HF 3024

as introduced - 81st Legislature (1999 - 2000) 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 to certain tax 
  1.4             and revenue recapture provisions; authorizing the 
  1.5             attorney general to compromise certain fees, 
  1.6             surcharges, and assessments; amending Minnesota 
  1.7             Statutes 1998, sections 8.30; 270.072, subdivision 2, 
  1.8             and by adding a subdivision; 270A.07, subdivision 1; 
  1.9             273.111, subdivision 3; 289A.20, subdivision 2; 
  1.10            289A.26, subdivision 1; 289A.60, subdivision 14; 
  1.11            290.01, subdivision 19c; 290.015, subdivisions 1, 3, 
  1.12            and 4; 290.06, subdivision 22; 290.92, subdivisions 3, 
  1.13            28, and 29; 295.58; 296A.03, subdivision 5; 296A.21, 
  1.14            subdivisions 2 and 3; 296A.22, subdivision 6; 297A.25, 
  1.15            subdivision 34; 297B.03; 297F.01, subdivisions 7, 14, 
  1.16            and by adding subdivisions; and 297F.13, subdivision 
  1.17            4; Minnesota Statutes 1999 Supplement, sections 
  1.18            270A.07, subdivision 2; 273.13, subdivision 24; 
  1.19            289A.20, subdivision 4; 289A.55, subdivision 9; 
  1.20            298.24, subdivision 1; and 477A.03, subdivision 2; 
  1.21            Laws 1988, chapter 645, section 3, as amended; Laws 
  1.22            1999, chapters 112, section 1, subdivision 1; 243, 
  1.23            articles 1, section 2; 6, section 18; repealing 
  1.24            Minnesota Statutes 1998, sections 270.072, subdivision 
  1.25            5; 270.075, subdivisions 3 and 4; 270.083; 273.127; 
  1.26            and 273.1316. 
  1.27  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.28                             ARTICLE 1 
  1.29                     INCOME AND FRANCHISE TAXES 
  1.30     Section 1.  Minnesota Statutes 1998, section 289A.20, 
  1.31  subdivision 2, is amended to read: 
  1.32     Subd. 2.  [WITHHOLDING FROM WAGES, ENTERTAINER WITHHOLDING, 
  1.33  WITHHOLDING FROM PAYMENTS TO OUT-OF-STATE CONTRACTORS, AND 
  1.34  WITHHOLDING BY PARTNERSHIPS AND SMALL BUSINESS CORPORATIONS.] 
  1.35  (a) A tax required to be deducted and withheld during the 
  1.36  quarterly period must be paid on or before the last day of the 
  2.1   month following the close of the quarterly period, unless an 
  2.2   earlier time for payment is provided.  A tax required to be 
  2.3   deducted and withheld from compensation of an entertainer and 
  2.4   from a payment to an out-of-state contractor must be paid on or 
  2.5   before the date the return for such tax must be filed under 
  2.6   section 289A.18, subdivision 2.  Taxes required to be deducted 
  2.7   and withheld by partnerships and S corporations must be paid on 
  2.8   or before the date the return must be filed under section 
  2.9   289A.18, subdivision 2. 
  2.10     (b) An employer who, during the previous quarter, withheld 
  2.11  more than $1,500 of tax under section 290.92, subdivision 2a or 
  2.12  3, or 290.923, subdivision 2, must deposit tax withheld under 
  2.13  those sections with the commissioner within the time allowed to 
  2.14  deposit the employer's federal withheld employment taxes under 
  2.15  Treasury Regulation, section 31.6302-1, without regard to the 
  2.16  safe harbor or de minimis rules in subparagraph (f) or the 
  2.17  one-day rule in subsection (c), clause (3).  Taxpayers must 
  2.18  submit a copy of their federal notice of deposit status to the 
  2.19  commissioner upon request by the commissioner. 
  2.20     (c) The commissioner may prescribe by rule other return 
  2.21  periods or deposit requirements.  In prescribing the reporting 
  2.22  period, the commissioner may classify payors according to the 
  2.23  amount of their tax liability and may adopt an appropriate 
  2.24  reporting period for the class that the commissioner judges to 
  2.25  be consistent with efficient tax collection.  In no event will 
  2.26  the duration of the reporting period be more than one year. 
  2.27     (d) If less than the correct amount of tax is paid to the 
  2.28  commissioner, proper adjustments with respect to both the tax 
  2.29  and the amount to be deducted must be made, without interest, in 
  2.30  the manner and at the times the commissioner prescribes.  If the 
  2.31  underpayment cannot be adjusted, the amount of the underpayment 
  2.32  will be assessed and collected in the manner and at the times 
  2.33  the commissioner prescribes. 
  2.34     (e) If the aggregate amount of the tax withheld during a 
  2.35  fiscal year ending June 30 under section 290.92, subdivision 2a 
  2.36  or 3, is equal to or exceeds the amounts established for 
  3.1   remitting federal withheld taxes pursuant to the regulations 
  3.2   promulgated under section 6302(h) of the Internal Revenue Code, 
  3.3   the employer must remit each required deposit for wages paid in 
  3.4   the subsequent calendar year by means of a funds transfer as 
  3.5   defined in section 336.4A-104, paragraph (a).  The funds 
  3.6   transfer payment date, as defined in section 336.4A-401, must be 
  3.7   on or before the date the deposit is due.  If the date the 
  3.8   deposit is due is not a funds transfer business day, as defined 
  3.9   in section 336.4A-105, paragraph (a), clause (4), the payment 
  3.10  date must be on or before the funds transfer business day next 
  3.11  following the date the deposit is due. 
  3.12     (f) A third-party bulk filer as defined in section 290.92, 
  3.13  subdivision 30, paragraph (a), clause (2), who remits 
  3.14  withholding deposits must remit all deposits by means of a funds 
  3.15  transfer as provided in paragraph (e), regardless of the 
  3.16  aggregate amount of tax withheld during a fiscal year for all of 
  3.17  the employers.  
  3.18     Sec. 2.  Minnesota Statutes 1998, section 289A.26, 
  3.19  subdivision 1, is amended to read: 
  3.20     Subdivision 1.  [MINIMUM LIABILITY.] A corporation subject 
  3.21  to taxation under chapter 290 (excluding section 290.92) or an 
  3.22  entity subject to taxation under section 290.05, subdivision 3, 
  3.23  must make payment of estimated tax for the taxable year if its 
  3.24  tax liability so computed can reasonably be expected to exceed 
  3.25  $500, or in accordance with rules prescribed by the commissioner 
  3.26  for an affiliated group of corporations electing to file filing 
  3.27  one return as permitted under section 289A.08, subdivision 3. 
  3.28     Sec. 3.  Minnesota Statutes 1998, section 290.01, 
  3.29  subdivision 19c, is amended to read: 
  3.30     Subd. 19c.  [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE 
  3.31  INCOME.] For corporations, there shall be added to federal 
  3.32  taxable income: 
  3.33     (1) the amount of any deduction taken for federal income 
  3.34  tax purposes for income, excise, or franchise taxes based on net 
  3.35  income or related minimum taxes, including but not limited to 
  3.36  the tax imposed under section 290.0922, paid by the corporation 
  4.1   to Minnesota, another state, a political subdivision of another 
  4.2   state, the District of Columbia, or any foreign country or 
  4.3   possession of the United States; 
  4.4      (2) interest not subject to federal tax upon obligations 
  4.5   of:  the United States, its possessions, its agencies, or its 
  4.6   instrumentalities; the state of Minnesota or any other state, 
  4.7   any of its political or governmental subdivisions, any of its 
  4.8   municipalities, or any of its governmental agencies or 
  4.9   instrumentalities; the District of Columbia; or Indian tribal 
  4.10  governments; 
  4.11     (3) exempt-interest dividends received as defined in 
  4.12  section 852(b)(5) of the Internal Revenue Code; 
  4.13     (4) the amount of any net operating loss deduction taken 
  4.14  for federal income tax purposes under section 172 or 832(c)(10) 
  4.15  of the Internal Revenue Code or operations loss deduction under 
  4.16  section 810 of the Internal Revenue Code; 
  4.17     (5) the amount of any special deductions taken for federal 
  4.18  income tax purposes under sections 241 to 247 of the Internal 
  4.19  Revenue Code; 
  4.20     (6) losses from the business of mining, as defined in 
  4.21  section 290.05, subdivision 1, clause (a), that are not subject 
  4.22  to Minnesota income tax; 
  4.23     (7) the amount of any capital losses deducted for federal 
  4.24  income tax purposes under sections 1211 and 1212 of the Internal 
  4.25  Revenue Code; 
  4.26     (8) the amount of any charitable contributions deducted for 
  4.27  federal income tax purposes under section 170 of the Internal 
  4.28  Revenue Code; 
  4.29     (9) the exempt foreign trade income of a foreign sales 
  4.30  corporation under sections 921(a) and 291 of the Internal 
  4.31  Revenue Code; 
  4.32     (10) the amount of percentage depletion deducted under 
  4.33  sections 611 through 614 and 291 of the Internal Revenue Code; 
  4.34     (11) for certified pollution control facilities placed in 
  4.35  service in a taxable year beginning before December 31, 1986, 
  4.36  and for which amortization deductions were elected under section 
  5.1   169 of the Internal Revenue Code of 1954, as amended through 
  5.2   December 31, 1985, the amount of the amortization deduction 
  5.3   allowed in computing federal taxable income for those 
  5.4   facilities; 
  5.5      (12) the amount of any deemed dividend from a foreign 
  5.6   operating corporation determined pursuant to section 290.17, 
  5.7   subdivision 4, paragraph (g); 
  5.8      (13) the amount of any environmental tax paid under section 
  5.9   59(a) of the Internal Revenue Code; and 
  5.10     (14) the amount of a partner's pro rata share of net income 
  5.11  which does not flow through to the partner because the 
  5.12  partnership elected to pay the tax on the income under section 
  5.13  6242(a)(2) of the Internal Revenue Code. 
  5.14     Sec. 4.  Minnesota Statutes 1998, section 290.015, 
  5.15  subdivision 1, is amended to read: 
  5.16     Subdivision 1.  [GENERAL RULE.] (a) Except as provided in 
  5.17  subdivision 3, a person that conducts a trade or business that 
  5.18  has a place of business in this state, regularly has employees 
  5.19  or independent contractors conducting business activities on its 
  5.20  behalf in this state, or owns or leases real property that is 
  5.21  located in this state or tangible personal property located, 
  5.22  including but not limited to mobile property, that is present in 
  5.23  this state as defined in section 290.191, subdivision 6, 
  5.24  paragraph (e), is subject to the taxes imposed by this chapter. 
  5.25     (b) Except as provided in subdivision 3, a person that 
  5.26  conducts a trade or business not described in paragraph (a) is 
  5.27  subject to the taxes imposed by this chapter if the trade or 
  5.28  business obtains or regularly solicits business from within this 
  5.29  state, without regard to physical presence in this state. 
  5.30     (c) For purposes of paragraph (b), business from within 
  5.31  this state includes, but is not limited to: 
  5.32     (1) sales of products or services of any kind or nature to 
  5.33  customers in this state who receive the product or service in 
  5.34  this state; 
  5.35     (2) sales of services which are performed from outside this 
  5.36  state but the services are received in this state; 
  6.1      (3) transactions with customers in this state that involve 
  6.2   intangible property and result in income flowing to the person 
  6.3   from within receipts attributed to this state as provided in 
  6.4   section 290.191, subdivision 5 or 6; 
  6.5      (4) leases of tangible personal property that is located in 
  6.6   this state as defined in section 290.191, subdivision 5, 
  6.7   paragraph (g), or 6, paragraph (e); and 
  6.8      (5) sales and leases of real property located in this 
  6.9   state; and 
  6.10     (6) if a financial institution, deposits received from 
  6.11  customers in this state.  
  6.12     (d) For purposes of paragraph (b), solicitation includes, 
  6.13  but is not limited to: 
  6.14     (1) the distribution, by mail or otherwise, without regard 
  6.15  to the state from which such distribution originated or in which 
  6.16  the materials were prepared, of catalogs, periodicals, 
  6.17  advertising flyers, or other written solicitations of business 
  6.18  to customers in this state; 
  6.19     (2) display of advertisements on billboards or other 
  6.20  outdoor advertising in this state; 
  6.21     (3) advertisements in newspapers published in this state; 
  6.22     (4) advertisements in trade journals or other periodicals, 
  6.23  the circulation of which is primarily within this state; 
  6.24     (5) advertisements in a Minnesota edition of a national or 
  6.25  regional publication or a limited regional edition of which this 
  6.26  state is included of a broader regional or national publication 
  6.27  which are not placed in other geographically defined editions of 
  6.28  the same issue of the same publication; 
  6.29     (6) advertisements in regional or national publications in 
  6.30  an edition which is not by its contents geographically targeted 
  6.31  to Minnesota, but which is sold over the counter in Minnesota or 
  6.32  by subscription to Minnesota residents; 
  6.33     (7) advertisements broadcast on a radio or television 
  6.34  station located in Minnesota; or 
  6.35     (8) any other solicitation by telegraph, telephone, 
  6.36  computer database, cable, optic, microwave, or other 
  7.1   communication system. 
  7.2      Sec. 5.  Minnesota Statutes 1998, section 290.015, 
  7.3   subdivision 3, is amended to read: 
  7.4      Subd. 3.  [EXCEPTIONS.] (a) A person is not subject to tax 
  7.5   under this chapter if the person is engaged in the business of 
  7.6   selling tangible personal property and taxation of that person 
  7.7   under this chapter is precluded by Public Law Number 86-272, 
  7.8   United States Code, title 15, sections 381 to 384, or would be 
  7.9   so precluded except for the fact that the person stored tangible 
  7.10  personal property in a state licensed facility under chapter 231.
  7.11     (b) Ownership of an interest in the following types of 
  7.12  property (including those contacts with this state reasonably 
  7.13  required to evaluate and complete the acquisition or disposition 
  7.14  of the property, the servicing of the property or the income 
  7.15  from it, the collection of income from the property, or the 
  7.16  acquisition or liquidation of collateral relating to the 
  7.17  property) shall not be a factor in determining whether the owner 
  7.18  is subject to tax under this chapter: 
  7.19     (1) an interest in a real estate mortgage investment 
  7.20  conduit, a real estate investment trust, a financial asset 
  7.21  securitization investment trust, or a regulated investment 
  7.22  company or a fund of a regulated investment company, as those 
  7.23  terms are defined in the Internal Revenue Code; 
  7.24     (2) an interest in money market instruments or securities 
  7.25  as defined in section 290.191, subdivision 6, paragraphs (c) and 
  7.26  (d); 
  7.27     (3) an interest in a loan-backed, mortgage-backed, or 
  7.28  receivable-backed security representing either:  (i) ownership 
  7.29  in a pool of promissory notes, mortgages, or receivables or 
  7.30  certificates of interest or participation in such notes, 
  7.31  mortgages, or receivables, or (ii) debt obligations or equity 
  7.32  interests which provide for payments in relation to payments or 
  7.33  reasonable projections of payments on the notes, mortgages, or 
  7.34  receivables; 
  7.35     (4) an interest acquired from a person in assets described 
  7.36  in section 290.191, subdivision 11, paragraphs (e) to (l), 
  8.1   subject to the provisions of paragraph (c), clause (2)(A); 
  8.2      (5) an interest acquired from a person in the right to 
  8.3   service, or collect income from any assets described in section 
  8.4   290.191, subdivision 11, paragraphs (e) to (l), subject to the 
  8.5   provisions of paragraph (c), clause (2)(A); 
  8.6      (6) an interest acquired from a person in a funded or 
  8.7   unfunded agreement to extend or guarantee credit whether 
  8.8   conditional, mandatory, temporary, standby, secured, or 
  8.9   otherwise, subject to the provisions of paragraph (c), clause 
  8.10  (2)(A); 
  8.11     (7) an interest of a person other than an individual, 
  8.12  estate, or trust, in any intangible, tangible, real, or personal 
  8.13  property acquired in satisfaction, whether in whole or in part, 
  8.14  of any asset embodying a payment obligation which is in default, 
  8.15  whether secured or unsecured, the ownership of an interest in 
  8.16  which would be exempt under the preceding provisions of this 
  8.17  subdivision, provided the property is disposed of within a 
  8.18  reasonable period of time; or 
  8.19     (8) amounts held in escrow or trust accounts, pursuant to 
  8.20  and in accordance with the terms of property described in this 
  8.21  subdivision. 
  8.22     (c)(1) For purposes of paragraph (b), clauses (4) to (6), 
  8.23  an interest in the type of assets or credit agreements described 
  8.24  is deemed to exist at the time the owner becomes legally 
  8.25  obligated, conditionally or unconditionally, to fund, acquire, 
  8.26  renew, extend, amend, or otherwise enter into the credit 
  8.27  arrangement. 
  8.28     (2)(A) An owner has acquired an interest from a person in 
  8.29  paragraph (b), clauses (4) to (6), assets if:  
  8.30     (i) the owner at the time of the acquisition of the asset 
  8.31  does not own, directly or indirectly, 15 percent or more of the 
  8.32  outstanding stock or in the case of a partnership 15 percent or 
  8.33  more of the capital or profit interests of the person from whom 
  8.34  it acquired the asset; 
  8.35     (ii) the person from whom the owner acquired the asset 
  8.36  regularly sells, assigns, or transfers interests in paragraph 
  9.1   (b), clauses (4) to (6), assets during the 12 calendar months 
  9.2   immediately preceding the month of acquisition to three or more 
  9.3   persons; and 
  9.4      (iii) the person from whom the owner acquired the asset 
  9.5   does not sell, assign, or transfer 75 percent or more of its 
  9.6   paragraph (b), clauses (4) to (6), assets during the 12 calendar 
  9.7   months immediately preceding the month of acquisition to the 
  9.8   owner. 
  9.9   For purposes of determining indirect ownership under item (i), 
  9.10  the owner is deemed to own all stock, capital, or profit 
  9.11  interests owned by another person if the owner directly owns 15 
  9.12  percent or more of the stock, capital, or profit interests in 
  9.13  the other person.  The owner is also deemed to own through any 
  9.14  intermediary parties all stock, capital, and profit interests 
  9.15  directly owned by a person to the extent there exists a 15 
  9.16  percent or more chain of ownership of stock, capital, or profit 
  9.17  interests between the owner, intermediary parties and the person.
  9.18     (B) If the owner of the asset is a member of the a unitary 
  9.19  group business, paragraph (b), clauses (4) to (8), do not apply 
  9.20  to an interest acquired from another member of the unitary group 
  9.21  business.  If the interest in the asset was originally acquired 
  9.22  from a nonunitary member and at that time qualified as a section 
  9.23  290.015, subdivision 3, paragraph (b), asset, the foregoing 
  9.24  limitation does not apply. 
  9.25     Sec. 6.  Minnesota Statutes 1998, section 290.015, 
  9.26  subdivision 4, is amended to read: 
  9.27     Subd. 4.  [LIMITATIONS.] (a) This section does not subject 
  9.28  a trade or business to any regulation, including any tax, of any 
  9.29  local unit of government or subdivision of this state if the 
  9.30  trade or business does not own or lease tangible or real 
  9.31  property located within this state and has no employees or 
  9.32  independent contractors present in this state to assist in the 
  9.33  carrying on of the business. 
  9.34     (b) The purchase of tangible personal property or 
  9.35  intangible property or services by a person that conducts a 
  9.36  trade or business with the principal place of business outside 
 10.1   of Minnesota, referred to as the "non-Minnesota person", from a 
 10.2   person within Minnesota shall not be taken into account in 
 10.3   determining whether the non-Minnesota person is subject to the 
 10.4   taxes imposed by this chapter, except for services involving 
 10.5   either the direct solicitation of Minnesota customers or 
 10.6   relationships with Minnesota customers after sales are made.  
 10.7   This paragraph is subject to the limitations contained in 
 10.8   subdivision 3, paragraph (b), clauses (4) to (6). 
 10.9      (c) No Contact with any Minnesota financial institution by 
 10.10  any financial institution with its principal place of business 
 10.11  outside Minnesota with respect to transactions described in 
 10.12  subdivision 3, or with respect to deposits received from or by a 
 10.13  Minnesota financial institution, shall not be taken into account 
 10.14  in determining whether such a financial institution is subject 
 10.15  to the taxes imposed by this chapter.  The fact of Participation 
 10.16  by a Minnesota financial institution in a transaction which also 
 10.17  involves a borrower and a financial institution that conducts a 
 10.18  trade or business with its principal place of business outside 
 10.19  of Minnesota shall not be a factor in determining whether such 
 10.20  financial institution is subject to the taxes imposed by this 
 10.21  chapter.  This paragraph does not apply to transactions between 
 10.22  or among members of the same unitary group business. 
 10.23     Sec. 7.  Minnesota Statutes 1998, section 290.06, 
 10.24  subdivision 22, is amended to read: 
 10.25     Subd. 22.  [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A 
 10.26  taxpayer who is liable for taxes on or measured by net income to 
 10.27  another state or province or territory of Canada, as provided in 
 10.28  paragraphs (b) through (f), upon income allocated or apportioned 
 10.29  to Minnesota, is entitled to a credit for the tax paid to 
 10.30  another state or province or territory of Canada if the tax is 
 10.31  actually paid in the taxable year or a subsequent taxable year.  
 10.32  A taxpayer who is a resident of this state pursuant to section 
 10.33  290.01, subdivision 7, clause (2), and who is subject to income 
 10.34  tax as a resident in the state of the individual's domicile is 
 10.35  not allowed this credit unless the state of domicile does not 
 10.36  allow a similar credit. 
 11.1      (b) For an individual, estate, or trust, the credit is 
 11.2   determined by multiplying the tax payable under this chapter by 
 11.3   the ratio derived by dividing the income subject to tax in the 
 11.4   other state or province or territory of Canada that is also 
 11.5   subject to tax in Minnesota while a resident of Minnesota by the 
 11.6   taxpayer's federal adjusted gross income, as defined in section 
 11.7   62 of the Internal Revenue Code, modified by the addition 
 11.8   required by section 290.01, subdivision 19a, clause (1), and the 
 11.9   subtraction allowed by section 290.01, subdivision 19b, clause 
 11.10  (1), to the extent the income is allocated or assigned to 
 11.11  Minnesota under sections 290.081 and 290.17.  
 11.12     (c) If the taxpayer is an athletic team that apportions all 
 11.13  of its income under section 290.17, subdivision 5, paragraph 
 11.14  (c), the credit is determined by multiplying the tax payable 
 11.15  under this chapter by the ratio derived from dividing the total 
 11.16  net income subject to tax in the other state or province or 
 11.17  territory of Canada by the taxpayer's Minnesota taxable income. 
 11.18     (d) The credit determined under paragraph (b) or (c) shall 
 11.19  not exceed the amount of tax so paid to the other state or 
 11.20  province or territory of Canada on the gross income earned 
 11.21  within the other state or province or territory of Canada 
 11.22  subject to tax under this chapter, nor shall the allowance of 
 11.23  the credit reduce the taxes paid under this chapter to an amount 
 11.24  less than what would be assessed if such income amount was 
 11.25  excluded from taxable net income. 
 11.26     (e) In the case of the tax assessed on a lump sum 
 11.27  distribution under section 290.032, the credit allowed under 
 11.28  paragraph (a) is the tax assessed by the other state or province 
 11.29  or territory of Canada on the lump sum distribution that is also 
 11.30  subject to tax under section 290.032, and shall not exceed the 
 11.31  tax assessed under section 290.032.  To the extent the total 
 11.32  lump sum distribution defined in section 290.032, subdivision 1, 
 11.33  includes lump sum distributions received in prior years or is 
 11.34  all or in part an annuity contract, the reduction to the tax on 
 11.35  the lump sum distribution allowed under section 290.032, 
 11.36  subdivision 2, includes tax paid to another state that is 
 12.1   properly apportioned to that distribution. 
 12.2      (f) If a Minnesota resident reported an item of income to 
 12.3   Minnesota and is assessed tax in such other state or province or 
 12.4   territory of Canada on that same income after the Minnesota 
 12.5   statute of limitations has expired, the taxpayer shall receive a 
 12.6   credit for that year under paragraph (a), notwithstanding any 
 12.7   statute of limitations to the contrary.  The claim for the 
 12.8   credit must be submitted within one year from the date the taxes 
 12.9   were paid to the other state or province or territory of 
 12.10  Canada.  The taxpayer must submit sufficient proof to show 
 12.11  entitlement to a credit. 
 12.12     (g) For the purposes of this subdivision, a resident 
 12.13  shareholder of a corporation treated as an "S" corporation under 
 12.14  section 290.9725, must be considered to have paid a tax imposed 
 12.15  on the shareholder in an amount equal to the shareholder's pro 
 12.16  rata share of any net income tax paid by the S corporation to 
 12.17  another state.  For the purposes of the preceding sentence, the 
 12.18  term "net income tax" means any tax imposed on or measured by a 
 12.19  corporation's net income. 
 12.20     (h) For the purposes of this subdivision, a resident 
 12.21  partner of an entity taxed as a partnership under the Internal 
 12.22  Revenue Code must be considered to have paid a tax imposed on 
 12.23  the partner in an amount equal to the partner's pro rata share 
 12.24  of any net income tax paid by the partnership to another state.  
 12.25  For purposes of the preceding sentence, the term "net income" 
 12.26  tax means any tax imposed on or measured by a partnership's net 
 12.27  income. 
 12.28     (i) For the purposes of this subdivision, "another state" 
 12.29  includes the District of Columbia, but does not include Puerto 
 12.30  Rico or the several territories organized by Congress. 
 12.31     (j) The limitations on the credit in paragraphs (b), (c), 
 12.32  and (d), are imposed on a state by state basis. 
 12.33     Sec. 8.  Minnesota Statutes 1998, section 290.92, 
 12.34  subdivision 3, is amended to read: 
 12.35     Subd. 3.  [WITHHOLDING, IRREGULAR PERIOD.] If payment of 
 12.36  wages is made to an employee by an employer 
 13.1      (a) With respect to a payroll period or other period, any 
 13.2   part of which is included in a payroll period or other period 
 13.3   with respect to which wages are also paid to such employees by 
 13.4   such employer, or 
 13.5      (b) Without regard to any payroll period or other period, 
 13.6   but on or prior to the expiration of a payroll period or other 
 13.7   period with respect to which wages are also paid to such 
 13.8   employee by such employer, or 
 13.9      (c) With respect to a period beginning in one and ending in 
 13.10  another calendar year, or 
 13.11     (d) Through an agent, fiduciary, or other person who also 
 13.12  has the control, receipt, custody, or disposal of or pays, the 
 13.13  wages payable by another employer to such employee. 
 13.14     The manner of withholding and the amount to be deducted and 
 13.15  withheld under subdivision 2a shall be determined in accordance 
 13.16  with rules prescribed by the commissioner under which the 
 13.17  withholding exemption allowed to the employee in any calendar 
 13.18  year shall approximate the withholding exemption allowable with 
 13.19  respect to an annual payroll period, except that if supplemental 
 13.20  wages are not paid concurrent with a payroll period the employer 
 13.21  shall withhold tax on the supplemental payment at the rate of 
 13.22  6.25 percent as if no exemption had been claimed. 
 13.23     Sec. 9.  Minnesota Statutes 1998, section 290.92, 
 13.24  subdivision 28, is amended to read: 
 13.25     Subd. 28.  [PAYMENTS TO HORSERACING LICENSE HOLDERS.] 
 13.26  Effective with payments made after April 1, 1988, any holder of 
 13.27  a license issued by the Minnesota racing commission who makes a 
 13.28  payment for personal or professional services to a holder of a 
 13.29  class C license issued by the commission, except an amount paid 
 13.30  as a purse, shall deduct from the payment and withhold seven 
 13.31  6.25 percent of the amount as Minnesota withholding tax when the 
 13.32  amount paid to that individual by the same person during the 
 13.33  calendar year exceeds $600.  For purposes of the provisions of 
 13.34  this section, a payment to any person which is subject to 
 13.35  withholding under this subdivision must be treated as if the 
 13.36  payment was a wage paid by an employer to an employee.  Every 
 14.1   individual who is to receive a payment which is subject to 
 14.2   withholding under this subdivision shall furnish the license 
 14.3   holder with a statement, made under the penalties of perjury, 
 14.4   containing the name, address, and social security account number 
 14.5   of the person receiving the payment.  No withholding is required 
 14.6   if the individual presents a signed certificate from the 
 14.7   individual's employer which states that the individual is an 
 14.8   employee of that employer.  A nonresident individual who holds a 
 14.9   class C license must be treated as an athlete for purposes of 
 14.10  applying the provisions of sections 290.17, subdivision 
 14.11  2(1)(b)(ii) and 290.92, subdivision 4a.  
 14.12     Sec. 10.  Minnesota Statutes 1998, section 290.92, 
 14.13  subdivision 29, is amended to read: 
 14.14     Subd. 29.  [LOTTERY PRIZES.] Eight 7.25 percent of the 
 14.15  payment of Minnesota state lottery winnings which are subject to 
 14.16  withholding must be withheld as Minnesota withholding tax.  For 
 14.17  purposes of this subdivision, the term "winnings which are 
 14.18  subject to withholding" has the meaning given in section 
 14.19  3402(q)(3) of the Internal Revenue Code.  For purposes of the 
 14.20  provisions of this section, a payment to any person of winnings 
 14.21  which are subject to withholding must be treated as if the 
 14.22  payment was a wage paid by an employer to an employee.  Every 
 14.23  individual who is to receive a payment of winnings which are 
 14.24  subject to withholding shall furnish the state lottery with a 
 14.25  statement, made under the penalties of perjury, containing the 
 14.26  name, address, and social security account number of the person 
 14.27  receiving the payment.  The Minnesota state lottery is liable 
 14.28  for the payment of the tax required to be withheld under this 
 14.29  subdivision but is not liable to any person for the amount of 
 14.30  the payment. 
 14.31     Sec. 11.  [EFFECTIVE DATES.] 
 14.32     Section 1 is effective for wages paid after December 31, 
 14.33  1999.  Sections 2 and 7 are effective the day following final 
 14.34  enactment.  Sections 3 to 6 are effective for tax years 
 14.35  beginning after December 31, 1999.  Section 8 is effective for 
 14.36  wages paid after December 31, 2000.  Section 9 is effective for 
 15.1   payments made after the date of final enactment.  Section 10 is 
 15.2   effective for winnings paid after the date of final enactment. 
 15.3                              ARTICLE 2 
 15.4                       SALES AND SPECIAL TAXES 
 15.5      Section 1.  Minnesota Statutes 1999 Supplement, section 
 15.6   289A.20, subdivision 4, is amended to read: 
 15.7      Subd. 4.  [SALES AND USE TAX.] (a) The taxes imposed by 
 15.8   chapter 297A are due and payable to the commissioner monthly on 
 15.9   or before the 20th day of the month following the month in which 
 15.10  the taxable event occurred, or following another reporting 
 15.11  period as the commissioner prescribes or as allowed under 
 15.12  section 289A.18, subdivision 4, paragraph (f), except that use 
 15.13  taxes due on an annual use tax return as provided under section 
 15.14  289A.11, subdivision 1, are payable by April 15 following the 
 15.15  close of the calendar year. 
 15.16     (b) A vendor having a liability of $120,000 or more during 
 15.17  a fiscal year ending June 30 must remit the June liability for 
 15.18  the next year in the following manner: 
 15.19     (1) Two business days before June 30 of the year, the 
 15.20  vendor must remit 75 percent of the estimated June liability to 
 15.21  the commissioner.  
 15.22     (2) On or before August 14 of the year, the vendor must pay 
 15.23  any additional amount of tax not remitted in June. 
 15.24     (c) A vendor having a liability of $120,000 or more during 
 15.25  a fiscal year ending June 30 must remit all liabilities on 
 15.26  returns due for periods beginning in the subsequent calendar 
 15.27  year by means of a funds transfer as defined in section 
 15.28  336.4A-104, paragraph (a).  The funds transfer payment date, as 
 15.29  defined in section 336.4A-401, must be on or before the 14th day 
 15.30  of the month following the month in which the taxable event 
 15.31  occurred, or on or before the 14th day of the month following 
 15.32  the month in which the sale is reported under section 289A.18, 
 15.33  subdivision 4, except for 75 percent of the estimated June 
 15.34  liability, which is due two business days before June 30.  The 
 15.35  remaining amount of the June liability is due on August 14.  If 
 15.36  the date the tax is due is not a funds transfer business day, as 
 16.1   defined in section 336.4A-105, paragraph (a), clause (4), the 
 16.2   payment date must be on or before the funds transfer business 
 16.3   day next following the date the tax is due. 
 16.4      (d) If the vendor required to remit by electronic funds 
 16.5   transfer as provided in paragraph (c) is unable due to 
 16.6   reasonable cause to determine the actual sales and use tax due 
 16.7   on or before the due date for payment, the vendor may remit an 
 16.8   estimate of the tax owed using one of the following options: 
 16.9      (1) 100 percent of the tax reported on the previous month's 
 16.10  sales and use tax return; 
 16.11     (2) 100 percent of the tax reported on the sales and use 
 16.12  tax return for the same month in the previous calendar year; or 
 16.13     (3) 95 percent of the actual tax due. 
 16.14     Any additional amount of tax that is not remitted on or 
 16.15  before the due date for payment, must be remitted with the 
 16.16  return.  If a vendor fails to remit the actual liability or does 
 16.17  not remit using one of the estimate options by the due date for 
 16.18  payment, the vendor must remit actual liability as provided in 
 16.19  paragraph (c) in all subsequent periods.  This paragraph does 
 16.20  not apply to the June sales and use tax liability. 
 16.21     Sec. 2.  Minnesota Statutes 1998, section 289A.60, 
 16.22  subdivision 14, is amended to read: 
 16.23     Subd. 14.  [PENALTY FOR USE OF SALES TAX EXEMPTION 
 16.24  CERTIFICATES TO EVADE TAX.] A person who uses an exemption 
 16.25  certificate to buy property or purchase services that will be 
 16.26  used for purposes other than the exemption claimed, with the 
 16.27  intent to evade payment of sales tax to the seller, is subject 
 16.28  to a penalty of $100 for each transaction where that use of an 
 16.29  exemption certificate has occurred.  
 16.30     Sec. 3.  Minnesota Statutes 1998, section 297A.25, 
 16.31  subdivision 34, is amended to read: 
 16.32     Subd. 34.  [MOTOR VEHICLES.] The gross receipts from the 
 16.33  sale or use of any motor vehicle taxable under the provisions of 
 16.34  the sales tax on motor vehicles laws of Minnesota shall be 
 16.35  exempt from taxation under this chapter.  Notwithstanding 
 16.36  subdivision 11, the exemption provided under this subdivision 
 17.1   remains in effect for motor vehicles purchased or leased by 
 17.2   political subdivisions of the state if the vehicles are exempt 
 17.3   from registration under section 168.012, subdivision 1, 
 17.4   paragraph (b), or exempt from taxation under section 473.448. 
 17.5      Sec. 4.  Minnesota Statutes 1998, section 297B.03, is 
 17.6   amended to read: 
 17.7      297B.03 [EXEMPTIONS.] 
 17.8      There is specifically exempted from the provisions of this 
 17.9   chapter and from computation of the amount of tax imposed by it 
 17.10  the following:  
 17.11     (1) Purchase or use, including use under a lease purchase 
 17.12  agreement or installment sales contract made pursuant to section 
 17.13  465.71, of any motor vehicle by the United States and its 
 17.14  agencies and instrumentalities and by any person described in 
 17.15  and subject to the conditions provided in section 297A.25, 
 17.16  subdivision 18.  
 17.17     (2) Purchase or use of any motor vehicle by any person who 
 17.18  was a resident of another state at the time of the purchase and 
 17.19  who subsequently becomes a resident of Minnesota, provided the 
 17.20  purchase occurred more than 60 days prior to the date such 
 17.21  person began residing in the state of Minnesota.  
 17.22     (3) Purchase or use of any motor vehicle by any person 
 17.23  making a valid election to be taxed under the provisions of 
 17.24  section 297A.211.  
 17.25     (4) Purchase or use of any motor vehicle previously 
 17.26  registered in the state of Minnesota when such transfer 
 17.27  constitutes a transfer within the meaning of section 118, 331, 
 17.28  332, 336, 337, 338, 351 or, 355, 368, 721, 731, 1031, 1033, or 
 17.29  1563(a) of the Internal Revenue Code of 1986, as amended through 
 17.30  December 31, 1988 1999.  
 17.31     (5) Purchase or use of any vehicle owned by a resident of 
 17.32  another state and leased to a Minnesota based private or for 
 17.33  hire carrier for regular use in the transportation of persons or 
 17.34  property in interstate commerce provided the vehicle is titled 
 17.35  in the state of the owner or secured party, and that state does 
 17.36  not impose a sales tax or sales tax on motor vehicles used in 
 18.1   interstate commerce.  
 18.2      (6) Purchase or use of a motor vehicle by a private 
 18.3   nonprofit or public educational institution for use as an 
 18.4   instructional aid in automotive training programs operated by 
 18.5   the institution.  "Automotive training programs" includes motor 
 18.6   vehicle body and mechanical repair courses but does not include 
 18.7   driver education programs.  
 18.8      (7) Purchase of a motor vehicle for use as an ambulance by 
 18.9   an ambulance service licensed under section 144E.10. 
 18.10     (8) Purchase of a motor vehicle by or for a public library, 
 18.11  as defined in section 134.001, subdivision 2, as a bookmobile or 
 18.12  library delivery vehicle. 
 18.13     (9) Purchase of a ready-mixed concrete truck. 
 18.14     (10) Purchase or use of a motor vehicle by a town for use 
 18.15  exclusively for road maintenance, including snowplows and dump 
 18.16  trucks, but not including automobiles, vans, or pickup trucks. 
 18.17     Sec. 5.  Minnesota Statutes 1998, section 297F.01, 
 18.18  subdivision 7, is amended to read: 
 18.19     Subd. 7.  [CONSUMER.] "Consumer" means any person an 
 18.20  individual who has title to or possession of cigarettes or 
 18.21  tobacco products in storage, for use or other personal 
 18.22  consumption in this state rather than for sale. 
 18.23     Sec. 6.  Minnesota Statutes 1998, section 297F.01, is 
 18.24  amended by adding a subdivision to read: 
 18.25     Subd. 9a.  [INVOICE.] "Invoice" means a detailed list of 
 18.26  cigarettes and tobacco products purchased or sold in this state 
 18.27  that contains the following information: 
 18.28     (1) name of seller; 
 18.29     (2) name of purchaser; 
 18.30     (3) date of sale; 
 18.31     (4) invoice number; 
 18.32     (5) itemized list of goods sold including brands of 
 18.33  cigarettes and number of cartons of each brand, unit price, and 
 18.34  identification of tobacco products by name, quantity, and unit 
 18.35  price; and 
 18.36     (6) any rebates, discounts, or other reductions. 
 19.1      Sec. 7.  Minnesota Statutes 1998, section 297F.01, 
 19.2   subdivision 14, is amended to read: 
 19.3      Subd. 14.  [RETAILER.] "Retailer" means a person required 
 19.4   to be licensed under chapter 461 engaged in this state in the 
 19.5   business of selling, or offering to sell, cigarettes or tobacco 
 19.6   products to consumers. 
 19.7      Sec. 8.  Minnesota Statutes 1998, section 297F.01, is 
 19.8   amended by adding a subdivision to read: 
 19.9      Subd. 21a.  [UNLICENSED SELLER.] "Unlicensed seller" means 
 19.10  anyone who is not licensed under section 297F.03 or 461.12 to 
 19.11  sell the particular product to the purchaser or possessor of the 
 19.12  product. 
 19.13     Sec. 9.  Minnesota Statutes 1998, section 297F.13, 
 19.14  subdivision 4, is amended to read: 
 19.15     Subd. 4.  [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE 
 19.16  INVOICES.] Every retailer and subjobber shall procure itemized 
 19.17  invoices of all cigarettes or tobacco products purchased.  The 
 19.18  invoices shall show the name and address of the seller and the 
 19.19  date of purchase. 
 19.20     The retailer and subjobber shall preserve at each licensed 
 19.21  place of business a legible copy of each invoice for one year 
 19.22  from the date of purchase.  Copies should be numbered and kept 
 19.23  in chronological order. 
 19.24     To determine whether the business is in compliance with the 
 19.25  provisions of this chapter and sections 325D.30 to 325D.42, at 
 19.26  any time during usual business hours, the commissioner, or duly 
 19.27  authorized agents and employees, may enter any place of business 
 19.28  of a retailer or subjobber without a search warrant and inspect 
 19.29  the premises, the records required to be kept under this 
 19.30  chapter, and the packages of cigarettes, tobacco products, and 
 19.31  vending devices contained on the premises. 
 19.32     Sec. 10.  [REPEALER.] 
 19.33     Minnesota Statutes 1998, section 270.083, is repealed. 
 19.34     Sec. 11.  [EFFECTIVE DATES.] 
 19.35     Sections 1, 4, 5, 7, 8, and 10 are effective the day 
 19.36  following final enactment.  Section 2 is effective for exemption 
 20.1   certificates used on or after July 1, 2000.  Section 3 is 
 20.2   retroactively effective July 1, 1997.  Sections 6 and 9 are 
 20.3   effective July 1, 2000. 
 20.4                              ARTICLE 3 
 20.5                            PROPERTY TAXES 
 20.6      Section 1.  Minnesota Statutes 1998, section 270.072, 
 20.7   subdivision 2, is amended to read: 
 20.8      Subd. 2.  [ASSESSMENT OF FLIGHT PROPERTY.] The flight 
 20.9   property of all airline companies operating in Minnesota shall 
 20.10  be assessed and appraised annually by the commissioner with 
 20.11  reference to its value on January 2 of the assessment year in 
 20.12  the manner prescribed by sections 270.071 to 270.079.  Aircraft 
 20.13  with a gross weight of less than 30,000 pounds and used on 
 20.14  intermittent or irregularly timed flights shall be excluded from 
 20.15  the provisions of sections 270.071 to 270.079. 
 20.16     Sec. 2.  Minnesota Statutes 1998, section 270.072, is 
 20.17  amended by adding a subdivision to read: 
 20.18     Subd. 6.  [AIRFLIGHT PROPERTY TAX LIEN.] The tax imposed 
 20.19  under sections 270.071 to 270.079 is a lien on all real and 
 20.20  personal property within this state of the airline company in 
 20.21  whose name the property is assessed.  For purposes of sections 
 20.22  270.65 and 270.69, the date of assessment for the tax imposed 
 20.23  under sections 270.071 to 270.079 is January 2 of each year for 
 20.24  the taxes payable in the following year.  
 20.25     Sec. 3.  Minnesota Statutes 1998, section 273.111, 
 20.26  subdivision 3, is amended to read: 
 20.27     Subd. 3.  [REQUIREMENTS.] (a) Real estate consisting of ten 
 20.28  acres or more or a nursery or greenhouse, and qualifying for 
 20.29  classification as class 1b, 2a, or 2b under section 273.13, 
 20.30  subdivision 23, paragraph (d), shall be entitled to valuation 
 20.31  and tax deferment under this section only if it is primarily 
 20.32  devoted to agricultural use, and meets the qualifications in 
 20.33  subdivision 6, and either:  
 20.34     (1) is the homestead of the owner, or of a surviving 
 20.35  spouse, child, or sibling of the owner or is real estate which 
 20.36  is farmed with the real estate which contains the homestead 
 21.1   property; or 
 21.2      (2) has been in possession of the applicant, the 
 21.3   applicant's spouse, parent, or sibling, or any combination 
 21.4   thereof, for a period of at least seven years prior to 
 21.5   application for benefits under the provisions of this section, 
 21.6   or is real estate which is farmed with the real estate which 
 21.7   qualifies under this clause and is within two four townships or 
 21.8   cities or combination thereof from the qualifying real estate; 
 21.9   or 
 21.10     (3) is the homestead of a shareholder in a family farm 
 21.11  corporation as defined in section 500.24, notwithstanding the 
 21.12  fact that legal title to the real estate may be held in the name 
 21.13  of the family farm corporation; or 
 21.14     (4) is in the possession of a nursery or greenhouse or an 
 21.15  entity owned by a proprietor, partnership, or corporation which 
 21.16  also owns the nursery or greenhouse operations on the parcel or 
 21.17  parcels. 
 21.18     (b) Valuation of real estate under this section is limited 
 21.19  to parcels the ownership of which is in noncorporate entities 
 21.20  except for:  
 21.21     (1) family farm corporations organized pursuant to section 
 21.22  500.24; and 
 21.23     (2) corporations that derive 80 percent or more of their 
 21.24  gross receipts from the wholesale or retail sale of 
 21.25  horticultural or nursery stock.  
 21.26     Corporate entities who previously qualified for tax 
 21.27  deferment pursuant to this section and who continue to otherwise 
 21.28  qualify under subdivisions 3 and 6 for a period of at least 
 21.29  three years following the effective date of Laws 1983, chapter 
 21.30  222, section 8, will not be required to make payment of the 
 21.31  previously deferred taxes, notwithstanding the provisions of 
 21.32  subdivision 9.  Special assessments are payable at the end of 
 21.33  the three-year period or at time of sale, whichever comes first. 
 21.34     (c) Land that previously qualified for tax deferment under 
 21.35  this section and no longer qualifies because it is not primarily 
 21.36  used for agricultural purposes but would otherwise qualify under 
 22.1   subdivisions 3 and 6 for a period of at least three years will 
 22.2   not be required to make payment of the previously deferred 
 22.3   taxes, notwithstanding the provisions of subdivision 9.  Sale of 
 22.4   the land prior to the expiration of the three-year period 
 22.5   requires payment of deferred taxes as follows:  sale in the year 
 22.6   the land no longer qualifies requires payment of the current 
 22.7   year's deferred taxes plus payment of deferred taxes for the two 
 22.8   prior years; sale during the second year the land no longer 
 22.9   qualifies requires payment of the current year's deferred taxes 
 22.10  plus payment of the deferred taxes for the prior year; and sale 
 22.11  during the third year the land no longer qualifies requires 
 22.12  payment of the current year's deferred taxes.  Deferred taxes 
 22.13  shall be paid even if the land qualifies pursuant to subdivision 
 22.14  11a.  When such property is sold or no longer qualifies under 
 22.15  this paragraph, or at the end of the three-year period, 
 22.16  whichever comes first, all deferred special assessments plus 
 22.17  interest are payable in equal installments spread over the time 
 22.18  remaining until the last maturity date of the bonds issued to 
 22.19  finance the improvement for which the assessments were levied.  
 22.20  If the bonds have matured, the deferred special assessments plus 
 22.21  interest are payable within 90 days.  The provisions of section 
 22.22  429.061, subdivision 2, apply to the collection of these 
 22.23  installments.  Penalties are not imposed on any such special 
 22.24  assessments if timely paid. 
 22.25     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
 22.26  273.13, subdivision 24, is amended to read: 
 22.27     Subd. 24.  [CLASS 3.] (a) Commercial and industrial 
 22.28  property and utility real and personal property is class 3a.  
 22.29     (1) Except as otherwise provided, each parcel of 
 22.30  commercial, industrial, or utility real property has a class 
 22.31  rate of 2.4 percent of the first tier of market value, and 3.4 
 22.32  percent of the remaining market value, except that.  In the case 
 22.33  of contiguous parcels of property owned by the same person or 
 22.34  entity, only the value equal to the first-tier value of the 
 22.35  contiguous parcels qualifies for the reduced class rate.  For 
 22.36  the purposes of this subdivision, the first tier means the first 
 23.1   $150,000 of market value.  Real property owned in fee by a 
 23.2   utility for transmission line right-of-way shall be classified 
 23.3   at the class rate for the higher tier.  All personal property 
 23.4   shall be classified at the class rate for the higher tier.  For 
 23.5   purposes of this subdivision "personal property" means tools, 
 23.6   implements, and machinery of an electric generating, 
 23.7   transmission, or distribution system, or a pipeline system 
 23.8   transporting or distributing water, gas, crude oil, or petroleum 
 23.9   products or mains and pipes used in the distribution of steam or 
 23.10  hot or chilled water for heating or cooling buildings, which are 
 23.11  fixtures. 
 23.12     For purposes of this paragraph, Parcels are considered to 
 23.13  be contiguous even if they are separated from each other by a 
 23.14  road, street, vacant lot, waterway, or other similar intervening 
 23.15  type of property.  However, connections between parcels that 
 23.16  consist of power lines or pipelines do not cause the parcels to 
 23.17  be contiguous. 
 23.18     (2) Personal property that is:  (i) part of an electric 
 23.19  generation, transmission, or distribution system; or (ii) part 
 23.20  of a pipeline system transporting or distributing water, gas, 
 23.21  crude oil, or petroleum products; and (iii) not described in 
 23.22  clause (3), has a class rate of 2.4 percent of the first tier of 
 23.23  market value and 3.4 percent of the remaining market value.  In 
 23.24  the case of multiple parcels in one county that are owned by one 
 23.25  person or entity, only one first tier amount is eligible for the 
 23.26  reduced rate.  
 23.27     (3) Personal property that is:  (i) tools, implements, and 
 23.28  machinery of an electric generation, transmission, or 
 23.29  distribution system; (ii) tools, implements, and machinery of a 
 23.30  pipeline system transporting or distributing water, gas, crude 
 23.31  oil, or petroleum products; or (iii) the mains and pipes used in 
 23.32  the distribution of steam or hot or chilled water for heating or 
 23.33  cooling buildings, has a class rate of 3.4 percent. 
 23.34     (b) Employment property defined in section 469.166, during 
 23.35  the period provided in section 469.170, shall constitute class 
 23.36  3b.  The class rates for class 3b property are determined under 
 24.1   paragraph (a). 
 24.2      (c)(1) Subject to the limitations of clause (2), structures 
 24.3   which are (i) located on property classified as class 3a, (ii) 
 24.4   constructed under an initial building permit issued after 
 24.5   January 2, 1996, (iii) located in a transit zone as defined 
 24.6   under section 473.3915, subdivision 3, (iv) located within the 
 24.7   boundaries of a school district, and (v) not primarily used for 
 24.8   retail or transient lodging purposes, shall have a class rate 
 24.9   equal to the lesser of 2.975 percent or the class rate of the 
 24.10  second tier of the commercial property rate under paragraph (a) 
 24.11  on any portion of the market value that does not qualify for the 
 24.12  first tier class rate under paragraph (a).  As used in item (v), 
 24.13  a structure is primarily used for retail or transient lodging 
 24.14  purposes if over 50 percent of its square footage is used for 
 24.15  those purposes.  A class rate equal to the lesser of 2.975 
 24.16  percent or the class rate of the second tier of the commercial 
 24.17  property class rate under paragraph (a) shall also apply to 
 24.18  improvements to existing structures that meet the requirements 
 24.19  of items (i) to (v) if the improvements are constructed under an 
 24.20  initial building permit issued after January 2, 1996, even if 
 24.21  the remainder of the structure was constructed prior to January 
 24.22  2, 1996.  For the purposes of this paragraph, a structure shall 
 24.23  be considered to be located in a transit zone if any portion of 
 24.24  the structure lies within the zone.  If any property once 
 24.25  eligible for treatment under this paragraph ceases to remain 
 24.26  eligible due to revisions in transit zone boundaries, the 
 24.27  property shall continue to receive treatment under this 
 24.28  paragraph for a period of three years. 
 24.29     (2) This clause applies to any structure qualifying for the 
 24.30  transit zone reduced class rate under clause (1) on January 2, 
 24.31  1999, or any structure meeting any of the qualification criteria 
 24.32  in item (i) and otherwise qualifying for the transit zone 
 24.33  reduced class rate under clause (1).  Such a structure continues 
 24.34  to receive the transit zone reduced class rate until the 
 24.35  occurrence of one of the events in item (ii).  Property 
 24.36  qualifying under item (i)(D), that is located outside of a city 
 25.1   of the first class, qualifies for the transit zone reduced class 
 25.2   rate as provided in that item.  Property qualifying under item 
 25.3   (i)(E) qualifies for the transit zone reduced class rate as 
 25.4   provided in that item. 
 25.5      (i) A structure qualifies for the rate in this clause if it 
 25.6   is: 
 25.7      (A) property for which a building permit was issued before 
 25.8   December 31, 1998; or 
 25.9      (B) property for which a building permit was issued before 
 25.10  June 30, 2001, if: 
 25.11     (I) at least 50 percent of the land on which the structure 
 25.12  is to be built has been acquired or is the subject of signed 
 25.13  purchase agreements or signed options as of March 15, 1998, by 
 25.14  the entity that proposes construction of the project or an 
 25.15  affiliate of the entity; 
 25.16     (II) signed agreements have been entered into with one 
 25.17  entity or with affiliated entities to lease for the account of 
 25.18  the entity or affiliated entities at least 50 percent of the 
 25.19  square footage of the structure or the owner of the structure 
 25.20  will occupy at least 50 percent of the square footage of the 
 25.21  structure; and 
 25.22     (III) one of the following requirements is met: 
 25.23     the project proposer has submitted the completed data 
 25.24  portions of an environmental assessment worksheet by December 
 25.25  31, 1998; or 
 25.26     a notice of determination of adequacy of an environmental 
 25.27  impact statement has been published by April 1, 1999; or 
 25.28     an alternative urban areawide review has been completed by 
 25.29  April 1, 1999; or 
 25.30     (C) property for which a building permit is issued before 
 25.31  July 30, 1999, if: 
 25.32     (I) at least 50 percent of the land on which the structure 
 25.33  is to be built has been acquired or is the subject of signed 
 25.34  purchase agreements as of March 31, 1998, by the entity that 
 25.35  proposes construction of the project or an affiliate of the 
 25.36  entity; 
 26.1      (II) a signed agreement has been entered into between the 
 26.2   building developer and a tenant to lease for its own account at 
 26.3   least 200,000 square feet of space in the building; 
 26.4      (III) a signed letter of intent is entered into by July 1, 
 26.5   1998, between the building developer and the tenant to lease the 
 26.6   space for its own account; and 
 26.7      (IV) the environmental review process required by state law 
 26.8   was commenced by December 31, 1998; 
 26.9      (D) property for which an irrevocable letter of credit with 
 26.10  a housing and redevelopment authority was signed before December 
 26.11  31, 1998.  The structure shall receive the transit zone reduced 
 26.12  class rate during construction and for the duration of time that 
 26.13  the original tenants remain in the building.  Any unoccupied net 
 26.14  leasable square footage that is not leased within 36 months 
 26.15  after the certificate of occupancy has been issued for the 
 26.16  building shall not be eligible to receive the reduced class 
 26.17  rate.  This reduced class rate applies only if the entity that 
 26.18  constructed the structure continues to own the property; 
 26.19     (E) property, located in a city of the first class, and for 
 26.20  which the building permits for the excavation, the parking ramp, 
 26.21  and the office tower were issued prior to April 1, 1999, shall 
 26.22  receive the reduced class rate during construction and for the 
 26.23  first five assessment years immediately following its initial 
 26.24  occupancy provided that, when completed, at least 25 percent of 
 26.25  the net leasable square footage must be occupied by the entity 
 26.26  or the parent entity constructing the structure each year during 
 26.27  this time period.  In order to receive the reduced class rate on 
 26.28  the structure in any subsequent assessment years, at least 50 
 26.29  percent of the rentable square footage must be occupied by the 
 26.30  entity or the parent entity that constructed the structure.  
 26.31  This reduced class rate applies only if the entity or the parent 
 26.32  entity that constructed the structure continues to own the 
 26.33  property. 
 26.34     (ii) A structure specified by this clause, other than a 
 26.35  structure qualifying under clause (i)(D) or (E), shall continue 
 26.36  to receive the transit zone reduced class rate until the 
 27.1   occurrence of one of the following events: 
 27.2      (A) if the structure upon initial occupancy will be owner 
 27.3   occupied by the entity initially constructing the structure or 
 27.4   an affiliated entity, the structure receives the reduced class 
 27.5   rate until the structure ceases to be at least 50 percent 
 27.6   occupied by the entity or an affiliated entity, provided, if the 
 27.7   portion of the structure occupied by that entity or an affiliate 
 27.8   of the entity is less than 85 percent, the transit zone class 
 27.9   rate reduction for the portion of structure not so occupied 
 27.10  terminates upon the leasing of such space to any nonaffiliated 
 27.11  entity; or 
 27.12     (B) if the structure is leased by a single entity or 
 27.13  affiliated entity at the time of initial occupancy, the 
 27.14  structure shall receive the reduced class rate until the 
 27.15  structure ceases to be at least 50 percent occupied by the 
 27.16  entity or an affiliated entity, provided, if the portion of the 
 27.17  structure occupied by that entity or an affiliate of the entity 
 27.18  is less than 85 percent, the transit zone class rate reduction 
 27.19  for the portion of structure not so occupied shall terminate 
 27.20  upon the leasing of such space to any nonaffiliated entity; or 
 27.21     (C) if the structure meets the criteria in item (i)(C), the 
 27.22  structure shall receive the reduced class rate until the 
 27.23  expiration of the initial lease term of the applicable tenants. 
 27.24     Percentages occupied or leased shall be determined based 
 27.25  upon net leasable square footage in the structure.  The assessor 
 27.26  shall allocate the value of the structure in the same fashion as 
 27.27  provided in the general law for portions of any structure 
 27.28  receiving and not receiving the transit tax class reduction as a 
 27.29  result of this clause. 
 27.30     Sec. 5.  Minnesota Statutes 1999 Supplement, section 
 27.31  477A.03, subdivision 2, is amended to read: 
 27.32     Subd. 2.  [ANNUAL APPROPRIATION.] (a) A sum sufficient to 
 27.33  discharge the duties imposed by sections 477A.011 to 477A.014 is 
 27.34  annually appropriated from the general fund to the commissioner 
 27.35  of revenue.  
 27.36     (b) Aid payments to counties under section 477A.0121 are 
 28.1   limited to $20,265,000 in 1996.  Aid payments to counties under 
 28.2   section 477A.0121 are limited to $27,571,625 in 1997.  For aid 
 28.3   payable in 1998 and thereafter, the total aids paid under 
 28.4   section 477A.0121 are the amounts certified to be paid in the 
 28.5   previous year, adjusted for inflation as provided under 
 28.6   subdivision 3. 
 28.7      (c)(i) For aids payable in 1998 and thereafter, the total 
 28.8   aids paid to counties under section 477A.0122 are the amounts 
 28.9   certified to be paid in the previous year, adjusted for 
 28.10  inflation as provided under subdivision 3. 
 28.11     (ii) Aid payments to counties under section 477A.0122 in 
 28.12  2000 are further increased by an additional $20,000,000 in 2000. 
 28.13     (d) Aid payments to cities in 1999 under section 477A.013, 
 28.14  subdivision 9, are limited to $380,565,489.  For aids payable in 
 28.15  2000 and, the total aids paid under section 477A.013, 
 28.16  subdivision 9, are the amounts paid in the previous year, 
 28.17  adjusted for inflation as provided in subdivision 3, and 
 28.18  increased by the amount necessary to effectuate Laws 1999, 
 28.19  chapter 243, article 5, section 48, paragraph (b).  For aids 
 28.20  payable in 2001, the total aids paid under section 477A.013, 
 28.21  subdivision 9, are the amounts certified to be paid in the 
 28.22  previous year, adjusted for inflation as provided under 
 28.23  subdivision 3.  For aids payable in 2002, the total aids paid 
 28.24  under section 477A.013, subdivision 9, are the amounts certified 
 28.25  to be paid in the previous year, adjusted for inflation as 
 28.26  provided under subdivision 3, and increased by the amount 
 28.27  certified to be paid in 2001 under section 477A.06.  For aids 
 28.28  payable in 2003 and thereafter, the total aids paid under 
 28.29  section 477A.013, subdivision 9, are the amounts certified to be 
 28.30  paid in the previous year, adjusted for inflation as provided 
 28.31  under subdivision 3.  The additional amount authorized under 
 28.32  subdivision 4 is not included when calculating the appropriation 
 28.33  limits under this paragraph. 
 28.34     Sec. 6.  Laws 1988, chapter 645, section 3, as amended by 
 28.35  Laws 1999, chapter 243, article 6, section 9, is amended to read:
 28.36     Sec. 3.  [TAX; PAYMENT OF EXPENSES.] 
 29.1      (a) The tax levied by the hospital district under Minnesota 
 29.2   Statutes, section 447.34, must not be levied at a rate that 
 29.3   exceeds .0063 0.063 percent of taxable market value.  
 29.4      (b) .0048 0.048 percent of taxable market value of tax in 
 29.5   paragraph (a) may be used only for acquisition, betterment, and 
 29.6   maintenance of the district's hospital and nursing home 
 29.7   facilities and equipment, and not for administrative or salary 
 29.8   expenses.  
 29.9      (c) .0015 0.015 percent of taxable market value of the tax 
 29.10  in paragraph (a) may be used solely for the purpose of capital 
 29.11  expenditures as it relates to ambulance acquisitions for the 
 29.12  Cook ambulance service and the Orr ambulance service and not for 
 29.13  administrative or salary expenses.  
 29.14     The part of the levy referred to in paragraph (c) must be 
 29.15  administered by the Cook Hospital and passed on directly to the 
 29.16  Cook area ambulance service board and the city of Orr to be held 
 29.17  in trust until funding for a new ambulance is needed by either 
 29.18  the Cook ambulance service or the Orr ambulance service. 
 29.19     Sec. 7.  Laws 1999, chapter 243, article 6, section 18, is 
 29.20  amended to read: 
 29.21     Sec. 18.  [EFFECTIVE DATE.] 
 29.22     Sections 3 to 6 and 10 are effective for taxes levied in 
 29.23  1999, and payable in 2000.  Section 7 is effective the day 
 29.24  following final enactment for taxes levied in 1999 and 
 29.25  thereafter.  Sections 8 and 17 are effective for taxes levied in 
 29.26  1999, payable in 2000, and thereafter.  
 29.27     The .0015 0.063 percent of market value levy described in 
 29.28  section 9, paragraph (a), and the 0.015 percent of taxable 
 29.29  market value levy described in section 9, paragraph (c), is are 
 29.30  effective for the cities of Cook and Orr and the counties of St. 
 29.31  Louis and Koochiching for affected parts of those counties on 
 29.32  January 1, 2000, to be requested for levies certified in the 
 29.33  year 2000, with the first payment to be received and taxes 
 29.34  payable in 2001 and thereafter.  The 0.048 percent market value 
 29.35  levy described in section 9, paragraph (b), is effective for the 
 29.36  cities of Cook and Orr and the counties of St. Louis and 
 30.1   Koochiching for the affected parts of those counties on January 
 30.2   1, 1999, for levies certified in 1999 and taxes payable in 2000 
 30.3   and thereafter. 
 30.4      Sec. 8.  [REPEALER.] 
 30.5      (a) Minnesota Statutes 1998, sections 270.072, subdivision 
 30.6   5, and 270.075, subdivisions 3 and 4, are repealed. 
 30.7      (b) Minnesota Statutes 1998, section 273.127, is repealed. 
 30.8      (c) Minnesota Statutes 1998, section 273.1316, is repealed. 
 30.9      Sec. 9.  [EFFECTIVE DATES.] 
 30.10     Sections 3, 4, and 8, paragraph (b), are effective for 
 30.11  taxes payable in 2000 and thereafter.  Sections 1, 2, and 8, 
 30.12  paragraph (a), are effective for taxes payable in 2001 and 
 30.13  thereafter.  Section 5 is effective for aids payable in 2000 and 
 30.14  thereafter.  Sections 6, 7, and 8, paragraph (c), are effective 
 30.15  the day following final enactment. 
 30.16                             ARTICLE 4 
 30.17                           MISCELLANEOUS 
 30.18     Section 1.  Minnesota Statutes 1998, section 8.30, is 
 30.19  amended to read: 
 30.20     8.30 [COMPROMISE OF TAX AND FEE CLAIMS.] 
 30.21     Notwithstanding any other provisions of law to the 
 30.22  contrary, the attorney general shall have authority to 
 30.23  compromise taxes, fees, surcharges, assessments, penalties, and 
 30.24  interest in any case referred to the attorney general by the 
 30.25  commissioner of revenue, whether reduced to judgment or not, 
 30.26  where, in the attorney general's opinion, it shall be in the 
 30.27  best interests of the state to do so.  Such a compromise of a 
 30.28  tax debt shall must be in such a form as prescribed by the 
 30.29  attorney general shall prescribe and shall be in writing signed 
 30.30  by the attorney general, the taxpayer or taxpayer's 
 30.31  representative, and the commissioner of revenue.  
 30.32     Sec. 2.  Minnesota Statutes 1998, section 270A.07, 
 30.33  subdivision 1, is amended to read: 
 30.34     Subdivision 1.  [NOTIFICATION REQUIREMENT.] Any claimant 
 30.35  agency, seeking collection of a debt through setoff against a 
 30.36  refund due, shall submit to the commissioner information 
 31.1   indicating the amount of each debt and information identifying 
 31.2   the debtor, as required by section 270A.04, subdivision 3.  
 31.3      For each setoff of a debt against a refund due, the 
 31.4   commissioner shall charge a fee of $10.  The claimant agency may 
 31.5   add the fee to the amount of the debt.  
 31.6      The claimant agency shall notify the commissioner when a 
 31.7   debt has been satisfied or reduced by at least $200 within 30 
 31.8   days after satisfaction or reduction. 
 31.9      Sec. 3.  Minnesota Statutes 1999 Supplement, section 
 31.10  270A.07, subdivision 2, is amended to read: 
 31.11     Subd. 2.  [SETOFF PROCEDURES.] (a) The commissioner, upon 
 31.12  receipt of notification, shall initiate procedures to detect any 
 31.13  refunds otherwise payable to the debtor.  When the commissioner 
 31.14  determines that a refund is due to a debtor whose debt was 
 31.15  submitted by a claimant agency, the commissioner shall first 
 31.16  deduct the fee in subdivision 1 and then remit the refund or the 
 31.17  amount claimed, whichever is less, to the agency.  In 
 31.18  transferring or remitting moneys to the claimant agency, the 
 31.19  commissioner shall provide information indicating the amount 
 31.20  applied against each debtor's obligation and the debtor's 
 31.21  address listed on the tax return.  
 31.22     (b) The commissioner shall remit to the debtor the amount 
 31.23  of any refund due in excess of the debt submitted for setoff by 
 31.24  the claimant agency.  Notice of the amount setoff and address of 
 31.25  the claimant agency shall accompany any disbursement to the 
 31.26  debtor of the balance of a refund, or shall be sent to the 
 31.27  debtor at the time of setoff if the entire refund is set off.  
 31.28  The notice shall also advise the debtor of the right to contest 
 31.29  the validity of the claim, other than a claim based upon child 
 31.30  support under section 518.171, 518.54, 518.551, or chapter 518C 
 31.31  at a hearing, subject to the restrictions in this paragraph.  
 31.32  The debtor must assert this right by written request to the 
 31.33  claimant agency, which request the claimant agency must receive 
 31.34  within 45 days of the date of the notice.  This right does not 
 31.35  apply to (1) issues relating to the validity of the claim that 
 31.36  have been previously raised at a hearing under this section or 
 32.1   section 270A.09; (2) issues relating to the validity of the 
 32.2   claim that were not timely raised by the debtor under section 
 32.3   270A.08, subdivision 2; (3) issues relating to the validity of 
 32.4   the claim that have been previously raised at a hearing 
 32.5   conducted under rules promulgated by the United States 
 32.6   Department of Housing and Urban Development or any public agency 
 32.7   that is responsible for the administration of a low-income 
 32.8   housing program, or that were not timely raised by the debtor 
 32.9   under those rules; or (4) issues relating to the validity of the 
 32.10  claim for which a hearing is discretionary under section 270A.09.
 32.11     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
 32.12  289A.55, subdivision 9, is amended to read: 
 32.13     Subd. 9.  [INTEREST ON PENALTIES.] (a) A penalty imposed 
 32.14  under section 289A.60, subdivision 1, 2, 3, 4, 5, 6, or 21 bears 
 32.15  interest from the date the return or payment was required to be 
 32.16  filed or paid, including any extensions, to the date of payment 
 32.17  of the penalty. 
 32.18     (b) A penalty not included in paragraph (a) bears interest 
 32.19  only if it is not paid within ten 60 days from the date of 
 32.20  notice.  In that case interest is imposed from the date of 
 32.21  notice to the date of payment. 
 32.22     Sec. 5.  Minnesota Statutes 1998, section 295.58, is 
 32.23  amended to read: 
 32.24     295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 
 32.25     The commissioner shall deposit all revenues, including 
 32.26  penalties and interest, derived from the taxes imposed by 
 32.27  sections 295.50 to 295.57 and from the insurance premiums tax on 
 32.28  health maintenance organizations, community integrated service 
 32.29  networks, and nonprofit health service plan corporations in the 
 32.30  health care access fund in the state treasury.  Refunds of 
 32.31  overpayments must be paid from the health care access fund in 
 32.32  the state treasury.  There is annually appropriated from the 
 32.33  health care access fund to the commissioner of revenue the 
 32.34  amount necessary to make any refunds required under section 
 32.35  295.54 this chapter. 
 32.36     Sec. 6.  Minnesota Statutes 1998, section 296A.03, 
 33.1   subdivision 5, is amended to read: 
 33.2      Subd. 5.  [FORM OF APPLICATION; BOND.] (a) A written 
 33.3   application shall be made in the form and manner prescribed by 
 33.4   the commissioner. 
 33.5      (b) The commissioner shall also require the applicant or 
 33.6   licensee to deposit with the state treasurer securities of the 
 33.7   United States government or the state of Minnesota or to execute 
 33.8   and file a bond, with a corporate surety approved by the 
 33.9   commissioner, to the state of Minnesota in an amount to be 
 33.10  determined by the commissioner and in a form to be fixed by the 
 33.11  commissioner and approved by the attorney general, and which 
 33.12  shall be conditioned for the payment when due of all excise 
 33.13  taxes, inspection fees, penalties, and accrued interest arising 
 33.14  in the ordinary course of business or by reason of any 
 33.15  delinquent money which may be due the state.  The bond shall 
 33.16  cover all places of business within the state where petroleum 
 33.17  products are received by the licensee.  The applicant or 
 33.18  licensee shall designate and maintain an agent in this state 
 33.19  upon whom service may be made for all purposes of this section. 
 33.20     (c) An initial applicant for a distributor's license shall 
 33.21  furnish a bond in a minimum sum of $3,000 for the first year. 
 33.22     (d) The commissioner, on reaching the opinion that the bond 
 33.23  given by a licensee is inadequate in amount to fully protect the 
 33.24  state, shall require an additional bond in such amount as the 
 33.25  commissioner deems sufficient. 
 33.26     (e) A licensee who desires to be exempt from depositing 
 33.27  securities or furnishing such bond shall furnish to the 
 33.28  commissioner an itemized financial statement showing the assets 
 33.29  and the liabilities of the applicant.  If it appears to the 
 33.30  commissioner, from the financial statement or otherwise, that 
 33.31  the applicant is financially responsible, then the commissioner 
 33.32  may exempt the applicant from depositing such securities or 
 33.33  furnishing such bond until the commissioner otherwise orders. 
 33.34     (f) When the surety upon any bond issued under the 
 33.35  provisions of this chapter have fulfilled the conditions of such 
 33.36  bond and compensated the state for any loss occasioned by any 
 34.1   act or omission of any licensee under this chapter, such surety 
 34.2   shall be subrogated to all the rights of the state in connection 
 34.3   with the transaction where such loss occurred. 
 34.4      Sec. 7.  Minnesota Statutes 1998, section 296A.21, 
 34.5   subdivision 2, is amended to read: 
 34.6      Subd. 2.  [COLLECTION.] No action shall be brought for the 
 34.7   collection of delinquent taxes and inspection fees under section 
 34.8   270.68 unless commenced within five years after the date of 
 34.9   assessment of the taxes and fees. 
 34.10     Sec. 8.  Minnesota Statutes 1998, section 296A.21, 
 34.11  subdivision 3, is amended to read: 
 34.12     Subd. 3.  [FALSE OR FRAUDULENT REPORT.] In the case of a 
 34.13  false or fraudulent report with intent to evade tax taxes or 
 34.14  inspection fee fees or of a failure to file a report, the taxes 
 34.15  or fees may be assessed at any time, and a proceeding in court 
 34.16  for their collection must be begun within five years after the 
 34.17  assessment. 
 34.18     Sec. 9.  Minnesota Statutes 1998, section 296A.22, 
 34.19  subdivision 6, is amended to read: 
 34.20     Subd. 6.  [SALE PROHIBITED UNDER CERTAIN CONDITIONS.] No 
 34.21  petroleum product shall be unloaded or sold by any person or 
 34.22  distributor whose tax and inspection fees are the basis for 
 34.23  collection action under subdivision 2. 
 34.24     Sec. 10.  Minnesota Statutes 1999 Supplement, section 
 34.25  298.24, subdivision 1, is amended to read: 
 34.26     Subdivision 1.  (a) For concentrate produced in 1999, there 
 34.27  is imposed upon taconite and iron sulphides, and upon the mining 
 34.28  and quarrying thereof, and upon the production of iron ore 
 34.29  concentrate therefrom, and upon the concentrate so produced, a 
 34.30  tax of $2.141 per gross ton of merchantable iron ore concentrate 
 34.31  produced therefrom.  
 34.32     (b) For concentrates produced in 2000 and subsequent years, 
 34.33  the tax rate shall be equal to the preceding year's tax rate 
 34.34  plus an amount equal to the preceding year's tax rate multiplied 
 34.35  by the percentage increase in the implicit price deflator from 
 34.36  the fourth quarter of the second preceding year to the fourth 
 35.1   quarter of the preceding year.  "Implicit price deflator" for 
 35.2   the gross national product means the implicit price deflator for 
 35.3   the gross domestic product prepared by the bureau of economic 
 35.4   analysis of the United States Department of Commerce.  
 35.5      (c) On concentrates produced in 1997 and thereafter, an 
 35.6   additional tax is imposed equal to three cents per gross ton of 
 35.7   merchantable iron ore concentrate for each one percent that the 
 35.8   iron content of the product exceeds 72 percent, when dried at 
 35.9   212 degrees Fahrenheit. 
 35.10     (d) The tax shall be imposed on the average of the 
 35.11  production for the current year and the previous two years.  The 
 35.12  rate of the tax imposed will be the current year's tax rate.  
 35.13  This clause shall not apply in the case of the closing of a 
 35.14  taconite facility if the property taxes on the facility would be 
 35.15  higher if this clause and section 298.25 were not applicable.  
 35.16     (e) If the tax or any part of the tax imposed by this 
 35.17  subdivision is held to be unconstitutional, a tax of $2.141 per 
 35.18  gross ton of merchantable iron ore concentrate produced shall be 
 35.19  imposed.  
 35.20     (f) Consistent with the intent of this subdivision to 
 35.21  impose a tax based upon the weight of merchantable iron ore 
 35.22  concentrate, the commissioner of revenue may indirectly 
 35.23  determine the weight of merchantable iron ore concentrate 
 35.24  included in fluxed pellets by subtracting the weight of the 
 35.25  limestone, dolomite, or olivine derivatives or other basic flux 
 35.26  additives included in the pellets from the weight of the 
 35.27  pellets.  For purposes of this paragraph, "fluxed pellets" are 
 35.28  pellets produced in a process in which limestone, dolomite, 
 35.29  olivine, or other basic flux additives are combined with 
 35.30  merchantable iron ore concentrate.  No subtraction from the 
 35.31  weight of the pellets shall be allowed for binders, mineral and 
 35.32  chemical additives other than basic flux additives, or moisture. 
 35.33     (g)(1) Notwithstanding any other provision of this 
 35.34  subdivision, for the first two years of a plant's production of 
 35.35  direct reduced ore, no tax is imposed under this section.  As 
 35.36  used in this paragraph, "direct reduced ore" is ore that results 
 36.1   in a product that has an iron content of at least 75 percent.  
 36.2   For the third year of a plant's production of direct reduced 
 36.3   ore, the rate to be applied to direct reduced ore is 25 percent 
 36.4   of the rate otherwise determined under this subdivision.  For 
 36.5   the fourth such production year, the rate is 50 percent of the 
 36.6   rate otherwise determined under this subdivision; for the fifth 
 36.7   such production year, the rate is 75 percent of the rate 
 36.8   otherwise determined under this subdivision; and for all 
 36.9   subsequent production years, the full rate is imposed. 
 36.10     (2) Subject to clause (1), production of direct reduced ore 
 36.11  in this state is subject to the tax imposed by this section, but 
 36.12  if that production is not produced by a producer of taconite or 
 36.13  iron sulfides, the production of taconite or iron sulfides 
 36.14  consumed in the production of direct reduced iron in this state 
 36.15  is not subject to the tax imposed by this section on taconite or 
 36.16  iron sulfides. 
 36.17     Sec. 11.  Laws 1999, chapter 112, section 1, subdivision 1, 
 36.18  is amended to read: 
 36.19     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
 36.20  subdivision apply to this section. 
 36.21     (b) "Acre" means an acre of effective agricultural use land 
 36.22  within the state of Minnesota as reported to the farm service 
 36.23  agency on form 156EZ. 
 36.24     (c) "Commissioner" means the commissioner of revenue. 
 36.25     (d) "Effective agricultural use land" means the land 
 36.26  suitable for growing an agricultural crop and excludes land 
 36.27  enrolled in the conservation reserve program established by 
 36.28  Minnesota Statutes, section 103F.515, or the water bank program 
 36.29  established by Minnesota Statutes, section 103F.601. 
 36.30     (e) "Farm" or "farm operation" means an agricultural 
 36.31  production operation with a unique farm number as reported on 
 36.32  form 156EZ to the farm service agency, which includes at least 
 36.33  40 acres of effective agricultural use land. 
 36.34     (f) "Farm operator" means a person who is identified as the 
 36.35  operator of a farm on form 156EZ filed with the farm service 
 36.36  agency. 
 37.1      (g) "Farm service agency" means the United States Farm 
 37.2   Service Agency. 
 37.3      (h) "Farmer" or "farmer at risk" means a person who 
 37.4   produces an agricultural crop or livestock and is reported to 
 37.5   the farm service agency as bearing a percentage of the risk for 
 37.6   the farm operation. 
 37.7      (i) "Livestock" means cattle, hogs, poultry, and sheep. 
 37.8      (j) "Livestock production facility" means a farm that has 
 37.9   produced at least a total of $10,000 in sales of unprocessed 
 37.10  livestock or unprocessed dairy products or receipts from the 
 37.11  care of another farmer's livestock as reported on schedule F or 
 37.12  form 1065 or form 1120 or 1120S of the farmer's federal income 
 37.13  tax return for either taxable years beginning in calendar year 
 37.14  1997 or 1998. 
 37.15     (k) "Person" includes individuals, fiduciaries, estates, 
 37.16  trusts, partnerships, joint ventures, and corporations. 
 37.17     Sec. 12.  Laws 1999, chapter 243, article 1, section 2, is 
 37.18  amended to read: 
 37.19     Sec. 2.  [SALES TAX REBATE.] 
 37.20     (a) An individual who: 
 37.21     (1) was eligible for a credit under Laws 1997, chapter 231, 
 37.22  article 1, section 16, as amended by Laws 1997, First Special 
 37.23  Session chapter 5, section 35, and Laws 1997, Third Special 
 37.24  Session chapter 3, section 11, and Laws 1998, chapter 304, and 
 37.25  Laws 1998, chapter 389, article 1, section 3, and who filed for 
 37.26  or received that credit on or before June 15, 1999; or 
 37.27     (2) was a resident of Minnesota for any part of 1997, and 
 37.28  filed a 1997 Minnesota income tax return on or before June 15, 
 37.29  1999, and had a tax liability before refundable credits on that 
 37.30  return of at least $1 but did not file the claim for credit 
 37.31  authorized under Laws 1997, chapter 231, article 1, section 16, 
 37.32  as amended, and who was not allowed to be claimed as a dependent 
 37.33  on a 1997 federal income tax return filed by another person; or 
 37.34     (3) had the property taxes payable on his or her homestead 
 37.35  abated to zero under Laws 1997, chapter 231, article 2, section 
 37.36  64, 
 38.1   shall receive a sales tax rebate. 
 38.2      (b) The sales tax rebate for taxpayers who qualify under 
 38.3   paragraph (a) as married filing joint or head of household must 
 38.4   be computed according to the following schedule: 
 38.5        Income                             Sales Tax Rebate
 38.6    less than $2,500                              $  358
 38.7    at least $2,500 but less than $5,000          $  469
 38.8    at least $5,000 but less than $10,000         $  502
 38.9    at least $10,000 but less than $15,000        $  549
 38.10   at least $15,000 but less than $20,000        $  604
 38.11   at least $20,000 but less than $25,000        $  641
 38.12   at least $25,000 but less than $30,000        $  690
 38.13   at least $30,000 but less than $35,000        $  762
 38.14   at least $35,000 but less than $40,000        $  820
 38.15   at least $40,000 but less than $45,000        $  874
 38.16   at least $45,000 but less than $50,000        $  921
 38.17   at least $50,000 but less than $60,000        $  969
 38.18   at least $60,000 but less than $70,000        $1,071
 38.19   at least $70,000 but less than $80,000        $1,162
 38.20   at least $80,000 but less than $90,000        $1,276
 38.21   at least $90,000 but less than $100,000       $1,417
 38.22   at least $100,000 but less than $120,000      $1,535
 38.23   at least $120,000 but less than $140,000      $1,682
 38.24   at least $140,000 but less than $160,000      $1,818
 38.25   at least $160,000 but less than $180,000      $1,946
 38.26   at least $180,000 but less than $200,000      $2,067
 38.27   at least $200,000 but less than $400,000      $2,644
 38.28   at least $400,000 but less than $600,000      $3,479
 38.29   at least $600,000 but less than $800,000      $4,175
 38.30   at least $800,000 but less than $1,000,000    $4,785
 38.31   $1,000,000 and over                           $5,000
 38.32     (c) The sales tax rebate for individuals who qualify under 
 38.33  paragraph (a) as single or married filing separately must be 
 38.34  computed according to the following schedule: 
 38.35        Income                                 Sales Tax Rebate
 38.36   less than $2,500                              $  204
 39.1    at least $2,500 but less than $5,000          $  249
 39.2    at least $5,000 but less than $10,000         $  299
 39.3    at least $10,000 but less than $15,000        $  408
 39.4    at least $15,000 but less than $20,000        $  464
 39.5    at least $20,000 but less than $25,000        $  496
 39.6    at least $25,000 but less than $30,000        $  515
 39.7    at least $30,000 but less than $40,000        $  570
 39.8    at least $40,000 but less than $50,000        $  649
 39.9    at least $50,000 but less than $70,000        $  776
 39.10   at least $70,000 but less than $100,000       $  958
 39.11   at least $100,000 but less than $140,000      $1,154
 39.12   at least $140,000 but less than $200,000      $1,394
 39.13   at least $200,000 but less than $400,000      $1,889
 39.14   at least $400,000 but less than $600,000      $2,485
 39.15   $600,000 and over                             $2,500
 39.16     (d) Individuals who were not residents of Minnesota for any 
 39.17  part of 1997 and who paid more than $10 in Minnesota sales tax 
 39.18  on nonbusiness consumer purchases in that year qualify for a 
 39.19  rebate under this paragraph only.  Qualifying nonresidents must 
 39.20  file a claim for rebate on a form prescribed by the commissioner 
 39.21  before the later of June 15, 1999, or 30 days after the date of 
 39.22  enactment of this act.  The claim must include receipts showing 
 39.23  the Minnesota sales tax paid and the date of the sale.  Taxes 
 39.24  paid on purchases allowed in the computation of federal taxable 
 39.25  income or reimbursed by an employer are not eligible for the 
 39.26  rebate.  The commissioner shall determine the qualifying taxes 
 39.27  paid and rebate the lesser of: 
 39.28     (1) 69.0 percent of that amount; or 
 39.29     (2) the maximum amount for which the claimant would have 
 39.30  been eligible as determined under paragraph (b) if the taxpayer 
 39.31  filed the 1997 federal income tax return as a married taxpayer 
 39.32  filing jointly or head of household, or as determined under 
 39.33  paragraph (c) for other taxpayers. 
 39.34     (e) "Income," for purposes of this section other than 
 39.35  paragraph (d), is taxable income as defined in section 63 of the 
 39.36  Internal Revenue Code of 1986, as amended through December 31, 
 40.1   1996, plus the sum of any additions to federal taxable income 
 40.2   for the taxpayer under Minnesota Statutes, section 290.01, 
 40.3   subdivision 19a, and reported on the original 1997 income tax 
 40.4   return including subsequent adjustments to that return made 
 40.5   within the time limits specified in paragraph (h).  For an 
 40.6   individual who was a resident of Minnesota for less than the 
 40.7   entire year, the sales tax rebate equals the sales tax rebate 
 40.8   calculated under paragraph (b) or (c) multiplied by the 
 40.9   percentage determined pursuant to Minnesota Statutes, section 
 40.10  290.06, subdivision 2c, paragraph (e), as calculated on the 
 40.11  original 1997 income tax return including subsequent adjustments 
 40.12  to that return made within the time limits specified in 
 40.13  paragraph (h).  For purposes of paragraph (d), "income" is 
 40.14  taxable income as defined in section 63 of the Internal Revenue 
 40.15  Code of 1986, as amended through December 31, 1996, and reported 
 40.16  on the taxpayer's original federal tax return for the first 
 40.17  taxable year beginning after December 31, 1996. 
 40.18     (f) Before payment, the commissioner of revenue shall 
 40.19  adjust the rebate as follows: 
 40.20     (1) the rebates calculated in paragraphs (b), (c), and (d) 
 40.21  must be proportionately reduced to account for 1997 income tax 
 40.22  returns that are filed on or after January 1, 1999, but before 
 40.23  July 1, 1999, so that the amount of sales tax rebates payable 
 40.24  under paragraphs (b), (c), and (d) does not exceed 
 40.25  $1,250,000,000; and 
 40.26     (2) the commissioner of finance shall certify by July 15, 
 40.27  1999, preliminary fiscal year 1999 general fund net nondedicated 
 40.28  revenues.  The certification shall exclude the impact of any 
 40.29  legislation enacted during the 1999 regular session.  If 
 40.30  certified net nondedicated revenues exceed the amount forecast 
 40.31  in February 1999, up to $50,000,000 of the increase shall be 
 40.32  added to the total amount rebated.  The commissioner of revenue 
 40.33  shall adjust all rebates proportionally to reflect any 
 40.34  increases.  The total amount of the rebate shall not exceed 
 40.35  $1,300,000,000. 
 40.36  The adjustments under this paragraph are not rules subject to 
 41.1   Minnesota Statutes, chapter 14. 
 41.2      (g) The commissioner of revenue may begin making sales tax 
 41.3   rebates by August 1, 1999.  Sales tax rebates not paid by 
 41.4   October 1, 1999, bear interest at the rate specified in 
 41.5   Minnesota Statutes, section 270.75. 
 41.6      (h) A sales tax rebate shall not be adjusted based on 
 41.7   changes to a 1997 income tax return that are made by order of 
 41.8   assessment after June 15, 1999, or made by the taxpayer that are 
 41.9   filed with the commissioner of revenue after June 15, 1999. 
 41.10     (i) Individuals who filed a joint income tax return for 
 41.11  1997 shall receive a joint sales tax rebate.  After the sales 
 41.12  tax rebate has been issued, but before the check has been 
 41.13  cashed, either joint claimant may request a separate check for 
 41.14  one-half of the joint sales tax rebate.  Notwithstanding 
 41.15  anything in this section to the contrary, if prior to payment, 
 41.16  the commissioner has been notified that persons who filed a 
 41.17  joint 1997 income tax return are living at separate addresses, 
 41.18  as indicated on their 1998 income tax return or otherwise, the 
 41.19  commissioner may issue separate checks to each person.  The 
 41.20  amount payable to each person is one-half of the total joint 
 41.21  rebate. 
 41.22     (j) The sales tax rebate is a "Minnesota tax law" for 
 41.23  purposes of Minnesota Statutes, section 270B.01, subdivision 8. 
 41.24     (k) The sales tax rebate is "an overpayment of any tax 
 41.25  collected by the commissioner" for purposes of Minnesota 
 41.26  Statutes, section 270.07, subdivision 5.  For purposes of this 
 41.27  paragraph, a joint sales tax rebate is payable to each spouse 
 41.28  equally. 
 41.29     (l) If the commissioner of revenue cannot locate an 
 41.30  individual entitled to a sales tax rebate by July 1, 2001, or if 
 41.31  an individual to whom a sales tax rebate was issued has not 
 41.32  cashed the check by July 1, 2001, the right to the sales tax 
 41.33  rebate lapses and the check must be deposited in the general 
 41.34  fund. 
 41.35     (m) Individuals entitled to a sales tax rebate pursuant to 
 41.36  paragraph (a), but who did not receive one, and individuals who 
 42.1   receive a sales tax rebate that was not correctly computed, must 
 42.2   file a claim with the commissioner before July 1, 2000, in a 
 42.3   form prescribed by the commissioner.  These claims must be 
 42.4   treated as if they are a claim for refund under Minnesota 
 42.5   Statutes, section 289A.50, subdivisions 4 and 7. 
 42.6      (n) The sales tax rebate is a refund subject to revenue 
 42.7   recapture under Minnesota Statutes, chapter 270A.  The 
 42.8   commissioner of revenue shall remit the entire refund to the 
 42.9   claimant agency, which shall, upon the request of the spouse who 
 42.10  does not owe the debt, refund one-half of the joint sales tax 
 42.11  rebate to the spouse who does not owe the debt. 
 42.12     (o) The rebate is a reduction of fiscal year 1999 sales tax 
 42.13  revenues.  The amount necessary to make the sales tax rebates 
 42.14  and interest provided in this section is appropriated from the 
 42.15  general fund to the commissioner of revenue in fiscal year 1999 
 42.16  and is available until June 30, 2001. 
 42.17     (p) If a sales tax rebate check is cashed by someone other 
 42.18  than the payee or payees of the check, and the commissioner of 
 42.19  revenue determines that the check has been forged or improperly 
 42.20  endorsed, the commissioner may issue an order of assessment for 
 42.21  the amount of the check against the person or persons cashing 
 42.22  it.  The assessment must be made within two years after the 
 42.23  check is cashed, but if cashing the check constitutes theft 
 42.24  under Minnesota Statutes, section 609.52, or forgery under 
 42.25  Minnesota Statutes, section 609.631, the assessment can be made 
 42.26  at any time.  The assessment may be appealed administratively 
 42.27  and judicially.  The commissioner may take action to collect the 
 42.28  assessment in the same manner as provided by Minnesota Statutes, 
 42.29  chapter 289A, for any other order of the commissioner assessing 
 42.30  tax. 
 42.31     (q) Notwithstanding Minnesota Statutes, sections 9.031, 
 42.32  16A.40, 16B.49, 16B.50, and any other law to the contrary, the 
 42.33  commissioner of revenue may take whatever actions the 
 42.34  commissioner deems necessary to pay the rebates required by this 
 42.35  section, and may, in consultation with the commissioner of 
 42.36  finance and the state treasurer, contract with a private vendor 
 43.1   or vendors to process, print, and mail the rebate checks or 
 43.2   warrants required under this section and receive and disburse 
 43.3   state funds to pay those checks or warrants. 
 43.4      (r) The commissioner may pay rebates required by this 
 43.5   section by electronic funds transfer to individuals who 
 43.6   requested that their 1998 individual income tax refund be paid 
 43.7   through electronic funds transfer.  The commissioner may make 
 43.8   the electronic funds transfer payments to the same financial 
 43.9   institution and into the same account as the 1998 individual 
 43.10  income tax refund. 
 43.11     Sec. 13.  [EFFECTIVE DATES.] 
 43.12     Section 1 is effective for compromises entered into after 
 43.13  the date of final enactment.  Sections 2, 3, and 6 to 10 are 
 43.14  effective the day following final enactment.  Section 4 is 
 43.15  effective for penalties assessed after the date of final 
 43.16  enactment.  Section 5 is effective for refunds made on or after 
 43.17  January 1, 1999.  Section 11 is effective retroactively to April 
 43.18  23, 1999.  Section 12 is effective retroactively to May 25, 1999.