by using a fraction in which the denominator 13.1 contains the total number of days in which the individual is 13.2 under a duty to perform for the employer, and the numerator is 13.3 the total number of those days spent in Minnesota; and 13.4 (ii) The amount of income to be assigned to Minnesota for 13.5 an individual who is a nonresident, and who is an athlete or 13.6 entertainer not listed in clause (i), for that person's athletic 13.7 or entertainment performance in Minnesota shall be determined by 13.8 assigning to this state all income from performances or athletic 13.9 contests in this state. 13.10 (3) For purposes of this section, amounts received by a 13.11 nonresident from the United States, its agencies or 13.12 instrumentalities, the Federal Reserve Bank, the state of 13.13 Minnesota or any of its political or governmental subdivisions, 13.14 or a Minnesota volunteer firefighters' relief association, by 13.15 way of payment as a pension, public employee retirement benefit, 13.16 or any combination of these, or as a retirement or survivor's 13.17 benefit made from a plan qualifying under section 401, 403, 408, 13.18 or 409, or as defined in section 403(b) or 457 of the Internal 13.19 Revenue Code, are not considered income derived from carrying on 13.20 a trade or business or from performing personal or professional 13.21 services in Minnesota, and are not taxable under this chapter. 13.22 (b) Income or gains from tangible property located in this 13.23 state that is not employed in the business of the recipient of 13.24 the income or gains must be assigned to this state. 13.25 (c) Income or gains from intangible personal property not 13.26 employed in the business of the recipient of the income or gains 13.27 must be assigned to this state if the recipient of the income or 13.28 gains is a resident of this state or is a resident trust or 13.29 estate. 13.30 Gain on the sale of a partnership interest is allocable to 13.31 this state in the ratio of the original cost of partnership 13.32 tangible property in this state to the original cost of 13.33 partnership tangible property everywhere, determined at the time 13.34 of the sale. If more than 50 percent of the value of the 13.35 partnership's assets consists of intangibles, gain or loss from 13.36 the sale of the partnership interest is allocated to this state 14.1 in accordance with the sales factor of the partnership for its 14.2 first full tax period immediately preceding the tax period of 14.3 the partnership during which the partnership interest was sold. 14.4 Gain on the sale of goodwill or income from a covenant not 14.5 to compete that is connected with a business operating all or 14.6 partially in Minnesota is allocated to this state to the extent 14.7 that the income from the business in the year preceding the year 14.8 of sale was assignable to Minnesota under subdivision 3. 14.9 When an employer pays an employee for a covenant not to 14.10 compete, the income allocated to this state is in the ratio of 14.11 the employee's service in Minnesota in the calendar year 14.12 preceding leaving the employment of the employer over the total 14.13 services performed by the employee for the employer in that year. 14.14 (d) Income from the operation of a farm shall be assigned14.15 to this state if the farm is located within this state and to14.16 other states only if the farm is not located in this state.14.17 (e)Income from winnings on Minnesota pari-mutuel betting 14.18 tickets, the Minnesota state lottery, and lawful gambling as 14.19 defined in section 349.12, subdivision 24, conducted within the 14.20 boundaries of the state of Minnesota shall be assigned to this 14.21 state. 14.22 (f)(e) All items of gross income not covered in paragraphs 14.23 (a) to (e)(d) and not part of the taxpayer's income from a 14.24 trade or business shall be assigned to the taxpayer's domicile. 14.25 Sec. 17. Minnesota Statutes 1996, section 290.92, 14.26 subdivision 24, is amended to read: 14.27 Subd. 24. [APPLICATION FOR ACCOUNT NUMBER.] An employer, 14.28 or person withholding tax under section 290.923, desiring to 14.29 engage in business in Minnesota shall file with the commissioner 14.30 an application for a withholding account number on or before the 14.31 due date of the first payment required to be made under14.32 subdivision 6date the employer is required to withhold 14.33 Minnesota taxes under this section. An application for an 14.34 account number must be made upon a form prescribed by the 14.35 commissioner. It must give the name of the employer or payor, 14.36 the location of the place or places of business, the names, 15.1 addresses and social security numbers of the owners or partners, 15.2 or if the employer or payor is a corporation of the officers, or 15.3 if the employer or payor is a trust of the trustees, and other 15.4 information the commissioner may require. The application must 15.5 be filed by the owner if the employer or payor is a natural 15.6 person; by a member or partner if the employer or payor is an 15.7 association or partnership; by a trustee if the employer or 15.8 payor be a trust, or by a person authorized to sign the 15.9 application if the employer or payor is a corporation. 15.10 No fee shall be charged for the application. 15.11 The account number is not assignable. 15.12 Sec. 18. Minnesota Statutes 1996, section 290A.04, 15.13 subdivision 6, is amended to read: 15.14 Subd. 6. [INFLATION ADJUSTMENT.] Beginning for property 15.15 tax refunds payable in calendar year 1996, the commissioner 15.16 shall annually adjust the dollar amounts of the income 15.17 thresholds and the maximum refunds under subdivisions 2 and 2a 15.18 for inflation. The commissioner shall make the inflation 15.19 adjustments in accordance with section 290.06, subdivision 2d, 15.20 except that for purposes of this subdivision the percentage 15.21 increase shall be determined from the year ending on August 3115.22 June 30, 1994, to the year ending on August 31June 30 of the 15.23 year preceding that in which the refund is payable. The 15.24 commissioner shall use the appropriate percentage increase to 15.25 annually adjust the income thresholds and maximum refunds under 15.26 subdivisions 2 and 2a for inflation without regard to whether or 15.27 not the income tax brackets are adjusted for inflation in that 15.28 year. The commissioner shall round the thresholds and the 15.29 maximum amounts, as adjusted to the nearest $10 amount. If the 15.30 amount ends in $5, the commissioner shall round it up to the 15.31 next $10 amount. 15.32 The commissioner shall annually announce the adjusted 15.33 refund schedule at the same time provided under section 290.06. 15.34 The determination of the commissioner under this subdivision is 15.35 not a rule under the administrative procedure act. 15.36 Sec. 19. [EFFECTIVE DATE.] 16.1 Section 2 is effective the day following final enactment. 16.2 Section 3 is effective for taxable years beginning after 16.3 December 31, 1995. Sections 5 and 10 are effective for estates 16.4 of decedents dying after the date of final enactment. Sections 16.5 6 and 7 are effective for returns due after December 31, 1996. 16.6 Section 9 is effective for returns due after July 30, 1997. 16.7 Section 11 is effective for federal changes beginning after the 16.8 date of final enactment. Section 12 is effective for actions of 16.9 the commissioner after the date of final enactment. Sections 13 16.10 to 16 are effective for taxable years beginning after December 16.11 31, 1996. Section 17 is effective for wages paid after December 16.12 31, 1997. Section 18 is effective for property tax refunds 16.13 based on rents paid in 1997 and property taxes payable in 1998 16.14 and thereafter. 16.15 ARTICLE 2 16.16 SALES AND SPECIAL TAXES 16.17 Section 1. Minnesota Statutes 1996, section 60A.15, 16.18 subdivision 2a, is amended to read: 16.19 Subd. 2a. [PROCEDURE FOR FILING AND ADJUSTMENT OF 16.20 STATEMENTS AND TAXES.] (a) Every insurer required to pay a 16.21 premium tax in this state shall make and file a statement of 16.22 estimated premium taxes for the period covered by the 16.23 installment tax payment. Such statement shall be in the form 16.24 prescribed by the commissioner of revenue. 16.25 (b) On or before March 1, annually every insurer subject to 16.26 taxation under this section shall make an annual return for the 16.27 preceding calendar year setting forth such information as the 16.28 commissioner of revenue may reasonably require on forms 16.29 prescribed by the commissioner. 16.30 (c) On March 1, the insurer shall pay any additional amount 16.31 due for the preceding calendar year; if there has been an 16.32 overpayment, such overpayment may be credited without interest 16.33 on the estimated tax due April 151. 16.34 (d) If unpaid by this date, penalties as provided in 16.35 section 289A.60, subdivision 1, as it relates to withholding and 16.36 sales or use taxes, shall be imposed. 17.1 Sec. 2. Minnesota Statutes 1996, section 60E.04, 17.2 subdivision 4, is amended to read: 17.3 Subd. 4. [TAXATION.] (a) Each risk retention group is 17.4 liable for the payment of premium taxes and taxes on premiums of 17.5 direct business for risks resident or located within this state, 17.6 and shall report to the commissioner of revenue the net premiums 17.7 written for risks resident or located within this state. The 17.8 risk retention group shall be subject to taxation, and any 17.9 applicable taxation-related fines and penalties, on the same 17.10 basis as a foreign admitted insurer. 17.11 (b) To the extent licensed agents or brokers are utilized 17.12 pursuant to section 60E.12, they shall report to the 17.13 commissioner of revenue the premiums for direct business for 17.14 risks resident or located within this state which the licensees 17.15 have placed with or on behalf of a risk retention group not 17.16 chartered in this state. 17.17 (c) To the extent that insurance agents or brokers are 17.18 utilized pursuant to section 60E.12, each agent or broker shall 17.19 keep a complete and separate record of all policies procured 17.20 from each risk retention group, which shall be open to 17.21 examination by the commissioner, as provided in section 17.22 60A.031 and by the commissioner of revenue. These records 17.23 shall, for each policy and each kind of insurance provided, 17.24 include the following: 17.25 (1) the limit of liability; 17.26 (2) the time period covered; 17.27 (3) the effective date; 17.28 (4) the name of the risk retention group which issued the 17.29 policy; 17.30 (5) the gross premium charged; and 17.31 (6) the amount of return premiums, if any. 17.32 Sec. 3. Minnesota Statutes 1996, section 69.021, 17.33 subdivision 2, is amended to read: 17.34 Subd. 2. [REPORT OF PREMIUMS.] Each insurer, including 17.35 township and farmers mutual insurers where applicable, shall 17.36 return to the commissioner with its annual financial statement18.1 the reports described in subdivision 1 certified by its 18.2 secretary and president or chief financial officer. The 18.3 Minnesota Firetown Premium Report shall contain a true and 18.4 accurate statement of the total premium for all gross direct 18.5 fire, lightning, sprinkler leakage, and extended coverage 18.6 insurance of all domestic mutual insurers and the total premiums 18.7 for all gross direct fire, lightning, sprinkler leakage and 18.8 extended coverage insurance of all other insurers, less return 18.9 premiums and dividends received by them on that business written 18.10 or done during the preceding calendar year upon property located 18.11 within the state or brought into the state for temporary use. 18.12 The fire and extended coverage portion of multiperil and 18.13 multiple peril package premiums and all other combination 18.14 premiums shall be determined by applying percentages determined 18.15 by the commissioner or by rating bureaus recognized by the 18.16 commissioner. The Minnesota Aid to Police Premium Report shall 18.17 contain a true and accurate statement of the total premiums, 18.18 less return premiums and dividends, on all direct business 18.19 received by such insurer in this state, or by its agents for it, 18.20 in cash or otherwise, during the preceding calendar year, with 18.21 reference to insurance written for perils described in section 18.22 69.011, subdivision 1, clause (f). 18.23 Sec. 4. Minnesota Statutes 1996, section 289A.11, 18.24 subdivision 1, is amended to read: 18.25 Subdivision 1. [RETURN REQUIRED.] Except as provided in 18.26 section 289A.18, subdivision 4, for the month in which taxes 18.27 imposed by sections 297A.01 to 297A.44chapter 297A are payable, 18.28 or for which a return is due, a return for the preceding 18.29 reporting period must be filed with the commissioner in the form 18.30 and manner the commissioner prescribes. A person making sales 18.31 at retail at two or more places of business may file a 18.32 consolidated return subject to rules prescribed by the 18.33 commissioner. In computing the dollar amount of items on the 18.34 return, the amounts are rounded off to the nearest whole dollar, 18.35 disregarding amounts less than 50 cents and increasing amounts 18.36 of 50 cents to 99 cents to the next highest dollar. 19.1 Notwithstanding this subdivision, a person who is not 19.2 required to hold a sales tax permit under chapter 297A and who 19.3 makes annual purchases of less than $18,500 that are subject to 19.4 the use tax imposed by section 297A.14, may file an annual use 19.5 tax return on a form prescribed by the commissioner. If a 19.6 person who qualifies for an annual use tax reporting period is 19.7 required to obtain a sales tax permit or makes use tax purchases 19.8 in excess of $18,500 during the calendar year, the reporting 19.9 period must be considered ended at the end of the month in which 19.10 the permit is applied for or the purchase in excess of $18,500 19.11 is made and a return must be filed for the preceding reporting 19.12 period. 19.13 Sec. 5. Minnesota Statutes 1996, section 289A.35, is 19.14 amended to read: 19.15 289A.35 [ASSESSMENTS.] 19.16 The commissioner shall make determinations, corrections, 19.17 and assessments with respect to state taxes, including interest, 19.18 additions to taxes, and assessable penalties. The commissioner 19.19 may audit and adjust the taxpayer's computation of federal 19.20 taxable income, items of federal tax preferences, or federal 19.21 credit amounts to make them conform with the provisions of 19.22 chapter 290 or section 298.01. If a taxpayer fails to file a 19.23 required return, the commissioner, from information in the 19.24 commissioner's possession or obtainable by the commissioner, may 19.25 make a return for the taxpayer. The return will be prima facie 19.26 correct and valid. If a return has been filed, the commissioner 19.27 shall examine the return and make any audit or investigation 19.28 that is considered necessary. The commissioner may use 19.29 statistical or other sampling techniques consistent with 19.30 generally accepted accounting principlesauditing standards in 19.31 examining returns or records and making assessments. 19.32 Sec. 6. Minnesota Statutes 1996, section 297A.01, 19.33 subdivision 1, is amended to read: 19.34 Subdivision 1. The following words, terms, and phrases 19.35 when used in sections 297A.01 to 297A.44this chapter shall have 19.36 the meanings ascribed to them in this section except where the 20.1 context clearly indicates a different meaning. 20.2 Sec. 7. Minnesota Statutes 1996, section 297A.09, is 20.3 amended to read: 20.4 297A.09 [PRESUMPTION OF TAX; BURDEN OF PROOF.] 20.5 For the purpose of the proper administration of sections20.6 297A.01 to 297A.44this chapter and to prevent evasion of the 20.7 tax, it shall be presumed that all gross receipts are subject to 20.8 the tax until the contrary is established. The burden of 20.9 proving that a sale is not a sale at retail is upon the person 20.10 who makes the sale, but that person may take from the purchaser 20.11 an exemption certificate to the effect that the property 20.12 purchased is for resale or that the sale is otherwise exempt 20.13 from the application of the tax imposed by sections 297A.01 to 20.14 297A.44. 20.15 Sec. 8. Minnesota Statutes 1996, section 297A.12, is 20.16 amended to read: 20.17 297A.12 [IMPROPER USE OF SUBJECT OF PURCHASE OBTAINED WITH 20.18 EXEMPTION CERTIFICATE.] 20.19 If a purchaser who gives an exemption certificate makes any 20.20 use of the subject of the purchase other than for a purpose 20.21 exempted by sections 297A.01 to 297A.44under this chapter, such 20.22 use shall be deemed a retail sale by the purchaser as of the 20.23 time of first use by the purchaser, and the sales price to the 20.24 purchaser shall be deemed the gross receipts from such retail 20.25 sale. If the sole nonexempt use is rental while holding for 20.26 sale, the purchaser shall include in the purchaser's gross 20.27 receipts the amount of the rental charged. Upon subsequent sale 20.28 of such property, the seller shall include the entire amount of 20.29 gross receipts received therefrom without deduction of amounts 20.30 previously received as rentals. 20.31 Sec. 9. Minnesota Statutes 1996, section 297A.14, 20.32 subdivision 4, is amended to read: 20.33 Subd. 4. [DE MINIMIS EXEMPTION.] Purchases subject to use 20.34 tax under this section are exempt if (1) the purchase is made by 20.35 an individual for personal use, and (2) the total purchases that 20.36 are subject to the use tax do not exceed $770 in the calendar 21.1 year. For purposes of this subdivision, "personal use" includes 21.2 purchases for gifts. If an individual makes purchases, which 21.3 are subject to use tax, of more than $770 in the calendar year 21.4 the individual must pay the use tax on the entire amount. This 21.5 exemption does not apply to purchases made from retailers who 21.6 are required or registered to collect taxes under this chapter. 21.7 Sec. 10. Minnesota Statutes 1996, section 297A.22, is 21.8 amended to read: 21.9 297A.22 [PRESUMPTION OF PURPOSE OF SALE, BURDEN OF PROOF.] 21.10 For the purpose of the proper administration of sections 21.11 297A.01 to 297A.44 and to prevent evasion of the use tax and the 21.12 duty to collect the use tax, it shall be presumed that all 21.13 retail sales for delivery in Minnesota are for storage, use or 21.14 other consumption in Minnesota until the contrary is 21.15 established. The burden of proving the contrary shall be upon21.16 The personretailer who makes the sale but that personmay take 21.17 from the purchaser an exemption certificate in accordance with 21.18 sections 297A.09 to 297A.13. 21.19 Sec. 11. Minnesota Statutes 1996, section 297A.23, is 21.20 amended to read: 21.21 297A.23 [PROPERTY BROUGHT TO STATE; PRESUMPTION; BURDEN OF 21.22 PROOF.] 21.23 Any purchaser of tangible personal property or any items 21.24 enumerated in section 297A.14 which are shipped or brought to 21.25 Minnesota by the purchaser after July 31, 1967,shall have the 21.26 burden of proving that the same were not purchased from a 21.27 retailer for storage, use or consumption in Minnesota. 21.28 Sec. 12. Minnesota Statutes 1996, section 297A.25, 21.29 subdivision 1, is amended to read: 21.30 Subdivision 1. [SCOPE.] The items contained in this 21.31 section are specifically exempted from the taxes imposed by 21.32 sections 297A.01 to 297A.44this chapter. 21.33 Sec. 13. Minnesota Statutes 1996, section 297A.25, 21.34 subdivision 2, is amended to read: 21.35 Subd. 2. [FOOD PRODUCTS.] The gross receipts from the sale 21.36 of and storage, use, or consumption of food products including 22.1 but not limited to cereal and cereal products, butter, cheese, 22.2 milk and milk products, oleomargarine, meat and meat products, 22.3 fish and fish products, eggs and egg products, vegetables and 22.4 vegetable products, fruit and fruit products, spices and salt, 22.5 sugar and sugar products, coffee and coffee substitutes, tea, 22.6 cocoa and cocoa products, and food products which are not 22.7 taxable pursuant to section 297A.01, subdivision 3, clause (c) 22.8 are exempt. This exemption does not include the following: 22.9 (1) candy and candy products, except when sold for 22.10 fundraising purposes by a nonprofit organization that provides 22.11 educational and social activities for young people primarily 22.12 aged 18 and under; 22.13 (2) carbonated beverages, beverages commonly referred to as 22.14 soft drinks containing less than 15 percent fruit juice, or 22.15 bottled water other than noncarbonated and noneffervescent 22.16 bottled water sold in individual containers of one-half gallon 22.17 or more in size. 22.18 Sec. 14. Minnesota Statutes 1996, section 297A.25, 22.19 subdivision 3, is amended to read: 22.20 Subd. 3. [MEDICINES; MEDICAL DEVICES.] The gross receipts 22.21 from the sale of and storage, use, or consumption of prescribed 22.22 drugs, prescribed medicine and insulin, intended for use, 22.23 internal or external, in the cure, mitigation, treatment or 22.24 prevention of illness or disease in human beings are exempt, 22.25 together with prescription glasses, fever thermometers, 22.26 therapeutic, and prosthetic devices. "Prescribed drugs" or 22.27 "prescribed medicine" includes over-the-counter drugs or 22.28 medicine prescribed by a licensed physician. "Therapeutic 22.29 devices" includes reusable finger pricking devices for the 22.30 extraction of blood, blood glucose monitoring machines, and 22.31 other diagnostic agents used in diagnosing, monitoring, or 22.32 treating diabetes. Nonprescription analgesics consisting 22.33 principally (determined by the weight of all ingredients) of 22.34 acetaminophen, acetylsalicylic acid, ibuprofen, or a combination 22.35 thereof are exempt. 22.36 Sec. 15. Minnesota Statutes 1996, section 297A.25, 23.1 subdivision 6, is amended to read: 23.2 Subd. 6. [PACKING MATERIALS.] The gross receipts from the 23.3 sale of and storage, use, or consumption of packing materials 23.4 used to pack and ship household goods, the ultimate destination 23.5 of which is outside the state of Minnesota and which are not 23.6 thereafter returned to a point within Minnesota, except in the 23.7 course of interstate commerce, are exempt. 23.8 Sec. 16. Minnesota Statutes 1996, section 297A.25, 23.9 subdivision 8, is amended to read: 23.10 Subd. 8. [CLOTHING.] The gross receipts from the sale 23.11 of and storage, use, or consumption of clothing and wearing 23.12 apparel are exempt, except the following: 23.13 (1) all articles commonly or commercially known as jewelry, 23.14 whether real or imitation; pearls, precious and semiprecious 23.15 stones, and imitations thereof; articles made of, or ornamented, 23.16 mounted or fitted with precious metals or imitations thereof; 23.17 watches; clocks; cases and movements for watches and clocks; 23.18 gold, gold-plated, silver, or sterling flatware or hollowware 23.19 and silver-plated hollowware; opera glasses; lorgnettes; marine 23.20 glasses; field glasses and binoculars; 23.21 (2) articles made of fur on the hide or pelt, and articles 23.22 of which such fur is the component material or chief value, but 23.23 only if such value is more than three times the value of the 23.24 next most valuable component material; 23.25 (3) perfume, essences, extracts, toilet waters, cosmetics, 23.26 petroleum jellies, hair oils, pomades, hair dressings, hair 23.27 restoratives, hair dyes, aromatic cachous and toilet powders. 23.28 The tax imposed by this chapter shall not apply to lotion, oil, 23.29 powder, or other articles intended to be used or applied only in 23.30 the case of babies; 23.31 (4) trunks, valises, traveling bags, suitcases, satchels, 23.32 overnight bags, hat boxes for use by travelers, beach bags, 23.33 bathing suit bags, brief cases made of leather or imitation 23.34 leather, salespeople's sample and display cases, purses, 23.35 handbags, pocketbooks, wallets, billfolds, card, pass, and key 23.36 cases and toilet cases. 24.1 Sec. 17. Minnesota Statutes 1996, section 297A.25, 24.2 subdivision 9, is amended to read: 24.3 Subd. 9. [MATERIALS CONSUMED IN PRODUCTION.] The gross 24.4 receipts from the sale of and the storage, use, or consumption 24.5 of all materials, including chemicals, fuels, petroleum 24.6 products, lubricants, packaging materials, including returnable 24.7 containers used in packaging food and beverage products, feeds, 24.8 seeds, fertilizers, electricity, gas and steam, used or consumed 24.9 in agricultural or industrial production of personal property 24.10 intended to be sold ultimately at retail, whether or not the 24.11 item so used becomes an ingredient or constituent part of the 24.12 property produced are exempt. Seeds, trees, fertilizers, and 24.13 herbicides purchased for use by farmers in the Conservation 24.14 Reserve Program under United States Code, title 16, section 24.15 590h, as amended through December 31, 1991, the Integrated Farm 24.16 Management Program under section 1627 of Public Law Number 24.17 101-624, the Wheat and Feed Grain Programs under sections 301 to 24.18 305 and 401 to 405 of Public Law Number 101-624, and the 24.19 conservation reserve program under sections 103F.505 to 24.20 103F.531, are included in this exemption. Sales to a 24.21 veterinarian of materials used or consumed in the care, 24.22 medication, and treatment of horses and agricultural production 24.23 animals and horses used in agricultural productionare exempt 24.24 under this subdivision. Chemicals used for cleaning food 24.25 processing machinery and equipment are included in this 24.26 exemption. Materials, including chemicals, fuels, and 24.27 electricity purchased by persons engaged in agricultural or 24.28 industrial production to treat waste generated as a result of 24.29 the production process are included in this exemption. Such 24.30 production shall include, but is not limited to, research, 24.31 development, design or production of any tangible personal 24.32 property, manufacturing, processing (other than by restaurants 24.33 and consumers) of agricultural products whether vegetable or 24.34 animal, commercial fishing, refining, smelting, reducing, 24.35 brewing, distilling, printing, mining, quarrying, lumbering, 24.36 generating electricity and the production of road building 25.1 materials. Such production shall not include painting, 25.2 cleaning, repairing or similar processing of property except as 25.3 part of the original manufacturing process. Machinery, 25.4 equipment, implements, tools, accessories, appliances, 25.5 contrivances, furniture and fixtures, used in such production 25.6 and fuel, electricity, gas or steam used for space heating or 25.7 lighting, are not included within this exemption; however, 25.8 accessory tools, equipment and other short lived items, which 25.9 are separate detachable units used in producing a direct effect 25.10 upon the product, where such items have an ordinary useful life 25.11 of less than 12 months, are included within the exemption 25.12 provided herein. Electricity used to make snow for outdoor use 25.13 for ski hills, ski slopes, or ski trails is included in this 25.14 exemption. 25.15 Sec. 18. Minnesota Statutes 1996, section 297A.25, 25.16 subdivision 11, is amended to read: 25.17 Subd. 11. [SALES TO GOVERNMENT.] The gross receipts from 25.18 all sales, including sales in which title is retained by a 25.19 seller or a vendor or is assigned to a third party under an 25.20 installment sale or lease purchase agreement under section 25.21 465.71, of tangible personal property to, and all storage, use 25.22 or consumption of such property by, the United States and its 25.23 agencies and instrumentalities, the University of Minnesota, 25.24 state universities, community colleges, technical colleges, 25.25 state academies, the Lola and Rudy Perpich Minnesota center for 25.26 arts education, and school districts are exempt. 25.27 As used in this subdivision, "school districts" means 25.28 public school entities and districts of every kind and nature 25.29 organized under the laws of the state of Minnesota, including, 25.30 without limitation, school districts, intermediate school 25.31 districts, education districts, service cooperatives, secondary 25.32 vocational cooperative centers, special education cooperatives, 25.33 joint purchasing cooperatives, telecommunication cooperatives, 25.34 regional management information centers, and any instrumentality 25.35 of a school district, as defined in section 471.59. 25.36 Sales exempted by this subdivision include sales under 26.1 section 297A.01, subdivision 3, paragraph (f), but do not 26.2 include sales under section 297A.01, subdivision 3, paragraph 26.3 (j)(i), clause (vii). 26.4 Sales to hospitals and nursing homes owned and operated by 26.5 political subdivisions of the state are exempt under this 26.6 subdivision. 26.7 The sales to and exclusively for the use of libraries of 26.8 books, periodicals, audio-visual materials and equipment, 26.9 photocopiers for use by the public, and all cataloguing and 26.10 circulation equipment, and cataloguing and circulation software 26.11 for library use are exempt under this subdivision. For purposes 26.12 of this paragraph "libraries" means libraries as defined in 26.13 section 134.001, county law libraries under chapter 134A, the 26.14 state library under section 480.09, and the legislative 26.15 reference library. 26.16 Sales of supplies and equipment used in the operation of an 26.17 ambulance service owned and operated by a political subdivision 26.18 of the state are exempt under this subdivision provided that the 26.19 supplies and equipment are used in the course of providing 26.20 medical care. Sales to a political subdivision of repair and 26.21 replacement parts for emergency rescue vehicles and fire trucks 26.22 and apparatus are exempt under this subdivision. 26.23 Sales to a political subdivision of machinery and 26.24 equipment, except for motor vehicles, used directly for mixed 26.25 municipal solid waste management services at a solid waste 26.26 disposal facility as defined in section 115A.03, subdivision 10, 26.27 are exempt under this subdivision. 26.28 Sales to political subdivisions of chore and homemaking 26.29 services to be provided to elderly or disabled individuals are 26.30 exempt. 26.31 Sales of telephone services to the department of 26.32 administration that are used to provide telecommunications 26.33 services through the intertechnologies revolving fund are exempt 26.34 under this subdivision. 26.35 This exemption shall not apply to building, construction or 26.36 reconstruction materials purchased by a contractor or a 27.1 subcontractor as a part of a lump-sum contract or similar type 27.2 of contract with a guaranteed maximum price covering both labor 27.3 and materials for use in the construction, alteration, or repair 27.4 of a building or facility. This exemption does not apply to 27.5 construction materials purchased by tax exempt entities or their 27.6 contractors to be used in constructing buildings or facilities 27.7 which will not be used principally by the tax exempt entities. 27.8 This exemption does not apply to the leasing of a motor 27.9 vehicle as defined in section 297B.01, subdivision 5, except for 27.10 leases entered into by the United States or its agencies or 27.11 instrumentalities. 27.12 The tax imposed on sales to political subdivisions of the 27.13 state under this section applies to all political subdivisions 27.14 other than those explicitly exempted under this subdivision, 27.15 notwithstanding section 115A.69, subdivision 6, 116A.25, 27.16 360.035, 458A.09, 458A.30, 458D.23, 469.101, subdivision 2, 27.17 469.127, 473.448, 473.545, or 473.608 or any other law to the 27.18 contrary enacted before 1992. 27.19 Sales exempted by this subdivision include sales made to 27.20 other states or political subdivisions of other states, if the 27.21 sale would be exempt from taxation if it occurred in that state, 27.22 but do not include sales under section 297A.01, subdivision 3, 27.23 paragraphs (c) and (e). 27.24 Sec. 19. Minnesota Statutes 1996, section 297A.25, 27.25 subdivision 16, is amended to read: 27.26 Subd. 16. [SALES TO NONPROFIT GROUPS.] The gross receipts 27.27 from the sale of tangible personal property to, and the storage, 27.28 use or other consumption of such property by, any corporation, 27.29 society, association, foundation, or institution organized and 27.30 operated exclusively for charitable, religious, or educational 27.31 purposes if the property purchased is to be used in the 27.32 performance of charitable, religious, or educational functions, 27.33 or any senior citizen group or association of groups that in 27.34 general limits membership to persons who are either (1) age 55 27.35 or older, or (2) physically disabled, and is organized and 27.36 operated exclusively for pleasure, recreation, and other 28.1 nonprofit purposes, no part of the net earnings of which inures 28.2 to the benefit of any private shareholders, are exempt. For 28.3 purposes of this subdivision, charitable purpose includes the 28.4 maintenance of a cemetery owned by a religious organization. 28.5 Sales exempted by this subdivision include sales pursuant to 28.6 section 297A.01, subdivision 3, paragraphs (d) and (f), but do 28.7 not include sales under section 297A.01, subdivision 3, 28.8 paragraph (j)(i), clause (vii). This exemption shall not apply 28.9 to building, construction, or reconstruction materials purchased 28.10 by a contractor or a subcontractor as a part of a lump-sum 28.11 contract or similar type of contract with a guaranteed maximum 28.12 price covering both labor and materials for use in the 28.13 construction, alteration, or repair of a building or facility. 28.14 This exemption does not apply to construction materials 28.15 purchased by tax exempt entities or their contractors to be used 28.16 in constructing buildings or facilities which will not be used 28.17 principally by the tax exempt entities. This exemption does not 28.18 apply to the leasing of a motor vehicle as defined in section 28.19 297B.01, subdivision 5. 28.20 Sec. 20. Minnesota Statutes 1996, section 297A.25, 28.21 subdivision 17, is amended to read: 28.22 Subd. 17. [CASKETS; VAULTS.] The gross receipts from the 28.23 sale of and storage, use, or consumption of caskets and burial 28.24 vaults are exempt. 28.25 Sec. 21. Minnesota Statutes 1996, section 297A.25, 28.26 subdivision 18, is amended to read: 28.27 Subd. 18. [AUTOMOBILES; DISABLED VETERANS.] The gross 28.28 receipts from the sale of and storage, use, or consumption of an 28.29 automobile or other conveyance are exempt if the purchaser is 28.30 assisted by a grant from the United States in accordance with 28.31 United States Code, title 38, section 19013901, as 28.32 amended through August 6, 1991. 28.33 Sec. 22. Minnesota Statutes 1996, section 297A.25, 28.34 subdivision 19, is amended to read: 28.35 Subd. 19. [AIRCRAFT.] The gross receipts from the sale 28.36 to and the storage, use, or consumption by a licensed aircraft 29.1 dealer of an aircraft for which a commercial use permit has been 29.2 issued pursuant to section 360.654 is exempt, if the aircraft is 29.3 resold while the permit is in effect. 29.4 Sec. 23. Minnesota Statutes 1996, section 297A.25, 29.5 subdivision 20, is amended to read: 29.6 Subd. 20. [BUILDING MATERIALS; DISABLED VETERANS.] The 29.7 gross receipts from the sale of and the storage, use, or 29.8 consumption of building materials to be used in the construction 29.9 or remodeling of a residence are exempt when the construction or 29.10 remodeling is financed in whole or in part by the United States 29.11 in accordance with United States Code, title 38, sections 801 to29.12 8052101 to 2105, as amended through August 6, 1991. This 29.13 exemption shall not be effective at time of sale of the 29.14 materials to contractors, subcontractors, builders or owners, 29.15 but shall be applicable only upon a claim for refund to the 29.16 commissioner of revenue filed by recipients of the benefits 29.17 provided in United States Code, title 38, chapter 21, as amended 29.18 through August 6, 1991. The commissioner shall provide by rule 29.19 for the refund of taxes paid on sales exempt in accordance with 29.20 this subdivision. 29.21 Sec. 24. Minnesota Statutes 1996, section 297A.25, 29.22 subdivision 21, is amended to read: 29.23 Subd. 21. [TEXTBOOKS.] The gross receipts from the sale of 29.24 and storage, use, or consumption of textbooks which are 29.25 prescribed for use in conjunction with a course of study in a 29.26 public or private school, college, university and business or 29.27 trade school to students who are regularly enrolled at such 29.28 institutions are exempt. For purposes of this subdivision a 29.29 "public school" is defined as one that furnishes course of 29.30 study, enrollment and staff that meets standards of the state 29.31 board of education and a "private school" is one which under the 29.32 standards of the state board of education, provides an education 29.33 substantially equivalent to that furnished at a public school. 29.34 "Business and trade schools" shall mean such schools licensed 29.35 pursuant to section 141.25. 29.36 Sec. 25. Minnesota Statutes 1996, section 297A.25, 30.1 subdivision 23, is amended to read: 30.2 Subd. 23. [RESIDENTIAL HEATING FUELS.] The gross receipts 30.3 from the sale of and the storage, use, or consumption of 30.4 residential heating fuels are exempt in the following manner: 30.5 (1) all fuel oil, coal, wood, steam, hot water, propane 30.6 gas, and L.P. gas sold to residential customers for residential 30.7 use; 30.8 (2) natural gas sold for residential use to customers who 30.9 are metered and billed as residential users and who use natural 30.10 gas for their primary source of residential heat, for the 30.11 billing months of November, December, January, February, March 30.12 and April; 30.13 (3) electricity sold for residential use to customers who 30.14 are metered and billed as residential users and who use 30.15 electricity for their primary source of residential heat, for 30.16 the billing months of November, December, January, February, 30.17 March and April. 30.18 Sec. 26. Minnesota Statutes 1996, section 297A.25, 30.19 subdivision 26, is amended to read: 30.20 Subd. 26. [FEMININE HYGIENE PRODUCTS.] The gross receipts 30.21 from the sale of and storage, use, or consumption of sanitary 30.22 napkins, tampons, or similar items used for feminine hygiene, 30.23 are exempt. 30.24 Sec. 27. Minnesota Statutes 1996, section 297A.25, 30.25 subdivision 27, is amended to read: 30.26 Subd. 27. [MANUFACTURED HOMES.] The gross receipts from 30.27 the sale of and the storage, use, or consumption of a 30.28 manufactured home, as defined in section 327.31, subdivision 6, 30.29 to be used by the purchaser for residential purposes are exempt, 30.30 unless the sale is the first retail sale of the manufactured 30.31 home in this state. 30.32 Sec. 28. Minnesota Statutes 1996, section 297A.25, 30.33 subdivision 28, is amended to read: 30.34 Subd. 28. [WASTE PROCESSING EQUIPMENT.] The gross receipts 30.35 from the sale of and storage, use, or consumption of equipment 30.36 used for processing solid or hazardous waste at a resource 31.1 recovery facility, as defined in section 115A.03, subdivision 31.2 28, are exempt, including pollution control equipment at a 31.3 resource recovery facility that burns refuse-derived fuel or 31.4 mixed municipal solid waste as its primary fuel. 31.5 Sec. 29. Minnesota Statutes 1996, section 297A.25, 31.6 subdivision 29, is amended to read: 31.7 Subd. 29. [FARM MACHINERY REPAIR PARTS.] The gross 31.8 receipts from the sale of and the storage, use, or consumption 31.9 of repair and replacement parts, except tires, used for 31.10 maintenance or repair of farm machinery are exempt, if the part 31.11 replaces a farm machinery part assigned a specific or generic 31.12 part number by the manufacturer of the farm machinery. 31.13 Sec. 30. Minnesota Statutes 1996, section 297A.25, 31.14 subdivision 30, is amended to read: 31.15 Subd. 30. [SCHOOL TICKETS OR ADMISSIONS.] The gross 31.16 receipts from sales and use of tickets or admissions to regular 31.17 season school games, events, and activities are exempt. For 31.18 purposes of this subdivision, "school" has the meaning given it 31.19 in section 120.101, subdivision 4. 31.20 Sec. 31. Minnesota Statutes 1996, section 297A.25, 31.21 subdivision 34, is amended to read: 31.22 Subd. 34. [MOTOR VEHICLES.] The gross receipts from the 31.23 sale or use of any motor vehicle taxable under the provisions of 31.24 the sales tax on motor vehicles laws of Minnesota shall be 31.25 exempt from taxation under this chapter. Notwithstanding 31.26 subdivision 11, the exemption provided under this subdivision 31.27 remains in effect for motor vehicles purchased or leased by 31.28 political subdivisions of the state if the vehicles are not31.29 subject to taxation under chapter 297Bexempt from registration 31.30 under section 168.012, subdivision 1, paragraph (b). 31.31 Sec. 32. Minnesota Statutes 1996, section 297A.25, 31.32 subdivision 35, is amended to read: 31.33 Subd. 35. [FOOD STAMPS.] The gross receipts from the 31.34 sale and the storage, use, or consumption of tangible personal 31.35 property purchased with food stamps, coupons, or vouchers issued 31.36 by the federal government under the Food Stamp Program are 32.1 exempt. This exemption also applies to food purchased under the 32.2 Special Supplemental Food Program for Women, Infants, and 32.3 Children. The exemption provided by this subdivision is 32.4 effective and applies only to the extent required by federal law. 32.5 Sec. 33. Minnesota Statutes 1996, section 297A.25, 32.6 subdivision 38, is amended to read: 32.7 Subd. 38. [USED MOTOR OILS.] The gross receipts from the 32.8 sale of and the storage, use, or consumption of used motor oils 32.9 are exempt. 32.10 Sec. 34. Minnesota Statutes 1996, section 297A.25, 32.11 subdivision 39, is amended to read: 32.12 Subd. 39. [CROSS-COUNTRY SKI PASSES.] The gross receipts 32.13 from the sale and use of cross-country ski passes issued under 32.14 sections 85.40 to 85.43 are exempt. 32.15 Sec. 35. Minnesota Statutes 1996, section 297A.25, 32.16 subdivision 40, is amended to read: 32.17 Subd. 40. [STATE FAIR ADMISSIONS.] The gross receipts from 32.18 the sale and use of tickets to the premises of or events 32.19 sponsored by the state agricultural society and conducted on the 32.20 state fairgrounds during the period of the annual state fair are 32.21 exempt, provided that: 32.22 (1) the tax foregone under this subdivision is used 32.23 exclusively for the purpose of making capital improvements to 32.24 state-owned buildings and facilities on the state fairgrounds; 32.25 and 32.26 (2) the tax foregone under this subdivision is matched in 32.27 equal amount by proceeds from special assessments levied against 32.28 commercial exhibits, concessions and rentals, and from other 32.29 special user fees specifically designated for capital 32.30 improvements. 32.31 Sec. 36. Minnesota Statutes 1996, section 297A.25, 32.32 subdivision 41, is amended to read: 32.33 Subd. 41. [BULLET-PROOF VESTS.] The gross receipts from 32.34 the sale of and storage, use, or consumption of bullet-resistant 32.35 soft body armor that is flexible, concealable, and custom-fitted 32.36 to provide the wearer with ballistic and trauma protection are 33.1 exempt if purchased by a law enforcement agency of the state or 33.2 a political subdivision of the state, or a licensed peace 33.3 officer, as defined in section 626.84, subdivision 1. The 33.4 bullet-resistant soft body armor must meet or exceed the 33.5 requirements of standard 0101.01 of the National Institute of 33.6 Law Enforcement and Criminal Justice in effect on December 30, 33.7 1986, or meet or exceed the requirements of the standard except 33.8 wet armor conditioning. 33.9 Sec. 37. Minnesota Statutes 1996, section 297A.25, 33.10 subdivision 42, is amended to read: 33.11 Subd. 42. [CAPITAL EQUIPMENT.] The gross receipts from the 33.12 sale of and storage, use, or consumption of capital equipment 33.13 are exempt. 33.14 Sec. 38. Minnesota Statutes 1996, section 297A.25, 33.15 subdivision 43, is amended to read: 33.16 Subd. 43. [CHAIR LIFTS, RAMPS, ELEVATORS.] The gross 33.17 receipts from the sale of and storage, use, or consumption of 33.18 chair lifts, ramps, and elevators and building materials used to 33.19 install or construct them are exempt, if they are authorized by 33.20 a physician and installed in or attached to the owner's 33.21 homestead. 33.22 Sec. 39. Minnesota Statutes 1996, section 297A.25, 33.23 subdivision 46, is amended to read: 33.24 Subd. 46. [SACRAMENTAL WINE.] The gross receipts from the 33.25 sale of and storage, use, or consumption of wine for sacramental 33.26 purposes in religious ceremonies, as described in section 33.27 340A.316, if the wine is purchased from a nonprofit religious 33.28 organization meeting the requirements of subdivision 16 or from 33.29 the holder of a sacramental wine license as provided in section 33.30 340A.316 are exempt. 33.31 Sec. 40. Minnesota Statutes 1996, section 297A.25, 33.32 subdivision 49, is amended to read: 33.33 Subd. 49. [AIR COOLING EQUIPMENT.] The gross receipts from 33.34 the sale of and storage, use, or consumption of equipment used 33.35 for air cooling are exempt, if the equipment is purchased for 33.36 conversion or replacement of an existing groundwater based 34.1 once-through cooling system as required under section 103G.271, 34.2 subdivision 5. 34.3 Sec. 41. Minnesota Statutes 1996, section 297A.25, 34.4 subdivision 51, is amended to read: 34.5 Subd. 51. [AUTOMATIC FIRE-SAFETY SPRINKLER SYSTEMS.] The 34.6 gross receipts from the sale of and storage, use, or consumption 34.7 of automatic fire-safety sprinkler systems described in section 34.8 273.11, subdivision 6a, are exempt. 34.9 Sec. 42. Minnesota Statutes 1996, section 297A.25, 34.10 subdivision 52, is amended to read: 34.11 Subd. 52. [PARTS AND ACCESSORIES USED TO MAKE A MOTOR 34.12 VEHICLE HANDICAPPED ACCESSIBLE.] The gross receipts from the 34.13 sale of and storage, use, or consumption of parts and 34.14 accessories that are used solely to modify a motor vehicle to 34.15 make it handicapped accessible are exempt. Labor charges for 34.16 modifying a motor vehicle to make it handicapped accessible are 34.17 included in this exemption. 34.18 Sec. 43. Minnesota Statutes 1996, section 297A.25, 34.19 subdivision 53, is amended to read: 34.20 Subd. 53. [SPECIAL TOOLING.] The gross receipts from the 34.21 sale of and storage, use, or consumption of special tooling are 34.22 exempt. 34.23 Sec. 44. Minnesota Statutes 1996, section 297A.25, 34.24 subdivision 57, is amended to read: 34.25 Subd. 57. [HORSES; RELATED MATERIALS.] (a) The gross 34.26 receipts from the sale of and storage or use of horses, 34.27 including racehorses, are exempt. 34.28 (b) Sales of and storage, use, or consumption of all 34.29 materials, including feed and bedding, used or consumed in the 34.30 breeding, raising, owning, boarding, and keeping of horses, are 34.31 exempt. Machinery, equipment, implements, tools, appliances, 34.32 furniture, and fixtures, used in the breeding, raising, owning, 34.33 boarding, and keeping of horses, are not included within this 34.34 exemption. 34.35 Sec. 45. Minnesota Statutes 1996, section 297A.25, 34.36 subdivision 61, is amended to read: 35.1 Subd. 61. [CONSTRUCTION MATERIALS FOR INDOOR ICE ARENAS.] 35.2 The gross receipts from the sale of and storage, use, or 35.3 consumption of construction materials and supplies are exempt if: 35.4 (1) the materials and supplies are to be used in 35.5 constructing an indoor ice arena intended to be used 35.6 predominantly for youth athletic activities; and 35.7 (2) the construction project is financed in whole or in 35.8 part from a grant under sections 240A.09 and 240A.10 or the 35.9 proceeds of obligations issued under section 373.43 or 475.58, 35.10 subdivision 3. 35.11 This exemption applies regardless of whether the purchases 35.12 are made by the owner of the facility or a contractor. 35.13 Sec. 46. Minnesota Statutes 1996, section 297A.256, 35.14 subdivision 1, is amended to read: 35.15 Subdivision 1. [FUNDRAISING SALES BY NONPROFIT GROUPS.] 35.16 Notwithstanding the provisions of this chapter, the following 35.17 sales made by a "nonprofit organization" are exempt from the 35.18 sales and use tax. 35.19 (a)(1) All sales made by an organization for fundraising 35.20 purposes if that organization exists solely for the purpose of 35.21 providing educational or social activities for young people 35.22 primarily age 18 and under. This exemption shall apply only if 35.23 the gross annual sales receipts of the organization from 35.24 fundraising do not exceed $10,000. 35.25 (2) A club, association, or other organization of 35.26 elementary or secondary school students organized for the 35.27 purpose of carrying on sports, educational, or other 35.28 extracurricular activities is a separate organization from the 35.29 school district or school for purposes of applying the $10,000 35.30 limit. This paragraph does not apply if the sales are derived 35.31 from admission charges or from activities for which the money 35.32 must be deposited with the school district treasurer under 35.33 section 123.38, subdivision 2, or be recorded in the same manner 35.34 as other revenues or expenditures of the school district under 35.35 section 123.38, subdivision 2b. 35.36 (b) All sales made by an organization for fundraising 36.1 purposes if that organization is a senior citizen group or 36.2 association of groups that in general limits membership to 36.3 persons age 55 or older and is organized and operated 36.4 exclusively for pleasure, recreation and other nonprofit 36.5 purposes and no part of the net earnings inure to the benefit of 36.6 any private shareholders. This exemption shall apply only if 36.7 the gross annual sales receipts of the organization from 36.8 fundraising do not exceed $10,000. 36.9 (c) The gross receipts from the sales of tangible personal 36.10 property at, admission charges for, and sales of food, meals, or 36.11 drinks at fundraising events sponsored by a nonprofit 36.12 organization when the entire proceeds, except for the necessary 36.13 expenses therewith, will be used solely and exclusively for 36.14 charitable, religious, or educational purposes. This exemption 36.15 does not apply to admission charges for events involving bingo 36.16 or other gambling activities or to charges for use of amusement 36.17 devices involving bingo or other gambling activities. For 36.18 purposes of this paragraph, a "nonprofit organization" means any 36.19 unit of government, corporation, society, association, 36.20 foundation, or institution organized and operated for 36.21 charitable, religious, educational, civic, fraternal, senior 36.22 citizens' or veterans' purposes, no part of the net earnings of 36.23 which inures to the benefit of a private individual. 36.24 If the profits are not used solely and exclusively for 36.25 charitable, religious, or educational purposes, the entire gross 36.26 receipts are subject to tax. 36.27 Each nonprofit organization shall keep a separate 36.28 accounting record, including receipts and disbursements from 36.29 each fundraising event. All deductions from gross receipts must 36.30 be documented with receipts and other records. If records are 36.31 not maintained as required, the entire gross receipts are 36.32 subject to tax. 36.33 The exemption provided by this paragraph does not apply to 36.34 any sale made by or in the name of a nonprofit corporation as 36.35 the active or passive agent of a person that is not a nonprofit 36.36 corporation. 37.1 The exemption for fundraising events under this paragraph 37.2 is limited to no more than 24 days a year. Fundraising events 37.3 conducted on premises leased for more than four days but less 37.4 than 30 days do not qualify for this exemption. 37.5 (d) The gross receipts from the sale or use of tickets or 37.6 admissions to a golf tournament held in Minnesota are exempt if 37.7 the beneficiary of the tournament's net proceeds qualifies as a 37.8 tax-exempt organization under section 501(c)(3) of the Internal 37.9 Revenue Code, as amended through December 31, 1994, including a 37.10 tournament conducted on premises leased or occupied for more 37.11 than four days. 37.12 Sec. 47. Minnesota Statutes 1996, section 297A.44, 37.13 subdivision 1, is amended to read: 37.14 Subdivision 1. (a) Except as provided in paragraphs (b), 37.15 (c), and (d), all revenues, including interest and penalties, 37.16 derived from the excise and use taxes imposed by sections 37.17 297A.01 to 297A.44 shall be deposited by the commissioner in the 37.18 state treasury and credited to the general fund. 37.19 (b) All excise and use taxes derived from sales and use of 37.20 property and services purchased for the construction and 37.21 operation of an agricultural resource project, from and after 37.22 the date on which a conditional commitment for a loan guaranty 37.23 for the project is made pursuant to section 41A.04, subdivision 37.24 3, shall be deposited in the Minnesota agricultural and economic 37.25 account in the special revenue fund. The commissioner of 37.26 finance shall certify to the commissioner the date on which the 37.27 project received the conditional commitment. The amount 37.28 deposited in the loan guaranty account shall be reduced by any 37.29 refunds and by the costs incurred by the department of revenue 37.30 to administer and enforce the assessment and collection of the 37.31 taxes. 37.32 (c) All revenues, including interest and penalties, derived 37.33 from the excise and use taxes imposed on sales and purchases 37.34 included in section 297A.01, subdivision 3, paragraphs (d) and 37.35 (l)(k), clauses (1) and (2), must be deposited by the 37.36 commissioner in the state treasury, and credited as follows: 38.1 (1) first to the general obligation special tax bond debt 38.2 service account in each fiscal year the amount required by 38.3 section 16A.661, subdivision 3, paragraph (b); and 38.4 (2) after the requirements of clause (1) have been met, the 38.5 balance must be credited to the general fund. 38.6 (d) The revenues, including interest and penalties, derived 38.7 from the taxes imposed on solid waste collection services as 38.8 described in section 297A.45, shall be deposited by the 38.9 commissioner in the state treasury and credited to the general 38.10 fund to be used for funding solid waste reduction and recycling 38.11 programs. 38.12 Sec. 48. Minnesota Statutes 1996, section 297B.03, is 38.13 amended to read: 38.14 297B.03 [EXEMPTIONS.] 38.15 There is specifically exempted from the provisions of this 38.16 chapter and from computation of the amount of tax imposed by it 38.17 the following: 38.18 (1) Purchase or use, including use under a lease purchase 38.19 agreement or installment sales contract made pursuant to section 38.20 465.71, of any motor vehicle by the United States and its 38.21 agencies and instrumentalities and by any person described in 38.22 and subject to the conditions provided in section 297A.25, 38.23 subdivision 18. 38.24 (2) Purchase or use of any motor vehicle by any person who 38.25 was a resident of another state at the time of the purchase and 38.26 who subsequently becomes a resident of Minnesota, provided the 38.27 purchase occurred more than 60 days prior to the date such 38.28 person began residing in the state of Minnesota. 38.29 (3) Purchase or use of any motor vehicle by any person 38.30 making a valid election to be taxed under the provisions of 38.31 section 297A.211. 38.32 (4) Purchase or use of any motor vehicle previously 38.33 registered in the state of Minnesota by any corporation or38.34 partnershipwhen such transfer constitutes a transfer within the 38.35 meaning of section 351 or 721 of the Internal Revenue Code of 38.36 1986, as amended through December 31, 1988. 39.1 (5) Purchase or use of any vehicle owned by a resident of 39.2 another state and leased to a Minnesota based private or for 39.3 hire carrier for regular use in the transportation of persons or 39.4 property in interstate commerce provided the vehicle is titled 39.5 in the state of the owner or secured party, and that state does 39.6 not impose a sales tax or sales tax on motor vehicles used in 39.7 interstate commerce. 39.8 (6) Purchase or use of a motor vehicle by a private 39.9 nonprofit or public educational institution for use as an 39.10 instructional aid in automotive training programs operated by 39.11 the institution. "Automotive training programs" includes motor 39.12 vehicle body and mechanical repair courses but does not include 39.13 driver education programs. 39.14 (7) Purchase of a motor vehicle for use as an ambulance by 39.15 an ambulance service licensed under section 144.802. 39.16 (8) Purchase of a motor vehicle by or for a public library, 39.17 as defined in section 134.001, subdivision 2, as a bookmobile or 39.18 library delivery vehicle. 39.19 Sec. 49. Minnesota Statutes 1996, section 297B.035, 39.20 subdivision 3, is amended to read: 39.21 Subd. 3. [SALES IN VIOLATION OF LICENSING REQUIREMENTS.] 39.22 Motor vehicles sold by a new motor vehicle dealer in 39.23 contravention of section 168.27, subdivision 10, clause (1)(b) 39.24 shall not be considered to have been acquired or purchased for 39.25 resale in the ordinary or regular course of business for the 39.26 purposes of this chapter, and the dealer shall be required to 39.27 pay the excise tax due on the purchase of those vehicles. The 39.28 sale by a lessor of a new motor vehicle under lease within 120 39.29 days of the commencement of the lease is deemed a sale in 39.30 contravention of section 168.27, subdivision 10, clause (1)(b) 39.31 unless the lessor holds a valid contract or franchise with the 39.32 manufacturer or distributor of the vehicle. Notwithstanding 39.33 section 297B.11, the rights of a dealer to appeal any amounts 39.34 owed by the dealer under this subdivision are governed 39.35 exclusively by the hearing procedure under section 168.27, 39.36 subdivision 13. 40.1 Sec. 50. Minnesota Statutes 1996, section 297B.11, is 40.2 amended to read: 40.3 297B.11 [REGISTRAR AS AGENT OF COMMISSIONER OF REVENUE; 40.4 POWERS.] 40.5 The state commissioner of revenue is charged with the 40.6 administration of the sales tax on motor vehicles. The 40.7 commissioner may prescribe all rules not inconsistent with the 40.8 provisions of this chapter, necessary and advisable for the 40.9 proper and efficient administration of the law. The collection 40.10 of this sales tax on motor vehicles shall be carried out by the 40.11 motor vehicle registrar who shall act as the agent of the 40.12 commissioner and who shall be subject to all rules not 40.13 inconsistent with the provisions of this chapter, that may be 40.14 prescribed by the commissioner. 40.15 The provisions of chapters 289A and 297A relating to the 40.16 commissioner's authority to audit, assess, and collect the tax, 40.17 and to issue refunds and to hear appeals, are applicable to the 40.18 sales tax on motor vehicles. The commissioner may impose civil 40.19 penalties as provided in chapters 289A and 297A, and the 40.20 additional tax and penalties are subject to interest at the rate 40.21 provided in section 270.75. 40.22 Sec. 51. Minnesota Statutes 1996, section 299F.21, 40.23 subdivision 2, is amended to read: 40.24 Subd. 2. [ANNUAL RETURNS.] (a) Every insurer required to 40.25 pay a tax under this section shall make and file a statement of 40.26 estimated taxes for the period covered by the installment tax 40.27 payment. The statement shall be in the form prescribed by the 40.28 commissioner of revenue. 40.29 (b) On or before March 1, annually every insurer subject to 40.30 taxation under this section shall make an annual return for the 40.31 preceding calendar year setting forth information the 40.32 commissioner of revenue may reasonably require on forms 40.33 prescribed by the commissioner. 40.34 (c) On March 1, the insurer shall pay any additional amount 40.35 due for the preceding calendar year; if there has been an 40.36 overpayment, the overpayment may be credited without interest on 41.1 the estimated tax due April 151. 41.2 (d) If unpaid by this date, penalties as provided in 41.3 section 289A.60, subdivision 1, as related to withholding and 41.4 sales or use taxes, shall be imposed. 41.5 Sec. 52. [EFFECTIVE DATE.] 41.6 Sections 1 to 51 are effective July 1, 1997. 41.7 ARTICLE 3 41.8 PROPERTY TAXES 41.9 Section 1. Minnesota Statutes 1996, section 272.02, 41.10 subdivision 4, is amended to read: 41.11 Subd. 4. [CONVERSION TO EXEMPT OR TAXABLE USES.] (a) Any 41.12 property exempt from taxation on January 2 of any year which, 41.13 due to sale or other reason, loses its exemption prior to July 1 41.14 of any year, shall be placed on the current assessment rolls for 41.15 that year. 41.16 The valuation shall be determined with respect to its value 41.17 on January 2 of such year. The classification shall be based 41.18 upon the use to which the property was put by the purchaser, or 41.19 in the event the purchaser has not utilized the property by July 41.20 1, the intended use of the property, determined by the county 41.21 assessor, based upon all relevant facts. 41.22 (b) Property subject to tax on January 2 that is acquired 41.23 by a governmental entity, institution of purely public charity,41.24 church, or educational institutionbefore July 1 of the year is 41.25 exempt for that assessment year if the property is to be used 41.26 for an exempt purpose under subdivision 1, clauses (1) to (7). 41.27 (c) Property which forfeits to the state for nonpayment of 41.28 real estate taxes on or before December 31 in an assessment 41.29 year, shall be removed from the assessment rolls for that 41.30 assessment year. Forfeited property that is repurchased, or 41.31 sold at a public or private sale, on or before December 31 of an 41.32 assessment year shall be placed on the assessment rolls for that 41.33 year's assessment. 41.34 Sec. 2. Minnesota Statutes 1996, section 272.04, 41.35 subdivision 1, is amended to read: 41.36 Subdivision 1. When any mineral, gas, coal, oil, or other 42.1 similar interests in real estate are owned separately and apart 42.2 from and independently of the rights and interests owned in the 42.3 surface of such real estate, such mineral, gas, coal, oil, or 42.4 other similar interests may be assessed and taxed separately 42.5 from such surface rights and interests in such real estate, 42.6 including but not limited to the taxation provided in section 42.7 273.165, subdivision 1 , and may be sold for taxes in the same42.8 manner and with the same effect as other interests in real42.9 estate are sold for taxes. All laws for the enforcement of 42.10 taxes on real estate apply to such interest. 42.11 Sec. 3. Minnesota Statutes 1996, section 273.032, is 42.12 amended to read: 42.13 273.032 [MARKET VALUE DEFINITION.] 42.14 For the purpose of determining any property tax levy 42.15 limitation based on market value, any net debt limit based on 42.16 market value, any limit on the issuance of bonds, certificates 42.17 of indebtedness, or capital notes based on market value, any 42.18 qualification to receive state aid based on market value, or any 42.19 state aid amount based on market value, the terms "market 42.20 value," "taxable market value," and "market valuation," whether 42.21 equalized or unequalized, mean the total taxable market value of 42.22 property within the local unit of government before any 42.23 adjustments for tax increment, fiscal disparity, orpowerline 42.24 credit, or wind energy values, but after the limited market 42.25 adjustments under section 273.11, subdivision 1a, and after the 42.26 market value exclusions of certain improvements to homestead 42.27 property under section 273.11, subdivision 16. Unless otherwise 42.28 provided, "market value," "taxable market value," and "market 42.29 valuation" refer to the taxable market value for the previous 42.30 assessment year. 42.31 Sec. 4. Minnesota Statutes 1996, section 273.124, 42.32 subdivision 1, is amended to read: 42.33 Subdivision 1. [GENERAL RULE.] (a) Residential real estate 42.34 that is occupied and used for the purposes of a homestead by its 42.35 owner, who must be a Minnesota resident, is a residential 42.36 homestead. 43.1 Agricultural land, as defined in section 273.13, 43.2 subdivision 23, that is occupied and used as a homestead by its 43.3 owner, who must be a Minnesota resident, is an agricultural 43.4 homestead. 43.5 Dates for establishment of a homestead and homestead 43.6 treatment provided to particular types of property are as 43.7 provided in this section. 43.8 Property of a trustee, beneficiary, or grantor of a trust 43.9 is not disqualified from receiving homestead benefits if the 43.10 homestead requirements under this chapter are satisfied. 43.11 The assessor shall require proof, as provided in 43.12 subdivision 13, of the facts upon which classification as a 43.13 homestead may be determined. Notwithstanding any other law, the 43.14 assessor may at any time require a homestead application to be 43.15 filed in order to verify that any property classified as a 43.16 homestead continues to be eligible for homestead status. 43.17 Notwithstanding any other law to the contrary, the department of 43.18 revenue may, upon request from an assessor, verify whether an 43.19 individual who is requesting or receiving homestead 43.20 classification has filed a Minnesota income tax return as a 43.21 resident for the most recent taxable year for which the 43.22 information is available. 43.23 When there is a name change or a transfer of homestead 43.24 property, the assessor may reclassify the property in the next 43.25 assessment unless a homestead application is filed to verify 43.26 that the property continues to qualify for homestead 43.27 classification. 43.28 (b) For purposes of this section, homestead property shall 43.29 include property which is used for purposes of the homestead but 43.30 is separated from the homestead by a road, street, lot, 43.31 waterway, or other similar intervening property. The term "used 43.32 for purposes of the homestead" shall include but not be limited 43.33 to uses for gardens, garages, or other outbuildings commonly 43.34 associated with a homestead, but shall not include vacant land 43.35 held primarily for future development. In order to receive 43.36 homestead treatment for the noncontiguous property, the owner 44.1 shallmust use the property for the purposes of the homestead, 44.2 and must apply for itto the assessor, both by July 1 of the44.3 year when the treatment is initially soughtthe deadlines given 44.4 in subdivision 9. After initial qualification for the homestead 44.5 treatment, additional applications for subsequent years are not 44.6 required. 44.7 (c) Residential real estate that is occupied and used for 44.8 purposes of a homestead by a relative of the owner is a 44.9 homestead but only to the extent of the homestead treatment that 44.10 would be provided if the related owner occupied the property. 44.11 For purposes of this paragraph and paragraph (f), "relative" 44.12 means a parent, stepparent, child, stepchild, grandparent, 44.13 grandchild, brother, sister, uncle, or aunt. This relationship 44.14 may be by blood or marriage. Property that has been classified 44.15 as seasonal recreational residential property at any time during 44.16 which it has been owned by the current owner or spouse of the 44.17 current owner will not be reclassified as a homestead unless it 44.18 is occupied as a homestead by the owner; this prohibition also 44.19 applies to property that, in the absence of this paragraph, 44.20 would have been classified as seasonal recreational residential 44.21 property at the time when the residence was constructed. 44.22 Neither the related occupant nor the owner of the property may 44.23 claim a property tax refund under chapter 290A for a homestead 44.24 occupied by a relative. In the case of a residence located on 44.25 agricultural land, only the house, garage, and immediately 44.26 surrounding one acre of land shall be classified as a homestead 44.27 under this paragraph, except as provided in paragraph (d). 44.28 (d) Agricultural property that is occupied and used for 44.29 purposes of a homestead by a relative of the owner, is a 44.30 homestead, only to the extent of the homestead treatment that 44.31 would be provided if the related owner occupied the property, 44.32 and only if all of the following criteria are met: 44.33 (1) the relative who is occupying the agricultural property 44.34 is a son, daughter, father, or mother of the owner of the 44.35 agricultural property or a son or daughter of the spouse of the 44.36 owner of the agricultural property, 45.1 (2) the owner of the agricultural property must be a 45.2 Minnesota resident, 45.3 (3) the owner of the agricultural property must not receive 45.4 homestead treatment on any other agricultural property in 45.5 Minnesota, and 45.6 (4) the owner of the agricultural property is limited to 45.7 only one agricultural homestead per family under this paragraph. 45.8 Neither the related occupant nor the owner of the property 45.9 may claim a property tax refund under chapter 290A for a 45.10 homestead occupied by a relative qualifying under this 45.11 paragraph. For purposes of this paragraph, "agricultural 45.12 property" means the house, garage, other farm buildings and 45.13 structures, and agricultural land. 45.14 Application must be made to the assessor by the owner of 45.15 the agricultural property to receive homestead benefits under 45.16 this paragraph. The assessor may require the necessary proof 45.17 that the requirements under this paragraph have been met. 45.18 (e) In the case of property owned by a property owner who 45.19 is married, the assessor must not deny homestead treatment in 45.20 whole or in part if only one of the spouses occupies the 45.21 property and the other spouse is absent due to: (1) marriage 45.22 dissolution proceedings, (2) legal separation, (3) employment or 45.23 self-employment in another location, (4) residence in a nursing 45.24 home or boarding care facility, or (5) other personal 45.25 circumstances causing the spouses to live separately, not 45.26 including an intent to obtain two homestead classifications for 45.27 property tax purposes. To qualify under clause (3), the 45.28 spouse's place of employment or self-employment must be at least 45.29 50 miles distant from the other spouse's place of employment, 45.30 and the homesteads must be at least 50 miles distant from each 45.31 other. Homestead treatment, in whole or in part, shall not be 45.32 denied to the owner's spouse who previously occupied the 45.33 residence with the owner if the absence of the owner is due to 45.34 one of the exceptions provided in this paragraph. 45.35 (f) If an individual is purchasing property with the intent 45.36 of claiming it as a homestead and is required by the terms of 46.1 the financing agreement to have a relative shown on the deed as 46.2 a coowner, the assessor shall allow a full homestead 46.3 classification. This provision only applies to first-time 46.4 purchasers, whether married or single, or to a person who had 46.5 previously been married and is purchasing as a single individual 46.6 for the first time. The application for homestead benefits must 46.7 be on a form prescribed by the commissioner and must contain the 46.8 data necessary for the assessor to determine if full homestead 46.9 benefits are warranted. 46.10 Sec. 5. Minnesota Statutes 1996, section 273.124, 46.11 subdivision 13, is amended to read: 46.12 Subd. 13. [HOMESTEAD APPLICATION.] (a) A person who meets 46.13 the homestead requirements under subdivision 1 must file a 46.14 homestead application with the county assessor to initially 46.15 obtain homestead classification. 46.16 (b) On or before January 2, 1993, each county assessor 46.17 shall mail a homestead application to the owner of each parcel 46.18 of property within the county which was classified as homestead 46.19 for the 1992 assessment year. The format and contents of a 46.20 uniform homestead application shall be prescribed by the 46.21 commissioner of revenue. The commissioner shall consult with 46.22 the chairs of the house and senate tax committees on the 46.23 contents of the homestead application form. The application 46.24 must clearly inform the taxpayer that this application must be 46.25 signed by all owners who occupy the property or by the 46.26 qualifying relative and returned to the county assessor in order 46.27 for the property to continue receiving homestead treatment. The 46.28 envelope containing the homestead application shall clearly 46.29 identify its contents and alert the taxpayer of its necessary 46.30 immediate response. 46.31 (c) Every property owner applying for homestead 46.32 classification must furnish to the county assessor the social 46.33 security number of each occupant who is listed as an owner of 46.34 the property on the deed of record, the name and address of each 46.35 owner who does not occupy the property, and the name and social 46.36 security number of each owner's spouse who occupies the 47.1 property. The application must be signed by each owner who 47.2 occupies the property and by each owner's spouse who occupies 47.3 the property, or, in the case of property that qualifies as a 47.4 homestead under subdivision 1, paragraph (c), by the qualifying 47.5 relative. 47.6 If a property owner occupies a homestead, the property 47.7 owner's spouse may not claim another property as a homestead 47.8 unless the property owner and the property owner's spouse file 47.9 with the assessor an affidavit or other proof required by the 47.10 assessor stating that the property qualifies as a homestead 47.11 under subdivision 1, paragraph (e). 47.12 Owners or spouses occupying residences owned by their 47.13 spouses and previously occupied with the other spouse, either of 47.14 whom fail to include the other spouse's name and social security 47.15 number on the homestead application or provide the affidavits or 47.16 other proof requested, will be deemed to have elected to receive 47.17 only partial homestead treatment of their residence. The 47.18 remainder of the residence will be classified as nonhomestead 47.19 residential. When an owner or spouse's name and social security 47.20 number appear on homestead applications for two separate 47.21 residences and only one application is signed, the owner or 47.22 spouse will be deemed to have elected to homestead the residence 47.23 for which the application was signed. 47.24 The social security numbers or affidavits or other proofs 47.25 of the property owners and spouses are private data on 47.26 individuals as defined by section 13.02, subdivision 12, but, 47.27 notwithstanding that section, the private data may be disclosed 47.28 to the commissioner of revenue, or, for purposes of proceeding 47.29 under the revenue recapture act to recover personal property 47.30 taxes owing, to the county treasurer. 47.31 (d) If residential real estate is occupied and used for 47.32 purposes of a homestead by a relative of the owner and qualifies 47.33 for a homestead under subdivision 1, paragraph (c), in order for 47.34 the property to receive homestead status, a homestead 47.35 application must be filed with the assessor. The social 47.36 security number of each relative occupying the property and the 48.1 social security number of each owner who is related to an 48.2 occupant of the property shall be required on the homestead 48.3 application filed under this subdivision. If a different 48.4 relative of the owner subsequently occupies the property, the 48.5 owner of the property must notify the assessor within 30 days of 48.6 the change in occupancy. The social security number of a 48.7 relative occupying the property is private data on individuals 48.8 as defined by section 13.02, subdivision 12, but may be 48.9 disclosed to the commissioner of revenue. 48.10 (e) The homestead application shall also notify the 48.11 property owners that the application filed under this section 48.12 will not be mailed annually and that if the property is granted 48.13 homestead status for the 1993 assessment, or any assessment year 48.14 thereafter, that same property shall remain classified as 48.15 homestead until the property is sold or transferred to another 48.16 person, or the owners, the spouse of the owner, or the relatives 48.17 no longer use the property as their homestead. Upon the sale or 48.18 transfer of the homestead property, a certificate of value must 48.19 be timely filed with the county auditor as provided under 48.20 section 272.115. Failure to notify the assessor within 30 days 48.21 that the property has been sold, transferred, or that the owner, 48.22 the spouse of the owner, or the relative is no longer occupying 48.23 the property as a homestead, shall result in the penalty 48.24 provided under this subdivision and the property will lose its 48.25 current homestead status. 48.26 (f) If the homestead application is not returned within 30 48.27 days, the county will send a second application to the present 48.28 owners of record. The notice of proposed property taxes 48.29 prepared under section 275.065, subdivision 3, shall reflect the 48.30 property's classification. Beginning with assessment year 1993 48.31 for all properties, if a homestead application has not been 48.32 filed with the county by December 15, the assessor shall 48.33 classify the property as nonhomestead for the current assessment 48.34 year for taxes payable in the following year, provided that the 48.35 owner may be entitled to receive the homestead classification by 48.36 proper application under section 375.192. 49.1 (g) At the request of the commissioner, each county must 49.2 give the commissioner a list that includes the name and social 49.3 security number of each property owner and the property owner's 49.4 spouse occupying the property, or relative of a property owner, 49.5 applying for homestead classification under this subdivision. 49.6 The commissioner shall use the information provided on the lists 49.7 as appropriate under the law, including for the detection of 49.8 improper claims by owners, or relatives of owners, under chapter 49.9 290A. 49.10 (h) If the commissioner finds that a property owner may be 49.11 claiming a fraudulent homestead, the commissioner shall notify 49.12 the appropriate counties. Within 90 days of the notification, 49.13 the county assessor shall investigate to determine if the 49.14 homestead classification was properly claimed. If the property 49.15 owner does not qualify, the county assessor shall notify the 49.16 county auditor who will determine the amount of homestead 49.17 benefits that had been improperly allowed. For the purpose of 49.18 this section, "homestead benefits" means the tax reduction 49.19 resulting from the classification as a homestead under section 49.20 273.13, the taconite homestead credit under section 273.135, and 49.21 the supplemental homestead credit under section 273.1391. 49.22 The county auditor shall send a notice to the person who 49.23 owned the affected property at the time the homestead 49.24 application related to the improper homestead was filed, 49.25 demanding reimbursement of the homestead benefits plus a penalty 49.26 equal to 100 percent of the homestead benefits. The person 49.27 notified may appeal the county's determination by serving copies 49.28 of a petition for review with county officials as provided in 49.29 section 278.01 and filing proof of service as provided in 49.30 section 278.01 with the Minnesota tax court within 60 days of 49.31 the date of the notice from the county. Procedurally, the 49.32 appeal is governed by the provisions in chapter 271 which apply 49.33 to the appeal of a property tax assessment or levy, but without 49.34 requiring any prepayment of the amount in controversy. If the 49.35 amount of homestead benefits and penalty is not paid within 60 49.36 days, and if no appeal has been filed, the county auditor shall 50.1 certify the amount of taxes and penalty to the county 50.2 treasurer. The county treasurer will add interest to the unpaid 50.3 homestead benefits and penalty amounts at the rate provided for50.4 delinquent personal property taxesin section 279.03 for real 50.5 property taxes becoming delinquent in the calendar year during 50.6 which the amount remains unpaid. Interest may be assessed for 50.7 the period beginning 60 days after demand for payment was 50.8 made until payment. 50.9 If the person notified is the current owner of the 50.10 property, the treasurer may add the total amount of benefits, 50.11 penalty, interest, and costs to the real estatead valorem taxes 50.12 otherwise payable on the property in the following yearby 50.13 including the amounts on the property tax statements under 50.14 section 276.04, subdivision 3. The amounts added under this 50.15 paragraph to the ad valorem taxes shall include interest accrued 50.16 through December 31 of the year preceding the taxes payable year 50.17 for which the amounts are first added. These amounts, when 50.18 added to the property tax statement, become subject to all the 50.19 laws for the enforcement of real or personal property taxes for 50.20 that year, and for any subsequent year. 50.21 If the person notified is not the current owner of the 50.22 property, the treasurer may collect the amounts due under the 50.23 revenue recapture act in chapter 270A, or use any of the powers 50.24 granted in sections 277.20 and 277.21 without exclusion, to 50.25 enforce payment of the benefits, penalty, interest, and costs, 50.26 as if those amounts were delinquent tax obligations of the 50.27 person who owned the property at the time the application 50.28 related to the improperly allowed homestead was filed. The 50.29 treasurer may relieve a prior owner of personal liability for 50.30 the benefits, penalty, interest, and costs, and instead extend 50.31 those amounts on the tax lists against the property for taxes50.32 payable in the following yearas provided in this paragraph to 50.33 the extent that the current owner agrees in writing. On all 50.34 demands, billings, property tax statements, and related 50.35 correspondence, the county must list and state separately the 50.36 amounts of homestead benefits, penalty, interest and costs being 51.1 demanded, billed or assessed. 51.2 (i) Any amount of homestead benefits recovered by the 51.3 county from the property owner shall be distributed to the 51.4 county, city or town, and school district where the property is 51.5 located in the same proportion that each taxing district's levy 51.6 was to the total of the three taxing districts' levy for the 51.7 current year. Any amount recovered attributable to taconite 51.8 homestead credit shall be transmitted to the St. Louis county 51.9 auditor to be deposited in the taconite property tax relief 51.10 account. Any amount recovered that is attributable to 51.11 supplemental homestead credit is to be transmitted to the 51.12 commissioner of revenue for deposit in the general fund of the 51.13 state treasury. The total amount of penalty collected must be 51.14 deposited in the county general fund. 51.15 (j) If a property owner has applied for more than one 51.16 homestead and the county assessors cannot determine which 51.17 property should be classified as homestead, the county assessors 51.18 will refer the information to the commissioner. The 51.19 commissioner shall make the determination and notify the 51.20 counties within 60 days. 51.21 (k) In addition to lists of homestead properties, the 51.22 commissioner may ask the counties to furnish lists of all 51.23 properties and the record owners. 51.24 Sec. 6. Minnesota Statutes 1996, section 273.1392, is 51.25 amended to read: 51.26 273.1392 [PAYMENT; SCHOOL DISTRICTS.] 51.27 The amounts of conservation tax credits under section 51.28 273.119; disaster or emergency reimbursement under section 51.29 273.123; attached machinery aid under section 273.138; homestead 51.30 credit under section 273.13; aids and credits under section 51.31 273.1398; wetlands reimbursement under section 275.295; 51.32 enterprise zone property credit payments under section 469.171; 51.33 and metropolitan agricultural preserve reduction under section 51.34 473H.10 for school districts, shall be certified to the 51.35 department of children, families, and learning by the department 51.36 of revenue. The amounts so certified shall be paid according to 52.1 section 124.195, subdivisions 6 and 10. 52.2 Sec. 7. Minnesota Statutes 1996, section 273.1398, 52.3 subdivision 1, is amended to read: 52.4 Subdivision 1. [DEFINITIONS.] (a) In this section, the 52.5 terms defined in this subdivision have the meanings given them. 52.6 (b) "Unique taxing jurisdiction" means the geographic area 52.7 subject to the same set of local tax rates. 52.8 (c) "Previous net tax capacity" means the product of the 52.9 appropriate net class rates for the year previous to the year in 52.10 which the aid is payable, and estimated market values for the 52.11 assessment two years prior to that in which aid is payable. 52.12 "Total previous net tax capacity" means the previous net tax 52.13 capacities for all property within the unique taxing 52.14 jurisdiction. The total previous net tax capacity shall be 52.15 reduced by the sum of (1) the unique taxing jurisdiction's 52.16 previous net tax capacity of commercial-industrial property as 52.17 defined in section 473F.02, subdivision 3, or 276A.02, 52.18 subdivision 3, multiplied by the ratio determined pursuant to 52.19 section 473F.08, subdivision 6, or 276A.06, subdivision 7, for 52.20 the municipality, as defined in section 473F.02, subdivision 8, 52.21 or 276A.06, subdivision 7, in which the unique taxing 52.22 jurisdiction is located, (2) the previous net tax capacity of 52.23 the captured value of tax increment financing districts as 52.24 defined in section 469.177, subdivision 2, and (3) the previous 52.25 net tax capacity of transmission lines deducted from a local 52.26 government's total net tax capacity under section 273.425. 52.27 Previous net tax capacity cannot be less than zero. 52.28 (d) "Equalized market values" are market values that have 52.29 been equalized by dividing the assessor's estimated market value 52.30 for the second year prior to that in which the aid is payable by 52.31 the assessment sales ratios determined by class in the 52.32 assessment sales ratio study conducted by the department of 52.33 revenue pursuant to section 124.2131 in the second year prior to 52.34 that in which the aid is payable. The equalized market values 52.35 shall equal the unequalized market values divided by the 52.36 assessment sales ratio. 53.1 (e) "Equalized school levies" means the amounts levied for: 53.2 (1) general education under section 124A.23, subdivision 2; 53.3 (2) supplemental revenue under section 124A.22, subdivision 53.4 8a; 53.5 (3) transition revenue under section 124A.22, subdivision 53.6 13c; 53.7 (4) basic transportation under section 124.226, subdivision 53.8 1; and 53.9 (5) referendum revenue under section 124A.03. 53.10 (f) "Current local tax rate" means the quotient derived by 53.11 dividing the taxes levied within a unique taxing jurisdiction 53.12 for taxes payable in the year prior to that for which aids are 53.13 being calculated by the total previous net tax capacity of the 53.14 unique taxing jurisdiction. 53.15 (g) For purposes of calculating and allocating homestead 53.16 and agricultural credit aid authorized pursuant to subdivision 2 53.17 and the disparity reduction aid authorized in subdivision 3, 53.18 "gross taxes levied on all properties," "gross taxes," or "taxes 53.19 levied" means the total net tax capacity based taxes levied on 53.20 all properties except that levied on the captured value of tax 53.21 increment districts as defined in section 469.177, subdivision 53.22 2, and that levied on the portion of commercial industrial 53.23 properties' assessed value or gross tax capacity, as defined in 53.24 section 473F.02, subdivision 3, subject to the areawide tax as 53.25 provided in section 473F.08, subdivision 6, in a unique taxing 53.26 jurisdiction. "Gross taxes" are before any reduction for 53.27 disparity reduction aid but "taxes levied" are after any 53.28 reduction for disparity reduction aid. Gross taxes levied or 53.29 taxes levied cannot be less than zero. 53.30 "Taxes levied" excludes equalized school levies. 53.31 (h) "Household adjustment factor" means the number of 53.32 households for the second most recent year preceding that in53.33 which the aids are payable, for the year most recently 53.34 determined as of July 1 in the aid calculation year, divided by 53.35 the number of households for the third most recentyear 53.36 immediately preceding the year for which the number of 54.1 households has most recently been determined as of July 1. The 54.2 household adjustment factor cannot be less than one. 54.3 (i) "Growth adjustment factor" means the household 54.4 adjustment factor in the case of counties. In the case of 54.5 cities, towns, school districts, and special taxing districts, 54.6 the growth adjustment factor equals one. The growth adjustment 54.7 factor cannot be less than one. 54.8 (j) "Homestead and agricultural credit base" means the 54.9 previous year's certified homestead and agricultural credit aid 54.10 determined under subdivision 2 less any permanent aid reduction 54.11 in the previous year to homestead and agricultural credit aid. 54.12 (k) "Net tax capacity adjustment" means (1) the tax base 54.13 differential defined in subdivision 1a, multiplied by (2) the 54.14 unique taxing jurisdiction's current local tax rate. The net 54.15 tax capacity adjustment cannot be less than zero. 54.16 (l) "Fiscal disparity adjustment" means a taxing 54.17 jurisdiction's fiscal disparity distribution levy under section 54.18 473F.08, subdivision 3, clause (a), or 276A.06, subdivision 3, 54.19 clause (a), for taxes payable in the year prior to that for 54.20 which aids are being calculated, multiplied by the ratio of the 54.21 tax base differential percent referenced in subdivision 1a for 54.22 the highest class rate for class 3 property for taxes payable in 54.23 the year prior to that for which aids are being calculated to 54.24 the highest class rate for class 3 property for taxes payable in 54.25 the second prior year to that for which aids are being 54.26 calculated. In the case of school districts, the fiscal 54.27 disparity distribution levy shall exclude that part of the levy 54.28 attributable to equalized school levies. 54.29 Sec. 8. Minnesota Statutes 1996, section 275.011, 54.30 subdivision 1, is amended to read: 54.31 Subdivision 1. The property tax levied for any purpose 54.32 under a special law that is not codified in Minnesota Statutes 54.33 or a city charter provision and that is subject to a mill rate 54.34 limitation imposed by the special law or city charter provision, 54.35 excluding levies subject to mill rate limitations that use 54.36 adjusted assessed values determined by the commissioner of 55.1 revenue under section 124.2131, must not exceed the following 55.2 amount for the years specified: 55.3 (a) for taxes payable in 1988, the product of the 55.4 applicable mill rate limitation imposed by special law or city 55.5 charter provision multiplied by the total assessed valuation of 55.6 all taxable property subject to the tax as adjusted by the 55.7 provisions of Minnesota Statutes 1986, sections 272.64; 273.13, 55.8 subdivision 7a; and 275.49; 55.9 (b) for taxes payable in 1989, the product of (1) the 55.10 property tax levy limitation for the taxes payable year 1988 55.11 determined under clause (a) multiplied by (2) an index for 55.12 market valuation changes equal to the assessment year 1988 total 55.13 market valuation of all taxable property subject to the tax 55.14 divided by the assessment year 1987 total market valuation of 55.15 all taxable property subject to the tax; and 55.16 (c) for taxes payable in 1990 and subsequent years, the 55.17 product of (1) the property tax levy limitation for the previous 55.18 year determined pursuant to this subdivision multiplied by (2) 55.19 an index for market valuation changes equal to the total market 55.20 valuation of all taxable property subject to the tax for the 55.21 current assessment year divided by the total market valuation of 55.22 all taxable property subject to the tax for the previous 55.23 assessment year. 55.24 For the purpose of determining the property tax levy 55.25 limitation for the taxes payable year 1988 and subsequent years 55.26 under this subdivision, "total market valuation" means the total 55.27 market valuation of all taxable property subject to the tax 55.28 without valuation adjustments for fiscal disparities ( chapter55.29 chapters 276A and 473F), tax increment financing (sections 55.30 469.174 to 469.179), and high voltage transmission55.31 linespowerline credit (section 273.425), or wind energy 55.32 (sections 276.20 to 276.21) values. 55.33 Sec. 9. Minnesota Statutes 1996, section 275.065, 55.34 subdivision 3, is amended to read: 55.35 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The 55.36 county auditor shall prepare and the county treasurer shall 56.1 deliver after November 10 and on or before November 24 each 56.2 year, by first class mail to each taxpayer at the address listed 56.3 on the county's current year's assessment roll, a notice of 56.4 proposed property taxes and, in the case of a town, final 56.5 property taxes. 56.6 (b) The commissioner of revenue shall prescribe the form of 56.7 the notice. 56.8 (c) The notice must inform taxpayers that it contains the 56.9 amount of property taxes each taxing authority other than a town 56.10 proposes to collect for taxes payable the following year and, 56.11 for a town, the amount of its final levy. It must clearly state 56.12 that each taxing authority, including regional library districts 56.13 established under section 134.201, and including the 56.14 metropolitan taxing districts as defined in paragraph (i), but 56.15 excluding all other special taxing districts and towns, will 56.16 hold a public meeting to receive public testimony on the 56.17 proposed budget and proposed or final property tax levy, or, in 56.18 case of a school district, on the current budget and proposed 56.19 property tax levy. It must clearly state the time and place of 56.20 each taxing authority's meeting and an address where comments 56.21 will be received by mail. 56.22 (d) The notice must state for each parcel: 56.23 (1) the market value of the property as determined under 56.24 section 273.11, and used for computing property taxes payable in 56.25 the following year and for taxes payable in the current year as 56.26 each appears in the records of the county assessor on November 1 56.27 of the current year; and, in the case of residential property, 56.28 whether the property is classified as homestead or 56.29 nonhomestead. The notice must clearly inform taxpayers of the 56.30 years to which the market values apply and that the values are 56.31 final values; 56.32 (2) by county, city or town, school district excess 56.33 referenda levy, remaining school district levy, regional library 56.34 district, if in existence, the total of the metropolitan special 56.35 taxing districts as defined in paragraph (i) and the sum of the 56.36 remaining special taxing districts, and as a total of the taxing 57.1 authorities, including all special taxing districts, the 57.2 proposed or, for a town, final net tax on the property for taxes 57.3 payable the following year and the actual tax for taxes payable 57.4 the current year. If a school district has certified under 57.5 section 124A.03, subdivision 2, that a referendum will be held 57.6 in the school district at the November general election, the 57.7 county auditor must note next to the school district's proposed 57.8 amount that a referendum is pending and that, if approved by the 57.9 voters, the tax amount may be higher than shown on the notice. 57.10 For the purposes of this subdivision, "school district excess 57.11 referenda levy" means school district taxes for operating 57.12 purposes approved at referendums, including those taxes based on 57.13 net tax capacity as well as those based on market value. 57.14 "School district excess referenda levy" does not include school 57.15 district taxes for capital expenditures approved at referendums 57.16 or school district taxes to pay for the debt service on bonds 57.17 approved at referenda. In the case of the city of Minneapolis, 57.18 the levy for the Minneapolis library board and the levy for 57.19 Minneapolis park and recreation shall be listed separately from 57.20 the remaining amount of the city's levy. In the case of a 57.21 parcel where tax increment or the fiscal disparities areawide 57.22 tax under chapter 276A or 473F applies, the proposed tax levy on 57.23 the captured value or the proposed tax levy on the tax capacity 57.24 subject to the areawide tax must each be stated separately and 57.25 not included in the sum of the special taxing districts; and 57.26 (3) the increase or decrease in the amounts in clause (2) 57.27 from taxes payable in the current year to proposed or, for a 57.28 town, final taxes payable the following year, expressed as a 57.29 dollar amount and as a percentage. 57.30 (e) The notice must clearly state that the proposed or 57.31 final taxes do not include the following: 57.32 (1) special assessments; 57.33 (2) levies approved by the voters after the date the 57.34 proposed taxes are certified, including bond referenda, school 57.35 district levy referenda, and levy limit increase referenda; 57.36 (3) amounts necessary to pay cleanup or other costs due to 58.1 a natural disaster occurring after the date the proposed taxes 58.2 are certified; 58.3 (4) amounts necessary to pay tort judgments against the 58.4 taxing authority that become final after the date the proposed 58.5 taxes are certified; and 58.6 (5) the contamination tax imposed on properties which 58.7 received market value reductions for contamination. 58.8 (f) Except as provided in subdivision 7, failure of the 58.9 county auditor to prepare or the county treasurer to deliver the 58.10 notice as required in this section does not invalidate the 58.11 proposed or final tax levy or the taxes payable pursuant to the 58.12 tax levy. 58.13 (g) If the notice the taxpayer receives under this section 58.14 lists the property as nonhomestead, and the homeowner provides58.15 satisfactory documentation is provided to the county assessor 58.16 thatby the applicable deadline, and the property is owned and58.17 used as the owner'squalifies for the homestead classification 58.18 in that assessment year, the assessor shall reclassify the 58.19 property to homestead for taxes payable in the following year. 58.20 (h) In the case of class 4 residential property used as a 58.21 residence for lease or rental periods of 30 days or more, the 58.22 taxpayer must either: 58.23 (1) mail or deliver a copy of the notice of proposed 58.24 property taxes to each tenant, renter, or lessee; or 58.25 (2) post a copy of the notice in a conspicuous place on the 58.26 premises of the property. 58.27 The notice must be mailed or posted by the taxpayer by 58.28 November 27 or within three days of receipt of the notice, 58.29 whichever is later. A taxpayer may notify the county treasurer 58.30 of the address of the taxpayer, agent, caretaker, or manager of 58.31 the premises to which the notice must be mailed in order to 58.32 fulfill the requirements of this paragraph. 58.33 (i) For purposes of this subdivision, subdivisions 5a and 58.34 6, "metropolitan special taxing districts" means the following 58.35 taxing districts in the seven-county metropolitan area that levy 58.36 a property tax for any of the specified purposes listed below: 59.1 (1) metropolitan council under section 473.132, 473.167, 59.2 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834; 59.3 (2) metropolitan airports commission under section 473.667, 59.4 473.671, or 473.672; and 59.5 (3) metropolitan mosquito control commission under section 59.6 473.711. 59.7 For purposes of this section, any levies made by the 59.8 regional rail authorities in the county of Anoka, Carver, 59.9 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter 59.10 398A shall be included with the appropriate county's levy and 59.11 shall be discussed at that county's public hearing. 59.12 (j) For taxes levied in 1996, payable in 1997 only, in the 59.13 case of a statutory or home rule charter city or town that 59.14 exercises the local levy option provided in section 473.388, 59.15 subdivision 7, the notice of its proposed taxes may include a 59.16 statement of the amount by which its proposed tax increase for 59.17 taxes payable in 1997 is attributable to its exercise of that 59.18 option, together with a statement that the levy of the 59.19 metropolitan council was decreased by a similar amount because 59.20 of the exercise of that option. 59.21 Sec. 10. Minnesota Statutes 1996, section 275.295, 59.22 subdivision 3, is amended to read: 59.23 Subd. 3. [APPROPRIATION.] There is appropriated from the 59.24 general fund to the commissioner of revenue the amount necessary 59.25 to make the payments required in subdivision 2. There is 59.26 appropriated from the general fund to the commissioner of 59.27 children, families, and learning the amount necessary to make 59.28 the payments determined under subdivisions 1 and 2 for school 59.29 districts. 59.30 Sec. 11. Minnesota Statutes 1996, section 276A.01, 59.31 subdivision 7, is amended to read: 59.32 Subd. 7. [POPULATION.] "Population" means the most recent 59.33 estimate of the population of a municipality made by the state 59.34 demographer and filed with the commissioner of revenue as of 59.35 July 1 of the year in which a municipality's distribution net 59.36 tax capacity is calculated. The state demographer shall 60.1 annually estimate the population of each municipality and, in 60.2 the case of a municipality which is located partly within and 60.3 partly without the area, the proportion of the total which 60.4 resides within the area, and shall file the estimates with the 60.5 commissioner of revenue. 60.6 Sec. 12. Minnesota Statutes 1996, section 277.21, 60.7 subdivision 3, is amended to read: 60.8 Subd. 3. [MANNER OF EXECUTION AND SALE.] In making the 60.9 execution of the levy and in collecting the taxes due in a 60.10 manner consistent with the provisions of this chapter, the 60.11 county treasurer has all of the powers in chapter 550 and in any60.12 other law, and the powers given to the commissioner of revenue 60.13 in sections 270.7001, 270.7002, and 290.92, subdivision 23, for 60.14 purposes of effecting an execution against property in this 60.15 state. The sale of property levied upon, and the time and 60.16 manner of redemption therefrom, must be consistent with 60.17 authority granted to the commissioner of revenue to collect 60.18 state taxes under sections 270.70 to 270.709. The seal of the 60.19 court, subscribed by the court administrator, as provided in 60.20 section 550.04, is not required. The levy for collection of 60.21 taxes may be made, whether or not a legal action for collection 60.22 of the taxes has been commenced. 60.23 Sec. 13. Minnesota Statutes 1996, section 287.22, is 60.24 amended to read: 60.25 287.22 [EXCEPTIONS.] 60.26 The tax imposed by section 287.21 shall not apply to: 60.27 A. Any executory contract for the sale of land under which 60.28 the vendee is entitled to or does take possession thereof, or 60.29 any assignment or cancellation thereof. 60.30 B. Any mortgage or any assignment, extension, partial 60.31 release, or satisfaction thereof. 60.32 C. Any will. 60.33 D. Any plat. 60.34 E. Any lease. 60.35 F. Any deed, instrument, or writing in which the United 60.36 States or any agency or instrumentality thereof is the grantor, 61.1 assignor, transferor, conveyor, grantee or assignee. 61.2 G. Deeds for cemetery lots. 61.3 H. Deeds of distribution by personal representatives. 61.4 I. Deeds to or from coowners partitioning undivided 61.5 interests in the same piece of property. 61.6 J. Any deed or other instrument of conveyance issued 61.7 pursuant to a land exchange under section 92.121 and related 61.8 laws. 61.9 K. A referee's or sheriff's certificate of sale in a 61.10 mortgage or lien foreclosure sale. 61.11 L. A referee's or sheriff's certificate of redemption from 61.12 a mortgage or lien foreclosure sale issued to the redeeming 61.13 mortgagor or lienee. 61.14 M. Any deed, instrument, or writing which grants, creates, 61.15 modifies, or cancels an easement. 61.16 Sec. 14. Minnesota Statutes 1996, section 414.033, 61.17 subdivision 7, is amended to read: 61.18 Subd. 7. [FILING; EFFECTIVE DATE; COPY, LEVIES.] Any 61.19 annexation ordinance provided for in this section must be filed 61.20 with the board, the township, the county auditor and the 61.21 secretary of state and is final on the date the ordinance is 61.22 approved by the board. A copy of the annexation ordinance must 61.23 be delivered immediately by the governing body of the 61.24 municipality to the appropriate county auditor or auditors. For61.25 the purposes of taxation, if the annexation becomes effective on61.26 or before August 1 of a levy year, the municipality may levy on61.27 the annexed area beginning with that same levy year. If the61.28 annexation becomes effective after August 1 of a levy year, the61.29 town may continue to levy on the annexed area for that levy61.30 year, and the municipality may not levy on the annexed area61.31 until the following levy year.61.32 Sec. 15. Minnesota Statutes 1996, section 414.033, 61.33 subdivision 12, is amended to read: 61.34 Subd. 12. [PROPERTY TAXES.] When a municipality annexes 61.35 land under subdivision 2, clause (2), (3), or (4), or 61.36 subdivision 2a, property taxes payable on the annexed land shall 62.1 continue to be paid to the affected town or towns for the year 62.2 in which the annexation becomes effective. If the annexation 62.3 becomes effective on or before August 1 of a levy year, the 62.4 municipality may levy on the annexed area beginning with that 62.5 same levy year. If the annexation becomes effective after 62.6 August 1 of a levy year, the town may continue to levy on the 62.7 annexed area for that levy year, and the municipality may not 62.8 levy on the annexed area until the following levy year. In the 62.9 first year following the year when the municipality could first 62.10 levy on the annexed area under this subdivision, and thereafter, 62.11 property taxes on the annexed land shall be paid to the 62.12 municipality. In the first year following the year the land was62.13 annexedmunicipality could first levy on the annexed area, the 62.14 municipality shall make a cash payment to the affected town or 62.15 towns in an amount equal to 90 percent of the property taxes 62.16 paid in the year the land was annexeddistributed to the town in 62.17 regard to the annexed area in the last year the property taxes 62.18 from the annexed area were payable to the town; in the second 62.19 year, an amount equal to 70 percent of the property taxes paid62.20 in the year the land was annexed; in the third year, an amount 62.21 equal to 50 percent of the property taxes paid in the year the62.22 land was annexed; in the fourth year, an amount equal to 30 62.23 percent of the property taxes paid in the year the land was62.24 annexed; and in the fifth year, an amount equal to ten 62.25 percent of the property taxes paid in the year the land was62.26 annexed. The municipality and the affected township may agree 62.27 to a different payment. 62.28 Sec. 16. Minnesota Statutes 1996, section 469.177, 62.29 subdivision 9, is amended to read: 62.30 Subd. 9. [DISTRIBUTIONS OF EXCESS TAXES ON CAPTURED NET 62.31 TAX CAPACITY.] (a) If the amount of tax paid on captured net tax 62.32 capacity exceeds the amount of tax increment, the county auditor 62.33 shall distribute the excess to the municipality, county, and 62.34 school district as follows: each governmental unit's share of 62.35 the excess equals 62.36 (1) the total amount of the excess for the tax increment 63.1 financing district, multiplied by 63.2 (2) a fraction, the numerator of which is the current local 63.3 tax rate of the governmental unit less the governmental unit's 63.4 local tax rate for the year the original local tax rate for the 63.5 district was certified (in no case may this amount be less than 63.6 zero) and the denominator of which is the sum of the numerators 63.7 for the municipality, county, and school district. 63.8 If the entire increase in the local tax rate is attributable to 63.9 a taxing district, other than the municipality, county, or 63.10 school district, then the excess must be distributed to the 63.11 municipality, county, and school district in proportion to their 63.12 respective local tax rates. 63.13 The school district's tax rate must be divided into the 63.14 portion of the tax rate attributable (1) to state equalized 63.15 levies, and (2) unequalized levies. As used in this 63.16 subdivision, "equalized levies" means the sum of the maximum63.17 amounts that may be levied for: (i) general education under63.18 section 124A.23, subdivision 2; (ii) supplemental revenue under63.19 section 124A.22, subdivision 8a; (iii) capital expenditure63.20 facilities revenue under section 124.243, subdivision 3; (iv)63.21 capital expenditure equipment revenue under section 124.244,63.22 subdivision 2; and (v) basic transportation under section63.23 124.226, subdivision 1."equalized school levies" which are 63.24 defined in section 273.1398, subdivision 1, for aids payable in 63.25 the year following the year in which the excess taxes on 63.26 captured net tax capacity are due and payable. Unequalized 63.27 levies mean the rest of the school district's levies. The 63.28 calculations under clause (2) must determine the amount of 63.29 excess taxes attributable to each portion of the school 63.30 district's tax rate. If one of the portions of the change in 63.31 the school district tax rate is less than zero and the combined 63.32 change is greater than zero, the combined rate must be used and 63.33 all the school district's share of excess taxes allocated to 63.34 that portion of the tax rate. 63.35 (b) The amounts distributed shall be deducted in computing 63.36 the levy limits of the taxing district for the succeeding 64.1 taxable year. In the case of a school district, only the 64.2 proportion of the excess taxes attributable to unequalized 64.3 levies that are subject to a fixed dollar amount levy limit 64.4 shall be deducted from the levy limit. 64.5 (c) In the case of distributions to a school district that 64.6 are attributable to state equalized levies, the county auditor 64.7 shall report amounts distributed to the commissioner of 64.8 children, families, and learning in the same manner as provided 64.9 for excess increments under section 469.176, subdivision 2, and 64.10 the distribution shall be deducted from the school district's 64.11 state aid payments. 64.12 Sec. 17. Minnesota Statutes 1996, section 473.388, 64.13 subdivision 7, is amended to read: 64.14 Subd. 7. [LOCAL LEVY OPTION.] (a) A statutory or home rule 64.15 charter city or town that is eligible for assistance under this 64.16 section, in lieu of receiving the assistance, may levy a tax for 64.17 payment of the operating and capital expenditures for transit 64.18 and other related activities and to provide for payment of 64.19 obligations issued by the municipality for such purposes, 64.20 provided that the tax must be sufficient to maintain the level 64.21 of transit service provided in the municipality in the previous 64.22 year. 64.23 (b) The transit tax revenues derived by the municipality 64.24 may not exceed: 64.25 (1) for the first transit levy year and any subsequent 64.26 transit levy year immediately following a year in which the 64.27 municipality declines to make the levy, the maximum available 64.28 local transit funds for the municipality for taxes payable in 64.29 the current year under section 473.446, calculated as if the 64.30 percentage of transit tax revenues for the municipality were 88 64.31 percent instead of 90 percent, and multiplied by the 64.32 municipality's market value adjustment ratio; and 64.33 (2) for taxes levied in any year that immediately follows a 64.34 year in which the municipality elects to levy under this 64.35 subdivision, the maximum transit tax that the municipality may 64.36 have levied in the previous year under this subdivision, 65.1 multiplied by the municipality's market value adjustment ratio. 65.2 The commissioner of revenue shall certify the 65.3 municipality's levy limitation under this subdivision to the 65.4 municipality by June 1 of the levy year. The tax must be 65.5 accumulated and kept in a separate fund to be known as the 65.6 "replacement transit fund." 65.7 (c) To enable the municipality to receive revenues 65.8 described in clauses (2) and (3) of the definition of "tax 65.9 revenues" in subdivision 4, that would otherwise be lost if the 65.10 municipality's transit tax levy was not treated as a successor 65.11 levy to that made by the council under section 473.446: 65.12 (1) in the first transit levy year and any subsequent 65.13 transit levy year immediately following a year in which the 65.14 municipality declined to make the levy, 88 percent of the 65.15 council's nondebt spread levy for the current taxes payable year 65.16 shall be treated as levied by the municipality, and not the 65.17 council, for purposes of section 473F.08, subdivision 3, for the 65.18 purpose of determining its local tax rate for the preceding 65.19 year; and 65.20 (2) 88 percent of the revenues described in clause (3) of 65.21 the definition of "tax revenues" in subdivision 4, payable in 65.22 the first transit levy year, or payable in any subsequent 65.23 transit levy year following a year in which a municipality 65.24 declined to make the levy, shall be permanently transferred from 65.25 the council to the municipality. If a municipality levies a tax 65.26 under this subdivision in one year, but declines to levy in a 65.27 subsequent year, the aid transferred under this clause shall be 65.28 transferred back to the council. 65.29 (d) Any transit taxes levied under this subdivision are not 65.30 subject to, or counted towards, any limit hereafter imposed by 65.31 law on the levy of taxes upon taxable property within any 65.32 municipality unless the law specifically includes the transit 65.33 tax. 65.34 (e) This subdivision is consistent with the transit 65.35 redesign plan. Eligible municipalities opting to levy the 65.36 transit tax under this subdivision shall continue to meet the 66.1 regional performance standards established by the council. 66.2 (f) Within the designated Americans with Disabilities Act 66.3 area, metro mobility remains the obligation of the state. 66.4 (g) For purposes of this subdivision, "transit levy year" 66.5 is any year in which the municipality elects to levy under this 66.6 subdivision. 66.7 (h) A municipality may not levy taxes under this 66.8 subdivision in any year unless it notifies the council and the 66.9 commissioner of revenue of its intent to levy before July 1 of 66.10 the levy year. The notification must include the amount of the 66.11 municipality's proposed transit tax for the current levy 66.12 year. After June 30 in the levy year, a municipality's decision 66.13 to levy or not levy taxes under this subdivision is irrevocable 66.14 for that levy year. 66.15 Sec. 18. Minnesota Statutes 1996, section 473F.02, 66.16 subdivision 7, is amended to read: 66.17 Subd. 7. [POPULATION.] "Population" means the most recent 66.18 estimate of the population of a municipality made by the 66.19 metropolitan council and filed with the commissioner of 66.20 revenue as of July 1 of the year in which a municipality's 66.21 distribution net tax capacity is calculated. The council shall 66.22 annually estimate the population of each municipality as of a 66.23 date which it determines and, in the case of a municipality 66.24 which is located partly within and partly without the area, the 66.25 proportion of the total which resides within the area, and shall 66.26 promptly thereafter file its estimates with the commissioner of 66.27 revenue. 66.28 Sec. 19. [EFFECTIVE DATE.] 66.29 Sections 1, 2, 4 to 7, 9 to 13, and 16 to 18 are effective 66.30 the day following final enactment. Sections 3 and 8 are 66.31 effective for determinations made in regard to taxes payable in 66.32 1996 and thereafter. Sections 14 and 15 are effective beginning 66.33 with annexations that become effective in 1996 and thereafter. 66.34 ARTICLE 4 66.35 MINNESOTACARE 66.36 Section 1. Minnesota Statutes 1996, section 295.50, 67.1 subdivision 3, is amended to read: 67.2 Subd. 3. [GROSS REVENUES.] "Gross revenues" are total 67.3 amounts received in money or otherwise by: 67.4 (1) a hospital for patient services; 67.5 (2) a surgical center for patient services; 67.6 (3) a health care provider, other than a staff model health 67.7 carrier, for patient services; 67.8 (4) a wholesale drug distributor for sale or distribution 67.9 of legend drugs that are delivered: (i) to ain Minnesota 67.10 residentby a wholesale drug distributor who is a nonresident 67.11 pharmacy directly, by common carrier, or by mail; or (ii) in 67.12 Minnesota by the wholesale drug distributor, by common carrier, 67.13 or by mail, unless the legend drugs are delivered to another 67.14 wholesale drug distributor who sells legend drugs exclusively at 67.15 wholesale. Legend drugs do not include nutritional products as 67.16 defined in Minnesota Rules, part 9505.0325; 67.17 (5) a staff model health plan company as gross premiums for 67.18 enrollees, copayments, deductibles, coinsurance, and fees for 67.19 patient services covered under its contracts with groups and 67.20 enrollees; and 67.21 (6) a pharmacymedical supplies distributor for sale, rent, 67.22 lease, or repair of medical supplies, appliances, and equipment. 67.23 Sec. 2. Minnesota Statutes 1996, section 295.50, 67.24 subdivision 4, is amended to read: 67.25 Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care 67.26 provider" means: 67.27 (1) a person whose health care occupation is required to be 67.28 licensed or registered by the state of Minnesota furnishing any 67.29 or all of the following goods or services directly to a patient 67.30 or consumer: medical, surgical, optical, visual, dental, 67.31 hearing, nursing services, drugs, medical supplies, medical 67.32 appliances, laboratory, diagnostic or therapeutic services, or 67.33 any goods and services not listed above that qualify for 67.34 reimbursement under the medical assistance program provided 67.35 under chapter 256B. For purposes of this clause, "directly to a 67.36 patient or consumer" includes goods and services provided in 68.1 connection with independent medical examinations under section 68.2 65B.56 or other examinations for purposes of litigation or 68.3 insurance claims; 68.4 (2) a staff model health plan company; or 68.5 (3) an ambulance service required to be licensed. 68.6 (b) Health care provider does not include 68.7 hospitals, medical supplies distributors, nursing homes licensed 68.8 under chapter 144A or licensed in any other jurisdiction, 68.9 pharmacies, surgical centers, bus and taxicab transportation, or 68.10 any other providers of transportation services other than 68.11 ambulance services required to be licensed, supervised living 68.12 facilities for persons with mental retardation or related 68.13 conditions, licensed under Minnesota Rules, parts 4665.0100 to 68.14 4665.9900, residential care homes licensed under chapter 144B, 68.15 board and lodging establishments providing only custodial 68.16 services that are licensed under chapter 157 and registered 68.17 under section 157.17 to provide supportive services or health 68.18 supervision services, adult foster homes as defined in Minnesota 68.19 Rules, part 9555.5105, day training and habilitation services 68.20 for adults with mental retardation and related conditions as 68.21 defined in section 252.41, subdivision 3, and boarding care 68.22 homes, as defined in Minnesota Rules, part 4655.0100. 68.23 Sec. 3. Minnesota Statutes 1996, section 295.50, 68.24 subdivision 7, is amended to read: 68.25 Subd. 7. [HOSPITAL.] "Hospital" means a hospital licensed 68.26 under chapter 144, or a hospital licensed by any other state or68.27 province or territory of Canadajurisdiction. 68.28 Sec. 4. Minnesota Statutes 1996, section 295.50, is 68.29 amended by adding a subdivision to read: 68.30 Subd. 7a. [MEDICAL SUPPLIES DISTRIBUTOR.] A medical 68.31 supplies distributor is a person who sells, rents, leases, or 68.32 repairs medical supplies, appliances, and equipment. 68.33 Sec. 5. Minnesota Statutes 1996, section 295.50, 68.34 subdivision 13, is amended to read: 68.35 Subd. 13. [SURGICAL CENTER.] "Surgical center" is an 68.36 outpatient surgical center as defined in Minnesota Rules, 69.1 chapter 4675 or a similar facility located in any other state or69.2 province or territory of Canadajurisdiction. 69.3 Sec. 6. Minnesota Statutes 1996, section 295.51, 69.4 subdivision 1, is amended to read: 69.5 Subdivision 1. [BUSINESS TRANSACTIONS IN MINNESOTA.] A 69.6 hospital, surgical center, pharmacymedical supplies 69.7 distributor, or health care provider is subject to tax under 69.8 sections 295.50 to 295.59 if it is "transacting business in 69.9 Minnesota." A hospital, surgical center, pharmacymedical 69.10 supplies distributor, or health care provider is transacting 69.11 business in Minnesota if it maintains contacts with or presence 69.12 in the state of Minnesota sufficient to permit taxation of gross 69.13 revenues received for patient services under the United States 69.14 Constitution. 69.15 Sec. 7. Minnesota Statutes 1996, section 295.52, 69.16 subdivision 1b, is amended to read: 69.17 Subd. 1b. [ PHARMACYMEDICAL SUPPLIES DISTRIBUTOR TAX.] A 69.18 tax is imposed on each pharmacymedical supplies distributor 69.19 equal to two percent of its gross revenues. 69.20 Sec. 8. Minnesota Statutes 1996, section 295.53, 69.21 subdivision 1, is amended to read: 69.22 Subdivision 1. [EXEMPTIONS.] (a) The following payments 69.23 are excluded from the gross revenues subject to the hospital, 69.24 surgical center, or health care provider taxes under sections 69.25 295.50 to 295.57: 69.26 (1) payments received for services provided under the 69.27 Medicare program, including payments received from the 69.28 government, and organizations governed by sections 1833 and 1876 69.29 of title XVIII of the federal Social Security Act, United States 69.30 Code, title 42, section 1395, and enrollee deductibles, 69.31 coinsurance, and copayments, whether paid by the Medicare 69.32 enrollee or by a Medicare supplemental coverage as defined in 69.33 section 62A.011, subdivision 3, clause (10). Payments for 69.34 services not covered by Medicare are taxable; 69.35 (2) medical assistance payments including payments received 69.36 directly from the government or from a prepaid plan; 70.1 (3) payments received for home health care services; 70.2 (4) payments received from hospitals or surgical centers 70.3 for goods and services on which liability for tax is imposed 70.4 under section 295.52 or the source of funds for the payment is 70.5 exempt under clause (1), (2), (7), (8), or (10); 70.6 (5) payments received from health care providers for goods 70.7 and services on which liability for tax is imposed under this 70.8 chapter or the source of funds for the payment is exempt under 70.9 clause (1), (2), (7), (8), or (10); 70.10 (6) amounts paid for legend drugs, other than nutritional 70.11 products, to a wholesale drug distributor who is subject to tax 70.12 under section 295.52, subdivision 3, reduced by reimbursements 70.13 received for legend drugs under clauses (1), (2), (7), and (8); 70.14 (7) payments received under the general assistance medical 70.15 care program including payments received directly from the 70.16 government or from a prepaid plan; 70.17 (8) payments received for providing services under the 70.18 MinnesotaCare program including payments received directly from 70.19 the government or from a prepaid plan and enrollee deductibles, 70.20 coinsurance, and copayments. For purposes of this clause, 70.21 coinsurance means the portion of payment that the enrollee is 70.22 required to pay for the covered service; 70.23 (9) payments received by a health care provider or the 70.24 wholly owned subsidiary of a health care provider for care 70.25 provided outside Minnesota to a patient who is not domiciled in 70.26 Minnesota; 70.27 (10) payments received from the chemical dependency fund 70.28 under chapter 254B; 70.29 (11) payments received in the nature of charitable 70.30 donations that are not designated for providing patient services 70.31 to a specific individual or group; 70.32 (12) payments received for providing patient services 70.33 incurred through a formal program of health care research 70.34 conducted in conformity with federal regulations governing 70.35 research on human subjects. Payments received from patients or 70.36 from other persons paying on behalf of the patients are subject 71.1 to tax; 71.2 (13) payments received from any governmental agency for 71.3 services benefiting the public, not including payments made by 71.4 the government in its capacity as an employer or insurer; 71.5 (14) payments received for services provided by community 71.6 residential mental health facilities licensed under Minnesota 71.7 Rules, parts 9520.0500 to 9520.0690, community support programs 71.8 and family community support programs approved under Minnesota 71.9 Rules, parts 9535.1700 to 9535.1760, and community mental health 71.10 centers as defined in section 245.62, subdivision 2; 71.11 (15) government payments received by a regional treatment 71.12 center; 71.13 (16) payments received for hospice care services; 71.14 (17) payments received by a health care provider for 71.15 medical supplies, appliances, and equipment delivered outside of 71.16 Minnesota; 71.17 (18) payments received by a post-secondary educational 71.18 institution from student tuition, student activity fees, health 71.19 care service fees, government appropriations, donations, or 71.20 grants. Fee for service payments and payments for extended 71.21 coverage are taxable; and 71.22 (19) payments received for services provided by: assisted 71.23 living programs and congregate housing programs. 71.24 (b) Payments received by wholesale drug distributors for 71.25 prescriptionlegend drugs sold directly to veterinarians or 71.26 veterinary bulk purchasing organizations are excluded from the 71.27 gross revenues subject to the wholesale drug distributor tax 71.28 under sections 295.50 to 295.59. 71.29 Sec. 9. Minnesota Statutes 1996, section 295.53, 71.30 subdivision 3, is amended to read: 71.31 Subd. 3. [SEPARATE STATEMENT OF TAX.] A hospital, surgical 71.32 center, pharmacymedical supplies distributor, or health care 71.33 provider must not state the tax obligation under section 295.52 71.34 in a deceptive or misleading manner. It must not separately 71.35 state tax obligations on bills provided to patients, consumers, 71.36 or other payers when the amount received for the services or 72.1 goods is not subject to tax. 72.2 Pharmacies that separately state the tax obligations on 72.3 bills provided to consumers or to other payers who purchase 72.4 legend drugs may state the tax obligation as two percent of the 72.5 wholesale price of the legend drugs. Pharmacies must not state 72.6 the tax obligation as two percent of the retail price. 72.7 Whenever the commissioner determines that a person has 72.8 engaged in any act or practice constituting a violation of this 72.9 subdivision, the commissioner may bring an action in the name of 72.10 the state in the district court of the appropriate county to 72.11 enjoin the act or practice and to enforce compliance with this 72.12 subdivision, or the commissioner may refer the matter to the 72.13 attorney general or the county attorney of the appropriate 72.14 county. Upon a proper showing, a permanent or temporary 72.15 injunction, restraining order, or other appropriate relief must 72.16 be granted. 72.17 Sec. 10. Minnesota Statutes 1996, section 295.53, 72.18 subdivision 5, is amended to read: 72.19 Subd. 5. [EXEMPTIONS FOR PHARMACIESMEDICAL SUPPLIES 72.20 DISTRIBUTORS.] (a) PharmaciesMedical supplies distributors may 72.21 exclude from their gross revenues subject to tax payments for 72.22 medical supplies, appliances, and devicesequipment that are 72.23 exempt under subdivision 1, clauses (1), (2), (4), (5), (7), 72.24 (8), and (13). 72.25 (b) PharmaciesMedical supplies distributors may exclude 72.26 from their gross revenues subject to tax payments received for 72.27 medical supplies, appliances, and equipment delivered outside of 72.28 Minnesota. 72.29 Sec. 11. Minnesota Statutes 1996, section 295.54, 72.30 subdivision 1, is amended to read: 72.31 Subdivision 1. [TAXES PAID TO ANOTHER STATE.] A hospital, 72.32 surgical center, pharmacymedical supplies distributor, or 72.33 health care provider that has paid taxes to another state or72.34 province or territory of Canadajurisdiction measured by gross 72.35 revenues and is subject to tax under sections 295.52 to 295.59 72.36 on the same gross revenues is entitled to a credit for the tax 73.1 legally due and paid to another state or province or territory73.2 of Canadajurisdiction to the extent of the lesser of (1) the 73.3 tax actually paid to the other state or province or territory of73.4 Canadajurisdiction, or (2) the amount of tax imposed by 73.5 Minnesota on the gross revenues subject to tax in the other 73.6 taxing jurisdictions. 73.7 Sec. 12. Minnesota Statutes 1996, section 295.582, is 73.8 amended to read: 73.9 295.582 [AUTHORITY.] 73.10 (a) A hospital, surgical center, pharmacymedical supplies 73.11 distributor, or health care provider that is subject to a tax 73.12 under section 295.52, or a pharmacy that has paid additional 73.13 expense transferred under this section by a wholesale drug 73.14 distributor, may transfer additional expense generated by 73.15 section 295.52 obligations on to all third-party contracts for 73.16 the purchase of health care services on behalf of a patient or 73.17 consumer. The additional expense transferred to the third-party 73.18 purchaser must not exceed two percent of the gross revenues 73.19 received under the third-party contract, and two percent of 73.20 copayments and deductibles paid by the individual patient or 73.21 consumer. The expense must not be generated on revenues derived 73.22 from payments that are excluded from the tax under section 73.23 295.53. All third-party purchasers of health care services 73.24 including, but not limited to, third-party purchasers regulated 73.25 under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, 73.26 or 79A, or under section 471.61 or 471.617, must pay the 73.27 transferred expense in addition to any payments due under 73.28 existing contracts with the hospital, surgical center, pharmacy73.29 medical supplies distributor, or health care provider, to the 73.30 extent allowed under federal law. A third-party purchaser of 73.31 health care services includes, but is not limited to, a health 73.32 carrier, integrated service network, or community integrated 73.33 service network that pays for health care services on behalf of 73.34 patients or that reimburses, indemnifies, compensates, or 73.35 otherwise insures patients for health care services. A 73.36 third-party purchaser shall comply with this section regardless 74.1 of whether the third-party purchaser is a for-profit, 74.2 not-for-profit, or nonprofit entity. A wholesale drug 74.3 distributor may transfer additional expense generated by section 74.4 295.52 obligations to entities that purchase from the 74.5 wholesaler, and the entities must pay the additional expense. 74.6 Nothing in this section limits the ability of a hospital, 74.7 surgical center, pharmacymedical supplies distributor, 74.8 wholesale drug distributor, or health care provider to recover 74.9 all or part of the section 295.52 obligation by other methods, 74.10 including increasing fees or charges. 74.11 (b) Each third-party purchaser regulated under any chapter 74.12 cited in paragraph (a) shall include with its annual renewal for 74.13 certification of authority or licensure documentation indicating 74.14 compliance with paragraph (a). If the commissioner responsible 74.15 for regulating the third-party purchaser finds at any time that 74.16 the third-party purchaser has not complied with paragraph (a), 74.17 the commissioner may by order fine or censure the third-party 74.18 purchaser or revoke or suspend the certificate of authority or 74.19 license of the third-party purchaser to do business in this 74.20 state. The third-party purchaser may appeal the commissioner's 74.21 order through a contested case hearing in accordance with 74.22 chapter 14. 74.23 Sec. 13. [EFFECTIVE DATE.] 74.24 Sections 1 to 12 are effective the day following final 74.25 enactment.